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08/05/2009
Radian Reports Second Quarter Financial Results
"We are pleased that Radian generated net income in the second quarter, despite a difficult environment with rising delinquencies. These earnings were driven primarily by loss management efforts that positively impacted our provision for mortgage insurance losses and by unrealized gains on derivatives," said Chief Executive Officer S. A. Ibrahim. "While there are positive signs in today's economy, we remain aware of the challenges and uncertainties Radian continues to face in the near term, and the condition of the U.S. housing market. Our primary focus is on increasing our capital strength and financial flexibility, continuing to write high-quality new business, and positioning Radian for growth and success when markets recover."
SECOND QUARTER HIGHLIGHTS
-- The mortgage insurance provision for losses of $142.8 million reflects
higher delinquency counts, offset significantly by Radian's ongoing
loss management efforts.
-- Mortgage insurance claims paid of $167.7 million again were lower than
the company's forecast and consisted of $149.4 million of first liens
and $18.3 million of second liens. In the third quarter, total first-
and second-lien claims paid are expected to be approximately $275
million to $300 million. For the full year 2009, Radian has reduced
its expectations from $1.2 billion to $1.4 billion, to a current
estimate in the $1.1 billion range.
-- Radian is encouraged by the many government and private initiatives to
help borrowers and has programs in place to provide assistance to
lenders and their borrowers who are struggling with mortgage payments.
The company is ready to handle the anticipated increase in volume from
government-sponsored programs and through other lender-initiated
refinance or modification programs. Radian continues to expect an
increase in delinquencies throughout the remainder of 2009, which could
result in a higher provision and reserve for losses.
-- Over the past year, Radian has successfully transformed its mortgage
insurance business, producing a 2009 book that consists of loans with
excellent risk characteristics. For example, of the total primary new
mortgage insurance written in the quarter of $5.5 billion:
-- 99.9 percent was prime credit quality;
-- 98.4 percent had a FICO score of 680 or greater, with 72.9 percent
at 740 or above;
-- all had loan-to-value (LTV) ratios of 95 percent or below, and 73
percent had LTV ratios of 90 percent or below;
-- 99.5 percent were fixed-rate mortgages; and
-- we have observed a significant decrease in early default activity
in the 2009 vintage, which is an example of improved underwriting.
In addition, Radian's market share has grown steadily in 2009 and
represents a significant increase over historical levels.
-- Unrealized gains on derivatives were $272.3 million on total pre-tax
income of $353.7 million.
-- Radian's current cash position is strong, with approximately $480
million immediately available to the parent company after having
received a $105 million tax refund in May.
-- Radian Asset Assurance Inc. the company's principal financial guaranty
subsidiary, continues to serve as an important source of capital
support for Radian Guaranty Inc., the company's mortgage insurance
subsidiary, and is expected to continue to provide Radian Guaranty with
cash infusions over time.
-- As of June 30, 2009, Radian Asset had more than $900 million in
statutory capital with an additional $1.84 billion in total claims-
paying resources.
-- At the end of June, Radian Asset paid an ordinary dividend of
approximately $100 million to Radian Guaranty.
RECENT EVENTS
-- On July 17, the Company filed a $1 billion securities shelf
registration.
-- On July 20, Radian Asset entered into a Commutation and Release
Agreement, effective as of July 1, 2009, with Ambac Assurance
Corporation and Ambac Assurance UK Limited to commute $9.8 billion of
Radian Asset's reinsurance portfolio assumed from Ambac, decreasing
Radian Asset's total insured portfolio by 10 percent.
As a result, the statutory surplus of Radian Asset (and Radian
Guaranty) will be positively impacted in the third quarter 2009 by
approximately $40 million.
CONFERENCE CALL
Radian will discuss each of these items in its conference call today, Wednesday, August 5, 2009, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives or at www.radian.com. The call may also be accessed by dialing 800-553-0288 inside the U.S., or 612-332-0530 for international callers, using passcode 108853 or by referencing Radian.
A replay of the Web cast will be available on the Radian Web site approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available two and a half hours after the call ends for one week, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 108853.
In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's Web site under Investors >Quarterly Results, or by clicking on http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-earnings.
About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. Additional information may be found at www.radian.com.
Financial Results and Supplemental Information Contents (Unaudited)
For trend information on all schedules, refer to Radian's quarterly financial statistics at http://www.radian.biz/investors/financial/corporate.aspx.
Exhibit A: Condensed Consolidated Statements of Income
Exhibit B: Condensed Consolidated Balance Sheets
Exhibit C: Segment Information Quarter Ended June 30, 2009
Exhibit D: Segment Information Quarter Ended June 30, 2008
Exhibit E: Segment Information Six Months Ended June 30, 2009
Exhibit F: Segment Information Six Months Ended June 30, 2008
Exhibit G: Financial Guaranty Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit H: Financial Guaranty Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit I: Mortgage Insurance Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
New Insurance Written and Risk Written
Exhibit J: Mortgage Insurance Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Insurance in Force and Risk in Force
Exhibit K: Mortgage Insurance Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Risk in Force by LTV and Policy Year and other Risk in Force
Exhibit L: Mortgage Insurance Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Claims and Reserves
Exhibit M: Mortgage Insurance Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Default Statistics
Exhibit N: Mortgage Insurance Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Net Premiums Written and Earned, Smart Home, Captives and
Persistency
Exhibit O: Mortgage Insurance Supplemental Information -
For the Quarter Ended and as of June 30, 2009
Reinsurance Progression Toward Attachment - Summary by Book
Year
Exhibit P: Mortgage Insurance Supplemental Information -
For the Quarter Ended and as of June 30, 2009
Modified Pool Risk in Force
Exhibit Q: Mortgage Insurance Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Alt-A Risk in Force
Exhibit R: Financial Services Supplemental Information -
For the Quarter and Six Months Ended and as of June 30, 2009
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
Quarter Ended Six Months Ended
June 30 June 30
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
(In thousands, except
per-share data)
Revenues:
Net premiums written -
insurance $161,901 $222,645 $318,657 $466,951
======== ======== ======== ========
Net premiums earned -
insurance $193,629 $249,137 $404,844 $491,058
Net investment income 53,251 65,128 109,534 131,107
Change in fair value of
derivative instruments 272,318 56,226 (12,098) 764,035
Net gains (losses) on other
financial instruments 54,384 14,801 79,264 (26,040)
Total other-than-temporary
impairment losses (46) (23,052) (680) (37,095)
Losses recognized in other
comprehensive loss - - - -
-- -- -- --
Net impairment losses
recognized in earnings (46) (23,052) (680) (37,095)
Other income 3,888 3,221 8,020 6,835
----- ----- ----- -----
Total revenues 577,424 365,461 588,884 1,329,900
------- ------- ------- ---------
Expenses:
Provision for losses 132,750 458,879 459,504 1,041,590
Provision for premium
deficiency 2,184 369,807 (1) (46,000) 387,897 (1)
Policy acquisition costs 25,967 75,952 (2) 39,921 99,858 (2)
Other operating expenses 55,635 63,849 107,237 118,990
Interest expense 12,295 13,832 24,594 26,325
------ ------ ------ ------
Total expenses 228,831 982,319 585,256 1,674,660
------- ------- ------- ---------
Equity in net income of
affiliates 5,110 15,704 15,662 28,230
----- ------ ------ ------
Pretax income (loss) 353,703 (601,154) 19,290 (316,530)
Income tax provision
(benefit) 121,828 (208,630) 4,852 (119,644)
------- -------- ----- --------
Net income (loss) $231,875 $(392,524) $14,438 $(196,886)
======== ========= ======= =========
Diluted net income (loss)
per share (3) $2.82 $(4.91) $0.18 $(2.46)
===== ====== ===== ======
(1) Includes $421.8 million for first-lien and $(52.0) million for second-
lien in the second quarter of 2008, and $421.8 million for first-lien and
$(33.9) million for second-lien for the six months of 2008.
(2) Includes the acceleration of $50.8 million of deferred policy
acquisition cost amortization, as a result of the establishment of a
first-lien premium deficiency reserve in the second quarter of 2008.
(3) Weighted average shares outstanding (In thousands)
Average common shares
outstanding 81,396 79,967 81,400 79,960
Increase in shares-
potential exercise of
options-diluted basis 844 - 836 -
--- -- --- --
Weighted average shares
outstanding 82,240 79,967 82,236 79,960
====== ====== ====== ======
For Trend Information, refer to our Quarterly Financial Statistics on
Radian's (RDN) website.
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit B
(In thousands, except per-share data) June 30 December 31 June 30
2009 2008 2008
------- ----------- -------
Assets:
Cash and investments $6,459,233 $6,060,601 $6,535,397
Investments in affiliates 108,767 99,712 112,683
Deferred policy acquisition costs 208,882 160,526 184,765
Prepaid federal income taxes - 248,828 536,343
Derivative assets 179,837 179,515 251,003
Deferred income taxes, net 368,281 446,102 171,577
Reinsurance recoverables 570,245 492,359 176,686
Other assets 560,257 428,476 440,963
------- ------- -------
Total assets $8,455,502 $8,116,119 $8,409,417
========== ========== ==========
Liabilities and stockholders' equity:
Unearned premiums $1,120,359 $916,724 $1,048,064
Reserve for losses and loss
adjustment expenses 3,304,236 3,224,542 2,287,742
Reserve for premium deficiency 40,861 86,861 583,543
Long-term debt and other borrowings 856,848 857,802 958,762
Variable interest entity debt 283,242 160,035 85,739
Derivative liabilities 379,270 519,260 657,426
Other liabilities 404,432 320,185 332,234
------- ------- -------
Total liabilities 6,389,248 6,085,409 5,953,510
--------- --------- ---------
Common stock 99 98 98
Additional paid-in capital 469,298 462,647 448,010
Retained earnings 1,764,878 1,766,946 1,981,046
Accumulated other comprehensive income (168,021) (198,981) 26,753
-------- -------- ------
Total common stockholders' equity 2,066,254 2,030,710 2,455,907
--------- --------- ---------
Total liabilities and stockholders'
equity $8,455,502 $8,116,119 $8,409,417
========== ========== ==========
Book value per share $25.12 $25.06 $30.54
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2009
Exhibit C
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
-------------- --------- --------- --------- -----
Revenues:
Net premiums written -
insurance $154,919 $6,982 $- $161,901
======== ====== == ========
Net premiums earned -
insurance $170,047 $23,582 $- $193,629
Net investment income 32,298 20,951 2 53,251
Change in fair value of
derivative instruments (6,557) 278,875 - 272,318
Net gains on other
financial instruments 12,590 41,794 - 54,384
Net impairment losses
recognized in earnings (46) - - (46)
Other income 3,748 66 74 3,888
----- -- -- -----
Total revenues 212,080 365,268 76 577,424
------- ------- -- -------
Expenses:
Provision for losses 142,802 (10,052) - 132,750
Provision for premium
deficiency 2,184 - - 2,184
Policy acquisition costs 7,921 18,046 - 25,967
Other operating expenses 35,590 19,909 136 55,635
Interest expense 2,619 9,676 - 12,295
----- ----- -- ------
Total expenses 191,116 37,579 136 228,831
------- ------ --- -------
Equity in net income of
affiliates - - 5,110 5,110
-- -- ----- -----
Pretax income 20,964 327,689 5,050 353,703
Income tax provision 7,948 112,019 1,861 121,828
----- ------- ----- -------
Net income $13,016 $215,670 $3,189 $231,875
======= ======== ====== ========
Cash and investments $3,919,403 $2,539,830 $- $6,459,233
Deferred policy
acquisition costs 28,674 180,208 - 208,882
Total assets 5,073,729 3,259,249 122,524 8,455,502
Unearned premiums 304,336 816,023 - 1,120,359
Reserve for losses and
loss adjustment expenses 3,122,444 181,792 - 3,304,236
Derivative liabilities 23,086 356,184 - 379,270
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2008
Exhibit D
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
-------------- --------- --------- --------- -----
Revenues:
Net premiums written -
insurance $199,030 $23,615 $- $222,645
======== ======= == ========
Net premiums earned -
insurance $205,096 $44,041 $- $249,137
Net investment income 38,941 26,187 - 65,128
Change in fair value of
derivative instruments 25,173 31,053 - 56,226
Net gains (losses) on
other financial instruments 18,155 (3,393) 39 14,801
Net impairment losses
recognized in earnings (7,711) (15,341) - (23,052)
Other income 2,999 58 164 3,221
----- -- --- -----
Total revenues 282,653 82,605 203 365,461
------- ------ --- -------
Expenses:
Provision for losses 449,296 9,583 - 458,879
Provision for premium
deficiency 369,807 - - 369,807
Policy acquisition costs 63,686 12,266 - 75,952
Other operating expenses 48,703 15,019 127 63,849
Interest expense 7,332 6,500 - 13,832
----- ----- -- ------
Total expenses 938,824 43,368 127 982,319
------- ------ --- -------
Equity in net income of
affiliates - - 15,704 15,704
-- -- ------ ------
Pretax (loss) income (656,171) 39,237 15,780 (601,154)
Income tax (benefit)
provision (221,988) 6,768 6,590 (208,630)
-------- ----- ----- --------
Net (loss) income $(434,183) $32,469 $9,190 $(392,524)
========= ======= ====== =========
Cash and investments $4,054,264 $2,481,133 $- $6,535,397
Deferred policy
acquisition costs 11,554 173,211 - 184,765
Total assets 5,037,309 3,166,316 205,792 8,409,417
Unearned premiums 359,080 688,984 - 1,048,064
Reserve for losses and
loss adjustment expenses 2,120,577 167,165 - 2,287,742
Derivative liabilities 308,543 348,883 - 657,426
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2009
Exhibit E
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
-------------- --------- --------- --------- -----
Revenues:
Net premiums written -
insurance $316,878 $1,779 $- $318,657
======== ====== == ========
Net premiums earned -
insurance $347,930 $56,914 $- $404,844
Net investment income 63,643 45,889 2 109,534
Change in fair value of
derivative instruments (35,133) 23,035 - (12,098)
Net gains on other
financial instruments 25,500 53,764 - 79,264
Net impairment losses
recognized in earnings (680) - - (680)
Other income 7,566 219 235 8,020
----- --- --- -----
Total revenues 408,826 179,821 237 588,884
------- ------- --- -------
Expenses:
Provision for losses 464,486 (4,982) - 459,504
Provision for premium
deficiency (46,000) - - (46,000)
Policy acquisition costs 13,660 26,261 - 39,921
Other operating expenses 71,284 35,742 211 107,237
Interest expense 8,313 16,281 - 24,594
----- ------ -- ------
Total expenses 511,743 73,302 211 585,256
------- ------ --- -------
Equity in net income of
affiliates - - 15,662 15,662
-- -- ------ ------
Pretax (loss) income (102,917) 106,519 15,688 19,290
Income tax (benefit) provision (27,136) 26,249 5,739 4,852
------- ------ ----- -----
Net (loss) income $(75,781) $80,270 $9,949 $14,438
======== ======= ====== =======
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2008
Exhibit F
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
-------------- --------- --------- --------- -----
Revenues:
Net premiums written -
insurance $410,281 $56,670 $- $466,951
======== ======= == ========
Net premiums earned -
insurance $409,361 $81,697 $- $491,058
Net investment income 77,786 53,307 14 131,107
Change in fair value of
derivative instruments 96,942 667,093 - 764,035
Net (losses) gains on
other financial
instruments (11,404) (14,673) 37 (26,040)
Net impairment losses
recognized in earnings (14,885) (22,210) - (37,095)
Other income 6,490 179 166 6,835
----- --- --- -----
Total revenues 564,290 765,393 217 1,329,900
------- ------- --- ---------
Expenses:
Provision for losses 1,020,304 21,286 - 1,041,590
Provision for premium
deficiency 387,897 - - 387,897
Policy acquisition costs 77,146 22,712 - 99,858
Other operating expenses 82,873 35,757 360 118,990
Interest expense 14,422 11,654 249 26,325
------ ------ --- ------
Total expenses 1,582,642 91,409 609 1,674,660
--------- ------ --- ---------
Equity in net income of
affiliates - - 28,230 28,230
-- -- ------ ------
Pretax (loss) income (1,018,352) 673,984 27,838 (316,530)
Income tax (benefit)
provision (357,713) 225,987 12,082 (119,644)
-------- ------- ------ --------
Net (loss) income $(660,639) $447,997 $15,756 $(196,886)
========= ======== ======= =========
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit G
Quarter Ended
(In thousands) June 30
--------------
2009 2008
---- ----
Net Premiums Earned:
Public finance direct $11,935 $12,004
Public finance reinsurance 18,949 22,965
Structured direct 2,058 3,760
Structured reinsurance 5,655 5,092
Trade credit reinsurance 39 220
-- ---
Net Premiums Earned - insurance 38,636 44,041
Impact of commutations (15,054) -
------- --
Total Net Premiums Earned - insurance $23,582 $44,041
======= =======
Refundings included in earned premium $10,479 $16,664
======= =======
Claims paid:
Trade credit reinsurance $693 $397
Financial Guaranty 23,876 4,066
------ -----
Total $24,569 $4,463
======= ======
Six Months Ended
(In thousands) June 30
----------------
2009 2008
---- ----
Net Premiums Earned:
Public finance direct $26,387 $29,814
Public finance reinsurance 27,226 32,835
Structured direct 3,835 7,642
Structured reinsurance 14,296 10,691
Trade credit reinsurance 135 715
--- ---
Net Premiums Earned - insurance 71,879 81,697
Impact of commutations (14,965) -
------- --
Total Net Premiums Earned - insurance $56,914 $81,697
======= =======
Refundings included in earned premium $23,523 $28,321
======= =======
Claims paid:
Trade credit reinsurance $871 $983
Financial Guaranty 38,785 107,590 (1)
------ -------
Total $39,656 $108,573
======= ========
Balance Sheet impact of initial adoption of SFAS No. 163 on January 1,
2009:
--------------------------------------------------------------------------
Increase in unearned premiums $(292,816)
Increase in premiums receivable 161,422
Increase in deferred acquisition costs 66,006
Decrease in reserves for losses 8,163
Decrease in deferred taxes, net 20,239
Increase in premium taxes payable (602)
----
Decrease in equity $(37,588)
========
Pre-tax Income Statement impact of Ambac Commutation:
($ in millions)
Decrease in premiums earned $(15.3)
Decrease in provision for losses 38.6
Increase in amortization of policy acquisition costs (8.9)
----
Increase in pre-tax income $14.4
=====
(1) Includes a $100 million payment related to one credit that is a CDO
of an ABS that was fully reserved for in 2007.
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit H
($ in thousands, except ratios) June 30 December 31 June 30
2009 2008 2008
------- ----------- -------
Statutory Information:
----------------------
Capital and surplus $914,458 $968,197 $982,340
Contingency reserve 504,464 515,023 485,972
------- ------- -------
Qualified statutory capital 1,418,922 1,483,220 1,468,312
Unearned premium reserve 690,512 729,274 866,504
Loss and loss expense reserve 104,441 82,340 54,391
------- ------ ------
Total statutory
policyholders' reserves 2,213,875 2,294,834 2,389,207
Present value of installment
premiums 389,730 380,666 430,450
Soft capital facilities 150,000 150,000 150,000
------- ------- -------
Total statutory claims
paying resources $2,753,605 $2,825,500 $2,969,657
========== ========== ==========
Net debt service outstanding $131,821,119 $138,430,925 $163,252,124
------------ ------------ ------------
Capital leverage ratio (1) 93 93 111
Claims paying leverage ratio (2) 48 49 55
Net par outstanding by product:
Public finance direct $18,329,451 $17,836,221 $18,824,907
Public finance reinsurance 32,830,674 31,578,163 43,114,460
Structured direct 44,679,632 46,001,355 47,235,046
Structured reinsurance 4,816,874 5,310,004 6,010,331
--------- --------- ---------
Total $100,656,631(3) $100,725,743 $115,184,744
============ ============ ============
Reserve for losses and LAE-GAAP Basis:
--------------------------------------
Financial Guaranty $171,459 $219,671 $143,790
Trade Credit 10,333 14,877 23,375
------ ------ ------
Total $181,792 $234,548 $167,165
======== ======== ========
(1) Net debt service outstanding divided by qualified statutory capital.
(2) Net debt service outstanding divided by total statutory claims paying
Resources.
(3) Includes $9.8 billion of par that was commuted with Ambac in July
2009. Also included in public finance net par outstanding is $3.1 billion
for legally defeased bond issues where our financial guaranty policy has
not been extinguished but cash or securities have been deposited in an
escrow account for the benefit of bondholders. SFAS No. 163 requires
that these contracts continue to be accounted for as outstanding
contracts despite the elimination of substantially all risk.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit I
Quarter Ended
($ in millions) June 30
---------------------------
2009 % 2008 %
---- - ---- -
Primary new insurance written
-----------------------------
Flow $5,499 100.0% $9,432 97.9%
Structured - - 205 2.1%
-- -- --- ---
Total Primary $5,499 100.0% $9,637 100.0%
====== ===== ====== =====
Flow
Prime $5,492 99.9% $8,743 92.7%
Alt-A 1 - 475 5.0%
A minus and below 6 0.1% 214 2.3%
-- --- --- ---
Total Flow $5,499 100.0% $9,432 100.0%
====== ===== ====== =====
Structured
Prime $- - $204 99.5%
Alt-A - - 1 0.5%
- - -- ---
Total Structured $- - $205 100.0%
== == ==== =====
Total
Prime $5,492 99.9% $8,947 92.8%
Alt-A 1 - 476 5.0%
A minus and below 6 0.1% 214 2.2%
-- --- --- ---
Total Primary $5,499 100.0% $9,637 100.0%
====== ===== ====== =====
Total primary new insurance written by FICO score
-------------------------------------------------
Flow
>=740 $4,009 72.9% $4,364 46.3%
680-739 1,402 25.5% 3,452 36.6%
620-679 87 1.6% 1,512 16.0%
<=619 1 - 104 1.1%
-- -- --- ---
Total Flow $5,499 100.0% $9,432 100.0%
====== ===== ====== =====
Structured
>=740 $- - $134 65.4%
680-739 - - 64 31.2%
620-679 - - 7 3.4%
-- -- -- ---
Total Structured $- - $205 100.0%
== == ==== =====
Total
------
>=740 $4,009 72.9% $4,498 46.7%
680-739 1,402 25.5% 3,516 36.4%
620-679 87 1.6% 1,519 15.8%
<=619 1 - 104 1.1%
-- -- --- ---
Total Primary $5,499 100.0% $9,637 100.0%
====== ===== ====== =====
Percentage of primary new insurance written
-------------------------------------------
Refinances 46% 35%
95.01% LTV and above - 12%
ARMs
Less than 5 years 0.1% -
5 years and longer 0.4% 10%
Primary risk written
--------------------
Flow $1,178 100.0% $2,231 97.9%
Structured - - 48 2.1%
-- -- -- ---
Total Primary $1,178 100.0% $2,279 100.0%
====== ===== ====== =====
Six Months Ended
($ in millions) June 30
---------------------------
2009 % 2008 %
---- - ---- -
Primary new insurance written
-----------------------------
Flow $11,109 100.0% $18,716 93.9%
Structured - - 1,218 6.1%
-- -- ----- ---
Total Primary $11,109 100.0% $19,934 100.0%
======= ===== ======= =====
Flow
Prime $11,089 99.8% $16,951 90.5%
Alt-A 10 0.1% 1,058 5.7%
A minus and below 10 0.1% 707 3.8%
-- --- --- ---
Total Flow $11,109 100.0% $18,716 100.0%
======= ===== ======= =====
Structured
Prime $- - $1,216 99.8%
Alt-A - - 2 0.2%
-- -- -- ---
Total Structured $- - $1,218 100.0%
== == ====== =====
Total
Prime $11,089 99.8% $18,167 91.2%
Alt-A 10 0.1% 1,060 5.3%
A minus and below 10 0.1% 707 3.5%
-- --- --- ---
Total Primary $11,109 100.0% $19,934 100.0%
======= ===== ======= =====
Total primary new insurance written by FICO score
-------------------------------------------------
Flow
>=740 $7,894 71.1% $7,830 41.8%
680-739 2,991 26.9% 7,067 37.8%
620-679 223 2.0% 3,450 18.4%
<=619 1 - 369 2.0%
-- -- --- ---
Total Flow $11,109 100.0% $18,716 100.0%
======= ===== ======= =====
Structured
>=740 $- - $768 63.1%
680-739 - - 433 35.5%
620-679 - - 17 1.4%
-- -- -- ---
Total Structured $- - $1,218 100.0%
== == ====== =====
Total
------
>=740 $7,894 71.1% $8,598 43.1%
680-739 2,991 26.9% 7,500 37.6%
620-679 223 2.0% 3,467 17.4%
<=619 1 - 369 1.9%
-- -- --- ---
Total Primary $11,109 100.0% $19,934 100.0%
======= ===== ======= =====
Percentage of primary new insurance written
-------------------------------------------
Refinances 47% 38%
95.01% LTV and above 0.1% 16%
ARMs
Less than 5 years 0.1% 1%
5 years and longer 0.4% 8%
Primary risk written
--------------------
Flow $2,374 100.0% $4,547 93.5%
Structured - - 314 6.5%
-- -- --- ---
Total Primary $2,374 100.0% $4,861 100.0%
====== ===== ====== =====
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit J
($ in millions) June 30 June 30
------- -------
2009 % 2008 %
---- - ---- -
Primary insurance in force
--------------------------
Flow $123,412 79.5% $115,425 76.3%
Structured 31,845 20.5% 35,754 23.7%
------ ---- ------ ----
Total Primary $155,257 100.0% $151,179 100.0%
======== ===== ======== =====
Prime $113,749 73.3% $105,049 69.5%
Alt-A 30,918 19.9% 34,239 22.6%
A minus and below 10,590 6.8% 11,891 7.9%
------ --- ------ ---
Total Primary $155,257 100.0% $151,179 100.0%
======== ===== ======== =====
Primary risk in force
---------------------
Flow $30,574 87.7% $29,003 85.6%
Structured 4,272 12.3% 4,879 14.4%
----- ---- ----- ----
Total Primary $34,846 100.0% $33,882 100.0%
======= ===== ======= =====
Flow
Prime $25,269 82.7% $23,125 79.7%
Alt-A 3,372 11.0% 3,759 13.0%
A minus and below 1,933 6.3% 2,119 7.3%
----- --- ----- ---
Total Flow $30,574 100.0% $29,003 100.0%
======= ===== ======= =====
Structured
Prime $2,231 52.2% $2,537 52.0%
Alt-A 1,340 31.4% 1,499 30.7%
A minus and below 701 16.4% 843 17.3%
--- ---- --- ----
Total Structured $4,272 100.0% $4,879 100.0%
====== ===== ====== =====
Total
Prime $27,500 78.9% $25,662 75.7%
Alt-A 4,712 13.5% 5,258 15.5%
A minus and below 2,634 7.6% 2,962 8.8%
----- --- ----- ---
Total Primary $34,846 100.0% $33,882 100.0%
======= ===== ======= =====
Total primary risk in force by FICO score
-----------------------------------------
Flow
>=740 $10,225 33.4% $8,287 28.6%
680-739 11,152 36.5% 10,744 37.0%
620-679 7,780 25.5% 8,365 28.9%
<=619 1,417 4.6% 1,607 5.5%
----- --- ----- ---
Total Flow $30,574 100.0% $29,003 100.0%
======= ===== ======= =====
Structured
>=740 $1,153 27.0% $1,291 26.5%
680-739 1,349 31.6% 1,492 30.5%
620-679 1,125 26.3% 1,312 26.9%
<=619 645 15.1% 784 16.1%
--- ---- --- ----
Total Structured $4,272 100.0% $4,879 100.0%
====== ===== ====== =====
Total
>=740 $11,378 32.7% $9,578 28.3%
680-739 12,501 35.9% 12,236 36.1%
620-679 8,905 25.6% 9,677 28.6%
<=619 2,062 5.8% 2,391 7.0%
----- --- ----- ---
Total Primary $34,846 100.0% $33,882 100.0%
======= ===== ======= =====
Percentage of primary risk in force
-----------------------------------
Refinances 31% 31%
95.01% LTV and above 21% 24%
ARMs
Less than 5 years 8% 10%
5 years and longer 9% 9%
Pool risk in force
------------------
Prime $1,997 70.3% $2,119 70.8%
Alt-A 287 10.1% 291 9.7%
A minus and below 557 19.6% 584 19.5%
--- ---- --- ----
Total $2,841 100.0% $2,994 100.0%
====== ===== ====== =====
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit K
($ in millions) June 30 June 30
------- -------
2009 % 2008 %
---- - ---- -
Total primary risk in force by LTV
----------------------------------
85.00% and below $3,608 10.4% $3,684 10.9%
85.01% to 90.00% 12,709 36.5% 11,576 34.2%
90.01% to 95.00% 11,195 32.1% 10,546 31.1%
95.01% and above 7,334 21.0% 8,076 23.8%
----- ---- ----- ----
Total $34,846 100.0% $33,882 100.0%
======= ===== ======= =====
Total primary risk in force by policy year
------------------------------------------
2005 and prior $10,576 30.3% $12,535 37.0%
2006 4,807 13.8% 5,516 16.3%
2007 10,091 29.0% 11,069 32.7%
2008 7,054 20.2% 4,762 14.0%
2009 2,318 6.7% - -
----- --- -- --
Total $34,846 100.0% $33,882 100.0%
======= ===== ======= =====
Total pool risk in force by policy year
---------------------------------------
2005 and prior $2,304 81.1% $2,437 81.4%
2006 246 8.6% 258 8.6%
2007 232 8.2% 243 8.1%
2008 59 2.1% 56 1.9%
-- --- -- ---
Total pool risk in force $2,841 100.0% $2,994 100.0%
====== ===== ====== =====
Other risk in force
-------------------
Second-lien
1st loss $223 $312
2nd loss 131 460
NIMs 418 485
International
1st loss-Hong Kong primary mortgage
insurance 358 469
Reinsurance 171 151
Credit default swaps 3,247 8,619
Other
Domestic credit default swaps - 206
-- ---
Total other risk in force $4,548 $10,702
====== =======
Risk to capital ratio-Radian Guaranty
only (1) 15.9:1 14.9:1
(1) Starting June 30, 2009, risk in force on policies currently in default
and for which loss reserves have been established are deducted from total
risk in force used for our risk to capital calculations. Risk to capital
ratios for the prior periods have not been restated to conform with this
presentation.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit L
Quarter Ended Six Months Ended
($ in thousands) June 30 June 30
------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Direct claims paid
Prime $72,752 $64,048 $142,211 $124,706
Alt-A 41,441 47,746 87,711 83,478
A minus and below 35,154 49,270 71,884 97,631
Second-lien and other 18,338 47,775 105,945 (1) 93,212
------ ------ ------- ------
Total $167,685 $208,839 $407,751 (1) $399,027
======== ======== ======== ========
Average claim paid
Prime $41.3 $36.7 $41.6 $36.7
Alt-A 52.6 51.1 53.1 50.5
A minus and below 38.6 35.4 38.4 36.3
Second-lien and other 43.4 34.2 42.2 (2) 34.3
Total $43.2 $38.2 $43.3 (2) $38.2
Loss ratio - GAAP Basis 83.7% 211.4% 132.9% 238.3%
Expense ratio - GAAP Basis (3) 25.5% 55.3% 24.3% (3) 38.5%
---- ---- ---- ----
109.2% 266.7% 157.2% 276.8%
===== ===== ===== =====
Reserve for losses by category
Prime $965,690 $559,947
Alt-A 887,068 722,813
A minus and below 448,527 410,373
Pool insurance 152,824 71,508
Second-lien 99,003 178,859
Other 1,781 1,237
----- -----
Reserve for losses, net 2,554,893 1,944,737
Reinsurance recoverable (4) 567,551 175,840
------- -------
Total $3,122,444 $2,120,577
========== ==========
(1) Includes a $65 million payment related to the settlement of certain
second-lien transactions, which were fully reserved for at December 31,
2008.
(2) Excludes $65 million payment noted in (1) above.
(3) Includes the acceleration of $50.8 million of deferred policy
acquisition cost amortization, as a result of the establishment of a
first-lien premium deficiency reserve in the second quarter of 2008.
(4) Reinsurance recoverable on ceded losses related to captives ($471
million) and Smart Home ($96 million).
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit M
June 30 December 31 June 30
2009 2008 2008
------- ----------- -------
Default Statistics
------------------
Primary insurance:
Flow
Prime
-----
Number of insured loans 625,528 624,970 602,571
Number of loans in default 58,012 44,575 26,604
Percentage of loans in default 9.27% 7.13% 4.42%
Alt-A
-----
Number of insured loans 64,977 68,948 72,715
Number of loans in default 19,969 16,959 11,702
Percentage of loans in default 30.73% 24.60% 16.09%
A minus and below
-----------------
Number of insured loans 57,311 59,189 62,874
Number of loans in default 17,988 15,768 11,637
Percentage of loans in default 31.39% 26.64% 18.51%
Total Flow
Number of insured loans 747,816 753,107 738,160
Number of loans in default 95,969 77,302 49,943
Percentage of loans in default 12.83% 10.26% 6.77%
Structured
Prime
-----
Number of insured loans 62,986 67,165 70,857
Number of loans in default 7,911 6,692 5,447
Percentage of loans in default 12.56% 9.96% 7.69%
Alt-A
-----
Number of insured loans 76,814 80,491 84,369
Number of loans in default 23,225 18,747 13,344
Percentage of loans in default 30.24% 23.29% 15.82%
A minus and below
-----------------
Number of insured loans 20,611 22,315 24,422
Number of loans in default 7,680 7,812 8,003
Percentage of loans in default 37.26% 35.01% 32.77%
Total Structured
Number of insured loans 160,411 169,971 179,648
Number of loans in default 38,816 33,251 26,794
Percentage of loans in default 24.20% 19.56% 14.91%
Total Primary Insurance
Prime
-----
Number of insured loans 688,514 692,135 673,428
Number of loans in default 65,923 51,267 32,051
Percentage of loans in default 9.57% 7.41% 4.76%
Alt-A
-----
Number of insured loans 141,791 149,439 157,084
Number of loans in default 43,194 35,706 25,046
Percentage of loans in default 30.46% 23.89% 15.94%
A minus and below
-----------------
Number of insured loans 77,922 81,504 87,296
Number of loans in default 25,668 23,580 19,640
Percentage of loans in default 32.94% 28.93% 22.50%
Total Primary Insurance
Number of insured loans 908,227 923,078 917,808
Number of loans in default (1) 134,785 110,553 76,737
Percentage of loans in default 14.84% 11.98% 8.36%
Pool insurance:
Number of loans in default (2) 34,513 32,677 27,944
(1) Includes approximately 343, 539 and 272 defaults at June 30, 2009,
December 31, 2008 and June 30, 2008, respectively, where reserves have
not been established because no claim payment is currently anticipated.
(2) Includes approximately 20,814, 21,719 and 20,880 defaults at June 30,
2009, December 31, 2008 and June 30, 2008, respectively, where reserves
have not been established because no claim payment is currently
anticipated.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit N
Quarter Ended Six Months Ended
June 30 June 30
------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Net Premiums Written (In thousands)
-----------------------------------
Primary and Pool Insurance $153,278 $191,769 $314,692 $392,246
Second-lien 829 2,905 743 6,386
International 812 4,356 1,443 11,649
--- ----- ----- ------
Total Net Premiums Written -
Insurance $154,919 $199,030 $316,878 $410,281
======== ======== ======== ========
Net Premiums Earned (In thousands)
----------------------------------
Primary and Pool Insurance $164,641 $193,938 $335,188 $387,421
Second-lien 2,149 4,964 3,385 11,128
International 3,257 6,194 9,357 10,812
----- ----- ----- ------
Total Net Premiums Earned -
Insurance $170,047 $205,096 $347,930 $409,361
======== ======== ======== ========
SMART HOME (In millions)
------------------------
Ceded Premiums Written $2.9 $3.7 $5.6 $6.9
Ceded Premiums Earned $2.9 $3.7 $5.6 $6.9
1st Lien Captives
-----------------
Premiums ceded to captives (In
millions) $37.5 $34.1 $72.0 $69.8
% of total premiums 18.3% 14.7% 17.5% 15.1%
NIW subject to captives (In millions) $430 $3,415 $1,471 $8,164
% of primary NIW 7.8% 35.4% 13.2% 41.0%
IIF included in captives (1) 34.8% 37.2%
RIF included in captives (1) 47.1% 41.7%
Persistency (twelve months ended
June 30) 87.0% 81.2%
June 30 June 30
2009 2008
------- -------
SMART HOME
% of Primary RIF included in
Smart Home Transactions (1) 3.5% 4.3%
(1) Radian reinsures the middle layer risk positions, while retaining a
significant portion of the total risk comprising the first loss and most
remote risk positions.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2009
Exhibit O
Reinsurance Progression Toward Attachment - Summary by Book Year (1)
June 30
($ in millions) 2009
----------------------------------------
Progression Ever-to- Re-
to Gross Ceded Net Date insurance
Original Attachment Current Current Current Incurred Benefit
Book Year(2): Book RIF Point RIF RIF(3) RIF Losses (4)
------------- -------- ---------- ------- ------- ------- -------- -------
Pre-2006 0-50% $623 $142 $481 $170
Pre-2006 50-75% 995 421 574 176
Pre-2006 75-99% 320 155 165 80
Pre-2006 Attached 2,124 494 1,630 348 $120
----- --- ----- --- ----
Pre-2006 Total $25,839 $4,062 $1,212 $2,850 $774 $120
====== ====== ====== ==== ====
2006 0-50% $2 $- $2 $-
2006 50-75% 30 2 28 1
2006 75-99% 52 3 49 4
2006 Attached 2,223 313 1,910 344 $185
----- --- ----- --- ----
2006 Total $3,529 $2,307 $318 $1,989 $349 $185
====== ==== ====== ==== ====
2007 0-50% $19 $1 $18 $-
2007 50-75% 129 7 122 6
2007 75-99% 139 12 127 7
2007 Attached 4,114 455 3,659 357 $151
----- --- ----- --- ----
2007 Total $5,246 $4,401 $475 $3,926 $370 $151
====== ==== ====== ==== ====
2008 0-50% $1,797 $169 $1,628 $32
2008 50-75% 306 35 271 8
2008 75-99% 2 - 2 -
2008 Attached 222 18 204 18 $9
--- -- --- -- --
2008 Total $2,564 $2,327 $222 $2,105 $58 $9
====== ==== ====== === ==
2009 0-50% $255 $11 $244 $-
2009 50-75% - - - -
2009 75-99% - - - -
2009 Attached - - - - $-
-- -- -- -- --
2009 Total $258 $255 $11 $244 $- $-
==== === ==== == ==
Quota Share 0-50% $- $- $- $-
Quota Share 50-75% - - - -
Quota Share 75-99% - - - -
Quota Share Attached 108 35 73 31 $14
--- -- -- -- ---
Quota Share Total $313 $108 $35 $73 $31 $14
==== === === === ===
Total Captive
(Including
Quota Share) $37,749 $13,460 $2,273 $11,187 $1,582 $479
======= ====== ======= ====== ====
SmartHome 0-50% $34 $16 $18 $10
SmartHome 50-75% 77 31 46 22
SmartHome 75-99% - - - -
SmartHome Attached 1,108 511 597 392 $96
----- --- --- --- ---
Total SmartHome $3,900 $1,219 $558 $661 $424 $96
====== ==== ==== ==== ===
(1) Data presented in aggregate for all trusts for captives active at
each period end only. Actual trust attachment and exit points vary by
individual contract. Attachment is calculated at the contract/deal level
and is based on Total Incurred Losses which are defined as claims paid
ever-to-date plus loss reserves.
(2) Book year figures may include loans from additional periods pursuant
to reinsurance agreement terms and conditions.
(3) Risk ceded to reinsurers based on individual contract terms.
(4) Captive Benefit is defined as ceded reserves at period end plus
ever-to-date claims paid by the trust.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2009
Exhibit O (continued)
Reinsurance Progression Toward Attachment - Summary by Book Year (1)
December 31
($ in millions) 2008(5)
----------------------------------------
Progression Ever-to- Re-
to Gross Ceded Net Date insurance
Original Attachment Current Current Current Incurred Benefit
Book Year(2): Book RIF Point RIF RIF(3) RIF Losses (4)
------------- -------- ---------- ------- ------- ------- -------- -------
Pre-2006 0-50% $1,120 $558 $562 $239
Pre-2006 50-75% 942 349 593 142
Pre-2006 75-99% 1,084 397 687 160
Pre-2006 Attached 1,355 237 1,118 184 $75
----- --- ----- --- ---
Pre-2006 Total $25,839 $4,501 $1,541 $2,960 $725 $75
====== ====== ====== ==== ===
2006 0-50% $32 $2 $30 $1
2006 50-75% 62 4 58 3
2006 75-99% 310 42 268 18
2006 Attached 2,074 270 1,804 290 $161
----- --- ----- --- ----
2006 Total $3,529 $2,478 $318 $2,160 $312 $161
====== ==== ====== ==== ====
2007 0-50% $31 $2 $29 $-
2007 50-75% 225 12 213 8
2007 75-99% 71 7 64 3
2007 Attached 4,329 454 3,875 350 $147
----- --- ----- --- ----
2007 Total $5,246 $4,656 $475 $4,181 $361 $147
====== ==== ====== ==== ====
2008 0-50% $2,167 $197 $1,970 $25
2008 50-75% 42 4 38 1
2008 75-99% - - - -
2008 Attached 190 15 175 16 $9
--- -- --- -- --
2008 Total $2,564 $2,399 $216 $2,183 $42 $9
====== ==== ====== === ==
2009 0-50% $- $- $- $-
2009 50-75% - - - -
2009 75-99% - - - -
2009 Attached - - - - $-
-- -- -- -- --
2009 Total $258 $- $- $- $- $-
== == == == ==
Quota Share 0-50% $- $- $- $-
Quota Share 50-75% - - - -
Quota Share 75-99% - - - -
Quota Share Attached 116 37 79 27 $12
--- -- -- -- ---
Quota Share Total $313 $116 $37 $79 $27 $12
==== === === === ===
Total Captive
(Including
Quota Share) $37,749 $14,150 $2,587 $11,563 $1,467 $404
======= ====== ======= ====== ====
SmartHome 0-50% $117 $51 $66 $27
SmartHome 50-75% - - - -
SmartHome 75-99% - - - -
SmartHome Attached 1,188 521 667 346 $91
----- --- --- --- ---
Total SmartHome $3,900 $1,305 $572 $733 $373 $91
====== ==== ==== ==== ===
(1) Data presented in aggregate for all trusts for captives active at
each period end only. Actual trust attachment and exit points vary by
individual contract. Attachment is calculated at the contract/deal level
and is based on Total Incurred Losses which are defined as claims paid
ever-to-date plus loss reserves.
(2) Book year figures may include loans from additional periods pursuant
to reinsurance agreement terms and conditions.
(3) Risk ceded to reinsurers based on individual contract terms.
(4) Captive Benefit is defined as ceded reserves at period end plus
ever-to-date claims paid by the trust.
(5) Revised from December 31, 2008 originally presented.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2009
Exhibit P
($ in millions) June 30 June 30
------- -------
2009 % 2008 %
---- - ---- -
Modified Pool Risk in Force - Primary Only
------------------------------------------
Prime
-----
2005 and prior $83 54.6% $90 56.6%
2006 44 29.0% 44 27.7%
2007 21 13.8% 22 13.8%
2008 4 2.6% 3 1.9%
-- --- -- ---
Total $152 100.0% $159 100.0%
==== ===== ==== =====
Alt-A
-----
2005 and prior $191 29.0% $207 30.4%
2006 161 24.4% 165 24.3%
2007 303 46.0% 304 44.7%
2008 4 0.6% 4 0.6%
-- --- -- ---
Total $659 100.0% $680 100.0%
==== ===== ==== =====
A minus and below
-----------------
2005 and prior $14 58.3% $16 61.6%
2006 3 12.5% 3 11.5%
2007 7 29.2% 7 26.9%
-- ---- -- ----
Total $24 100.0% $26 100.0%
=== ===== === =====
Total
-----
2005 and prior $288 34.5% $313 36.2%
2006 208 24.9% 212 24.5%
2007 331 39.6% 333 38.5%
2008 8 1.0% 7 0.8%
-- --- -- ---
Total Modified Pool Risk in Force $835 100.0% $865 100.0%
==== ===== ==== =====
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
ALT-A
Exhibit Q
($ in millions) June 30 June 30
------- -------
2009 % 2008 %
---- - ---- -
Primary risk in force by FICO score
------------------------------------
>=740 1,156 24.5% $1,287 24.5%
680-739 2,271 48.2% 2,509 47.7%
660-679 691 14.7% 772 14.7%
620-659 562 11.9% 654 12.4%
<=619 32 0.7% 36 0.7%
-- --- -- ---
Total $4,712 100.0% $5,258 100.0%
====== ===== ====== =====
Primary risk in force by LTV
-----------------------------
85.00% and below 1,222 25.9% $1,340 25.5%
85.01% to 90.00% 1,951 41.4% 2,187 41.6%
90.01% to 95.00% 1,215 25.8% 1,367 26.0%
95.01% and above 324 6.9% 364 6.9%
--- --- --- ---
Total $4,712 100.0% $5,258 100.0%
====== ===== ====== =====
Primary risk in force by policy year
-------------------------------------
2005 and prior $1,483 31.5% $1,730 32.9%
2006 1,041 22.1% 1,178 22.4%
2007 1,944 41.3% 2,112 40.2%
2008 242 5.1% 238 4.5%
2009 2 - - -
-- -- -- --
Total $4,712 100.0% $5,258 100.0%
====== ===== ====== =====
Radian Group Inc.
Financial Services Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit R
Quarter Ended Six Months Ended
June 30 June 30
------------- ----------------
(In thousands) 2009 2008 2009 2008
---- ---- ---- ----
Investment in Affiliates-Selected
Information
Sherman
-----------------
Balance, beginning of period $103,236 $116,929 $99,656 $104,315
Net income for period 5,110 15,704 15,662 28,230
Dividends received - 19,499 6,441 19,499
Other comprehensive income(loss) 373 (490) (158) (402)
--- ---- ---- ----
Balance, end of period $108,719 $112,644 $108,719 $112,644
======== ======== ======== ========
Portfolio Information:
Sherman
-----------------
Total assets $2,103,158 $2,432,122
Net revenues $320,449 $398,374 $668,483 $790,342
Forward-Looking Statements
Some of the statements in this release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Generally, words such as "may," "will," "should," "could," "would," "anticipate," "expect," "intend," "estimate," "plan," "project," "continue," "goal" and "believe," or other variations on these and other similar expressions identify forward-looking statements. Forward-looking statements are only predictions and, as such, are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events or our future financial performance that may not prove to be accurate. These statements speak only as of the date of this news release, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Actual outcomes and results may differ materially from what is expressed or implied in these forward-looking statements. Factors that could cause actual results to differ from those projected in such forward-looking statements include, without limitation, the following:
-- changes in general financial and political conditions, such as a
deepening of the existing national economic recession, further decreases
in housing demand, mortgage originations or housing values (in
particular, further deterioration in the housing, mortgage and related
credit markets, which would harm our future consolidated results of
operations and could cause losses for our businesses to be worse than
expected), a further reduction in the liquidity in the capital markets
and further contraction of credit markets, further increases in
unemployment rates, changes or volatility in interest rates or consumer
confidence, changes in credit spreads, changes in the way investors
perceive the strength of private mortgage insurers or financial guaranty
providers, investor concern over the credit quality and specific risks
faced by the particular businesses, municipalities or pools of assets
covered by our insurance;
-- catastrophic events or further economic changes in geographic regions
where our mortgage insurance or financial guaranty insurance in force is
more concentrated;
-- our ability to successfully execute upon our internally sourced capital
plan for our mortgage insurance business (which depends, in part, on the
performance of our financial guaranty portfolio), and if necessary, to
obtain additional capital to support new business writings in our
mortgage insurance business and the long-term liquidity needs of our
holding company (including significant payment obligations in 2010 and
2011); and to protect our credit ratings and the financial strength
ratings of Radian Guaranty Inc., our principal mortgage insurance
subsidiary, from further downgrades;
-- a further decrease in the volume of home mortgage originations due to
reduced liquidity in the lending market, tighter underwriting standards
and the ongoing deterioration in housing markets throughout the U.S.;
-- our ability to maintain adequate risk-to-capital ratios and surplus
requirements in our mortgage insurance business in light of ongoing
losses in this business and in our financial guaranty portfolio which,
in the absence of new capital, may depend on our ability to execute upon
strategies for which regulatory and other approvals are required and may
not be obtained;
-- our ongoing efforts to mitigate mortgage insurance losses (which
recently have had a positive impact on our provision for losses due to
increased levels of rescissions and denials) for which we may not
continue to realize benefits at the levels we have recently experienced;
-- the concentration of our mortgage insurance business among a relatively
small number of large customers;
-- disruption in the servicing of mortgages covered by our insurance
policies;
-- the aging of our mortgage insurance portfolio and changes in severity or
frequency of losses associated with certain of our products that are
riskier than traditional mortgage insurance or financial guaranty
insurance policies;
-- the performance of our insured portfolio of higher risk loans, such as
Alternative-A ("Alt-A") and subprime loans, and of adjustable
rate products, such as adjustable rate mortgages and interest-only
mortgages, which have resulted in increased losses and are expected to
result in further losses;
-- changes in persistency rates of our mortgage insurance policies;
-- an increase in the risk profile of our existing mortgage insurance
portfolio due to mortgage refinancing in the current housing market;
-- further downgrades or threatened downgrades of, or other ratings actions
with respect to, our credit ratings or the ratings assigned by the major
rating agencies to any of our rated insurance subsidiaries at any time
(in particular, the credit rating of Radian Group Inc. and the financial
strength ratings assigned to Radian Guaranty Inc.);
-- heightened competition for our mortgage insurance business from others
such as the Federal Housing Administration and the Veterans'
Administration or other private mortgage insurers (in particular those
that have been assigned higher ratings from the major rating agencies);
-- changes in the charters or business practices of Federal National
Mortgage Association ("Fannie Mae") and Freddie Mac, the
largest purchasers of mortgage loans that we insure, and our ability to
remain an eligible provider to both Freddie Mac and Fannie Mae;
-- the application of existing federal or state consumer, lending,
insurance, securities and other applicable laws and regulations, or
changes in these laws and regulations or the way they are interpreted;
including, without limitation: (i) the outcome of existing
investigations or the possibility of private lawsuits or other formal
investigations by state insurance departments and state attorneys
general alleging that services offered by the mortgage insurance
industry, such as captive reinsurance, pool insurance and contract
underwriting, are violative of the Real Estate Settlement Procedures Act
and/or similar state regulations, (ii) legislative and regulatory
changes affecting demand for private mortgage insurance, or (iii)
legislation and regulatory changes limiting or restricting our use of
(or requirements for) additional capital, the products we may offer, the
form in which we may execute the credit protection we provide or the
aggregate notional amount of any product we may offer for any one
transaction or in the aggregate;
-- the possibility that we may fail to estimate accurately the likelihood,
magnitude and timing of losses in connection with establishing loss
reserves for our mortgage insurance or financial guaranty businesses or
premium deficiencies for our mortgage insurance businesses, or to
estimate accurately the fair value amounts of derivative contracts in
our mortgage insurance and financial guaranty businesses in determining
gains and losses on these contracts;
-- the ability of our primary insurance customers in our financial guaranty
reinsurance business to provide appropriate surveillance and to mitigate
losses adequately with respect to our assumed insurance portfolio; and
the significant concentration of our financial guaranty reinsurance
business in customers owned by the same holding company;
-- volatility in our earnings caused by changes in the fair value of our
derivative instruments and our need to reevaluate the premium deficiency
in our mortgage insurance business on a quarterly basis;
-- changes in accounting guidance from the Securities and Exchange
Commission or the Financial Accounting Standards Board;
-- legal and other limitations on amounts we may receive from our
subsidiaries as dividends or through tax and expense-sharing
arrangements with our subsidiaries; and
-- our investment in Sherman Financial Group LLC, which could be negatively
affected in the current credit environment if Sherman is unable to
maintain sufficient sources of funding for its business activities or
remain in compliance with its credit facilities.
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should review the risks described under Item 1A, "Risk Factors" under our Annual Report on Form 10-K for the year ended December 31, 2008 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
SOURCE Radian Group Inc.