Exhibit 99.1
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | | | | News Release |
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| | Contact: | | |
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| | For investors: | | Terri Williams-Perry – phone: 215 231.1486 |
| | | | Email: terri.williams-perry@radian.biz |
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| | For the media: | | Rick Gillespie – phone: 215 231.1061 |
| | | | email: rick.gillespie@radian.biz |
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| | Radian Reports Second Quarter Financial Results and Announces Capital Plan |
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| | Net Loss of $392.5 Million Including Premium Deficiency Reserve |
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| | Significant Internal Resources to Support Mortgage Insurance Capital Requirements |
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| | PHILADELPHIA, August 11, 2008 - Radian Group Inc. (NYSE: RDN) today reported a net loss for the quarter of $392.5 million, or $4.91 per share, after establishing a pre-tax first-lien premium deficiency reserve of $421.8 million. This compares to net income of $21.1 million, or $0.26 per share, for the second quarter of 2007. Book value per share at June 30, 2008, was $30.54. |
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| | “Radian’s results in the second quarter were largely impacted by the first-lien premium deficiency reserve we established after updating our future mortgage insurance loss expectations,” said S.A. Ibrahim, Chief Executive Officer of Radian. “While our industry continues to be challenged, we remain highly committed to our mortgage insurance business. Radian is in the unique position to fulfill its capital needs through internal resources by contributing our financial guaranty business to our mortgage insurance business. This non-dilutive capital strategy benefits our shareholders and allows Radian to continue to take advantage of market opportunities that will best position the Company for the future.” |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | | SECOND QUARTER HIGHLIGHTS |
| | — Radian Asset Assurance Inc., the principal financial guaranty subsidiary (Radian Asset), declared an ordinary dividend of $107.5 million to Radian Group Inc. $100 million was subsequently contributed to Radian Guaranty to support the mortgage insurance business. |
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| | — Radian Asset has $960 million of statutory surplus, which is part of approximately $3 billion of claims paying resources. Radian expects to contribute the investment in Radian Asset to Radian Guaranty during the third quarter of 2008. |
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| | — A pre-tax first lien premium deficiency reserve (PDR) of $421.8 million was established after updating the Company’s future loss projections. The PDR represents Radian’s best estimate of the present value of expected future losses not already included in the June 30, 2008 loss reserves, net of related future premiums. There was a $50.8 million deferred policy acquisition cost (DPAC) write-off in conjunction with the PDR. |
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| | — Captive reinsurance and Smart Home transactions generated significant ceded losses recoverable, the balances of which are $131.1 million and $44.7 million, respectively, at June 30, 2008. |
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| | — First and second lien claims paid were below expectations at $209 million, driven primarily by increased investment in Loss Management efforts. |
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| | — First-lien primary defaults increased 11.0% in the quarter, which compares favorably to the 13.6% increase in first-lien primary defaults added during the first quarter of 2008. Including pool defaults, the increase was 8.9% during the second quarter of 2008, compared to 9.9% during the first quarter of 2008. |
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| | — Radian Guaranty has made multiple guideline changes and pricing increases. In markets where home prices have declined, Radian has increased down payment requirements. Approximately 93% of new insurance written during the second quarter of 2008 was prime. Primary New Insurance Written in the second quarter of 2008 was $9.6 billion. |
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| | — Radian Guaranty remains a Top Tier provider to the GSEs and maintains a stable market position. |
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| | — Sherman Financial reported overall pretax operating income of $77.8 million for the second quarter of 2008, of which Radian’s share is $15.7 million. Radian received $19.5 million of dividends from Sherman during the quarter. |
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| | CAPITAL STRATEGY |
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| | The book of business in Radian Asset has significantly less exposure to mortgage and mortgage related assets compared to other financial guaranty insurers and new business production across all |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | | financial guaranty product lines has been significantly reduced in 2008 and is likely to remain at minimal levels. These combined factors have created an opportunity unique to Radian that will allow Radian Group’s investment in Radian Asset to be contributed to Radian Guaranty. Radian expects this will occur during the third quarter of 2008. |
| | Instrumental to the movement of Radian Asset under Radian Guaranty was the need to get consent from Radian's lenders. The necessary lenders have signed an amendment to our credit facility to allow for that transfer. The amendment will become effective if certain conditions are satisfied, all of which Radian currently expects to be able to satisfy in the time permitted by the amendment. |
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| | Radian Group’s liquidity position remains strong with over $50 million in cash and liquid investment securities after an impending paydown of $50 million of its credit facility in conjunction with the Radian Asset contribution, with no principal payments on its debt due until 2011. In addition, Radian has at its option the sale of its remaining stake in Sherman. |
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| | After taking into consideration the contribution of Radian Asset, Radian Guaranty’s resulting risk to capital ratio on a pro forma basis would be 10.3 to 1 at June 30, 2008, allowing it to maintain a strong and sufficient claims paying ability to withstand the stressed macroeconomic environment, while continuing to selectively write new business. |
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| | CONFERENCE CALL |
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| | Radian will discuss each of these items in its conference call today, Monday, August 11, 2008, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the internet athttp://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives or athttp://www.radian.biz >News. The call may also be accessed by dialing 800-230-1074 inside the U.S., or 612-234-9959 for international callers, using passcode 955796 or by referencing Radian. |
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| | A replay of the webcast will be available at 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 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 955796. |
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| | About Radian |
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| | Radian Group Inc. is a global credit risk management company headquartered in Philadelphia with significant operations in New York and London. Radian develops innovative financial solutions by applying its core mortgage credit risk expertise and structured finance capabilities to the credit enhancement needs of the capital markets worldwide, primarily through credit insurance products. |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | | The company also provides credit enhancement for public finance and other corporate and consumer assets on both a direct and reinsurance basis and holds strategic interests in credit-based consumer asset businesses. Additional information may be found atwww.radian.biz. |
| | Financial Results and Supplemental Information Contents (Unaudited) |
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| | For trend information on all schedules, refer to Radian’s quarterly financial statistics athttp://www.radian.biz/investors/financial/corporate.aspx. |
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| | Exhibit A: | | Condensed Consolidated Statements of Income |
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| | Exhibit B: | | Condensed Consolidated Balance Sheets |
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| | Exhibit C: | | Segment Information Quarter Ended June 30, 2008 |
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| | Exhibit D: | | Segment Information Quarter Ended June 30, 2007 |
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| | Exhibit E: | | Segment Information Six Months Ended June 30, 2008 |
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| | Exhibit F: | | Segment Information Six Months Ended June 30, 2007 |
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| | Exhibit G: | | Financial Guaranty Supplemental Information-
Quarter and Six Months Ended June 30, 2008 |
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| | Exhibit H: | | Financial Guaranty Supplemental Information-
Quarter and Six Months Ended June 30, 2008 |
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| | Exhibit I: | | Mortgage Insurance Supplemental Information-
New Insurance Written and Risk Written |
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| | Exhibit J: | | Mortgage Insurance Supplemental Information-
Insurance in Force and Risk in Force |
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| | Exhibit K: | | Mortgage Insurance Supplemental Information-
Risk in Force by LTV and Policy Year and Other Risk in Force |
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| | Exhibit L: | | Mortgage Insurance Supplemental Information-
Claims and Reserves |
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| | Exhibit M: | | Mortgage Insurance Supplemental Information-
Defaults |
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| | Exhibit N: | | Mortgage Insurance Supplemental Information-
Net Premiums Written and Earned, Smart Home, Captives and Persistency |
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| | Exhibit O: | | Mortgage Insurance Supplemental Information-
Reinsurance Progression Toward Attachment – Summary by Book Year |
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| | Exhibit P: | | Mortgage Insurance Supplemental Information-
ALT-A |
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| | Exhibit Q: | | Financial Services Supplemental Information |
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| | Forward Looking Statements |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | | All statements made in this news 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 U.S. Private Securities Litigation Reform Act of 1995. These statements 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 information. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties, including the following: |
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| | • changes in general financial and political conditions, such as extended national or regional economic recessions, changes in housing demand or mortgage originations, changes in 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), changes in the liquidity in the capital markets and the further contraction of credit markets, population trends and changes in household formation patterns, changes 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; |
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| | • economic changes or catastrophic events in geographic regions where our mortgage insurance or financial guaranty insurance in force is more concentrated; |
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| | • our ability to successfully obtain additional capital, if necessary, to support our long-term liquidity needs and to protect our credit ratings and the financial strength ratings of Radian Guaranty Inc., our primary mortgage insurance subsidiary; |
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| | • a decrease in the volume of home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards and a deterioration in housing markets throughout the U.S.; |
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| | • our ability to maintain adequate risk-to-capital ratios, leverage ratios and surplus requirements in our mortgage insurance business in light of on-going losses in this business; |
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| | • a decrease in the volume of municipal bonds, and other public finance and structured finance transactions that we insure, or a decrease in the volume of such transactions for which issuers or investors seek or demand financial guaranty insurance; |
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| | • the loss of a customer for whom we write a significant amount of mortgage insurance or financial guaranty insurance or the influence of large customers; |
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| | • reduction in the volume of reinsurance business available to us from one or more of our primary financial guaranty insurer customers due to adverse changes in their ability to generate new profitable direct financial guaranty insurance or their need for us to reinsure their risk; |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | | • 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 adjustable rate products, such as adjustable rate mortgages and interest-only mortgages, which have resulted in increased losses in 2007 and 2008 and may result in further losses; |
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| | • reduced opportunities for loss mitigation in markets where housing values fail to appreciate or begin to decline; |
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| | • changes in persistency rates of our mortgage insurance policies caused by changes in refinancing activity, in the rate of appreciation or depreciation of home values and changes in the mortgage insurance cancellation requirements of mortgage lenders and investors; |
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| | • recapture of reinsurance business by the primary insurers under our financial guaranty reinsurance arrangements, which would reduce written and earned premiums in our financial guaranty business and correspondingly reduce the amount of capital required to be held against this risk; |
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| | • downgrades or threatened downgrades of, or other ratings actions with respect to, our credit ratings or the insurance financial strength ratings assigned by the major rating agencies to any of our rated insurance subsidiaries at any time (in particular, our credit rating and the financial strength ratings assigned to Radian Guaranty Inc., which are currently on CreditWatch Negative or negative outlook); |
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| | • 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 ratings agencies; |
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| | • changes in the charters or business practices of Federal National Mortgage Association and Freddie Mac, the largest purchasers of mortgage loans that we insure, and our ability to retain our ���Top Tier” eligibility requirement from both Freddie Mac and Fannie Mae; |
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| | • heightened competition for financial guaranty business from other financial guaranty insurers, from other forms of credit enhancement such as letters of credit, guaranties and credit default swaps provided by foreign and domestic banks and other financial institutions, and from alternative structures that may permit insurers to securitize assets more cost-effectively without the need for the types of credit enhancement we offer, or result in our having to reduce the premium we charge for our products; |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | | • 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 possibility of private lawsuits or 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 financial guaranty 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; |
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| | • 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 the premium deficiency for our first- and second-lien mortgage insurance business, 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; |
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| | • volatility in our earnings caused by changes in the fair value of our derivative instruments and our need to reevaluate the premium deficiencies in our mortgage insurance business on a quarterly basis; |
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| | • changes in accounting guidance from the Securities and Exchange Commission (“SEC”) or the Financial Accounting Standards Board; |
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| | • 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 |
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| | • vulnerability to the performance of our strategic investments, including in particular, our investment in Sherman Financial Group LLC. |
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| | 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 I of our Annual Report on Form 10-K for the year ended December 31, 2007 as well as the material changes to these risks discussed in our Quarterly Reports on Form 10-Q. 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 news release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this release to reflect new information or future events or for any other reason. |
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| | SOURCE Radian Group Inc. |
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Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
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| | | Quarter Ended
June 30 | | | Six Months Ended
June 30 | |
| (In thousands, except per-share data) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Revenues: | | | | | | | | | | | | | | | | |
Net premiums written—insurance | | $ | 222,645 | | | $ | 242,419 | | | $ | 466,951 | | | $ | 490,849 | |
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Net premiums earned—insurance | | $ | 249,137 | | | $ | 218,010 | | | $ | 491,058 | | | $ | 432,517 | |
Net investment income | | | 65,128 | | | | 62,650 | | | | 131,107 | | | | 123,646 | |
Change in fair value of derivative instruments (1) | | | 56,226 | | | | (66,246 | ) | | | 764,035 | | | | (17,829 | ) |
Net (losses) gains on other financial instruments | | | (8,251 | ) | | | 25,694 | | | | (63,135 | ) | | | 39,439 | |
Other income | | | 3,221 | | | | 3,102 | | | | 6,835 | | | | 6,920 | |
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Total revenues | | | 365,461 | | | | 243,210 | | | | 1,329,900 | | | | 584,693 | |
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Expenses: | | | | | | | | | | | | | | | | |
Provision for losses | | | 458,879 | | | | 173,962 | | | | 1,041,590 | | | | 281,004 | |
Provision for premium deficiency (2) | | | 369,807 | | | | — | | | | 387,897 | | | | — | |
Policy acquisition costs | | | 75,952 | (3) | | | 24,198 | | | | 99,858 | | | | 52,452 | |
Other operating expenses | | | 63,849 | | | | 48,213 | | | | 118,990 | | | | 102,580 | |
Merger expenses | | | — | | | | 9,395 | | | | — | | | | 12,723 | |
Interest expense | | | 13,832 | | | | 12,360 | | | | 26,325 | | | | 25,416 | |
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Total expenses | | | 982,319 | | | | 268,128 | | | | 1,674,660 | | | | 474,175 | |
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Equity in net income of affiliates | | | 15,704 | | | | 49,507 | | | | 28,230 | | | | 72,279 | |
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Pretax (loss) income | | | (601,154 | ) | | | 24,589 | | | | (316,530 | ) | | | 182,797 | |
Income tax (benefit) provision | | | (208,630 | ) | | | 3,506 | | | | (119,644 | ) | | | 48,247 | |
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Net (loss) income | | $ | (392,524 | ) | | $ | 21,083 | | | $ | (196,886 | ) | | $ | 134,550 | |
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Diluted net (loss) income per share (4) | | $ | (4.91 | ) | | $ | 0.26 | | | $ | (2.46 | ) | | $ | 1.68 | |
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| (1) | Includes premiums earned on derivative contracts. |
| (2) | 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 first six months of 2008. |
| (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) | Weighted average shares outstanding (in thousands) |
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Average common shares outstanding | | 79,967 | | 79,627 | | 79,960 | | 79,295 |
Increase in shares-potential exercise of options-diluted basis | | — | | 918 | | — | | 984 |
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Weighted average shares outstanding (in thousands) | | 79,967 | | 80,545 | | 79,960 | | 80,279 |
For Trend Information, refer to our Quarterly Financial Statistics on Radian’s (RDN) website.
Page 1
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit B
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| (In thousands, except share and per-share data) | | June 30
2008 | | December 31
2007 | | | June 30
2007 |
Assets: | | | | | | | | | | |
Cash and investments | | $ | 6,535,397 | | $ | 6,611,836 | | | $ | 6,028,815 |
Investments in affiliates | | | 112,683 | | | 104,354 | | | | 639,571 |
Deferred policy acquisition costs | | | 184,765 | | | 234,955 | | | | 232,548 |
Prepaid federal income taxes | | | 536,343 | | | 793,486 | | | | 860,135 |
Other assets | | | 1,040,229 | | | 465,558 | | | | 357,016 |
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Total assets | | $ | 8,409,417 | | $ | 8,210,189 | | | $ | 8,118,085 |
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Liabilities and stockholders’ equity: | | | | | | | | | | |
Unearned premiums | | $ | 1,048,064 | | $ | 1,094,710 | | | $ | 987,788 |
Reserve for losses and loss adjustment expenses | | | 2,287,742 | | | 1,598,756 | | | | 909,371 |
Reserve for premium deficiency | | | 583,543 | | | 195,646 | | | | — |
Long-term debt and other borrowings | | | 958,762 | | | 953,524 | | | | 747,929 |
Variable interest entity debt | | | 85,739 | | | — | | | | — |
Deferred income taxes | | | — | | | 26,705 | | | | 888,667 |
Derivative liabilities | | | 657,426 | | | 1,305,665 | | | | — |
Other liabilities | | | 332,234 | | | 314,447 | | | | 441,612 |
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Total liabilities | | | 5,953,510 | | | 5,489,453 | | | | 3,975,367 |
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Common stock | | | 98 | | | 98 | | | | 97 |
Additional paid-in capital | | | 448,010 | | | 442,312 | | | | 436,017 |
Retained earnings | | | 1,981,046 | | | 2,181,191 | | | | 3,609,259 |
Accumulated other comprehensive income | | | 26,753 | | | 97,135 | | | | 97,345 |
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Total common stockholders’ equity | | | 2,455,907 | | | 2,720,736 | | | | 4,142,718 |
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Total liabilities and stockholders’ equity | | $ | 8,409,417 | | $ | 8,210,189 | | | $ | 8,118,085 |
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Book value per share | | $ | 30.54 | | $ | 33.83 | | | $ | 51.53 |
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Treasury Stock Repurchases (Year-to-Date for Periods Presented) | | | | | | | |
Total number of shares repurchased | | | — | | | 398,645 | (1) | | | 398,645 |
Average price paid per share | | | — | | $ | 57.25 | | | $ | 57.25 |
Total cost of repurchased shares | | | — | | $ | 22,822,537 | | | $ | 22,822,537 |
| (1) | 0.3 million shares were repurchased in the 2nd quarter of 2007 at a cost of $18.8 million. |
Page 2
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2008
Exhibit C
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(In thousands) | | Mortgage
Insurance | | | Financial
Guaranty | | | Financial
Services | | Total | |
Revenues: | | | | | | | | | | | | | | | |
Net premiums written—insurance | | $ | 199,030 | | | $ | 23,615 | | | $ | — | | $ | 222,645 | |
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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 | | | 10,444 | | | | (18,734 | ) | | | 39 | | | (8,251 | ) |
Other income | | | 2,999 | | | | 58 | | | | 164 | | | 3,221 | |
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Total revenues | | | 282,653 | | | | 82,605 | | | | 203 | | | 365,461 | |
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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 | |
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Total expenses | | | 938,824 | | | | 43,368 | | | | 127 | | | 982,319 | |
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Equity in net income of affiliates | | | — | | | | — | | | | 15,704 | | | 15,704 | |
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Pretax (loss) income | | | (656,171 | ) | | | 39,237 | | | | 15,780 | | | (601,154 | ) |
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Income tax (benefit) provision | | | (221,988 | ) | | | 6,768 | | | | 6,590 | | | (208,630 | ) |
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Net (loss) income | | $ | (434,183 | ) | | $ | 32,469 | | | $ | 9,190 | | $ | (392,524 | ) |
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Assets | | $ | 5,037,309 | | | $ | 3,166,316 | | | $ | 205,792 | | $ | 8,409,417 | |
Total investments | | | 3,919,870 | | | | 2,467,199 | | | | — | | | 6,387,069 | |
Deferred policy acquisition costs | | | 11,554 | | | | 173,211 | | | | — | | | 184,765 | |
Reserve for losses and loss adjustment expenses | | | 2,120,577 | | | | 167,165 | | | | — | | | 2,287,742 | |
Derivative liabilities | | | 308,543 | | | | 348,883 | | | | — | | | 657,426 | |
Unearned premiums | | | 359,080 | | | | 688,984 | | | | — | | | 1,048,064 | |
Stockholders’ equity | | | 988,773 | | | | 1,331,610 | | | | 135,524 | | | 2,455,907 | |
Page 3
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2007
Exhibit D
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(In thousands) | | Mortgage
Insurance | | | Financial
Guaranty | | | Financial
Services | | Total | |
Revenues: | | | | | | | | | | | | | | | |
Net premiums written—insurance | | $ | 197,507 | | | $ | 44,912 | | | $ | — | | $ | 242,419 | |
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Net premiums earned—insurance | | $ | 185,588 | | | $ | 32,422 | | | $ | — | | $ | 218,010 | |
Net investment income | | | 36,287 | | | | 26,320 | | | | 43 | | | 62,650 | |
Change in fair value of derivative instruments | | | (49,410 | ) | | | (16,836 | ) | | | — | | | (66,246 | ) |
Net gains on other financial instruments | | | 19,356 | | | | 5,609 | | | | 729 | | | 25,694 | |
Other income | | | 2,726 | | | | 126 | | | | 250 | | | 3,102 | |
| | | | | | | | | | | | | | | |
Total revenues | | | 194,547 | | | | 47,641 | | | | 1,022 | | | 243,210 | |
| | | | | | | | | | | | | | | |
| | | | |
Expenses: | | | | | | | | | | | | | | | |
Provision for losses | | | 180,152 | | | | (6,190 | ) | | | — | | | 173,962 | |
Policy acquisition costs | | | 12,556 | | | | 11,642 | | | | — | | | 24,198 | |
Other operating expenses | | | 34,036 | | | | 12,533 | | | | 1,644 | | | 48,213 | |
Merger expenses | | | 8,990 | | | | 405 | | | | — | | | 9,395 | |
Interest expense | | | 6,341 | | | | 4,462 | | | | 1,557 | | | 12,360 | |
| | | | | | | | | | | | | | | |
Total expenses | | | 242,075 | | | | 22,852 | | | | 3,201 | | | 268,128 | |
| | | | | | | | | | | | | | | |
Equity in net income of affiliates | | | — | | | | — | | | | 49,507 | | | 49,507 | |
| | | | | | | | | | | | | | | |
Pretax (loss) income | | | (47,528 | ) | | | 24,789 | | | | 47,328 | | | 24,589 | |
| | | | |
Income tax (benefit) provision | | | (19,326 | ) | | | 2,768 | | | | 20,064 | | | 3,506 | |
| | | | | | | | | | | | | | | |
Net (loss) income | | $ | (28,202 | ) | | $ | 22,021 | | | $ | 27,264 | | $ | 21,083 | |
| | | | | | | | | | | | | | | |
| | | | |
Assets | | $ | 4,762,306 | | | $ | 2,717,023 | | | $ | 638,756 | | $ | 8,118,085 | |
Total investments | | | 3,545,036 | | | | 2,374,941 | | | | — | | | 5,919,977 | |
Deferred policy acquisition costs | | | 70,525 | | | | 162,023 | | | | — | | | 232,548 | |
Reserve for losses and loss adjustment expenses | | | 746,095 | | | | 163,276 | | | | — | | | 909,371 | |
Unearned premiums | | | 287,824 | | | | 699,964 | | | | — | | | 987,788 | |
Stockholders’ equity | | | 2,270,272 | | | | 1,456,497 | | | | 415,949 | | | 4,142,718 | |
Page 4
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2008
Exhibit E
| | | | | | | | | | | | | | | |
(In thousands) | | Mortgage
Insurance | | | Financial
Guaranty | | | Financial
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 | | | (26,289 | ) | | | (36,883 | ) | | | 37 | | | (63,135 | ) |
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 | ) |
| | | | | | | | | | | | | | | |
Page 5
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2007
Exhibit F
| | | | | | | | | | | | | | | |
(In thousands) | | Mortgage
Insurance | | | Financial
Guaranty | | | Financial
Services | | Total | |
Revenues: | | | | | | | | | | | | | | | |
Net premiums written—insurance | | $ | 403,918 | | | $ | 86,931 | | | $ | — | | $ | 490,849 | |
| | | | | | | | | | | | | | | |
Net premiums earned—insurance | | $ | 365,831 | | | $ | 66,686 | | | $ | — | | $ | 432,517 | |
Net investment income | | | 71,846 | | | | 51,757 | | | | 43 | | | 123,646 | |
Change in fair value of derivative instruments | | | (45,072 | ) | | | 27,243 | | | | — | | | (17,829 | ) |
Net gains on other financial instruments | | | 30,479 | | | | 8,433 | | | | 527 | | | 39,439 | |
Other income | | | 5,575 | | | | 266 | | | | 1,079 | | | 6,920 | |
| | | | | | | | | | | | | | | |
Total revenues | | | 428,659 | | | | 154,385 | | | | 1,649 | | | 584,693 | |
| | | | | | | | | | | | | | | |
| | | | |
Expenses: | | | | | | | | | | | | | | | |
Provision for losses | | | 293,006 | | | | (12,002 | ) | | | — | | | 281,004 | |
Policy acquisition costs | | | 29,079 | | | | 23,373 | | | | — | | | 52,452 | |
Other operating expenses | | | 70,308 | | | | 26,768 | | | | 5,504 | | | 102,580 | |
Merger expenses | | | 12,318 | | | | 405 | | | | — | | | 12,723 | |
Interest expense | | | 13,195 | | | | 9,058 | | | | 3,163 | | | 25,416 | |
| | | | | | | | | | | | | | | |
Total expenses | | | 417,906 | | | | 47,602 | | | | 8,667 | | | 474,175 | |
| | | | | | | | | | | | | | | |
Equity in net income of affiliates | | | — | | | | — | | | | 72,279 | | | 72,279 | |
| | | | | | | | | | | | | | | |
Pretax income | | | 10,753 | | | | 106,783 | | | | 65,261 | | | 182,797 | |
| | | | |
Income tax (benefit) provision | | | (5,747 | ) | | | 26,846 | | | | 27,148 | | | 48,247 | |
| | | | | | | | | | | | | | | |
Net income | | $ | 16,500 | | | $ | 79,937 | | | $ | 38,113 | | $ | 134,550 | |
| | | | | | | | | | | | | | | |
Page 6
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit G
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
June 30 | | | Six Months Ended
June 30 | |
| ($ in thousands, except ratios) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net Premiums Written: (1) | | | | | | | | | | | | | | | | |
Public finance direct | | $ | 7,876 | | | $ | 18,130 | | | $ | 13,479 | | | $ | 30,910 | |
Public finance reinsurance | | | 7,221 | | | | 17,495 | | | | 24,762 | | | | 35,649 | |
Structured direct | | | 3,006 | | | | 2,789 | | | | 7,188 | | | | 8,036 | |
Structured reinsurance | | | 5,411 | | | | 5,693 | | | | 10,853 | | | | 11,605 | |
Trade credit reinsurance | | | 101 | | | | 805 | | | | 388 | | | | 731 | |
| | | | | | | | | | | | | | | | |
Total Net Premiums Written—insurance | | $ | 23,615 | | | $ | 44,912 | | | $ | 56,670 | | | $ | 86,931 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net Premiums Earned: (2) | | | | | | | | | | | | | | | | |
Public finance direct | | $ | 12,004 | | | $ | 9,961 | | | $ | 29,814 | | | $ | 21,546 | |
Public finance reinsurance | | | 22,965 | | | | 11,692 | | | | 32,835 | | | | 22,792 | |
Structured direct | | | 3,760 | | | | 4,389 | | | | 7,642 | | | | 9,080 | |
Structured reinsurance | | | 5,092 | | | | 5,742 | | | | 10,691 | | | | 11,936 | |
Trade credit reinsurance | | | 220 | | | | 638 | | | | 715 | | | | 1,332 | |
| | | | | | | | | | | | | | | | |
Total Net Premiums Earned—insurance | | $ | 44,041 | | | $ | 32,422 | | | $ | 81,697 | | | $ | 66,686 | |
| | | | | | | | | | | | | | | | |
Refundings included in earned premium | | $ | 16,664 | | | $ | 5,177 | | | $ | 28,321 | | | $ | 11,763 | |
| | | | | | | | | | | | | | | | |
| | | | |
Claims paid: | | | | | | | | | | | | | | | | |
Trade credit reinsurance | | $ | 397 | | | $ | 2,625 | | | $ | 983 | | | $ | 5,271 | |
Other | | | 1,761 | | | | 803 | | | | 103,217 | (3) | | | 734 | |
Conseco | | | 2,305 | | | | 3,011 | | | | 4,373 | | | | 6,119 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 4,463 | | | $ | 6,439 | | | $ | 108,573 | | | $ | 12,124 | |
| | | | | | | | | | | | | | | | |
| | | | |
Incurred losses: | | | | | | | | | | | | | | | | |
Trade credit reinsurance | | $ | (3,819 | ) | | $ | (8,480 | ) | | $ | (5,474 | ) | | $ | (11,616 | ) |
Other | | | 14,074 | | | | 2,290 | | | | 27,432 | | | | (386 | ) |
Conseco | | | (672 | ) | | | — | | | | (672 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 9,583 | | | $ | (6,190 | ) | | $ | 21,286 | | | $ | (12,002 | ) |
| | | | | | | | | | | | | | | | |
Loss ratio—GAAP Basis | | | 16.7 | % | | | (12.8 | )% | | | 19.5 | % | | | (11.8 | )% |
Expense ratio—GAAP Basis (4) | | | 47.4 | % | | | 50.2 | % | | | 53.7 | % | | | 49.5 | % |
| | | | | | | | | | | | | | | | |
| | | 64.1 | % | | | 37.4 | % | | | 73.2 | % | | | 37.7 | % |
| | | | | | | | | | | | | | | | |
Net payments (receipts) under derivatives contracts | | $ | 5,578 | | | $ | (16,147 | ) | | $ | 5,578 | | | $ | (27,375 | ) |
| | | | | | | | | | | | | | | | |
| (1) | Premiums written on credit derivatives for the quarter and six months ended June 30, 2008 were $13.0 million and $25.9 million, respectively, compared to $5.6 million and $18.9 million, respectively, for the quarter and six months ended June 30, 2007. |
| (2) | Premiums earned on credit derivatives for the quarter and six months ended June 30, 2008 were $13.5 million and $27.2 million, respectively, compared to $15.8 million and $34.7 million, respectively, for the quarter and six months ended June 30, 2007. Premiums earned on credit derivatives are included in change of fair value of derivative instruments. |
| (3) | Includes a $100 million payment related to one credit that is a CDO of an ABS that was fully reserved for in 2007. |
| (4) | Excludes merger expenses. |
Page 7
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit H
| | | | | | | | | | | | |
| ($ in thousands, except ratios) | | June 30
2008 | | | December 31
2007 | | | June 30
2007 | |
Capital and surplus | | $ | 982,340 | | | $ | 1,158,537 | | | $ | 1,066,378 | |
Contingency reserve | | | 485,972 | | | | 433,296 | | | | 380,222 | |
| | | | | | | | | | | | |
Qualified statutory capital | | | 1,468,312 | | | | 1,591,833 | | | | 1,446,600 | |
| | | |
Unearned premium reserve | | | 866,504 | | | | 886,024 | | | | 846,254 | |
Loss and loss expense reserve | | | 54,391 | | | | 61,038 | | | | 73,083 | |
| | | | | | | | | | | | |
Total statutory policyholders’ reserves | | | 2,389,207 | | | | 2,538,895 | | | | 2,365,937 | |
| | | |
Present value of installment premiums | | | 430,450 | | | | 461,806 | | | | 366,572 | |
Reinsurance and soft capital facilities | | | 150,000 | | | | 150,000 | | | | 150,000 | |
| | | | | | | | | | | | |
Total statutory claims paying resources | | $ | 2,969,657 | | | $ | 3,150,701 | | | $ | 2,882,509 | |
| | | | | | | | | | | | |
Net debt service outstanding | | $ | 163,252,124 | | | $ | 164,346,659 | | | $ | 152,351,096 | |
| | | | | | | | | | | | |
Capital leverage ratio (1) | | | 111 | | | | 103 | | | | 105 | |
Claims paying leverage ratio (2) | | | 55 | | | | 52 | | | | 53 | |
| | | |
Net par outstanding by product: | | | | | | | | | | | | |
Public finance direct | | $ | 18,824,907 | | | $ | 18,228,946 | | | $ | 17,131,513 | |
Public finance reinsurance | | | 43,114,460 | | | | 43,822,781 | | | | 40,063,123 | |
Structured direct | | | 47,235,046 | | | | 47,878,168 | | | | 48,071,745 | |
Structured reinsurance | | | 6,010,331 | | | | 6,091,717 | | | | 5,270,740 | |
| | | | | | | | | | | | |
Total | | $ | 115,184,744 | | | $ | 116,021,612 | | | $ | 110,537,121 | |
| | | | | | | | | | | | |
Reinsurance business net par outstanding: | | | | | | | | | | | | |
Treaty | | | 61 | % | | | 59 | % | | | 59 | % |
Facultative | | | 39 | % | | | 41 | % | | | 41 | % |
| | | |
Reserve for losses and LAE | | | | | | | | | | | | |
Specific | | $ | 29,053 | | | $ | 26,791 | | | $ | 29,274 | |
Conseco | | | 17,480 | | | | 22,526 | | | | 27,855 | |
Non-specific | | | 120,632 | | | | 203,987 | | | | 106,147 | |
| | | | | | | | | | | | |
Total | | $ | 167,165 | | | $ | 253,304 | | | $ | 163,276 | |
| | | | | | | | | | | | |
| (1) | Net debt service outstanding divided by qualified statutory capital |
| (2) | Net debt service outstanding divided by total statutory claims paying resources |
Page 8
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit I
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
June 30 | | | Six Months Ended
June 30 | |
($ in millions) | | 2008 | | | % | | | 2007 | | | % | | | 2008 | | | % | | | 2007 | | | % | |
Primary New Insurance Written | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Flow | | $ | 9,432 | | | 97.9 | % | | $ | 10,639 | | | 63.1 | % | | $ | 18,716 | | | 93.9 | % | | $ | 17,688 | | | 58.8 | % |
Structured | | | 205 | | | 2.1 | % | | | 6,211 | | | 36.9 | % | | | 1,218 | | | 6.1 | % | | | 12,389 | | | 41.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Primary | | $ | 9,637 | | | 100.0 | % | | $ | 16,850 | | | 100.0 | % | | $ | 19,934 | | | 100.0 | % | | $ | 30,077 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Flow | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prime | | $ | 8,743 | | | 92.7 | % | | $ | 7,673 | | | 72.1 | % | | $ | 16,951 | | | 90.5 | % | | $ | 12,723 | | | 71.9 | % |
Alt-A | | | 475 | | | 5.0 | % | | | 2,026 | | | 19.1 | % | | | 1,058 | | | 5.7 | % | | | 3,427 | | | 19.4 | % |
A minus and below | | | 214 | | | 2.3 | % | | | 940 | | | 8.8 | % | | | 707 | | | 3.8 | % | | | 1,538 | | | 8.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Flow | | $ | 9,432 | | | 100.0 | % | | $ | 10,639 | | | 100.0 | % | | $ | 18,716 | | | 100.0 | % | | $ | 17,688 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Structured | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prime | | $ | 204 | | | 99.5 | % | | $ | 581 | | | 9.4 | % | | $ | 1,216 | | | 99.8 | % | | $ | 674 | | | 5.5 | % |
Alt-A | | | 1 | | | 0.5 | % | | | 5,200 | | | 83.7 | % | | | 2 | | | 0.2 | % | | | 11,105 | | | 89.6 | % |
A minus and below | | | — | | | — | | | | 430 | | | 6.9 | % | | | — | | | — | | | | 610 | | | 4.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Structured | | $ | 205 | | | 100.0 | % | | $ | 6,211 | | | 100.0 | % | | $ | 1,218 | | | 100.0 | % | | $ | 12,389 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prime | | $ | 8,947 | | | 92.8 | % | | $ | 8,254 | | | 49.0 | % | | $ | 18,167 | | | 91.2 | % | | $ | 13,397 | | | 44.6 | % |
Alt-A | | | 476 | | | 5.0 | % | | | 7,226 | | | 42.9 | % | | | 1,060 | | | 5.3 | % | | | 14,532 | | | 48.3 | % |
A minus and below | | | 214 | | | 2.2 | % | | | 1,370 | | | 8.1 | % | | | 707 | | | 3.5 | % | | | 2,148 | | | 7.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Primary | | $ | 9,637 | | | 100.0 | % | | $ | 16,850 | | | 100.0 | % | | $ | 19,934 | | | 100.0 | % | | $ | 30,077 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Primary New Insurance Written by FICO Score | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Flow | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
<=619 | | $ | 104 | | | 1.1 | % | | $ | 641 | | | 6.0 | % | | $ | 369 | | | 2.0 | % | | $ | 1,127 | | | 6.4 | % |
620-679 | | | 1,512 | | | 16.0 | % | | | 3,397 | | | 32.0 | % | | | 3,450 | | | 18.4 | % | | | 5,652 | | | 31.9 | % |
680-739 | | | 3,452 | | | 36.6 | % | | | 3,854 | | | 36.2 | % | | | 7,067 | | | 37.8 | % | | | 6,333 | | | 35.8 | % |
>=740 | | | 4,364 | | | 46.3 | % | | | 2,747 | | | 25.8 | % | | | 7,830 | | | 41.8 | % | | | 4,576 | | | 25.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Flow | | $ | 9,432 | | | 100.0 | % | | $ | 10,639 | | | 100.0 | % | | $ | 18,716 | | | 100.0 | % | | $ | 17,688 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Structured | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
<=619 | | $ | — | | | — | | | $ | 283 | | | 4.6 | % | | $ | — | | | — | | | $ | 409 | | | 3.3 | % |
620-679 | | | 7 | | | 3.4 | % | | | 2,090 | | | 33.6 | % | | | 17 | | | 1.4 | % | | | 3,466 | | | 28.0 | % |
680-739 | | | 64 | | | 31.2 | % | | | 2,761 | | | 44.5 | % | | | 433 | | | 35.5 | % | | | 5,829 | | | 47.0 | % |
>=740 | | | 134 | | | 65.4 | % | | | 1,077 | | | 17.3 | % | | | 768 | | | 63.1 | % | | | 2,685 | | | 21.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Structured | | $ | 205 | | | 100.0 | % | | $ | 6,211 | | | 100.0 | % | | $ | 1,218 | | | 100.0 | % | | $ | 12,389 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
<=619 | | $ | 104 | | | 1.1 | % | | $ | 924 | | | 5.5 | % | | $ | 369 | | | 1.9 | % | | $ | 1,536 | | | 5.1 | % |
620-679 | | | 1,519 | | | 15.8 | % | | | 5,487 | | | 32.6 | % | | | 3,467 | | | 17.4 | % | | | 9,118 | | | 30.3 | % |
680-739 | | | 3,516 | | | 36.4 | % | | | 6,615 | | | 39.2 | % | | | 7,500 | | | 37.6 | % | | | 12,162 | | | 40.4 | % |
>=740 | | | 4,498 | | | 46.7 | % | | | 3,824 | | | 22.7 | % | | | 8,598 | | | 43.1 | % | | | 7,261 | | | 24.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Primary | | $ | 9,637 | | | 100.0 | % | | $ | 16,850 | | | 100.0 | % | | $ | 19,934 | | | 100.0 | % | | $ | 30,077 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Percentage of primary new insurance written | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Refinances | | | 35 | % | | | | | | 41 | % | | | | | | 38 | % | | | | | | 46 | % | | | |
95.01% LTV and above | | | 12 | % | | | | | | 21 | % | | | | | | 16 | % | | | | | | 19 | % | | | |
ARMs | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Less than 5 years | | | — | | | | | | | 7 | % | | | | | | 1 | % | | | | | | 23 | % | | | |
5 years and longer | | | 10 | % | | | | | | 10 | % | | | | | | 8 | % | | | | | | 8 | % | | | |
Primary risk written | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Flow | | $ | 2,231 | | | 97.9 | % | | $ | 2,699 | | | 83.4 | % | | $ | 4,547 | | | 93.5 | % | | $ | 4,445 | | | 85.9 | % |
Structured | | | 48 | | | 2.1 | % | | | 537 | | | 16.6 | % | | | 314 | | | 6.5 | % | | | 731 | | | 14.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Primary | | $ | 2,279 | | | 100.0 | % | | $ | 3,236 | | | 100.0 | % | | $ | 4,861 | | | 100.0 | % | | $ | 5,176 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pool risk written | | $ | 28 | | | | | | $ | 96 | | | | | | $ | 59 | | | | | | $ | 185 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other risk written | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Seconds | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1st loss | | $ | — | | | | | | $ | 3 | | | | | | $ | — | | | | | | $ | 6 | | | | |
2nd loss | | | — | | | | | | | — | | | | | | | — | | | | | | | 21 | | | | |
NIMs | | | — | | | | | | | 109 | | | | | | | — | | | | | | | 377 | | | | |
International | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1st loss-Hong Kong primary mortgage insurance | | | — | | | | | | | 31 | | | | | | | 51 | | | | | | | 50 | | | | |
Reinsurance | | | 23 | | | | | | | 17 | | | | | | | 42 | | | | | | | 34 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total other risk written | | $ | 23 | | | | | | $ | 160 | | | | | | $ | 93 | | | | | | $ | 488 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Page 9
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit J
| | | | | | | | | | | | | | |
| | | June 30 | | | June 30 | |
| ($ in millions) | | 2008 | | | % | | | 2007 | | | % | |
Primary insurance in force | | | | | | | | | | | | | | |
Flow | | $ | 115,425 | | | 76.3 | % | | $ | 91,098 | | | 71.0 | % |
Structured | | | 35,754 | | | 23.7 | % | | | 37,172 | | | 29.0 | % |
| | | | | | | | | | | | | | |
Total Primary | | $ | 151,179 | | | 100.0 | % | | $ | 128,270 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Prime | | $ | 105,049 | | | 69.5 | % | | $ | 80,984 | | | 63.1 | % |
Alt-A | | | 34,239 | | | 22.6 | % | | | 35,671 | | | 27.8 | % |
A minus and below | | | 11,891 | | | 7.9 | % | | | 11,615 | | | 9.1 | % |
| | | | | | | | | | | | | | |
Total Primary | | $ | 151,179 | | | 100.0 | % | | $ | 128,270 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Primary risk in force | | | | | | | | | | | | | | |
Flow | | $ | 29,003 | | | 85.6 | % | | $ | 22,702 | | | 83.2 | % |
Structured | | | 4,879 | | | 14.4 | % | | | 4,580 | | | 16.8 | % |
| | | | | | | | | | | | | | |
Total Primary | | $ | 33,882 | | | 100.0 | % | | $ | 27,282 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Flow | | | | | | | | | | | | | | |
Prime | | $ | 23,125 | | | 79.7 | % | | $ | 17,677 | | | 77.9 | % |
Alt-A | | | 3,759 | | | 13.0 | % | | | 3,305 | | | 14.5 | % |
A minus and below | | | 2,119 | | | 7.3 | % | | | 1,720 | | | 7.6 | % |
| | | | | | | | | | | | | | |
Total Flow | | $ | 29,003 | | | 100.0 | % | | $ | 22,702 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Structured | | | | | | | | | | | | | | |
Prime | | $ | 2,537 | | | 52.0 | % | | $ | 1,653 | | | 36.1 | % |
Alt-A | | | 1,499 | | | 30.7 | % | | | 1,756 | | | 38.3 | % |
A minus and below | | | 843 | | | 17.3 | % | | | 1,171 | | | 25.6 | % |
| | | | | | | | | | | | | | |
Total Structured | | $ | 4,879 | | | 100.0 | % | | $ | 4,580 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | |
Prime | | $ | 25,662 | | | 75.7 | % | | $ | 19,330 | | | 70.9 | % |
Alt-A | | | 5,258 | | | 15.5 | % | | | 5,061 | | | 18.5 | % |
A minus and below | | | 2,962 | | | 8.8 | % | | | 2,891 | | | 10.6 | % |
| | | | | | | | | | | | | | |
Total Primary | | $ | 33,882 | | | 100.0 | % | | $ | 27,282 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Total Primary Risk in Force by FICO Score | | | | | | | | | | | | | | |
Flow | | | | | | | | | | | | | | |
<=619 | | $ | 1,607 | | | 5.5 | % | | $ | 1,458 | | | 6.4 | % |
620-679 | | | 8,365 | | | 28.9 | % | | | 7,037 | | | 31.0 | % |
680-739 | | | 10,744 | | | 37.0 | % | | | 8,264 | | | 36.4 | % |
>=740 | | | 8,287 | | | 28.6 | % | | | 5,943 | | | 26.2 | % |
| | | | | | | | | | | | | | |
Total Flow | | $ | 29,003 | | | 100.0 | % | | $ | 22,702 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Structured | | | | | | | | | | | | | | |
<=619 | | $ | 784 | | | 16.1 | % | | $ | 1,121 | | | 24.5 | % |
620-679 | | | 1,312 | | | 26.9 | % | | | 1,571 | | | 34.3 | % |
680-739 | | | 1,492 | | | 30.5 | % | | | 1,262 | | | 27.5 | % |
>=740 | | | 1,291 | | | 26.5 | % | | | 626 | | | 13.7 | % |
| | | | | | | | | | | | | | |
Total Structured | | $ | 4,879 | | | 100.0 | % | | $ | 4,580 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | |
<=619 | | $ | 2,391 | | | 7.0 | % | | $ | 2,579 | | | 9.4 | % |
620-679 | | | 9,677 | | | 28.6 | % | | | 8,608 | | | 31.6 | % |
680-739 | | | 12,236 | | | 36.1 | % | | | 9,526 | | | 34.9 | % |
>=740 | | | 9,578 | | | 28.3 | % | | | 6,569 | | | 24.1 | % |
| | | | | | | | | | | | | | |
Total Primary | | $ | 33,882 | | | 100.0 | % | | $ | 27,282 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Percentage of primary risk in force | | | | | | | | | | | | | | |
Refinances | | | 31 | % | | | | | | 33 | % | | | |
95.01% LTV and above | | | 24 | % | | | | | | 20 | % | | | |
ARMs | | | | | | | | | | | | | | |
Less than 5 years | | | 10 | % | | | | | | 16 | % | | | |
5 years and longer | | | 9 | % | | | | | | 9 | % | | | |
Pool risk in force | | | | | | | | | | | | | | |
Prime | | $ | 2,119 | | | 70.8 | % | | $ | 2,206 | | | 70.2 | % |
Alt-A | | | 291 | | | 9.7 | % | | | 297 | | | 9.5 | % |
A minus and below | | | 584 | | | 19.5 | % | | | 638 | | | 20.3 | % |
| | | | | | | | | | | | | | |
Total | | $ | 2,994 | | | 100.0 | % | | $ | 3,141 | | | 100.0 | % |
| | | | | | | | | | | | | | |
Page 10
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit K
| | | | | | | | | | | | |
| | | June 30 | | | June 30 | |
| ($ in millions) | | 2008 | | % | | | 2007 | | % | |
Total Primary Risk in Force by LTV | | | | | | | | | | | | |
95.01% and above | | $ | 8,076 | | 23.8 | % | | $ | 5,549 | | 20.3 | % |
90.01% to 95.00% | | | 10,546 | | 31.1 | % | | | 8,227 | | 30.2 | % |
85.01% to 90.00% | | | 11,576 | | 34.2 | % | | | 9,497 | | 34.8 | % |
85.00% and below | | | 3,684 | | 10.9 | % | | | 4,009 | | 14.7 | % |
| | | | | | | | | | | | |
Total | | $ | 33,882 | | 100.0 | % | | $ | 27,282 | | 100.0 | % |
| | | | | | | | | | | | |
Total Primary Risk in Force by Policy Year | | | | | | | | | | | | |
2004 and prior | | $ | 7,960 | | 23.5 | % | | $ | 10,029 | | 36.7 | % |
2005 | | | 4,575 | | 13.5 | % | | | 5,704 | | 20.9 | % |
2006 | | | 5,516 | | 16.3 | % | | | 6,482 | | 23.8 | % |
2007 | | | 11,069 | | 32.7 | % | | | 5,067 | | 18.6 | % |
2008 | | | 4,762 | | 14.0 | % | | | — | | — | |
| | | | | | | | | | | | |
Total | | $ | 33,882 | | 100.0 | % | | $ | 27,282 | | 100.0 | % |
| | | | | | | | | | | | |
Total Pool Risk in Force by Policy Year | | | | | | | | | | | | |
2004 and prior | | $ | 1,848 | | 61.7 | % | | $ | 2,019 | | 64.3 | % |
2005 | | | 589 | | 19.7 | % | | | 650 | | 20.7 | % |
2006 | | | 258 | | 8.6 | % | | | 281 | | 8.9 | % |
2007 | | | 243 | | 8.1 | % | | | 191 | | 6.1 | % |
2008 | | | 56 | | 1.9 | % | | | — | | — | |
| | | | | | | | | | | | |
Total Pool risk in Force | | $ | 2,994 | | 100.0 | % | | $ | 3,141 | | 100.0 | % |
| | | | | | | | | | | | |
Other risk in force | | | | | | | | | | | | |
Seconds | | | | | | | | | | | | |
1st loss | | $ | 312 | | | | | $ | 495 | | | |
2nd loss | | | 460 | | | | | | 590 | | | |
NIMs | | | 485 | | | | | | 796 | | | |
International | | | | | | | | | | | | |
1st loss-Hong Kong primary mortgage insurance | | | 469 | | | | | | 384 | | | |
Reinsurance | | | 151 | | | | | | 79 | | | |
Credit default swaps | | | 8,619 | | | | | | 7,872 | | | |
Other | | | | | | | | | | | | |
Domestic credit default swaps | | | 206 | | | | | | 212 | | | |
| | | | | | | | | | | | |
Total other risk in force | | $ | 10,702 | | | | | $ | 10,428 | | | |
| | | | | | | | | | | | |
Risk to capital ratio-STAT Basis | | | 20.8:1 | | | | | | 10.6:1 | | | |
Risk to capital ratio-STAT Basis excluding AAA-rated CDS | | | 16.7:1 | | | | | | 8.6:1 | | | |
Risk to capital ratio-Radian Guaranty only | | | 14.9:1 | | | | | | 10.5:1 | | | |
Page 11
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit L
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
June 30 | | | Six Months Ended
June 30 | |
| ($ in thousands) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Direct claims paid | | | | | | | | | | | | | | | | |
Prime | | $ | 64,048 | | | $ | 34,226 | | | $ | 124,706 | | | $ | 67,351 | |
Alt-A | | | 47,746 | | | | 21,755 | | | | 83,478 | | | | 41,753 | |
A minus and below | | | 49,270 | | | | 35,027 | | | | 97,631 | | | | 64,107 | |
Seconds and other | | | 47,775 | | | | 21,071 | | | | 93,212 | | | | 34,692 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 208,839 | | | $ | 112,079 | | | $ | 399,027 | | | $ | 207,903 | |
| | | | | | | | | | | | | | | | |
Average claim paid | | | | | | | | | | | | | | | | |
Prime | | $ | 36.7 | | | $ | 28.4 | | | $ | 36.7 | | | $ | 28.2 | |
Alt-A | | | 51.1 | | | | 40.9 | | | | 50.5 | | | | 40.3 | |
A minus and below | | | 35.4 | | | | 31.1 | | | | 36.3 | | | | 30.4 | |
Seconds | | | 34.2 | | | | 27.8 | | | | 34.3 | | | | 28.2 | |
Total | | $ | 38.2 | | | $ | 30.9 | | | $ | 38.2 | | | $ | 30.8 | |
| | | | |
Loss ratio—GAAP Basis | | | 211.4 | % | | | 87.2 | % | | | 238.3 | % | | | 72.8 | % |
Expense ratio—GAAP Basis (2) | | | 55.3 | % | | | 22.5 | % | | | 38.5 | % | | | 24.7 | % |
| | | | | | | | | | | | | | | | |
| | | 266.7 | % | | | 109.7 | % | | | 276.8 | % | | | 97.5 | % |
| | | | | | | | | | | | | | | | |
Reserve for losses by category | | | | | | | | | | | | | | | | |
Prime | | $ | 559,947 | | | $ | 212,191 | | | | | | | | | |
Alt-A | | | 722,813 | | | | 182,537 | | | | | | | | | |
A minus and below | | | 410,373 | | | | 246,062 | | | | | | | | | |
Pool insurance | | | 71,508 | | | | 37,531 | | | | | | | | | |
Seconds | | | 178,859 | | | | 37,251 | | | | | | | | | |
Other | | | 1,237 | | | | 1,004 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Reserve for losses, net | | | 1,944,737 | | | | 716,576 | | | | | | | | | |
Reinsurance recoverable | | | 175,840 | (1) | | | 29,519 | (1) | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,120,577 | | | $ | 746,095 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| (1) | Reinsurance recoverable on ceded losses related to captives ($131.1 million) and Smart Home ($44.7 million). |
| (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 and excludes merger expenses. |
Page 12
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit M
| | | | | | | | | |
| | | June 30 | | | December 31 | | | June 30 | |
| | | 2008 | | | 2007 | | | 2007 | |
Default Statistics | | | | | | | | | |
Primary insurance: | | | | | | | | | |
Flow | | | | | | | | | |
Prime | | | | | | | | | |
Number of insured loans | | 602,571 | | | 565,563 | | | 520,488 | |
Number of loans in default | | 26,604 | | | 20,632 | | | 14,795 | |
Percentage of loans in default | | 4.42 | % | | 3.65 | % | | 2.84 | % |
| | | |
Alt-A | | | | | | | | | |
Number of insured loans | | 72,715 | | | 74,559 | | | 68,454 | |
Number of loans in default | | 11,702 | | | 7,980 | | | 5,034 | |
Percentage of loans in default | | 16.09 | % | | 10.70 | % | | 7.35 | % |
| | | |
A minus and below | | | | | | | | | |
Number of insured loans | | 62,874 | | | 63,853 | | | 56,073 | |
Number of loans in default | | 11,637 | | | 10,087 | | | 7,456 | |
Percentage of loans in default | | 18.51 | % | | 15.80 | % | | 13.30 | % |
| | | |
Total Flow | | | | | | | | | |
Number of insured loans | | 738,160 | | | 703,975 | | | 645,015 | |
Number of loans in default | | 49,943 | | | 38,699 | | | 27,285 | |
Percentage of loans in default | | 6.77 | % | | 5.50 | % | | 4.23 | % |
| | | |
Structured | | | | | | | | | |
Prime | | | | | | | | | |
Number of insured loans | | 70,857 | | | 64,789 | | | 57,500 | |
Number of loans in default | | 5,447 | | | 4,707 | | | 3,612 | |
Percentage of loans in default | | 7.69 | % | | 7.27 | % | | 6.28 | % |
| | | |
Alt-A | | | | | | | | | |
Number of insured loans | | 84,369 | | | 97,526 | | | 98,242 | |
Number of loans in default | | 13,344 | | | 8,783 | | | 4,992 | |
Percentage of loans in default | | 15.82 | % | | 9.01 | % | | 5.08 | % |
| | | |
A minus and below | | | | | | | | | |
Number of insured loans | | 24,422 | | | 28,747 | | | 32,612 | |
Number of loans in default | | 8,003 | | | 8,659 | | | 8,278 | |
Percentage of loans in default | | 32.77 | % | | 30.12 | % | | 25.38 | % |
| | | |
Total Structured | | | | | | | | | |
Number of insured loans | | 179,648 | | | 191,062 | | | 188,354 | |
Number of loans in default | | 26,794 | | | 22,149 | | | 16,882 | |
Percentage of loans in default | | 14.91 | % | | 11.59 | % | | 8.96 | % |
| | | |
Total Primary Insurance | | | | | | | | | |
Prime | | | | | | | | | |
Number of insured loans | | 673,428 | | | 630,352 | | | 577,988 | |
Number of loans in default | | 32,051 | | | 25,339 | | | 18,407 | |
Percentage of loans in default | | 4.76 | % | | 4.02 | % | | 3.18 | % |
| | | |
Alt-A | | | | | | | | | |
Number of insured loans | | 157,084 | | | 172,085 | | | 166,696 | |
Number of loans in default | | 25,046 | | | 16,763 | | | 10,026 | |
Percentage of loans in default | | 15.94 | % | | 9.74 | % | | 6.01 | % |
| | | |
A minus and below | | | | | | | | | |
Number of insured loans | | 87,296 | | | 92,600 | | | 88,685 | |
Number of loans in default | | 19,640 | | | 18,746 | | | 15,734 | |
Percentage of loans in default | | 22.50 | % | | 20.24 | % | | 17.74 | % |
| | | |
Total Primary Insurance | | | | | | | | | |
Number of insured loans | | 917,808 | | | 895,037 | | | 833,369 | |
Number of loans in default | | 76,737 | (1) | | 60,848 | (1) | | 44,167 | (1) |
Percentage of loans in default | | 8.36 | % | | 6.80 | % | | 5.30 | % |
| | | |
Pool insurance: | | | | | | | | | |
Number of loans in default | | 27,944 | (2) | | 26,526 | (2) | | 21,409 | (2) |
| (1) | Includes approximately 272, 2,595 and 2,318 defaults at June 30, 2008, December 31, 2007 and June 30, 2007, respectively, where reserves have not been established because no claim payment is currently anticipated. |
| (2) | Includes approximately 20,880, 20,193 and 16,101 defaults at June 30, 2008, December 31, 2007 and June 30, 2007, respectively, where reserves have not been established because no claim payment is currently anticipated. |
Page 13
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit N
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
June 30 | | | Six Months Ended
June 30 | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net Premiums Written (In thousands) (1) | | | | | | | | | | | | | | | | |
Primary and Pool Insurance | | $ | 191,769 | | | $ | 184,492 | | | $ | 392,246 | | | $ | 376,600 | |
Seconds | | | 2,905 | | | | 6,450 | | | | 6,386 | | | | 17,629 | |
International | | | 4,356 | | | | 6,565 | | | | 11,649 | | | | 9,689 | |
| | | | | | | | | | | | | | | | |
Total Net Premiums Written—insurance | | $ | 199,030 | | | $ | 197,507 | | | $ | 410,281 | | | $ | 403,918 | |
| | | | | | | | | | | | | | | | |
Net Premiums Earned (In thousands) (2) | | | | | | | | | | | | | | | | |
Primary and Pool Insurance | | $ | 193,938 | | | $ | 174,174 | | | $ | 387,421 | | | $ | 341,329 | |
Seconds | | | 4,964 | | | | 8,723 | | | | 11,128 | | | | 17,895 | |
International | | | 6,194 | | | | 2,691 | | | | 10,812 | | | | 6,607 | |
| | | | | | | | | | | | | | | | |
Total Net Premiums Earned—insurance | | $ | 205,096 | | | $ | 185,588 | | | $ | 409,361 | | | $ | 365,831 | |
| | | | | | | | | | | | | | | | |
SMART HOME (In millions) | | | | | | | | | | | | | | | | |
Ceded Premiums Written | | $ | 3.7 | | | $ | 3.2 | | | $ | 6.9 | | | $ | 6.4 | |
Ceded Premiums Earned | | $ | 3.7 | | | $ | 3.1 | | | $ | 6.9 | | | $ | 6.0 | |
| | | | |
Captives | | | | | | | | | | | | | | | | |
Premiums ceded to captives (In millions) | | $ | 34.1 | | | $ | 30.0 | | | $ | 69.8 | | | $ | 58.1 | |
% of total premiums | | | 14.7 | % | | | 14.5 | % | | | 15.1 | % | | | 14.3 | % |
NIW subject to captives (In millions) | | $ | 3,415 | | | $ | 6,146 | | | $ | 8,164 | | | $ | 11,140 | |
% of primary NIW | | | 35.4 | % | | | 36.5 | % | | | 41.0 | % | | | 37.0 | % |
IIF included in captives (3) | | | 37.2 | % | | | 34.6 | % | | | | | | | | |
RIF included in captives (3) | | | 41.7 | % | | | 40.5 | % | | | | | | | | |
| | | | |
Persistency (twelve months ended June 30) | | | 81.2 | % | | | 71.1 | % | | | | | | | | |
| | | | |
| | | June 30
2008 | | | June 30
2007 | | | | | | | |
SMART HOME | | | | | | | | | | | | | | | | |
% of Primary RIF included in Smart Home Transactions (3) | | | 4.3 | % | | | 7.4 | % | | | | | | | | |
| (1) | Premiums written on credit derivatives for the quarter and six months ended June 30, 2008 were $5.6 million and $14.5 million, respectively, compared to $19.5 million and $35.4 million, respectively, for the quarter and six months ended June 30, 2007. |
| (2) | Premiums earned on credit derivatives for the quarter and six months ended June 30, 2008 were $5.8 million and $18.9 million, respectively, compared to $21.1 million and $36.8 million, respectively, for the quarter and six months ended June 30, 2007. Premiums earned on credit derivatives are included in change of fair value of derivative instruments. |
| (3) | Radian reinsures the middle layer risk positions, while retaining a significant portion of the total risk comprising the first loss and most remote risk positions. |
Page 14
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2008
Exhibit O
Reinsurance Progression Toward Attachment—Summary by Book Year (1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in millions) | | | | | | | June 30
2008 | | March 31
2008 | | December 31
2007 |
Book Year (2): | | Original
Book
RIF as of
June 30
2008 | | Progression
to
Attachment
Point | | | Current
RIF | | Ever-to-
Date
Incurred
Losses | | Captive
Benefit
(3) | | Current
RIF | | Ever-to-
Date
Incurred
Losses | | Captive
Benefit
(3) | | Current
RIF | | Ever-to-
Date
Incurred
Losses | | Captive
Benefit
(3) |
Pre-2005 | | | | | 0-50 | % | | $ | 1,337 | | $ | 240 | | | | | $ | 1,444 | | $ | 235 | | | | | $ | 2,209 | | $ | 279 | | | |
Pre-2005 | | | | | 50-75 | % | | | 1,155 | | | 158 | | | | | | 1,651 | | | 194 | | | | | | 1,145 | | | 144 | | | |
Pre-2005 | | | | | 75-99 | % | | | 514 | | | 81 | | | | | | 96 | | | 31 | | | | | | 32 | | | 19 | | | |
Pre-2005 | | | | | Attached | | | | 17 | | | 5 | | | | | | 18 | | | 5 | | | | | | 12 | | | 3 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pre-2005 Total | | $ | 26,334 | | | | | $ | 3,023 | | $ | 484 | | $ | — | | $ | 3,209 | | $ | 465 | | $ | 1 | | $ | 3,398 | | $ | 445 | | $ | 1 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2005 | | | | | 0-50 | % | | $ | 187 | | $ | 4 | | | | | $ | 536 | | $ | 13 | | | | | $ | 697 | | $ | 13 | | | |
2005 | | | | | 50-75 | % | | | 430 | | | 17 | | | | | | 327 | | | 13 | | | | | | 429 | | | 15 | | | |
2005 | | | | | 75-99 | % | | | 392 | | | 21 | | | | | | 245 | | | 12 | | | | | | 945 | | | 53 | | | |
2005 | | | | | Attached | | | | 896 | | | 95 | | | | | | 881 | | | 69 | | | | | | 11 | | | 2 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2005 Total | | $ | 3,333 | | | | | $ | 1,905 | | $ | 137 | | $ | 29 | | $ | 1,989 | | $ | 107 | | $ | 8 | | $ | 2,082 | | $ | 83 | | $ | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2006 | | | | | 0-50 | % | | $ | 146 | | $ | 3 | | | | | $ | 632 | | $ | 12 | | | | | $ | 851 | | $ | 12 | | | |
2006 | | | | | 50-75 | % | | | 524 | | | 18 | | | | | | 72 | | | 2 | | | | | | 332 | | | 10 | | | |
2006 | | | | | 75-99 | % | | | 153 | | | 7 | | | | | | 446 | | | 21 | | | | | | 1,470 | | | 71 | | | |
2006 | | | | | Attached | | | | 1,800 | | | 169 | | | | | | 1,593 | | | 110 | | | | | | 210 | | | 10 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2006 Total | | $ | 3,547 | | | | | $ | 2,623 | | $ | 197 | | $ | 74 | | $ | 2,743 | | $ | 145 | | $ | 29 | | $ | 2,863 | | $ | 103 | | $ | 1 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2007 | | | | | 0-50 | % | | $ | 913 | | $ | 15 | | | | | $ | 3,900 | | $ | 63 | | | | | $ | 4,058 | | $ | 36 | | | |
2007 | | | | | 50-75 | % | | | 2,876 | | | 91 | | | | | | 242 | | | 6 | | | | | | 580 | | | 12 | | | |
2007 | | | | | 75-99 | % | | | — | | | — | | | | | | 185 | | | 7 | | | | | | 4 | | | — | | | |
2007 | | | | | Attached | | | | 1,055 | | | 63 | | | | | | 644 | | | 24 | | | | | | 1 | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2007 Total | | $ | 5,288 | | | | | $ | 4,844 | | $ | 169 | | $ | 21 | | $ | 4,971 | | $ | 100 | | $ | 2 | | $ | 4,643 | | $ | 48 | | $ | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2008 | | | | | 0-50 | % | | $ | 1,483 | | $ | 3 | | | | | $ | 756 | | $ | — | | | | | $ | — | | $ | — | | | |
2008 | | | | | 50-75 | % | | | 90 | | | 2 | | | | | | — | | | — | | | | | | — | | | — | | | |
2008 | | | | | 75-99 | % | | | — | | | — | | | | | | — | | | — | | | | | | — | | | — | | | |
2008 | | | | | Attached | | | | — | | | — | | | | | | — | | | — | | | | | | — | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2008 Total | | $ | 1,601 | | | | | $ | 1,573 | | $ | 5 | | $ | — | | $ | 756 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Quota Share | | | | | 0-50 | % | | $ | 27 | | $ | — | | | | | $ | 23 | | $ | — | | | | | $ | 20 | | $ | — | | | |
Quota Share | | | | | 50-75 | % | | | — | | | — | | | | | | 7 | | | — | | | | | | 7 | | | 1 | | | |
Quota Share | | | | | 75-99 | % | | | 6 | | | 1 | | | | | | — | | | 1 | | | | | | — | | | — | | | |
Quota Share | | | | | Attached | | | | 85 | | | 17 | | | | | | 88 | | | 13 | | | | | | 90 | | | 9 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Quota Share Total | | $ | 309 | | | | | $ | 118 | | $ | 18 | | $ | 8 | | $ | 118 | | $ | 14 | | $ | 5 | | $ | 117 | | $ | 10 | | $ | 4 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Captive (Including Quota Share) | | $ | 40,412 | | | | | $ | 14,086 | | $ | 1,010 | | $ | 132 | | $ | 13,786 | | $ | 831 | | $ | 45 | | $ | 13,103 | | $ | 689 | | $ | 6 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SmartHome | | | | | 0-50 | % | | $ | 127 | | $ | 24 | | | | | $ | 134 | | $ | 23 | | | | | $ | 142 | | $ | 23 | | | |
SmartHome | | | | | 50-75 | % | | | — | | | — | | | | | | — | | | — | | | | | | 693 | | | 92 | | | |
SmartHome | | | | | 75-99 | % | | | 622 | | | 115 | | | | | | 657 | | | 101 | | | | | | — | | | — | | | |
SmartHome | | | | | Attached | | | | 703 | | | 154 | | | | | | 764 | | | 132 | | | | | | 833 | | | 112 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total SmartHome | | $ | 3,900 | | | | | $ | 1,452 | | $ | 293 | | $ | 45 | | $ | 1,555 | | $ | 257 | | $ | 25 | | $ | 1,668 | | $ | 227 | | $ | 10 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (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) | Captive Benefit is defined as ceded reserves at period end plus ever-to-date claims paid by the trust. |
Page 15
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2008
ALT-A
Exhibit P
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
June 30 | | | Six Months Ended
June 30 | |
| ($ in millions) | | 2008 | | % | | | 2007 | | % | | | 2008 | | % | | | 2007 | | % | |
Primary New Insurance Written by FICO Score | | | | | | | | | | | | | | | | | | | | | | | | |
<=619 | | $ | 2 | | 0.4 | % | | $ | 84 | | 1.2 | % | | $ | 3 | | 0.3 | % | | $ | 92 | | 0.6 | % |
620-659 | | | 8 | | 1.7 | % | | | 1,090 | | 15.1 | % | | | 17 | | 1.6 | % | | | 1,679 | | 11.6 | % |
660-679 | | | 22 | | 4.6 | % | | | 1,221 | | 16.9 | % | | | 53 | | 5.0 | % | | | 2,386 | | 16.4 | % |
680-739 | | | 230 | | 48.3 | % | | | 3,383 | | 46.8 | % | | | 531 | | 50.1 | % | | | 7,023 | | 48.3 | % |
>=740 | | | 214 | | 45.0 | % | | | 1,448 | | 20.0 | % | | | 456 | | 43.0 | % | | | 3,352 | | 23.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 476 | | 100.0 | % | | $ | 7,226 | | 100.0 | % | | $ | 1,060 | | 100.0 | % | | $ | 14,532 | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Primary Risk in Force by FICO Score | | | | | | | | | | | | | | | | | | | | | | | | |
<=619 | | $ | 36 | | 0.7 | % | | $ | 38 | | 0.7 | % | | | | | | | | | | | | |
620-659 | | | 654 | | 12.4 | % | | | 767 | | 15.2 | % | | | | | | | | | | | | |
660-679 | | | 772 | | 14.7 | % | | | 811 | | 16.0 | % | | | | | | | | | | | | |
680-739 | | | 2,509 | | 47.7 | % | | | 2,313 | | 45.7 | % | | | | | | | | | | | | |
>=740 | | | 1,287 | | 24.5 | % | | | 1,132 | | 22.4 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 5,258 | | 100.0 | % | | $ | 5,061 | | 100.0 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Primary Risk in Force by LTV | | | | | | | | | | | | | | | | | | | | | | | | |
95.01% and above | | $ | 364 | | 6.9 | % | | $ | 239 | | 4.7 | % | | | | | | | | | | | | |
90.01% to 95.00% | | | 1,367 | | 26.0 | % | | | 1,299 | | 25.7 | % | | | | | | | | | | | | |
85.01% to 90.00% | | | 2,187 | | 41.6 | % | | | 2,044 | | 40.4 | % | | | | | | | | | | | | |
85.00% and below | | | 1,340 | | 25.5 | % | | | 1,479 | | 29.2 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 5,258 | | 100.0 | % | | $ | 5,061 | | 100.0 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Primary Risk in Force by Policy Year | | | | | | | | | | | | | | | | | | | | | | | | |
2004 and prior | | $ | 984 | | 18.7 | % | | $ | 1,272 | | 25.1 | % | | | | | | | | | | | | |
2005 | | | 746 | | 14.2 | % | | | 966 | | 19.1 | % | | | | | | | | | | | | |
2006 | | | 1,178 | | 22.4 | % | | | 1,389 | | 27.5 | % | | | | | | | | | | | | |
2007 | | | 2,112 | | 40.2 | % | | | 1,434 | | 28.3 | % | | | | | | | | | | | | |
2008 | | | 238 | | 4.5 | % | | | — | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 5,258 | | 100.0 | % | | $ | 5,061 | | 100.0 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Page 16
Radian Group Inc.
Financial Services Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit Q
| | | | | | | | | | | | | | | |
| | | Quarter Ended
June 30 | | Six Months Ended
June 30 | |
| (In thousands ) | | 2008 | | | 2007 | | 2008 | | | 2007 | |
Investment in Affiliates-Selected Information | | | | | | | | | | | | | | | |
| | | | |
C-BASS | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | — | | | $ | 444,591 | | $ | — | | | $ | 451,395 | |
Net income for period | | | — | | | | 23,209 | | | — | | | | 16,405 | |
| | | | | | | | | | | | | | | |
Balance, end of period | | $ | — | | | $ | 467,800 | | $ | — | | | $ | 467,800 | |
| | | | | | | | | | | | | | | |
| | | | |
Sherman | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 116,929 | | | $ | 143,698 | | $ | 104,315 | | | $ | 167,412 | |
Net income for period | | | 15,704 | | | | 26,298 | | | 28,230 | | | | 55,874 | |
Dividends received | | | 19,499 | | | | — | | | 19,499 | | | | 51,512 | |
Other comprehensive (loss) income | | | (490 | ) | | | 1,741 | | | (402 | ) | | | (37 | ) |
| | | | | | | | | | | | | | | |
Balance, end of period | | $ | 112,644 | | | $ | 171,737 | | $ | 112,644 | | | $ | 171,737 | |
| | | | | | | | | | | | | | | |
Portfolio Information: | | | | | | | | | | | | | | | |
| | | | |
C-BASS | | | | | | | | | | | | | | | |
Servicing portfolio | | | N/A | | | $ | 58,100,000 | | | N/A | | | | | |
Total assets | | | N/A | | | | 6,619,605 | | | N/A | | | | | |
Servicing income | | | N/A | | | | 48,621 | | | N/A | | | $ | 91,747 | |
Net interest income | | | N/A | | | | 66,572 | | | N/A | | | | 145,424 | |
Total revenues | | | N/A | | | | 101,099 | | | N/A | | | | 140,080 | |
| | | | |
Sherman | | | | | | | | | | | | | | | |
Total assets | | $ | 2,432,122 | | | $ | 1,778,299 | | | | | | | | |
Total revenues | | $ | 295,842 | | | $ | 285,439 | | $ | 588,657 | | | $ | 569,227 | |
Radian owns a 46% interest in C-BASS and a 21.8% interest in Sherman. Prior to September 2007, we owned an interest in Sherman consisting of 40.96% of the Class A Common Units of Sherman (Class A Common Units represent 94% of the total equity in Sherman) and 50% of the Preferred Units of Sherman.
Page 17
