News
Read about the progress we’re making across the mortgage and real estate services industry.
02/03/2011
Radian Reports Fourth Quarter and Full Year 2010 Financial Results
- Mortgage insurance delinquencies declined for fourth consecutive quarter -
- Improved risk-to-capital ratio of 16.8:1 among lowest in MI industry -
PHILADELPHIA, Feb 03, 2011 (BUSINESS WIRE) --
Radian Group Inc. (NYSE: RDN) today reported a net loss for the quarter ended December 31, 2010, of $1.1 billion, or $8.55 per diluted share. This compares to a net loss of $91.9 million, or $1.12 per diluted share, for the prior-year fourth quarter. The net loss for the full year 2010 was $1.8 billion, or $15.74 per diluted share. This compares to a net loss of $147.9 million, or $1.80 per diluted share, for the prior year. The results for 2010 included the impact of a non-cash, GAAP accounting charge of $841.5 million, or $6.35 per share in the fourth quarter of 2010, related to establishing a valuation allowance against substantially all of the company's net deferred tax asset (DTA) and also includes a pre-tax loss from the change in fair value of derivatives of $185.9 million for the quarter and $558.7 million for the year. Book value per share at December 31, 2010, was $6.46.
"We were encouraged by the fourth straight quarter of declining mortgage insurance delinquencies, continued signs of credit trend stabilization in our businesses, and a steady 21 percent market share in an environment where private mortgage insurance continues to regain business from the FHA," said Chief Executive Officer S.A. Ibrahim.
Ibrahim added, "It is important to note that the establishment of a valuation allowance in the quarter does not have any impact on statutory capital, risk-to-capital ratio, liquidity or business operations, and it does not reflect a change in our view of Radian's long-term financial outlook. We are confident that our capital, financial flexibility and solid customer base position Radian for future success."
FOURTH QUARTER HIGHLIGHTS
- The risk-to-capital ratio for Radian Guaranty Inc., the company's primary mortgage insurance subsidiary, was 16.8:1 at December 31, 2010, compared to 17.2:1 at September 30, 2010, and 15.4:1 at December 31, 2009. Radian Group contributed $200 million to Radian Guaranty during the fourth quarter and the company has sufficient liquidity to contribute additional capital to its mortgage insurance subsidiaries in 2011, if needed.
- New mortgage insurance written (NIW) increased for the fourth consecutive quarter to $3.8 billion, compared to $3.2 billion in the third quarter. NIW continued to consist of loans with excellent risk characteristics, and the company maintained a market share of 21 percent.
- The total number of primary delinquent loans decreased by 4 percent in the fourth quarter, which represented the fourth consecutive quarterly decline. In addition, the number of primary delinquencies declined slightly in January.
- The mortgage insurance provision for losses was $426.3 million in the fourth quarter of 2010, compared to $459.9 million in the prior-year period. Mortgage insurance loss reserves were approximately $3.5 billion as of December 31, 2010, which was flat to the third quarter of 2010, and up slightly from a year ago. As of December 31, 2010, total first-lien reserves increased to $23,467 per primary default, compared to $20,921 for the prior year-end, and increased to $24,911 per pool default, compared to $16,118 for the prior year-end. The reserve per default totals exclude defaults for which reserves have not been established due to the presence of a deductible.
- Mortgage insurance claims paid were $392.9 million, which consisted of $389.3 million of first-liens and $3.6 million of second-liens. Net claims paid of $69.2 million were net of recoveries received from captive terminations of $323.7 million. For the full-year 2010, mortgage insurance claims paid were $1.3 billion. The company continues to expect mortgage insurance claims paid of approximately $1.7 billion for the full-year 2011.
-
Radian Asset Assurance Inc. continues to serve as an important source
of capital support for Radian Guaranty and is expected to continue to
provide Radian Guaranty with cash infusions over time.
- Excluding gains and losses on derivatives and other financial instruments, the financial guaranty segment was profitable on a pre-tax basis in the fourth quarter and for the full-year 2010.
- As of December 31, 2010, Radian Asset had approximately $1.0 billion in statutory surplus with an additional $1.4 billion in claims-paying resources.
- Radian Asset is expected to pay an ordinary dividend of approximately $60 million to Radian Guaranty in June 2011.
- On February 1, 2011, Radian Asset signed an agreement to purchase Municipal and Infrastructure Assurance Corporation (MIAC), a New York domiciled financial guaranty insurance company shell that has not written any business, but has obtained licenses in 36 states and the District of Columbia. The acquisition, which remains subject to regulatory approval, provides Radian Asset with the flexibility to consider using MIAC to pursue strategic alternatives in the public finance market, including possibly partnering with third-party investors to write new public finance insurance and/or reinsuring all or a portion of Radian Asset's existing public finance business. The company is in early stages of exploring these potential uses, and expects that any new initiative for MIAC would be consistent with its ultimate goal of reducing financial guaranty exposure. The expected purchase price of approximately $82 million is $7 million above the value of the capital base of MIAC, consisting of approximately $75 million of cash, cash equivalents and treasury securities.
- The valuation allowance of $841.5 million recorded in the quarter represents substantially all of the company's deferred tax asset. The valuation allowance is primarily a result of the company's continued history of losses, including the significant loss in the fourth quarter, and the continued uncertainty of future results. While Radian continues to expect a return to profitability in the long-term, this remains uncertain based on macroeconomic factors such as the slower-than-expected pace of the economic recovery as well as the ultimate timing and magnitude of losses. If the company returns to a period of sustained profitability, as it currently expects, all or a portion of this valuation allowance would be reversed.
CONFERENCE CALL
The company will discuss each of these items in its conference call today, Thursday, February 3, 2011, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at http://www.radian.biz/page?name=Webcasts or at www.radian.com. The call may also be accessed by dialing 800-230-1096 inside the U.S., or 612-332-0342 for international callers, using passcode 190970 or by referencing Radian.
A replay of the webcast will be available on the Radian website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available approximately two and a half hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 190970.
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 website under Investors >Quarterly Results, or by clicking on http://www.radian.biz/page?name=QuarterlyResults.
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/page?name=FinancialReportsCorporate.
| Exhibit A: | Condensed Consolidated Statements of Income | ||
| Exhibit B: | Condensed Consolidated Balance Sheets | ||
| Exhibit C: | Segment Information Quarter Ended December 31, 2010 | ||
| Exhibit D: | Segment Information Quarter Ended December 31, 2009 | ||
| Exhibit E: | Segment Information Year Ended December 31, 2010 | ||
| Exhibit F: | Segment Information Year Ended December 31, 2009 | ||
| Exhibit G: | Financial Guaranty Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Exhibit H: | Financial Guaranty Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Exhibit I: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| New Insurance Written and Risk Written | |||
| Exhibit J: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Insurance in Force and Risk in Force | |||
| Exhibit K: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Risk in Force by LTV and Policy Year and other Risk in Force | |||
| Exhibit L: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Claims Paid, Reserves and Reserve per Default | |||
| Exhibit M: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Default Statistics | |||
| Exhibit N: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
|
Net Premiums Written and Earned, SmartHome, Captives and Persistency |
|||
| Exhibit O: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Reinsurance Progression Toward Attachment - Summary by Book Year | |||
| Exhibit P: | Mortgage Insurance Supplemental Information - | ||
| For the Quarter and Year Ended and as of December 31, 2010 | |||
| Modified Pool | |||
| Radian Group Inc. and Subsidiaries | |||||||||||||||||
| Condensed Consolidated Statements of Income | |||||||||||||||||
| Exhibit A | |||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||
| December 31 | December 31 | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||
| (In thousands, except per-share data) | |||||||||||||||||
| Revenues: | |||||||||||||||||
| Net premiums written - insurance | $ | 201,672 | $ | 163,251 | $ | 691,881 | $ | 443,848 | (1) | ||||||||
| Net premiums earned - insurance | $ | 220,082 | $ | 211,570 | $ | 825,733 | $ | 825,901 | |||||||||
| Net investment income | 38,229 | 50,624 | 178,760 | 214,190 | |||||||||||||
| Change in fair value of derivative instruments | (185,935 | ) | 142,913 | (558,712 | ) | 99,958 | |||||||||||
| Net (losses) gains on other financial instruments | (121,323 | ) | (7,390 | ) | (71,737 | ) | 168,572 | ||||||||||
| Net impairment losses recognized in earnings | - | (8,396 | ) | (90 | ) | (9,269 | ) | ||||||||||
| Gain on sale of affiliate | - | - | 34,815 | - | |||||||||||||
| Other income | 3,042 | 3,539 | 8,696 | 14,026 | |||||||||||||
| Total revenues | (45,905 | ) | 392,860 | 417,465 | 1,313,378 | ||||||||||||
| Expenses: | |||||||||||||||||
| Provision for losses | 415,809 | 473,166 | 1,739,244 | 1,337,574 | |||||||||||||
| Provision for premium deficiency | (14,664 | ) | 16,065 | (14,621 | ) | (61,504 | ) | ||||||||||
| Policy acquisition costs | 10,750 | 8,920 | 53,469 | 63,034 | |||||||||||||
| Other operating expenses | 48,669 | 42,499 | 191,942 | 203,770 | |||||||||||||
| Interest expense | 13,226 | 10,120 | 41,777 | 46,010 | |||||||||||||
| Total expenses | 473,790 | 550,770 | 2,011,811 | 1,588,884 | |||||||||||||
| Equity in net income of affiliates | - | 9,618 | 14,668 | 33,226 | |||||||||||||
| Pretax loss | (519,695 | ) | (148,292 | ) | (1,579,678 | ) | (242,280 | ) | |||||||||
| Income tax provision (benefit) | 612,922 | (56,425 | ) | 226,189 | (94,401 | ) | |||||||||||
| Net loss | $ | (1,132,617 | ) | $ | (91,867 | ) | $ | (1,805,867 | ) | $ | (147,879 | ) | |||||
| Diluted net loss per share (2) | $ | (8.55 | ) | $ | (1.12 | ) | $ | (15.74 | ) | $ | (1.80 | ) | |||||
| (1) Includes the reversal of $185.6 million of premiums written related to commutation of $9.8 billion Financial Guaranty net par outstanding in July 2009. | |||||||||||||||||
| (2) Weighted average shares outstanding (In thousands) | |||||||||||||||||
| Weighted average common shares outstanding | 82,434 | 81,926 | 82,505 | 81,937 | |||||||||||||
| Increase in weighted average shares-common stock offering | 50,000 | - | 32,192 | - | |||||||||||||
| Weighted average shares outstanding | 132,434 | 81,926 | 114,697 | 81,937 | |||||||||||||
| 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 | ||||||||||
| December 31 | December 31 | |||||||||
| (In thousands, except per-share data) | 2010 | 2009 | ||||||||
| Assets: | ||||||||||
| Cash and investments | $ | 6,680,630 | $ | 6,214,376 | ||||||
| Investments in affiliates | 133 | 121,480 | ||||||||
| Deferred policy acquisition costs | 148,326 | 160,281 | ||||||||
| Deferred income taxes, net | 27,531 | 440,948 | ||||||||
| Reinsurance recoverables | 244,894 | 628,572 | ||||||||
| Derivative assets | 26,212 | 68,534 | ||||||||
| Other assets | 493,161 | 442,115 | ||||||||
| Total assets | $ | 7,620,887 | $ | 8,076,306 | ||||||
| Liabilities and stockholders' equity: | ||||||||||
| Unearned premiums | $ | 686,364 | $ | 823,621 | ||||||
| Reserve for losses and loss adjustment expenses | 3,596,735 | 3,578,982 | ||||||||
| Reserve for premium deficiency | 10,736 | 25,357 | ||||||||
| Long-term debt | 964,788 | 698,222 | ||||||||
| VIE debt | 520,114 | 296,080 | ||||||||
| Derivative liabilities |
723,579 |
238,697 | ||||||||
| Other liabilities |
258,791 |
410,353 | ||||||||
| Total liabilities | 6,761,107 | 6,071,312 | ||||||||
| Common stock | 150 | 100 | ||||||||
| Additional paid-in capital | 1,071,080 | 473,759 | ||||||||
| Retained earnings | (204,926 | ) | 1,602,143 | |||||||
| Accumulated other comprehensive loss | (6,524 | ) | (71,008 | ) | ||||||
| Total common stockholders' equity | 859,780 | 2,004,994 | ||||||||
| Total liabilities and stockholders' equity | $ | 7,620,887 | $ | 8,076,306 | ||||||
| Book value per share | $ | 6.46 | $ | 24.22 | ||||||
| Radian Group Inc. and Subsidiaries | |||||||||||||||
| Segment Information | |||||||||||||||
| Quarter Ended December 31, 2010 | |||||||||||||||
| Exhibit C | |||||||||||||||
| Mortgage | Financial | Financial | |||||||||||||
| (In thousands) | Insurance | Guaranty | Services | Total | |||||||||||
| Revenues: | |||||||||||||||
| Net premiums written - insurance | $ | 200,549 | $ | 1,123 | $ | - | $ | 201,672 | |||||||
| Net premiums earned - insurance | $ | 200,569 | $ | 19,513 | $ | - | $ | 220,082 | |||||||
| Net investment income | 22,469 | 15,760 | - | 38,229 | |||||||||||
| Change in fair value of derivative instruments | 26,642 | (212,577 | ) | - | (185,935 | ) | |||||||||
| Net losses on other financial instruments | (44,917 | ) | (76,406 | ) | - | (121,323 | ) | ||||||||
| Net impairment losses recognized in earnings | - | - | - | - | |||||||||||
| Other income | 1,916 | 65 | 1,061 | 3,042 | |||||||||||
| Total revenues | 206,679 | (253,645 | ) | 1,061 | (45,905 | ) | |||||||||
| Expenses: | |||||||||||||||
| Provision for losses | 426,288 | (10,479 | ) | - | 415,809 | ||||||||||
| Provision for premium deficiency | (14,664 | ) | - | - | (14,664 | ) | |||||||||
| Policy acquisition costs | 7,041 | 3,709 | - | 10,750 | |||||||||||
| Other operating expenses | 37,610 | 11,009 | 50 | 48,669 | |||||||||||
| Interest expense | 4,748 | 8,478 | - | 13,226 | |||||||||||
| Total expenses | 461,023 | 12,717 | 50 | 473,790 | |||||||||||
| Pretax (loss) income | (254,344 | ) | (266,362 | ) | 1,011 | (519,695 | ) | ||||||||
| Income tax provision | 424,782 | 187,787 | 353 | 612,922 | |||||||||||
| Net (loss) income | $ | (679,126 | ) | $ | (454,149 | ) | $ | 658 | $ | (1,132,617 | ) | ||||
| Cash and investments | $ | 4,037,578 | $ | 2,643,052 | $ | - | $ | 6,680,630 | |||||||
| Deferred policy acquisition costs | 41,939 | 106,387 | - | 148,326 | |||||||||||
| Total assets | 4,801,953 | 2,818,934 | - | 7,620,887 | |||||||||||
| Unearned premiums | 197,260 | 489,104 | - | 686,364 | |||||||||||
| Reserve for losses and loss adjustment expenses | 3,524,971 | 71,764 | - | 3,596,735 | |||||||||||
| VIE debt | 141,006 | 379,108 | - | 520,114 | |||||||||||
| Radian Group Inc. and Subsidiaries | |||||||||||||||
| Segment Information | |||||||||||||||
| Quarter Ended December 31, 2009 | |||||||||||||||
| Exhibit D | |||||||||||||||
| Mortgage | Financial | Financial | |||||||||||||
| (In thousands) | Insurance | Guaranty | Services | Total | |||||||||||
| Revenues: | |||||||||||||||
| Net premiums written - insurance | $ | 164,198 | $ | (947 | ) | $ | - | $ | 163,251 | ||||||
| Net premiums earned - insurance | $ | 189,634 | $ | 21,936 | $ | - | $ | 211,570 | |||||||
| Net investment income | 32,406 | 18,217 | 1 | 50,624 | |||||||||||
| Change in fair value of derivative instruments | 14,027 | 128,886 | - | 142,913 | |||||||||||
| Net (losses) gains on other financial instruments | 1,365 | (8,755 | ) | - | (7,390 | ) | |||||||||
| Net impairment losses recognized in earnings | (8,396 | ) | - | - | (8,396 | ) | |||||||||
| Other income | 2,393 | 1,078 | 68 | 3,539 | |||||||||||
| Total revenues | 231,429 | 161,362 | 69 | 392,860 | |||||||||||
| Expenses: | |||||||||||||||
| Provision for losses | 459,853 | 13,313 | - | 473,166 | |||||||||||
| Provision for premium deficiency | 16,065 | - | - | 16,065 | |||||||||||
| Policy acquisition costs | 5,231 | 3,689 | - | 8,920 | |||||||||||
| Other operating expenses | 29,763 | 12,604 | 132 | 42,499 | |||||||||||
| Interest expense | 3,320 | 6,800 | - | 10,120 | |||||||||||
| Total expenses | 514,232 | 36,406 | 132 | 550,770 | |||||||||||
| Equity in net income of affiliates | - | - | 9,618 | 9,618 | |||||||||||
| Pretax (loss) income | (282,803 | ) | 124,956 | 9,555 | (148,292 | ) | |||||||||
| Income tax (benefit) provision | (103,408 | ) | 43,637 | 3,346 | (56,425 | ) | |||||||||
| Net (loss) income | $ | (179,395 | ) | $ | 81,319 | $ | 6,209 | $ | (91,867 | ) | |||||
| Cash and investments | $ | 3,775,682 | $ | 2,438,694 | $ | - | $ | 6,214,376 | |||||||
| Deferred policy acquisition costs | 35,854 | 124,427 | - | 160,281 | |||||||||||
| Total assets | 4,968,963 | 2,985,919 | 121,424 | 8,076,306 | |||||||||||
| Unearned premiums | 240,346 | 583,275 | - | 823,621 | |||||||||||
| Reserve for losses and loss adjustment expenses | 3,450,538 | 128,444 | - | 3,578,982 | |||||||||||
| VIE debt | 287,995 | 8,085 | - | 296,080 | |||||||||||
| Radian Group Inc. and Subsidiaries | |||||||||||||||
| Segment Information | |||||||||||||||
| Year Ended December 31, 2010 | |||||||||||||||
| Exhibit E | |||||||||||||||
| Mortgage | Financial | Financial | |||||||||||||
| (In thousands) | Insurance | Guaranty | Services | Total | |||||||||||
| Revenues: | |||||||||||||||
| Net premiums written - insurance | $ | 699,909 | $ | (8,028 | ) | $ | - | $ | 691,881 | ||||||
| Net premiums earned - insurance | $ | 739,631 | $ | 86,102 | $ | - | $ | 825,733 | |||||||
| Net investment income | 104,030 | 74,730 | - | 178,760 | |||||||||||
| Change in fair value of derivative instruments | 32,381 | (591,093 | ) | - | (558,712 | ) | |||||||||
| Net (losses) gains on other financial instruments | 35,867 | (107,604 | ) | - | (71,737 | ) | |||||||||
| Net impairment losses recognized in earnings | (90 | ) | - | - | (90 | ) | |||||||||
| Gain on sale of affiliate | - | - | 34,815 | 34,815 | |||||||||||
| Other income | 7,208 | 364 | 1,124 | 8,696 | |||||||||||
| Total revenues | 919,027 | (537,501 | ) | 35,939 | 417,465 | ||||||||||
| Expenses: | |||||||||||||||
| Provision for losses | 1,730,801 | 8,443 | - | 1,739,244 | |||||||||||
| Provision for premium deficiency | (14,621 | ) | - | - | (14,621 | ) | |||||||||
| Policy acquisition costs | 36,102 | 17,367 | - | 53,469 | |||||||||||
| Other operating expenses | 141,172 | 50,520 | 250 | 191,942 | |||||||||||
| Interest expense | 11,668 | 30,109 | - | 41,777 | |||||||||||
| Total expenses | 1,905,122 | 106,439 | 250 | 2,011,811 | |||||||||||
| Equity in net income of affiliates | - | 78 | 14,590 | 14,668 | |||||||||||
| Pretax (loss) income | (986,095 | ) | (643,862 | ) | 50,279 | (1,579,678 | ) | ||||||||
| Income tax provision | 157,082 | 51,509 | 17,598 | 226,189 | |||||||||||
| Net (loss) income | $ | (1,143,177 | ) | $ | (695,371 | ) | $ | 32,681 | $ | (1,805,867 | ) | ||||
| Radian Group Inc. and Subsidiaries | ||||||||||||||||
| Segment Information | ||||||||||||||||
| Year Ended December 31, 2009 | ||||||||||||||||
| Exhibit F | ||||||||||||||||
| Mortgage | Financial | Financial | ||||||||||||||
| (In thousands) | Insurance | Guaranty | Services | Total | ||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums written - insurance | $ | 630,076 | $ | (186,228 | ) | $ | - | $ | 443,848 | |||||||
| Net premiums earned - insurance | $ | 724,423 | $ | 101,478 | $ | - | $ | 825,901 | ||||||||
| Net investment income | 129,871 | 84,315 | 4 | 214,190 | ||||||||||||
| Change in fair value of derivative instruments | (14,428 | ) | 114,386 | - | 99,958 | |||||||||||
| Net gains on other financial instruments | 65,615 | 102,957 | - | 168,572 | ||||||||||||
| Net impairment losses recognized in earnings | (9,246 | ) | (23 | ) | - | (9,269 | ) | |||||||||
| Other income | 12,258 | 1,394 | 374 | 14,026 | ||||||||||||
| Total revenues | 908,493 | 404,507 | 378 | 1,313,378 | ||||||||||||
| Expenses: | ||||||||||||||||
| Provision for losses | 1,300,827 | 36,747 | - | 1,337,574 | ||||||||||||
| Provision for premium deficiency | (61,504 | ) | - | - | (61,504 | ) | ||||||||||
| Policy acquisition costs | 27,563 | 35,471 | - | 63,034 | ||||||||||||
| Other operating expenses | 140,487 | 67,223 | (3,940 | ) | 203,770 | |||||||||||
| Interest expense | 15,372 | 30,638 | - | 46,010 | ||||||||||||
| Total expenses | 1,422,745 | 170,079 | (3,940 | ) | 1,588,884 | |||||||||||
| Equity in net income of affiliates | - | - | 33,226 | 33,226 | ||||||||||||
| Pretax (loss) income | (514,252 | ) | 234,428 | 37,544 | (242,280 | ) | ||||||||||
| Income tax (benefit) provision | (176,456 | ) | 68,641 | 13,414 | (94,401 | ) | ||||||||||
| Net (loss) income | $ | (337,796 | ) | $ | 165,787 | $ | 24,130 | $ | (147,879 | ) | ||||||
| Radian Group Inc. | ||||||||||||||||
| Financial Guaranty Supplemental Information | ||||||||||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||||||||||
| Exhibit G | ||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||
| (In thousands) | December 31 | December 31 | ||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net Premiums Earned: | ||||||||||||||||
| Public finance direct | $ | 13,898 | $ | 14,215 | $ | 54,734 | $ | 49,965 | ||||||||
| Public finance reinsurance | 4,362 | 5,935 | 25,297 | 44,232 | ||||||||||||
| Structured direct | 443 | 1,208 | 2,498 | 6,364 | ||||||||||||
| Structured reinsurance | 815 | 584 | 3,544 | 15,714 | ||||||||||||
| Trade credit reinsurance | (5 | ) | 17 | 46 | 191 | |||||||||||
| Net Premiums Earned - insurance | 19,513 | 21,959 | 86,119 | 116,466 | ||||||||||||
| Impact of commutations | 0 | (23 | ) | (17 | ) | (14,988 | ) | |||||||||
| Total Net Premiums Earned - insurance | $ | 19,513 | $ | 21,936 | $ | 86,102 | $ | 101,478 | ||||||||
| Refundings included in earned premium | $ | 7,442 | $ | 8,913 | $ | 35,782 | $ | 40,989 | ||||||||
| Net premiums earned - derivatives (1) | $ | 11,259 | $ | 12,633 | $ | 46,431 | $ | 53,423 | ||||||||
| Claims paid: | ||||||||||||||||
| Trade credit reinsurance | $ | 13 | $ | (136 | ) | $ | 1,091 | $ | 776 | |||||||
| Financial Guaranty | 6,536 | 10,258 | 64,032 | 134,019 | ||||||||||||
| Total | $ | 6,549 | $ | 10,122 | $ | 65,123 | $ | 134,795 | ||||||||
|
Impact of adoption of amendment to accounting standard regarding VIEs on January 1, 2010: |
||||||||||||||||
| (In millions) | ||||||||||||||||
| Balance Sheet Increase (Decrease): | ||||||||||||||||
| Investments | $ | 89.4 | ||||||||||||||
| Other assets | 121.0 | |||||||||||||||
| VIE debt | 321.0 | |||||||||||||||
| Derivative liabilities | (128.6 | ) | ||||||||||||||
| Derivative liabilities-VIE | 17.4 | |||||||||||||||
| Other liabilities | 0.6 | |||||||||||||||
| Income Statement Increase (Decrease): | ||||||||||||||||
| Net investment income | $ | 2.7 | ||||||||||||||
| Net (losses) gains on other financial instruments | (58.2 | ) | ||||||||||||||
| Change in fair value of derivative instruments | 57.5 | |||||||||||||||
| Other operating expenses | 2.0 | |||||||||||||||
| (1) Included in change in fair value of derivative instruments. | ||||||||||||||||
| Radian Group Inc. | ||||||||
| Financial Guaranty Supplemental Information | ||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||
| Exhibit H | ||||||||
| ($ in thousands, except ratios) | December 31 | December 31 | ||||||
| 2010 | 2009 | |||||||
| Statutory Information: | ||||||||
| Capital and surplus | $ | 1,040,679 | $ | 1,062,637 | ||||
| Contingency reserve | 392,589 | 366,108 | ||||||
| Qualified statutory capital | 1,433,268 | 1,428,745 | ||||||
| Unearned premium reserve | 517,516 | 595,819 | ||||||
| Loss and loss expense reserve | 70,129 | 128,754 | ||||||
| Total statutory policyholders' reserves | 2,020,913 | 2,153,318 | ||||||
| Present value of installment premiums | 202,386 | 260,662 | ||||||
| Soft capital facilities | 150,000 | 150,000 | ||||||
| Total statutory claims paying resources | $ | 2,373,299 | $ | 2,563,980 | ||||
| Net debt service outstanding | $ | 101,168,759 | $ | 110,207,923 | ||||
| Capital leverage ratio (1) | 71 | 77 | ||||||
| Claims paying leverage ratio (2) | 43 | 43 | ||||||
| Net par outstanding by product: | ||||||||
| Public finance direct | $ | 15,727,252 | $ | 17,536,616 | ||||
| Public finance reinsurance | 21,907,290 | 24,180,588 | ||||||
| Structured direct | 39,315,801 | 43,528,366 | ||||||
| Structured reinsurance | 1,805,295 | 2,174,433 | ||||||
| Total (3) | $ | 78,755,638 | $ | 87,420,003 | ||||
| (1) The capital leverage ratio is derived by dividing net debt service outstanding by qualified statutory capital. |
| (2) The claims paying leverage ratio is derived by dividing net debt service outstanding by total statutory claims paying resources. |
| (3) Included in public finance net par outstanding is $1.9 billion and $2.2 billion at December 31, 2010 and December 31, 2009, respectively, for legally defeased bond issues where our financial guaranty policy has not been extinguished but cash or securities have been deposited in an escrow account for the benefit of bondholders. The accounting standard for financial guarantee insurance contracts requires that these contracts continue to be accounted for as outstanding contracts despite the elimination of substantially all risk. |
| Radian Group Inc. | ||||||||||||||||||||||||||||||
| Mortgage Insurance Supplemental Information | ||||||||||||||||||||||||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||||||||||||||||||||||||
| Exhibit I | ||||||||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||||||||
| December 31 | December 31 | |||||||||||||||||||||||||||||
| ($ in millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||
|
Primary new insurance written |
||||||||||||||||||||||||||||||
| Flow | $ | 3,781 | 100.0 | % | $ | 2,414 | 100.0 | % | $ | 11,558 | 100.0 | % | $ | 16,969 | 100.0 | % | ||||||||||||||
| Total Primary | $ | 3,781 | 100.0 | % | $ | 2,414 | 100.0 | % | $ | 11,558 | 100.0 | % | $ | 16,969 | 100.0 | % | ||||||||||||||
| Total | ||||||||||||||||||||||||||||||
| Prime | $ | 3,779 | 99.9 | % | $ | 2,412 | 99.9 | % | $ | 11,553 | 100.0 | % | $ | 16,942 | 99.8 | % | ||||||||||||||
| Alt-A | - | - | - | - | - | - | 11 | 0.1 | % | |||||||||||||||||||||
| A minus and below | 2 | 0.1 | % | 2 | 0.1 | % | 5 | - | 16 | 0.1 | % | |||||||||||||||||||
| Total Flow | $ | 3,781 | 100.0 | % | $ | 2,414 | 100.0 | % | $ | 11,558 | 100.0 | % | $ | 16,969 | 100.0 | % | ||||||||||||||
|
Total primary new insurance written by FICO score |
||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||
| >=740 | $ | 3,112 | 82.3 | % | $ | 1,829 | 75.8 | % | $ | 9,294 | 80.4 | % | $ | 12,293 | 72.5 | % | ||||||||||||||
|
680-739 |
669 | 17.7 | % | 581 | 24.1 | % | 2,261 | 19.6 | % | 4,403 | 25.9 | % | ||||||||||||||||||
|
620-679 |
- | - | 4 | 0.1 | % | 3 | - | 272 | 1.6 | % | ||||||||||||||||||||
| <=619 | - | - | - | - | - | - | 1 | - | ||||||||||||||||||||||
| Total Flow | $ | 3,781 | 100.0 | % | $ | 2,414 | 100.0 | % | $ | 11,558 | 100.0 | % | $ | 16,969 | 100.0 | % | ||||||||||||||
|
Percentage of primary new insurance written |
||||||||||||||||||||||||||||||
| Refinances | 58 | % | 26 | % | 42 | % | 41 | % | ||||||||||||||||||||||
| 95.01% LTV and above | 0.7 | % | 0.2 | % | 0.4 | % | 0.1 | % | ||||||||||||||||||||||
| ARMs | ||||||||||||||||||||||||||||||
| Less than 5 years | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | ||||||||||||||||||||||
| 5 years and longer | 4.1 | % | 5.8 | % | 5.3 | % | 1.6 | % | ||||||||||||||||||||||
|
Primary risk written |
||||||||||||||||||||||||||||||
| Flow | $ | 852 | 100.0 | % | $ | 533 | 100.0 | % | $ | 2,663 | 100.0 | % | $ | 3,663 | 100.0 | % | ||||||||||||||
| Total Primary | $ | 852 | 100.0 | % | $ | 533 | 100.0 | % | $ | 2,663 | 100.0 | % | $ | 3,663 | 100.0 | % | ||||||||||||||
| Radian Group Inc. | ||||||||||||||||
| Mortgage Insurance Supplemental Information | ||||||||||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||||||||||
| Exhibit J | ||||||||||||||||
| December 31 | December 31 | |||||||||||||||
| ($ in millions) | 2010 | 2009 | ||||||||||||||
| $ | % | $ | % | |||||||||||||
|
Primary insurance in force |
||||||||||||||||
| Flow | $ | 115,532 | 89.2 | % | $ | 121,596 | 84.3 | % | ||||||||
| Structured | 14,034 | 10.8 | % | 22,672 | 15.7 | % | ||||||||||
| Total Primary | $ | 129,566 | 100.0 | % | $ | 144,268 | 100.0 | % | ||||||||
| Prime | $ | 106,466 | 82.2 | % | $ | 111,398 | 77.2 | % | ||||||||
| Alt-A | 14,542 | 11.2 | % | 22,941 | 15.9 | % | ||||||||||
| A minus and below | 8,558 | 6.6 | % | 9,929 | 6.9 | % | ||||||||||
| Total Primary | $ | 129,566 | 100.0 | % | $ | 144,268 | 100.0 | % | ||||||||
|
Primary risk in force |
||||||||||||||||
| Flow | $ | 28,397 | 90.3 | % | $ | 29,971 | 88.8 | % | ||||||||
| Structured | 3,064 | 9.7 | % | 3,794 | 11.2 | % | ||||||||||
| Total Primary | $ | 31,461 | 100.0 | % | $ | 33,765 | 100.0 | % | ||||||||
| Flow | ||||||||||||||||
| Prime | $ | 24,213 | 85.3 | % | $ | 25,036 | 83.5 | % | ||||||||
| Alt-A | 2,618 | 9.2 | % | 3,121 | 10.4 | % | ||||||||||
| A minus and below | 1,566 | 5.5 | % | 1,814 | 6.1 | % | ||||||||||
| Total Flow | $ | 28,397 | 100.0 | % | $ | 29,971 | 100.0 | % | ||||||||
| Structured | ||||||||||||||||
| Prime | $ | 1,788 | 58.4 | % | $ | 2,059 | 54.3 | % | ||||||||
| Alt-A | 702 | 22.9 | % | 1,083 | 28.5 | % | ||||||||||
| A minus and below | 574 | 18.7 | % | 652 | 17.2 | % | ||||||||||
| Total Structured | $ | 3,064 | 100.0 | % | $ | 3,794 | 100.0 | % | ||||||||
| Total | ||||||||||||||||
| Prime | $ | 26,001 | 82.6 | % | $ | 27,095 | 80.2 | % | ||||||||
| Alt-A | 3,320 | 10.6 | % | 4,204 | 12.5 | % | ||||||||||
| A minus and below | 2,140 | 6.8 | % | 2,466 | 7.3 | % | ||||||||||
| Total Primary | $ | 31,461 | 100.0 | % | $ | 33,765 | 100.0 | % | ||||||||
|
Total primary risk in force by FICO score |
||||||||||||||||
| Flow | ||||||||||||||||
| >=740 | $ | 11,039 | 38.9 | % | $ | 10,526 | 35.1 | % | ||||||||
|
680-739 |
9,849 | 34.7 | % | 10,790 | 36.0 | % | ||||||||||
|
620-679 |
6,359 | 22.4 | % | 7,329 | 24.5 | % | ||||||||||
| <=619 | 1,150 | 4.0 | % | 1,326 | 4.4 | % | ||||||||||
| Total Flow | $ | 28,397 | 100.0 | % | $ | 29,971 | 100.0 | % | ||||||||
| Structured | ||||||||||||||||
| >=740 | $ | 825 | 26.9 | % | $ | 1,036 | 27.3 | % | ||||||||
|
680-739 |
892 | 29.1 | % | 1,168 | 30.8 | % | ||||||||||
| 620-679 | 815 | 26.6 | % | 990 | 26.1 | % | ||||||||||
| <=619 | 532 | 17.4 | % | 600 | 15.8 | % | ||||||||||
| Total Structured | $ | 3,064 | 100.0 | % | $ | 3,794 | 100.0 | % | ||||||||
| Total | ||||||||||||||||
| >=740 | $ | 11,864 | 37.7 | % | $ | 11,562 | 34.3 | % | ||||||||
|
680-739 |
10,741 | 34.1 | % | 11,958 | 35.4 | % | ||||||||||
|
620-679 |
7,174 | 22.8 | % | 8,319 | 24.6 | % | ||||||||||
| <=619 | 1,682 | 5.4 | % | 1,926 | 5.7 | % | ||||||||||
| Total Primary | $ | 31,461 | 100.0 | % | $ | 33,765 | 100.0 | % | ||||||||
|
Percentage of primary risk in force |
||||||||||||||||
| Refinances | 31 | % | 31 | % | ||||||||||||
| 95.01% LTV and above | 19 | % | 21 | % | ||||||||||||
| ARMs | ||||||||||||||||
| Less than 5 years | 6 | % | 8 | % | ||||||||||||
| 5 years and longer | 7 | % | 8 | % | ||||||||||||
|
Pool risk in force |
||||||||||||||||
| Prime | $ | 1,828 | 74.5 | % | $ | 1,918 | 71.1 | % | ||||||||
| Alt-A | 165 | 6.7 | % | 246 | 9.1 | % | ||||||||||
| A minus and below | 460 | 18.8 | % | 534 | 19.8 | % | ||||||||||
| Total | $ | 2,453 | 100.0 | % | $ | 2,698 | 100.0 | % | ||||||||
| Radian Group Inc. | ||||||||||||||
| Mortgage Insurance Supplemental Information | ||||||||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||||||||
| Exhibit K | ||||||||||||||
| December 31 | December 31 | |||||||||||||
| ($ in millions) | 2010 | 2009 | ||||||||||||
| $ | % | $ | % | |||||||||||
|
Total primary risk in force by LTV |
||||||||||||||
| 85.00% and below | $ | 2,816 | 8.9 | % | $ | 3,263 | 9.6 | % | ||||||
| 85.01% to 90.00% | 12,102 | 38.5 | % | 12,589 | 37.3 | % | ||||||||
| 90.01% to 95.00% | 10,506 | 33.4 | % | 10,996 | 32.6 | % | ||||||||
| 95.01% and above | 6,037 | 19.2 | % | 6,917 | 20.5 | % | ||||||||
| Total | $ | 31,461 | 100.0 | % | $ | 33,765 | 100.0 | % | ||||||
|
Total primary risk in force by policy year |
||||||||||||||
| 2005 and prior | $ | 8,145 | 25.9 | % | $ | 9,709 | 28.7 | % | ||||||
| 2006 | 3,690 | 11.7 | % | 4,390 | 13.0 | % | ||||||||
| 2007 | 8,072 | 25.7 | % | 9,443 | 28.0 | % | ||||||||
| 2008 | 5,935 | 18.9 | % | 6,725 | 19.9 | % | ||||||||
| 2009 | 3,099 | 9.8 | % | 3,498 | 10.4 | % | ||||||||
| 2010 | 2,520 | 8.0 | % | - | - | |||||||||
| Total | $ | 31,461 | 100.0 | % | $ | 33,765 | 100.0 | % | ||||||
|
Total pool risk in force by policy year |
||||||||||||||
| 2005 and prior | $ | 2,038 | 83.1 | % | $ | 2,183 | 80.9 | % | ||||||
| 2006 | 179 | 7.3 | % | 236 | 8.7 | % | ||||||||
| 2007 | 190 | 7.7 | % | 223 | 8.3 | % | ||||||||
| 2008 | 46 | 1.9 | % | 56 | 2.1 | % | ||||||||
| Total pool risk in force | $ | 2,453 | 100.0 | % | $ | 2,698 | 100.0 | % | ||||||
|
Other risk in force |
||||||||||||||
| Second-lien | ||||||||||||||
| 1st loss | $ | 114 | $ | 147 | ||||||||||
| 2nd loss | 79 | 116 | ||||||||||||
| NIMs | 136 | 353 | ||||||||||||
| International | ||||||||||||||
| 1st loss-Hong Kong primary mortgage insurance | 126 | 257 | ||||||||||||
| Credit default swaps | - | 127 | ||||||||||||
| Total other risk in force | $ | 455 | $ | 1,000 | ||||||||||
| Risk to capital ratio-Radian Guaranty only |
16.8:1(1) |
15.4:1 | ||||||||||||
|
(1) Preliminary |
||||||||||||||
| Radian Group Inc. | |||||||||||||||||
| Mortgage Insurance Supplemental Information | |||||||||||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | |||||||||||||||||
| Exhibit L | |||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||
| ($ in thousands) | December 31 | December 31 | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||
| Claims paid | |||||||||||||||||
| Prime | $ | 226,106 | $ | 113,386 | $ | 691,922 | $ | 344,760 | |||||||||
| Alt-A | 81,681 | 67,458 | 308,113 | 215,350 | |||||||||||||
| A minus and below | 50,593 | 40,562 | 180,078 | 150,466 | |||||||||||||
| Total primary claims paid | 358,380 | 221,406 | 1,180,113 | 710,576 | |||||||||||||
| Pool | 30,882 | 18,090 | 147,667 | 40,858 | |||||||||||||
| Second-lien and other | 3,644 | 14,848 | 20,630 | 66,583 | |||||||||||||
| Subtotal | 392,906 | 254,344 | 1,348,410 | 818,017 | |||||||||||||
| Impact of first-lien terminations | - | 197,692 | 223,099 | 197,692 | |||||||||||||
| Impact of captive terminations | (323,716 | ) | (25,194 | ) | (324,365 | ) | (132,941 | ) | |||||||||
| Impact of second-lien terminations | - | - | 10,834 | 87,323 | |||||||||||||
| Total | $ | 69,190 | $ | 426,842 | $ | 1,257,978 | $ | 970,091 | |||||||||
| Average claim paid (1) | |||||||||||||||||
| Prime | $ | 47.0 | $ | 44.4 | $ | 44.6 | $ | 43.5 | |||||||||
| Alt-A | 59.8 | 56.6 | 57.5 | 55.2 | |||||||||||||
| A minus and below | 39.4 | 38.0 | 37.6 | 38.6 | |||||||||||||
| Total primary claims paid | 48.0 | 46.0 | 46.0 | 45.2 | |||||||||||||
| Pool | 68.5 | 47.2 | 71.7 | 38.4 | |||||||||||||
| Second-lien and other | 32.8 | 38.0 | 35.3 | 41.2 | |||||||||||||
| Total | $ | 49.0 | $ | 45.5 | $ | 47.7 | $ | 44.5 | |||||||||
| Average primary claim paid before reinsurance recoveries | $ | 51.7 | $ | 51.6 | $ | 52.5 | $ | 47.9 | |||||||||
| Average total claim paid before reinsurance recoveries | $ | 52.4 | $ | 50.3 | $ | 53.6 | $ | 46.8 | |||||||||
| Loss ratio - GAAP Basis | 212.5 | % | 242.5 | % | 234.0 | % | 179.6 | % | |||||||||
| Expense ratio - GAAP Basis | 22.3 | % | 18.5 | % | 24.0 | % | 23.2 | % | |||||||||
| 234.8 | % | 261.0 | % | 258.0 | % | 202.8 | % | ||||||||||
| Reserve for losses by category | |||||||||||||||||
| Prime | $ | 1,607,741 | $ | 1,265,859 | |||||||||||||
| Alt-A | 687,960 | 767,043 | |||||||||||||||
| A minus and below | 413,137 | 456,281 | |||||||||||||||
| Reinsurance recoverable | 223,254 | (2) | 621,644 | ||||||||||||||
| Total primary reserves | 2,932,092 | 3,110,827 | |||||||||||||||
| Pool insurance | 566,565 | 295,996 | |||||||||||||||
| Total 1st lien reserves | 3,498,657 | 3,406,823 | |||||||||||||||
| Second-lien | 26,161 | 43,579 | |||||||||||||||
| Other | 153 | 136 | |||||||||||||||
| Total reserves | $ | 3,524,971 | $ | 3,450,538 | |||||||||||||
| 1st lien reserve per default (3) | |||||||||||||||||
| Primary reserve per primary default | $ | 23,467 | $ | 20,921 | |||||||||||||
| Pool reserve per pool default | 24,911 | 16,118 | |||||||||||||||
| Total 1st lien reserve per default | 23,689 | 20,393 | |||||||||||||||
| (1) Calculated net of reinsurance recoveries and without giving effect to the impact of first-lien, second-lien and captive terminations. |
|
(2) Reinsurance recoverable on ceded losses related to captives ($130 million) and SmartHome ($93 million). |
| (3) Excludes defaults for which reserves have not been established because they were associated with transactions where no claim payment was anticipated primarily due to deductibles or where a partial reserve has been recorded that is less than the gross calculated reserve due to the presence of a deductible. |
| Radian Group Inc. | ||||||||
| Mortgage Insurance Supplemental Information | ||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||
| Exhibit M | ||||||||
| December 31 | December 31 | |||||||
| 2010 | 2009 | |||||||
|
Default Statistics |
||||||||
| Primary insurance: | ||||||||
| Flow | ||||||||
|
Prime |
||||||||
| Number of insured loans | 584,213 | 614,590 | ||||||
| Number of loans in default | 71,196 | 78,130 | ||||||
| Percentage of loans in default | 12.19 | % | 12.71 | % | ||||
|
Alt-A |
||||||||
| Number of insured loans | 51,765 | 60,616 | ||||||
| Number of loans in default | 17,934 | 22,177 | ||||||
| Percentage of loans in default | 34.65 | % | 36.59 | % | ||||
|
A minus and below |
||||||||
| Number of insured loans | 47,044 | 53,932 | ||||||
| Number of loans in default | 16,401 | 20,911 | ||||||
| Percentage of loans in default | 34.86 | % | 38.77 | % | ||||
| Total Flow | ||||||||
| Number of insured loans | 683,022 | 729,138 | ||||||
| Number of loans in default | 105,531 | 121,218 | ||||||
| Percentage of loans in default | 15.45 | % | 16.62 | % | ||||
| Structured | ||||||||
|
Prime |
||||||||
| Number of insured loans | 42,131 | 52,629 | ||||||
| Number of loans in default | 6,735 | 7,520 | ||||||
| Percentage of loans in default | 15.99 | % | 14.29 | % | ||||
|
Alt-A |
||||||||
| Number of insured loans | 20,234 | 43,615 | ||||||
| Number of loans in default | 6,635 | 15,295 | ||||||
| Percentage of loans in default | 32.79 | % | 35.07 | % | ||||
|
A minus and below |
||||||||
| Number of insured loans | 16,716 | 19,287 | ||||||
| Number of loans in default | 6,569 | 7,965 | ||||||
| Percentage of loans in default | 39.30 | % | 41.30 | % | ||||
| Total Structured | ||||||||
| Number of insured loans | 79,081 | 115,531 | ||||||
| Number of loans in default | 19,939 | 30,780 | ||||||
| Percentage of loans in default | 25.21 | % | 26.64 | % | ||||
| Total Primary Insurance | ||||||||
|
Prime |
||||||||
| Number of insured loans | 626,344 | 667,219 | ||||||
| Number of loans in default | 77,931 | 85,650 | ||||||
| Percentage of loans in default | 12.44 | % | 12.84 | % | ||||
|
Alt-A |
||||||||
| Number of insured loans | 71,999 | 104,231 | ||||||
| Number of loans in default | 24,569 | 37,472 | ||||||
| Percentage of loans in default | 34.12 | % | 35.95 | % | ||||
|
A minus and below |
||||||||
| Number of insured loans | 63,760 | 73,219 | ||||||
| Number of loans in default | 22,970 | 28,876 | ||||||
| Percentage of loans in default | 36.03 | % | 39.44 | % | ||||
| Total Primary Insurance | ||||||||
| Number of insured loans | 762,103 | 844,669 | ||||||
| Number of loans in default (1) | 125,470 | 151,998 | ||||||
| Percentage of loans in default | 16.46 | % | 17.99 | % | ||||
| Pool insurance: | ||||||||
| Number of loans in default (2) | 32,456 | 36,397 | ||||||
|
(1) |
Includes an estimated 525 and 3,302 defaults at December 31, 2010 and December 31, 2009, respectively, for which reserves have not been established because they were associated with transactions where no claim payment was anticipated primarily due to deductibles or where a partial reserve has been recorded that is less than the gross calculated reserve due to the presence of a deductible. |
|
|
(2) |
Includes an estimated 9,712 and 18,033 defaults at December 31, 2010 and December 31, 2009, respectively, for which reserves have not been established because they were associated with transactions where no claim payment was anticipated primarily due to deductibles or where a partial reserve has been recorded that is less than the gross calculated reserve due to the presence of a deductible. |
|
| Radian Group Inc. | ||||||||||||||||
| Mortgage Insurance Supplemental Information | ||||||||||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||||||||||
| Exhibit N | ||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net Premiums Written (In thousands) | ||||||||||||||||
| Primary and Pool Insurance | $ | 199,610 | $ | 166,188 | $ | 698,078 | $ | 650,060 | ||||||||
| Second-lien (1) | 647 | 709 | 1,535 | (41 | ) | |||||||||||
| International (1) | 292 | (2,699 | ) | 296 | (19,943 | ) | ||||||||||
| Total Net Premiums Written - Insurance | $ | 200,549 | $ | 164,198 | $ | 699,909 | $ | 630,076 | ||||||||
| Net Premiums Earned (In thousands) | ||||||||||||||||
| Primary and Pool Insurance | $ | 198,196 | $ | 185,306 | $ | 727,484 | $ | 703,076 | ||||||||
| Second-lien | 646 | 972 | 2,501 | 5,621 | ||||||||||||
| International | 1,727 | 3,356 | 9,646 | 15,726 | ||||||||||||
| Total Net Premiums Earned - Insurance | $ | 200,569 | $ | 189,634 | $ | 739,631 | $ | 724,423 | ||||||||
|
SMARTHOME (In millions) |
||||||||||||||||
| Ceded Premiums Written and Earned | $ | 2.4 | $ | 2.9 | $ | 9.8 | $ | 10.9 | ||||||||
| Net premiums earned - derivatives (In thousands) (2) | $ | 276 | $ | 470 | $ | 692 | $ | 2,257 | ||||||||
| 1st Lien Captives | ||||||||||||||||
| Premiums ceded to captives (In thousands) | $ | 8,834 | $ | 26,832 | $ | 83,384 | $ | 129,808 | ||||||||
| % of total premiums | 4.2 | % | 12.5 | % | 10.2 | % | 15.4 | % | ||||||||
| NIW subject to captives (In thousands) | $ | - | $ | 39,989 | $ | 129 | $ | 1,655,642 | ||||||||
| % of primary NIW | - | 1.7 | % |
<1 |
% |
9.8 | % | |||||||||
| IIF included in captives (3) | 10.6 | % | 29.3 | % | ||||||||||||
| RIF included in captives (3) | 10.4 | % | 31.5 | % | ||||||||||||
| Persistency (twelve months ended December 31) | 81.8 | % | 82.0 | % | ||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2010 | 2009 | |||||||||||||||
|
SMARTHOME |
||||||||||||||||
|
% of Primary RIF included in SmartHome Transactions (3) |
3.2 | % | 3.4 | % | ||||||||||||
|
(1) |
Reflects the impact of second-lien and international terminations. |
|
|
(2) |
Included in change in fair value of derivative instruments. |
|
|
(3) |
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 and Year Ended and as of December 31, 2010 | |||||||||||||||||||||||||||||||||||
| Exhibit O | |||||||||||||||||||||||||||||||||||
| Reinsurance Progression Toward Attachment - Summary by Book Year (1) | |||||||||||||||||||||||||||||||||||
| December 31 | December 31 | ||||||||||||||||||||||||||||||||||
| ($ in millions) | 2010 | 2009 | |||||||||||||||||||||||||||||||||
| Progression | Ever-to- | ||||||||||||||||||||||||||||||||||
| to | Gross | Ceded | Net | Date | Ceded | Ever-to-Date | |||||||||||||||||||||||||||||
| Original | Attachment | Current | Current | Current | Incurred | Reinsurance | Gross | Current | Net Current | Incurred | Reinsurance | ||||||||||||||||||||||||
|
Book Year (2): |
Book RIF | Point | RIF | RIF(3) | RIF | Losses | Benefit (4) | Current RIF | RIF(3) | RIF | Losses | Benefit (4) | |||||||||||||||||||||||
| Pre-2006 | 0-50% | $ | 193 | $ | 38 | $ | 155 | $ | 77 | $ | 375 | $ | 62 | $ | 313 | $ | 142 | ||||||||||||||||||
| Pre-2006 | 50-75% | 166 | 94 | 72 | 50 | 325 | 185 | 140 | 86 | ||||||||||||||||||||||||||
| Pre-2006 | 75-99% | 146 | 83 | 63 | 59 | 557 | 231 | 326 | 127 | ||||||||||||||||||||||||||
| Pre-2006 | Attached | 578 | 168 | 410 | 139 | $ | 51 | 1,673 | 452 | 1,221 | 381 | $ | 139 | ||||||||||||||||||||||
| Pre-2006 Total | $ | 11,983 | $ | 1,083 | $ | 383 | $ | 700 | $ | 325 | $ | 51 | $ | 2,930 | $ | 930 | $ | 2,000 | $ | 736 | $ | 139 | |||||||||||||
| 2006 | 0-50% | $ | 2 | $ | - | $ | 2 | $ | - | $ | 1 | $ | - | $ | 1 | $ | - | ||||||||||||||||||
| 2006 | 50-75% | - | - | - | - | 16 | 1 | 15 | 1 | ||||||||||||||||||||||||||
| 2006 | 75-99% | 11 | 1 | 10 | 1 | 13 | 1 | 12 | 1 | ||||||||||||||||||||||||||
| 2006 | Attached | 369 | 40 | 329 | 95 | $ | 45 | 1,695 | 242 | 1,453 | 355 | $ | 163 | ||||||||||||||||||||||
| 2006 Total | $ | 773 | $ | 382 | $ | 41 | $ | 341 | $ | 96 | $ | 45 | $ | 1,725 | $ | 244 | $ | 1,481 | $ | 357 | $ | 163 | |||||||||||||
| 2007 | 0-50% | $ | - | $ | - | $ | - | $ | - | $ | 1 | $ | - | $ | 1 | $ | - | ||||||||||||||||||
| 2007 | 50-75% | - | - | - | - | 12 | 1 | 11 | - | ||||||||||||||||||||||||||
| 2007 | 75-99% | 9 | 1 | 8 | 1 | 15 | 1 | 14 | 1 | ||||||||||||||||||||||||||
| 2007 | Attached | 830 | 57 | 773 | 189 | $ | 78 | 3,446 | 391 | 3,055 | 437 | $ | 191 | ||||||||||||||||||||||
| 2007 Total | $ | 1,243 | $ | 839 | $ | 58 | $ | 781 | $ | 190 | $ | 78 | $ | 3,474 | $ | 393 | $ | 3,081 | $ | 438 | $ | 191 | |||||||||||||
| 2008 | 0-50% | $ | 122 | $ | 8 | $ | 114 | $ | 4 | $ | 298 | $ | 22 | $ | 276 | $ | 6 | ||||||||||||||||||
| 2008 | 50-75% | 34 | 2 | 32 | 1 | 149 | 8 | 141 | 6 | ||||||||||||||||||||||||||
| 2008 | 75-99% | 22 | 1 | 21 | 1 | 1,454 | 166 | 1,288 | 56 | ||||||||||||||||||||||||||
| 2008 | Attached | 454 | 45 | 409 | 51 | $ | 17 | 159 | 14 | 145 | 19 | $ | 11 | ||||||||||||||||||||||
| 2008 Total | $ | 881 | $ | 632 | $ | 56 | $ | 576 | $ | 57 | $ | 17 | $ | 2,060 | $ | 210 | $ | 1,850 | $ | 87 | $ | 11 | |||||||||||||
| 2009 | 0-50% | $ | 242 | $ | 12 | $ | 230 | $ | 1 | $ | 284 | $ | 12 | $ | 272 | $ | - | ||||||||||||||||||
| 2009 | 50-75% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| 2009 | 75-99% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| 2009 | Attached | - | - | - | - | $ | - | - | - | - | - | $ | - | ||||||||||||||||||||||
| 2009 Total | $ | 288 | $ | 242 | $ | 12 | $ | 230 | $ | 1 | $ | - | $ | 284 | $ | 12 | $ | 272 | $ | - | $ | - | |||||||||||||
| Quota Share | 0-50% | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Quota Share | 50-75% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Quota Share | 75-99% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Quota Share | Attached | 89 | 29 | 60 | 26 | $ | 11 | 102 | 33 | 69 | 37 | $ | 17 | ||||||||||||||||||||||
| Quota Share Total | $ | 313 | $ | 89 | $ | 29 | $ | 60 | $ | 26 | $ | 11 | $ | 102 | $ | 33 | $ | 69 | $ | 37 | $ | 17 | |||||||||||||
| Total Captive (Including Quota Share) | $ | 15,481 | $ | 3,267 | $ | 579 | $ | 2,688 | $ | 695 | $ | 202 | $ | 10,575 | $ | 1,822 | $ | 8,753 | $ | 1,655 | $ | 521 | |||||||||||||
| SmartHome | 0-50% | $ | 28 | $ | 12 | $ | 16 | $ | 14 | $ | 32 | $ | 14 | $ | 18 | $ | 12 | ||||||||||||||||||
| SmartHome | 50-75% | - | - | - | - | 71 | 29 | 42 | 23 | ||||||||||||||||||||||||||
| SmartHome | 75-99% | 63 | 29 | 34 | 26 | - | - | - | - | ||||||||||||||||||||||||||
| SmartHome | Attached | 909 | 445 | 464 | 475 | $ | 137 | 1,029 | 492 | 537 | 435 | $ | 143 | ||||||||||||||||||||||
| Total SmartHome | $ | 3,900 | $ | 1,000 | $ | 486 | $ | 514 | $ | 515 | $ | 137 | $ | 1,132 | $ | 535 | $ | 597 | $ | 470 | $ | 143 | |||||||||||||
| (1) Data is presented in the aggregate for all trusts for captives with risk in force at each period end only. Actual trust attachment points and exit points vary by individual contract. The attachment point 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 for captives with risk in force at period end only. Reinsurance benefit excludes $324 million and $71 million of recoveries recognized from the terminations of certain captive reinsurance agreements during the years ended December 31, 2010 and December 31, 2009, respectively. |
| Radian Group Inc. | ||||||||||||||
| Mortgage Insurance Supplemental Information | ||||||||||||||
| For the Quarter and Year Ended and as of December 31, 2010 | ||||||||||||||
| Modified Pool | ||||||||||||||
| Exhibit P | ||||||||||||||
| December 31 | December 31 | |||||||||||||
| ($ in millions) | 2010 | 2009 | ||||||||||||
| $ | % | $ | % | |||||||||||
|
Primary risk in force by policy year |
||||||||||||||
| 2005 and prior | $ | 186 | 64.4 | % | $ | 243 | 41.7 | % | ||||||
| 2006 | 41 | 14.2 | % | 98 | 16.8 | % | ||||||||
| 2007 | 55 | 19.0 | % | 235 | 40.3 | % | ||||||||
| 2008 | 7 | 2.4 | % | 7 | 1.2 | % | ||||||||
| Total | $ | 289 | 100.0 | % | $ | 583 | 100.0 | % | ||||||
|
Primary risk in force by product |
||||||||||||||
| Prime | $ | 74 | 25.6 | % | $ | 104 | 17.8 | % | ||||||
| Alt-A | 197 | 68.2 | % | 456 | 78.2 | % | ||||||||
| A minus and below | 18 | 6.2 | % | 23 | 4.0 | % | ||||||||
| Total | $ | 289 | 100.0 | % | $ | 583 | 100.0 | % | ||||||
|
Primary insurance in force by product |
||||||||||||||
| Prime | $ | 671 | 22.2 | % | $ | 1,508 | 16.0 | % | ||||||
| Alt-A | 2,216 | 73.1 | % | 7,649 | 81.2 | % | ||||||||
| A minus and below | 143 | 4.7 | % | 258 | 2.8 | % | ||||||||
| Total | $ | 3,030 | 100.0 | % | $ | 9,415 | 100.0 | % | ||||||
| Reserve for losses (in thousands) | $ | 87,218 | $ | 239,824 | ||||||||||
|
Default Statistics: |
||||||||||||||
| Primary Insurance: | ||||||||||||||
|
Total modified pool (1) |
||||||||||||||
| Number of insured loans | 15,487 | 42,509 | ||||||||||||
| Number of loans in default | 4,009 | 12,677 | ||||||||||||
| Percentage of loans in default | 25.89 | % | 29.82 | % | ||||||||||
| (1) Impacted by the termination of transactions in 2009 and 2010. | ||||||||||||||
Forward Looking Statements--Safe Harbor Provisions
All statements in this new release that address events, developments or results that we expect or anticipate may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the United States ("U.S.") Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as "anticipate," "may," "will," "could," "should," "would," "expect," "intend," "plan," "goal," "contemplate," "believe," "estimate," "predict," "project," "potential," "continue," or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties, including the following:
- changes in general financial and political conditions, such as the failure or significant delay of the U.S. economy to recover from the most recent recession or the U.S. economy reentering a recessionary period following a brief period of stabilization or even growth, the lack of meaningful liquidity in the capital markets or in the credit markets, a prolonged period of high unemployment rates and limited home price appreciation or further depreciation (which has resulted in some borrowers voluntarily defaulting on their mortgages when their mortgage balances exceed the value of their homes), 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, or 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 is more concentrated;
- our ability to successfully execute upon our 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;
- a further reduction in, or prolonged period of depressed levels of, home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards and the decrease in housing demand 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 continued deterioration in our financial guaranty portfolio, which, in the absence of new capital, could depend on our ability to execute strategies for which regulatory and other approvals are required and may not be obtained;
- our ability to continue to effectively mitigate our mortgage insurance and financial guaranty losses;
- reduced opportunities for loss mitigation in markets where housing values do not appreciate or continue to decline;
- a more rapid than expected decrease in the level of future insurance rescissions and claim denials from the current elevated levels, which rescissions and denials have materially mitigated our paid losses and resulted in a significant reduction in our loss reserves;
- the negative impact our insurance rescissions and claim denials may have on our relationships with customers, including the potential loss of customers and the heightened risk of disputes and litigation, and, in the event that we are unsuccessful in defending our rescissions or denials, the need to reestablish loss reserves for, and reassume risk on, rescinded loans and pay additional claims;
- 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;
- a decrease 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, the Veterans' Administration and private mortgage insurers (in particular, the FHA and those private mortgage insurers that have been assigned higher ratings from the major rating agencies or new entrants to the industry that are not burdened by legacy obligations);
- changes in the charters or business practices of Federal National Mortgage Association ("Fannie Mae") and Freddie Mac (together, the "GSEs"), the largest purchasers of mortgage loans that we insure, and our ability to remain an eligible provider to both Freddie Mac and Fannie Mae;
- changes to the current system of housing finance, including the possibility of a new system in which private mortgage insurers are not required or their services are significantly limited in scope;
- the effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") on the financial services industry in general, and on our mortgage insurance and financial guaranty businesses in particular, including whether and to what extent loans with mortgage insurance are considered "qualified residential mortgages" for purposes of the Dodd-Frank Act securitization provisions (a draft rule that defines "qualified residential mortgages" is expected shortly and the final rule is required by the Dodd-Frank Act on April 17, 2011) or "qualified mortgages" for purposes of the ability to repay provisions;
- the application of existing federal or state consumer, lending, insurance, tax, 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, or the possibility of additional, lawsuits or investigations, and (ii) legislative and regulatory changes (a) affecting demand for private mortgage insurance, (b) limiting or restricting our use of (or increasing requirements for) additional capital and the products we may offer, or (c) affecting the form in which we execute credit protection or affecting our existing financial guaranty portfolio;
- 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 business, or to estimate accurately the fair value amounts of derivative instruments 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;
- volatility in our earnings caused by changes in the fair value of our derivative instruments and our need to reevaluate the possibility of a premium deficiency in our mortgage insurance business on a quarterly basis;
- our ability to return to a period of sustained profitability, which would allow us to reverse all or a portion of the valuation allowance that was established against substantially all of our net deferred tax asset (DTA);
- our ability to obtain the necessary regulatory approval to consummate the purchase of MIAC and to successfully develop and implement a strategy to utilize MIAC in the public finance financial guaranty market, which strategy may depend on, among other items, our ability to obtain necessary regulatory or other approvals, to attract third-party capital and to obtain ratings sufficient to support such strategy;
- changes in accounting guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board; and
- legal and other limitations on amounts we may receive from our subsidiaries as dividends or through our tax- and expense-sharing arrangements with our subsidiaries.
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this press release to reflect new information or future events or for any other reason.
SOURCE: Radian Group Inc.
Radian Group Inc.
Emily Riley,215-231-1035
emily.riley@radian.com