Exhibit 99.1
1601 Market Street | News Release | |||
Philadelphia, Pennsylvania | ||||
19103-2337 | ||||
800 523.1988 | ||||
215 564.6600 | ||||
Contact: | ||||
For investors: | Terri Williams-Perry – phone: 215 231.1486 Email: terri.williams-perry@radian.biz | |||
For the media: | Rick Gillespie – phone: 215 231.1061 Email: rick.gillespie@radian.biz | |||
Radian Reports Second Quarter Financial Results Net income driven by lower provision for MI losses and unrealized gains on derivatives
PHILADELPHIA, August 5, 2009 - Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended June 30, 2009, of $231.9 million, or $2.82 per diluted share. This compares to a net loss of $392.5 million, or $4.91 per diluted share, for the prior-year quarter. Book value per share at June 30, 2009, was $25.12.
“We are pleased that Radian generated net income in the second quarter, despite a difficult environment with rising delinquencies. These earnings were driven primarily by loss management efforts that positively impacted our provision for mortgage insurance losses and by unrealized gains on derivatives,” said Chief Executive Officer S. A. Ibrahim. “While there are positive signs in today’s economy, we remain aware of the challenges and uncertainties Radian continues to face, and the condition of the U.S. housing market. Our primary focus is on increasing our capital strength and financial flexibility, continuing to write high-quality new business, and positioning Radian for growth and success when markets recover.”
SECOND QUARTER HIGHLIGHTS
• The mortgage insurance provision for losses of $142.8 million reflects higher delinquency counts, offset significantly by Radian’s ongoing loss management efforts.
• Mortgage insurance claims paid of $167.7 million again were lower than the company’s forecast and consisted of $149.4 million of first liens and $18.3 million of second liens. In the third quarter, total first- and second-lien claims paid are expected to be approximately $275 million to $300 million. For the full year 2009, Radian has reduced its expectations from $1.2 billion to $1.4 billion, to a current estimate in the $1.1 billion range. |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | • Radian is encouraged by the many government and private initiatives to help borrowers and has programs in place to provide assistance to lenders and their borrowers who are struggling with mortgage payments. The company is ready to handle the anticipated increase in volume from government-sponsored programs and other lender-initiated refinance or modification programs. Radian continues to expect an increase in delinquencies throughout the remainder of 2009, which could result in a higher provision and reserve for losses.
• Over the past year, Radian has successfully transformed its mortgage insurance business, producing a 2009 book that consists of loans with excellent risk characteristics. For example, of the total primary new mortgage insurance written in the quarter of $5.5 billion:
• 99.9 percent was prime credit quality;
• 98.4 percent had a FICO score of 680 or greater, with 72.9 percent at 740 or above;
• all had loan-to-value (LTV) ratios of 95 percent or below, and 73 percent had LTV ratios of 90 percent or below;
• 99.5 percent were fixed-rate mortgages; and
• we have observed a significant decrease in early default activity in the 2009 vintage, which is an example of improved underwriting.
In addition, Radian’s market share has grown steadily in 2009 and represents a significant increase over historical levels.
• Unrealized gains on derivatives were $272.3 million on total pre-tax income of $353.7 million.
• Radian’s current cash position is strong, with approximately $480 million immediately available to the parent company after having received a $105 million tax refund in May.
• Radian Asset Assurance Inc. the company’s principal financial guaranty subsidiary, continues to serve as an important source of capital support for Radian Guaranty Inc., the company’s mortgage insurance subsidiary, and is expected to continue to provide Radian Guaranty with cash infusions over time.
• As of June 30, 2009, Radian Asset had more than $900 million in statutory capital with an additional $1.84 billion in total claims-paying resources.
• At the end of June, Radian Asset paid an ordinary dividend of approximately $100 million to Radian Guaranty. |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | RECENT EVENTS
• On July 17, the Company filed a $1 billion securities shelf registration.
• On July 20, Radian Asset entered into a Commutation and Release Agreement, effective as of July 1, 2009, with Ambac Assurance Corporation and Ambac Assurance UK Limited to commute $9.8 billion of Radian Asset’s reinsurance portfolio assumed from Ambac, decreasing Radian Asset’s total insured portfolio by 10 percent. As a result, the statutory surplus of Radian Asset (and Radian Guaranty) will be positively impacted in the third quarter 2009 by approximately $40 million.
CONFERENCE CALL
Radian will discuss each of these items in its conference call today, Wednesday, August 5, 2009, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet athttp://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives or at www.radian.biz. The call may also be accessed by dialing 800-553-0288 inside the U.S., or 612-332-0530 for international callers, using passcode 108853 or by referencing Radian.
A replay of the Web cast will be available on the Radian Web site approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available two and a half hours after the call ends for one week, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 108853.
In addition to the information provided in the company’s earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian’s Web site under Investors >Quarterly Results, or by clicking onhttp://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-earnings.
About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. Additional information may be found atwww.radian.biz.
Financial Results and Supplemental Information Contents (Unaudited)
For trend information on all schedules, refer to Radian’s quarterly financial statistics at http://www.radian.biz/investors/financial/corporate.aspx. |
Page 3
1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | Exhibit A: | Condensed Consolidated Statements of Income | ||
Exhibit B: |
Condensed Consolidated Balance Sheets | |||
Exhibit C: |
Segment Information Quarter Ended June 30, 2009 | |||
Exhibit D: |
Segment Information Quarter Ended June 30, 2008 | |||
Exhibit E: | Segment Information Six Months Ended June 30, 2009 | |||
Exhibit F: | Segment Information Six Months Ended June 30, 2008 | |||
Exhibit G: | Financial Guaranty Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 | |||
Exhibit H: | Financial Guaranty Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 | |||
Exhibit I: | Mortgage Insurance Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 New Insurance Written and Risk Written | |||
Exhibit J: | Mortgage Insurance Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 Insurance in Force and Risk in Force | |||
Exhibit K: | Mortgage Insurance Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 Risk in Force by LTV and Policy Year and other Risk in Force | |||
Exhibit L: | Mortgage Insurance Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 Claims and Reserves | |||
Exhibit M: | Mortgage Insurance Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 Default Statistics | |||
Exhibit N: | Mortgage Insurance Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 Net Premiums Written and Earned, Smart Home, Captives and Persistency | |||
Exhibit O: | Mortgage Insurance Supplemental Information – For the Quarter Ended and as of June 30, 2009 Reinsurance Progression Toward Attachment – Summary by Book Year | |||
Exhibit P: | Mortgage Insurance Supplemental Information – For the Quarter Ended and as of June 30, 2009 Modified Pool Risk in Force | |||
Exhibit Q: | Mortgage Insurance Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 Alt-A Risk in Force | |||
Exhibit R: | Financial Services Supplemental Information – For the Quarter and Six Months Ended and as of June 30, 2009 |
Page 4
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
Quarter Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(In thousands, except per-share data) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Revenues: | ||||||||||||||||
Net premiums written—insurance | $ | 161,901 | $ | 222,645 | $ | 318,657 | $ | 466,951 | ||||||||
Net premiums earned—insurance | $ | 193,629 | $ | 249,137 | $ | 404,844 | $ | 491,058 | ||||||||
Net investment income | 53,251 | 65,128 | 109,534 | 131,107 | ||||||||||||
Change in fair value of derivative instruments | 272,318 | 56,226 | (12,098 | ) | 764,035 | |||||||||||
Net gains (losses) on other financial instruments | 54,384 | 14,801 | 79,264 | (26,040 | ) | |||||||||||
Total other-than-temporary impairment losses | (46 | ) | (23,052 | ) | (680 | ) | (37,095 | ) | ||||||||
Losses recognized in other comprehensive loss | — | — | — | — | ||||||||||||
Net impairment losses recognized in earnings | (46 | ) | (23,052 | ) | (680 | ) | (37,095 | ) | ||||||||
Other income | 3,888 | 3,221 | 8,020 | 6,835 | ||||||||||||
Total revenues | 577,424 | 365,461 | 588,884 | 1,329,900 | ||||||||||||
Expenses: | ||||||||||||||||
Provision for losses | 132,750 | 458,879 | 459,504 | 1,041,590 | ||||||||||||
Provision for premium deficiency | 2,184 | 369,807 | (1) | (46,000 | ) | 387,897 | (1) | |||||||||
Policy acquisition costs | 25,967 | 75,952 | (2) | 39,921 | 99,858 | (2) | ||||||||||
Other operating expenses | 55,635 | 63,849 | 107,237 | 118,990 | ||||||||||||
Interest expense | 12,295 | 13,832 | 24,594 | 26,325 | ||||||||||||
Total expenses | 228,831 | 982,319 | 585,256 | 1,674,660 | ||||||||||||
Equity in net income of affiliates | 5,110 | 15,704 | 15,662 | 28,230 | ||||||||||||
Pretax income (loss) | 353,703 | (601,154 | ) | 19,290 | (316,530 | ) | ||||||||||
Income tax provision (benefit) | 121,828 | (208,630 | ) | 4,852 | (119,644 | ) | ||||||||||
Net income (loss) | $ | 231,875 | $ | (392,524 | ) | $ | 14,438 | $ | (196,886 | ) | ||||||
Diluted net income (loss) per share (3) | $ | 2.82 | $ | (4.91 | ) | $ | 0.18 | $ | (2.46 | ) | ||||||
(1) | Includes $421.8 million for first-lien and $(52.0) million for second-lien in the second quarter of 2008, and $421.8 million for first-lien and $(33.9) million for second-lien for the six months of 2008. |
(2) | Includes the acceleration of $50.8 million of deferred policy acquisition cost amortization, as a result of the establishment of a first-lien premium deficiency reserve in the second quarter of 2008. |
(3) | Weighted average shares outstanding (In thousands) |
Average common shares outstanding | 81,396 | 79,967 | 81,400 | 79,960 | ||||
Increase in shares-potential exercise of options-diluted basis | 844 | — | 836 | — | ||||
Weighted average shares outstanding | 82,240 | 79,967 | 82,236 | 79,960 | ||||
For Trend Information, refer to our Quarterly Financial Statistics on Radian’s (RDN) website.
Page 1
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit B
(In thousands, except per-share data) | June 30 2009 | December 31 2008 | June 30 2008 | ||||||||
Assets: | |||||||||||
Cash and investments | $ | 6,459,233 | $ | 6,060,601 | $ | 6,535,397 | |||||
Investments in affiliates | 108,767 | 99,712 | 112,683 | ||||||||
Deferred policy acquisition costs | 208,882 | 160,526 | 184,765 | ||||||||
Prepaid federal income taxes | — | 248,828 | 536,343 | ||||||||
Derivative assets | 179,837 | 179,515 | 251,003 | ||||||||
Deferred income taxes, net | 368,281 | 446,102 | 171,577 | ||||||||
Reinsurance recoverables | 570,245 | 492,359 | 176,686 | ||||||||
Other assets | 560,257 | 428,476 | 440,963 | ||||||||
Total assets | $ | 8,455,502 | $ | 8,116,119 | $ | 8,409,417 | |||||
Liabilities and stockholders’ equity: | |||||||||||
Unearned premiums | $ | 1,120,359 | $ | 916,724 | $ | 1,048,064 | |||||
Reserve for losses and loss adjustment expenses | 3,304,236 | 3,224,542 | 2,287,742 | ||||||||
Reserve for premium deficiency | 40,861 | 86,861 | 583,543 | ||||||||
Long-term debt and other borrowings | 856,848 | 857,802 | 958,762 | ||||||||
Variable interest entity debt | 283,242 | 160,035 | 85,739 | ||||||||
Derivative liabilities | 379,270 | 519,260 | 657,426 | ||||||||
Other liabilities | 404,432 | 320,185 | 332,234 | ||||||||
Total liabilities | 6,389,248 | 6,085,409 | 5,953,510 | ||||||||
Common stock | 99 | 98 | 98 | ||||||||
Additional paid-in capital | 469,298 | 462,647 | 448,010 | ||||||||
Retained earnings | 1,764,878 | 1,766,946 | 1,981,046 | ||||||||
Accumulated other comprehensive income | (168,021 | ) | (198,981 | ) | 26,753 | ||||||
Total common stockholders’ equity | 2,066,254 | 2,030,710 | 2,455,907 | ||||||||
Total liabilities and stockholders’ equity | $ | 8,455,502 | $ | 8,116,119 | $ | 8,409,417 | |||||
Book value per share | $ | 25.12 | $ | 25.06 | $ | 30.54 |
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Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2009
Exhibit C
(In thousands) | Mortgage Insurance | Financial Guaranty | Financial Services | Total | |||||||||||
Revenues: | |||||||||||||||
Net premiums written—insurance | $ | 154,919 | $ | 6,982 | $ | — | $ | 161,901 | |||||||
Net premiums earned—insurance | $ | 170,047 | $ | 23,582 | $ | — | $ | 193,629 | |||||||
Net investment income | 32,298 | 20,951 | 2 | 53,251 | |||||||||||
Change in fair value of derivative instruments | (6,557 | ) | 278,875 | — | 272,318 | ||||||||||
Net gains on other financial instruments | 12,590 | 41,794 | — | 54,384 | |||||||||||
Net impairment losses recognized in earnings | (46 | ) | — | — | (46 | ) | |||||||||
Other income | 3,748 | 66 | 74 | 3,888 | |||||||||||
Total revenues | 212,080 | 365,268 | 76 | 577,424 | |||||||||||
Expenses: | |||||||||||||||
Provision for losses | 142,802 | (10,052 | ) | — | 132,750 | ||||||||||
Provision for premium deficiency | 2,184 | — | — | 2,184 | |||||||||||
Policy acquisition costs | 7,921 | 18,046 | — | 25,967 | |||||||||||
Other operating expenses | 35,590 | 19,909 | 136 | 55,635 | |||||||||||
Interest expense | 2,619 | 9,676 | — | 12,295 | |||||||||||
Total expenses | 191,116 | 37,579 | 136 | 228,831 | |||||||||||
Equity in net income of affiliates | — | — | 5,110 | 5,110 | |||||||||||
Pretax income | 20,964 | 327,689 | 5,050 | 353,703 | |||||||||||
Income tax provision | 7,948 | 112,019 | 1,861 | 121,828 | |||||||||||
Net income | $ | 13,016 | $ | 215,670 | $ | 3,189 | $ | 231,875 | |||||||
Cash and investments | $ | 3,919,403 | $ | 2,539,830 | $ | — | $ | 6,459,233 | |||||||
Deferred policy acquisition costs | 28,674 | 180,208 | — | 208,882 | |||||||||||
Total assets | 5,073,729 | 3,259,249 | 122,524 | 8,455,502 | |||||||||||
Unearned premiums | 304,336 | 816,023 | — | 1,120,359 | |||||||||||
Reserve for losses and loss adjustment expenses | 3,122,444 | 181,792 | — | 3,304,236 | |||||||||||
Derivative liabilities | 23,086 | 356,184 | — | 379,270 |
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Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2008
Exhibit D
(In thousands) | Mortgage Insurance | Financial Guaranty | Financial Services | Total | |||||||||||
Revenues: | |||||||||||||||
Net premiums written—insurance | $ | 199,030 | $ | 23,615 | $ | — | $ | 222,645 | |||||||
Net premiums earned—insurance | $ | 205,096 | $ | 44,041 | $ | — | $ | 249,137 | |||||||
Net investment income | 38,941 | 26,187 | — | 65,128 | |||||||||||
Change in fair value of derivative instruments | 25,173 | 31,053 | — | 56,226 | |||||||||||
Net gains (losses) on other financial instruments | 18,155 | (3,393 | ) | 39 | 14,801 | ||||||||||
Net impairment losses recognized in earnings | (7,711 | ) | (15,341 | ) | — | (23,052 | ) | ||||||||
Other income | 2,999 | 58 | 164 | 3,221 | |||||||||||
Total revenues | 282,653 | 82,605 | 203 | 365,461 | |||||||||||
Expenses: | |||||||||||||||
Provision for losses | 449,296 | 9,583 | — | 458,879 | |||||||||||
Provision for premium deficiency | 369,807 | — | — | 369,807 | |||||||||||
Policy acquisition costs | 63,686 | 12,266 | — | 75,952 | |||||||||||
Other operating expenses | 48,703 | 15,019 | 127 | 63,849 | |||||||||||
Interest expense | 7,332 | 6,500 | — | 13,832 | |||||||||||
Total expenses | 938,824 | 43,368 | 127 | 982,319 | |||||||||||
Equity in net income of affiliates | — | — | 15,704 | 15,704 | |||||||||||
Pretax (loss) income | (656,171 | ) | 39,237 | 15,780 | (601,154 | ) | |||||||||
Income tax (benefit) provision | (221,988 | ) | 6,768 | 6,590 | (208,630 | ) | |||||||||
Net (loss) income | $ | (434,183 | ) | $ | 32,469 | $ | 9,190 | $ | (392,524 | ) | |||||
Cash and investments | $ | 4,054,264 | $ | 2,481,133 | $ | — | $ | 6,535,397 | |||||||
Deferred policy acquisition costs | 11,554 | 173,211 | — | 184,765 | |||||||||||
Total assets | 5,037,309 | 3,166,316 | 205,792 | 8,409,417 | |||||||||||
Unearned premiums | 359,080 | 688,984 | — | 1,048,064 | |||||||||||
Reserve for losses and loss adjustment expenses | 2,120,577 | 167,165 | — | 2,287,742 | |||||||||||
Derivative liabilities | 308,543 | 348,883 | — | 657,426 |
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Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2009
Exhibit E
(In thousands) | Mortgage Insurance | Financial Guaranty | Financial Services | Total | |||||||||||
Revenues: | |||||||||||||||
Net premiums written—insurance | $ | 316,878 | $ | 1,779 | $ | — | $ | 318,657 | |||||||
Net premiums earned—insurance | $ | 347,930 | $ | 56,914 | $ | — | $ | 404,844 | |||||||
Net investment income | 63,643 | 45,889 | 2 | 109,534 | |||||||||||
Change in fair value of derivative instruments | (35,133 | ) | 23,035 | — | (12,098 | ) | |||||||||
Net gains on other financial instruments | 25,500 | 53,764 | — | 79,264 | |||||||||||
Net impairment losses recognized in earnings | (680 | ) | — | — | (680 | ) | |||||||||
Other income | 7,566 | 219 | 235 | 8,020 | |||||||||||
Total revenues | 408,826 | 179,821 | 237 | 588,884 | |||||||||||
Expenses: | |||||||||||||||
Provision for losses | 464,486 | (4,982 | ) | — | 459,504 | ||||||||||
Provision for premium deficiency | (46,000 | ) | — | — | (46,000 | ) | |||||||||
Policy acquisition costs | 13,660 | 26,261 | — | 39,921 | |||||||||||
Other operating expenses | 71,284 | 35,742 | 211 | 107,237 | |||||||||||
Interest expense | 8,313 | 16,281 | — | 24,594 | |||||||||||
Total expenses | 511,743 | 73,302 | 211 | 585,256 | |||||||||||
Equity in net income of affiliates | — | — | 15,662 | 15,662 | |||||||||||
Pretax (loss) income | (102,917 | ) | 106,519 | 15,688 | 19,290 | ||||||||||
Income tax (benefit) provision | (27,136 | ) | 26,249 | 5,739 | 4,852 | ||||||||||
Net (loss) income | $ | (75,781 | ) | $ | 80,270 | $ | 9,949 | $ | 14,438 | ||||||
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Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2008
Exhibit F
(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 | (11,404 | ) | (14,673 | ) | 37 | (26,040 | ) | ||||||||
Net impairment losses recognized in earnings | (14,885 | ) | (22,210 | ) | — | (37,095 | ) | ||||||||
Other income | 6,490 | 179 | 166 | 6,835 | |||||||||||
Total revenues | 564,290 | 765,393 | 217 | 1,329,900 | |||||||||||
Expenses: | |||||||||||||||
Provision for losses | 1,020,304 | 21,286 | — | 1,041,590 | |||||||||||
Provision for premium deficiency | 387,897 | — | — | 387,897 | |||||||||||
Policy acquisition costs | 77,146 | 22,712 | — | 99,858 | |||||||||||
Other operating expenses | 82,873 | 35,757 | 360 | 118,990 | |||||||||||
Interest expense | 14,422 | 11,654 | 249 | 26,325 | |||||||||||
Total expenses | 1,582,642 | 91,409 | 609 | 1,674,660 | |||||||||||
Equity in net income of affiliates | — | — | 28,230 | 28,230 | |||||||||||
Pretax (loss) income | (1,018,352 | ) | 673,984 | 27,838 | (316,530 | ) | |||||||||
Income tax (benefit) provision | (357,713 | ) | 225,987 | 12,082 | (119,644 | ) | |||||||||
Net (loss) income | $ | (660,639 | ) | $ | 447,997 | $ | 15,756 | $ | (196,886 | ) | |||||
Page 6
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit G
(In thousands) | Quarter Ended June 30 | Six Months Ended June 30 | |||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||
Net Premiums Earned: | |||||||||||||||
Public finance direct | $ | 11,935 | $ | 12,004 | $ | 26,387 | $ | 29,814 | |||||||
Public finance reinsurance | 18,949 | 22,965 | 27,226 | 32,835 | |||||||||||
Structured direct | 2,058 | 3,760 | 3,835 | 7,642 | |||||||||||
Structured reinsurance | 5,655 | 5,092 | 14,296 | 10,691 | |||||||||||
Trade credit reinsurance | 39 | 220 | 135 | 715 | |||||||||||
Net Premiums Earned—insurance | 38,636 | 44,041 | 71,879 | 81,697 | |||||||||||
Impact of commutations | (15,054 | ) | — | (14,965 | ) | — | |||||||||
Total Net Premiums Earned—insurance | $ | 23,582 | $ | 44,041 | $ | 56,914 | $ | 81,697 | |||||||
Refundings included in earned premium | $ | 10,479 | $ | 16,664 | $ | 23,523 | $ | 28,321 | |||||||
Claims paid: | |||||||||||||||
Trade credit reinsurance | $ | 693 | $ | 397 | $ | 871 | $ | 983 | |||||||
Financial Guaranty | 23,876 | 4,066 | 38,785 | 107,590 | (1) | ||||||||||
Total | $ | 24,569 | $ | 4,463 | $ | 39,656 | $ | 108,573 | |||||||
Balance Sheet impact of initial adoption of SFAS No. 163 on January 1, 2009: |
Increase in unearned premiums | $ | (292,816 | ) | |
Increase in premiums receivable | 161,422 | |||
Increase in deferred acquisition costs | 66,006 | |||
Decrease in reserves for losses | 8,163 | |||
Decrease in deferred taxes, net | 20,239 | |||
Increase in premium taxes payable | (602 | ) | ||
Decrease in equity | $ | (37,588 | ) | |
Pre-tax Income Statement impact of Ambac Commutation: |
($ in millions) | ||||
Decrease in premiums earned | $ | (15.3 | ) | |
Decrease in provision for losses | 38.6 | |||
Increase in amortization of policy acquisition costs | (8.9 | ) | ||
Increase in pre-tax income | $ | 14.4 | ||
(1) | Includes a $100 million payment related to one credit that is a CDO of an ABS that was fully reserved for in 2007. |
Page 7
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit H
($ in thousands, except ratios) | June 30 2009 | December 31 2008 | June 30 2008 | |||||||
Statutory Information: | ||||||||||
Capital and surplus | $ | 914,458 | $ | 968,197 | $ | 982,340 | ||||
Contingency reserve | 504,464 | 515,023 | 485,972 | |||||||
Qualified statutory capital | 1,418,922 | 1,483,220 | 1,468,312 | |||||||
Unearned premium reserve | 690,512 | 729,274 | 866,504 | |||||||
Loss and loss expense reserve | 104,441 | 82,340 | 54,391 | |||||||
Total statutory policyholders’ reserves | 2,213,875 | 2,294,834 | 2,389,207 | |||||||
Present value of installment premiums | 389,730 | 380,666 | 430,450 | |||||||
Soft capital facilities | 150,000 | 150,000 | 150,000 | |||||||
Total statutory claims paying resources | $ | 2,753,605 | $ | 2,825,500 | $ | 2,969,657 | ||||
Net debt service outstanding | $ | 131,821,119 | $ | 138,430,925 | $ | 163,252,124 | ||||
Capital leverage ratio (1) | 93 | 93 | 111 | |||||||
Claims paying leverage ratio (2) | 48 | 49 | 55 | |||||||
Net par outstanding by product: | ||||||||||
Public finance direct | $ | 18,329,451 | $ | 17,836,221 | $ | 18,824,907 | ||||
Public finance reinsurance | 32,830,674 | 31,578,163 | 43,114,460 | |||||||
Structured direct | 44,679,632 | 46,001,355 | 47,235,046 | |||||||
Structured reinsurance | 4,816,874 | 5,310,004 | 6,010,331 | |||||||
Total | $ | 100,656,631 | (3) | $ | 100,725,743 | $ | 115,184,744 | |||
Reserve for losses and LAE-GAAP Basis: | ||||||||||
Financial Guaranty | $ | 171,459 | $ | 219,671 | $ | 143,790 | ||||
Trade Credit | 10,333 | 14,877 | 23,375 | |||||||
Total | $ | 181,792 | $ | 234,548 | $ | 167,165 | ||||
(1) | Net debt service outstanding divided by qualified statutory capital. |
(2) | Net debt service outstanding divided by total statutory claims paying resources. |
(3) | Includes $9.8 billion of par that was commuted with Ambac in July 2009. Also included in public finance net par outstanding is $3.1 billion for legally defeased bond issues where our financial guaranty policy has not been extinguished but cash or securities have been deposited in an escrow account for the benefit of bondholders. SFAS No. 163 requires that these contracts continue to be accounted for as outstanding contracts despite the elimination of substantially all risk. |
Page 8
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit I
($ in millions) | Quarter Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||||||
2009 | % | 2008 | % | 2009 | % | 2008 | % | |||||||||||||||||||||
Primary new insurance written | ||||||||||||||||||||||||||||
Flow | $ | 5,499 | 100.0 | % | $ | 9,432 | 97.9 | % | $ | 11,109 | 100.0 | % | $ | 18,716 | 93.9 | % | ||||||||||||
Structured | — | — | 205 | 2.1 | % | — | — | 1,218 | 6.1 | % | ||||||||||||||||||
Total Primary | $ | 5,499 | 100.0 | % | $ | 9,637 | 100.0 | % | $ | 11,109 | 100.0 | % | $ | 19,934 | 100.0 | % | ||||||||||||
Flow | ||||||||||||||||||||||||||||
Prime | $ | 5,492 | 99.9 | % | $ | 8,743 | 92.7 | % | $ | 11,089 | 99.8 | % | $ | 16,951 | 90.5 | % | ||||||||||||
Alt-A | 1 | — | 475 | 5.0 | % | 10 | 0.1 | % | 1,058 | 5.7 | % | |||||||||||||||||
A minus and below | 6 | 0.1 | % | 214 | 2.3 | % | 10 | 0.1 | % | 707 | 3.8 | % | ||||||||||||||||
Total Flow | $ | 5,499 | 100.0 | % | $ | 9,432 | 100.0 | % | $ | 11,109 | 100.0 | % | $ | 18,716 | 100.0 | % | ||||||||||||
Structured | ||||||||||||||||||||||||||||
Prime | $ | — | — | $ | 204 | 99.5 | % | $ | — | — | $ | 1,216 | 99.8 | % | ||||||||||||||
Alt-A | — | — | 1 | 0.5 | % | — | — | 2 | 0.2 | % | ||||||||||||||||||
Total Structured | $ | — | — | $ | 205 | 100.0 | % | $ | — | — | $ | 1,218 | 100.0 | % | ||||||||||||||
Total | ||||||||||||||||||||||||||||
Prime | $ | 5,492 | 99.9 | % | $ | 8,947 | 92.8 | % | $ | 11,089 | 99.8 | % | $ | 18,167 | 91.2 | % | ||||||||||||
Alt-A | 1 | — | 476 | 5.0 | % | 10 | 0.1 | % | 1,060 | 5.3 | % | |||||||||||||||||
A minus and below | 6 | 0.1 | % | 214 | 2.2 | % | 10 | 0.1 | % | 707 | 3.5 | % | ||||||||||||||||
Total Primary | $ | 5,499 | 100.0 | % | $ | 9,637 | 100.0 | % | $ | 11,109 | 100.0 | % | $ | 19,934 | 100.0 | % | ||||||||||||
Total primary new insurance written by FICO score | ||||||||||||||||||||||||||||
Flow | ||||||||||||||||||||||||||||
>=740 | $ | 4,009 | 72.9 | % | $ | 4,364 | 46.3 | % | $ | 7,894 | 71.1 | % | $ | 7,830 | 41.8 | % | ||||||||||||
680-739 | 1,402 | 25.5 | % | 3,452 | 36.6 | % | 2,991 | 26.9 | % | 7,067 | 37.8 | % | ||||||||||||||||
620-679 | 87 | 1.6 | % | 1,512 | 16.0 | % | 223 | 2.0 | % | 3,450 | 18.4 | % | ||||||||||||||||
<=619 | 1 | — | 104 | 1.1 | % | 1 | — | 369 | 2.0 | % | ||||||||||||||||||
Total Flow | $ | 5,499 | 100.0 | % | $ | 9,432 | 100.0 | % | $ | 11,109 | 100.0 | % | $ | 18,716 | 100.0 | % | ||||||||||||
Structured | ||||||||||||||||||||||||||||
>=740 | $ | — | — | $ | 134 | 65.4 | % | $ | — | — | $ | 768 | 63.1 | % | ||||||||||||||
680-739 | — | — | 64 | 31.2 | % | — | — | 433 | 35.5 | % | ||||||||||||||||||
620-679 | — | — | 7 | 3.4 | % | — | — | 17 | 1.4 | % | ||||||||||||||||||
Total Structured | $ | — | — | $ | 205 | 100.0 | % | $ | — | — | $ | 1,218 | 100.0 | % | ||||||||||||||
Total | ||||||||||||||||||||||||||||
>=740 | $ | 4,009 | 72.9 | % | $ | 4,498 | 46.7 | % | $ | 7,894 | 71.1 | % | $ | 8,598 | 43.1 | % | ||||||||||||
680-739 | 1,402 | 25.5 | % | 3,516 | 36.4 | % | 2,991 | 26.9 | % | 7,500 | 37.6 | % | ||||||||||||||||
620-679 | 87 | 1.6 | % | 1,519 | 15.8 | % | 223 | 2.0 | % | 3,467 | 17.4 | % | ||||||||||||||||
<=619 | 1 | — | 104 | 1.1 | % | 1 | — | 369 | 1.9 | % | ||||||||||||||||||
Total Primary | $ | 5,499 | 100.0 | % | $ | 9,637 | 100.0 | % | $ | 11,109 | 100.0 | % | $ | 19,934 | 100.0 | % | ||||||||||||
Percentage of primary new insurance written | ||||||||||||||||||||||||||||
Refinances | 46 | % | 35 | % | 47 | % | 38 | % | ||||||||||||||||||||
95.01% LTV and above | — | 12 | % | 0.1 | % | 16 | % | |||||||||||||||||||||
ARMs | ||||||||||||||||||||||||||||
Less than 5 years | 0.1 | % | — | 0.1 | % | 1 | % | |||||||||||||||||||||
5 years and longer | 0.4 | % | 10 | % | 0.4 | % | 8 | % | ||||||||||||||||||||
Primary risk written | ||||||||||||||||||||||||||||
Flow | $ | 1,178 | 100.0 | % | $ | 2,231 | 97.9 | % | $ | 2,374 | 100.0 | % | $ | 4,547 | 93.5 | % | ||||||||||||
Structured | — | — | 48 | 2.1 | % | — | — | 314 | 6.5 | % | ||||||||||||||||||
Total Primary | $ | 1,178 | 100.0 | % | $ | 2,279 | 100.0 | % | $ | 2,374 | 100.0 | % | $ | 4,861 | 100.0 | % | ||||||||||||
Page 9
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit J
($ in millions) | June 30 | June 30 | ||||||||||||
2009 | % | 2008 | % | |||||||||||
Primary insurance in force | ||||||||||||||
Flow | $ | 123,412 | 79.5 | % | $ | 115,425 | 76.3 | % | ||||||
Structured | 31,845 | 20.5 | % | 35,754 | 23.7 | % | ||||||||
Total Primary | $ | 155,257 | 100.0 | % | $ | 151,179 | 100.0 | % | ||||||
Prime | $ | 113,749 | 73.3 | % | $ | 105,049 | 69.5 | % | ||||||
Alt-A | 30,918 | 19.9 | % | 34,239 | 22.6 | % | ||||||||
A minus and below | 10,590 | 6.8 | % | 11,891 | 7.9 | % | ||||||||
Total Primary | $ | 155,257 | 100.0 | % | $ | 151,179 | 100.0 | % | ||||||
Primary risk in force | ||||||||||||||
Flow | $ | 30,574 | 87.7 | % | $ | 29,003 | 85.6 | % | ||||||
Structured | 4,272 | 12.3 | % | 4,879 | 14.4 | % | ||||||||
Total Primary | $ | 34,846 | 100.0 | % | $ | 33,882 | 100.0 | % | ||||||
Flow | ||||||||||||||
Prime | $ | 25,269 | 82.7 | % | $ | 23,125 | 79.7 | % | ||||||
Alt-A | 3,372 | 11.0 | % | 3,759 | 13.0 | % | ||||||||
A minus and below | 1,933 | 6.3 | % | 2,119 | 7.3 | % | ||||||||
Total Flow | $ | 30,574 | 100.0 | % | $ | 29,003 | 100.0 | % | ||||||
Structured | ||||||||||||||
Prime | $ | 2,231 | 52.2 | % | $ | 2,537 | 52.0 | % | ||||||
Alt-A | 1,340 | 31.4 | % | 1,499 | 30.7 | % | ||||||||
A minus and below | 701 | 16.4 | % | 843 | 17.3 | % | ||||||||
Total Structured | $ | 4,272 | 100.0 | % | $ | 4,879 | 100.0 | % | ||||||
Total | ||||||||||||||
Prime | $ | 27,500 | 78.9 | % | $ | 25,662 | 75.7 | % | ||||||
Alt-A | 4,712 | 13.5 | % | 5,258 | 15.5 | % | ||||||||
A minus and below | 2,634 | 7.6 | % | 2,962 | 8.8 | % | ||||||||
Total Primary | $ | 34,846 | 100.0 | % | $ | 33,882 | 100.0 | % | ||||||
Total primary risk in force by FICO score | ||||||||||||||
Flow | ||||||||||||||
>=740 | $ | 10,225 | 33.4 | % | $ | 8,287 | 28.6 | % | ||||||
680-739 | 11,152 | 36.5 | % | 10,744 | 37.0 | % | ||||||||
620-679 | 7,780 | 25.5 | % | 8,365 | 28.9 | % | ||||||||
<=619 | 1,417 | 4.6 | % | 1,607 | 5.5 | % | ||||||||
Total Flow | $ | 30,574 | 100.0 | % | $ | 29,003 | 100.0 | % | ||||||
Structured | ||||||||||||||
>=740 | $ | 1,153 | 27.0 | % | $ | 1,291 | 26.5 | % | ||||||
680-739 | 1,349 | 31.6 | % | 1,492 | 30.5 | % | ||||||||
620-679 | 1,125 | 26.3 | % | 1,312 | 26.9 | % | ||||||||
<=619 | 645 | 15.1 | % | 784 | 16.1 | % | ||||||||
Total Structured | $ | 4,272 | 100.0 | % | $ | 4,879 | 100.0 | % | ||||||
Total | ||||||||||||||
>=740 | $ | 11,378 | 32.7 | % | $ | 9,578 | 28.3 | % | ||||||
680-739 | 12,501 | 35.9 | % | 12,236 | 36.1 | % | ||||||||
620-679 | 8,905 | 25.6 | % | 9,677 | 28.6 | % | ||||||||
<=619 | 2,062 | 5.8 | % | 2,391 | 7.0 | % | ||||||||
Total Primary | $ | 34,846 | 100.0 | % | $ | 33,882 | 100.0 | % | ||||||
Percentage of primary risk in force | ||||||||||||||
Refinances | 31 | % | 31 | % | ||||||||||
95.01% LTV and above | 21 | % | 24 | % | ||||||||||
ARMs | ||||||||||||||
Less than 5 years | 8 | % | 10 | % | ||||||||||
5 years and longer | 9 | % | 9 | % | ||||||||||
Pool risk in force | ||||||||||||||
Prime | $ | 1,997 | 70.3 | % | $ | 2,119 | 70.8 | % | ||||||
Alt-A | 287 | 10.1 | % | 291 | 9.7 | % | ||||||||
A minus and below | 557 | 19.6 | % | 584 | 19.5 | % | ||||||||
Total | $ | 2,841 | 100.0 | % | $ | 2,994 | 100.0 | % | ||||||
Page 10
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit K
($ in millions) | June 30 | June 30 | ||||||||||
2009 | % | 2008 | % | |||||||||
Total primary risk in force by LTV | ||||||||||||
85.00% and below | $ | 3,608 | 10.4 | % | $ | 3,684 | 10.9 | % | ||||
85.01% to 90.00% | 12,709 | 36.5 | % | 11,576 | 34.2 | % | ||||||
90.01% to 95.00% | 11,195 | 32.1 | % | 10,546 | 31.1 | % | ||||||
95.01% and above | 7,334 | 21.0 | % | 8,076 | 23.8 | % | ||||||
Total | $ | 34,846 | 100.0 | % | $ | 33,882 | 100.0 | % | ||||
Total primary risk in force by policy year | ||||||||||||
2005 and prior | $ | 10,576 | 30.3 | % | $ | 12,535 | 37.0 | % | ||||
2006 | 4,807 | 13.8 | % | 5,516 | 16.3 | % | ||||||
2007 | 10,091 | 29.0 | % | 11,069 | 32.7 | % | ||||||
2008 | 7,054 | 20.2 | % | 4,762 | 14.0 | % | ||||||
2009 | 2,318 | 6.7 | % | — | — | |||||||
Total | $ | 34,846 | 100.0 | % | $ | 33,882 | 100.0 | % | ||||
Total pool risk in force by policy year | ||||||||||||
2005 and prior | $ | 2,304 | 81.1 | % | $ | 2,437 | 81.4 | % | ||||
2006 | 246 | 8.6 | % | 258 | 8.6 | % | ||||||
2007 | 232 | 8.2 | % | 243 | 8.1 | % | ||||||
2008 | 59 | 2.1 | % | 56 | 1.9 | % | ||||||
Total pool risk in force | $ | 2,841 | 100.0 | % | $ | 2,994 | 100.0 | % | ||||
Other risk in force | ||||||||||||
Second-lien | ||||||||||||
1st loss | $ | 223 | $ | 312 | ||||||||
2nd loss | 131 | 460 | ||||||||||
NIMs | 418 | 485 | ||||||||||
International | ||||||||||||
1st loss-Hong Kong primary mortgage insurance | 358 | 469 | ||||||||||
Reinsurance | 171 | 151 | ||||||||||
Credit default swaps | 3,247 | 8,619 | ||||||||||
Other | ||||||||||||
Domestic credit default swaps | — | 206 | ||||||||||
Total other risk in force | $ | 4,548 | $ | 10,702 | ||||||||
Risk to capital ratio-Radian Guaranty only (1) | 15.9:1 | 14.9:1 |
(1) | Starting June 30, 2009, risk in force on policies currently in default and for which loss reserves have been established are deducted from total risk in force used for our risk to capital calculations. Risk to capital ratios for the prior periods have not been restated to conform with this presentation. |
Page 11
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit L
($ in thousands) | Quarter Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Direct claims paid | ||||||||||||||||
Prime | $ | 72,752 | $ | 64,048 | $ | 142,211 | $ | 124,706 | ||||||||
Alt-A | 41,441 | 47,746 | 87,711 | 83,478 | ||||||||||||
A minus and below | 35,154 | 49,270 | 71,884 | 97,631 | ||||||||||||
Second-lien and other | 18,338 | 47,775 | 105,945 | (1) | 93,212 | |||||||||||
Total | $ | 167,685 | $ | 208,839 | $ | 407,751 | (1) | $ | 399,027 | |||||||
Average claim paid | ||||||||||||||||
Prime | $ | 41.3 | $ | 36.7 | $ | 41.6 | $ | 36.7 | ||||||||
Alt-A | 52.6 | 51.1 | 53.1 | 50.5 | ||||||||||||
A minus and below | 38.6 | 35.4 | 38.4 | 36.3 | ||||||||||||
Second-lien and other | 43.4 | 34.2 | 42.2 | (2) | 34.3 | |||||||||||
Total | $ | 43.2 | $ | 38.2 | $ | 43.3 | (2) | $ | 38.2 | |||||||
Loss ratio—GAAP Basis | 83.7 | % | 211.4 | % | 132.9 | % | 238.3 | % | ||||||||
Expense ratio—GAAP Basis (3) | 25.5 | % | 55.3 | % | 24.3 | % (3) | 38.5 | % | ||||||||
109.2 | % | 266.7 | % | 157.2 | % | 276.8 | % | |||||||||
Reserve for losses by category | ||||||||||||||||
Prime | $ | 965,690 | $ | 559,947 | ||||||||||||
Alt-A | 887,068 | 722,813 | ||||||||||||||
A minus and below | 448,527 | 410,373 | ||||||||||||||
Pool insurance | 152,824 | 71,508 | ||||||||||||||
Second-lien | 99,003 | 178,859 | ||||||||||||||
Other | 1,781 | 1,237 | ||||||||||||||
Reserve for losses, net | 2,554,893 | 1,944,737 | ||||||||||||||
Reinsurance recoverable (4) | 567,551 | 175,840 | ||||||||||||||
Total | $ | 3,122,444 | $ | 2,120,577 | ||||||||||||
(1) | Includes a $65 million payment related to the settlement of certain second-lien transactions, which were fully reserved for at December 31, 2008. |
(2) | Excludes $65 million payment noted in (1) above. |
(3) | Includes the acceleration of $50.8 million of deferred policy acquisition cost amortization, as a result of the establishment of a first-lien premium deficiency reserve in the second quarter of 2008. |
(4) | Reinsurance recoverable on ceded losses related to captives ($471 million) and Smart Home ($96 million). |
Page 12
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit M
June 30 2009 | December 31 2008 | June 30 2008 | |||||||
Default Statistics | |||||||||
Primary insurance: | |||||||||
Flow | |||||||||
Prime | |||||||||
Number of insured loans | 625,528 | 624,970 | 602,571 | ||||||
Number of loans in default | 58,012 | 44,575 | 26,604 | ||||||
Percentage of loans in default | 9.27 | % | 7.13 | % | 4.42 | % | |||
Alt-A | |||||||||
Number of insured loans | 64,977 | 68,948 | 72,715 | ||||||
Number of loans in default | 19,969 | 16,959 | 11,702 | ||||||
Percentage of loans in default | 30.73 | % | 24.60 | % | 16.09 | % | |||
A minus and below | |||||||||
Number of insured loans | 57,311 | 59,189 | 62,874 | ||||||
Number of loans in default | 17,988 | 15,768 | 11,637 | ||||||
Percentage of loans in default | 31.39 | % | 26.64 | % | 18.51 | % | |||
Total Flow | |||||||||
Number of insured loans | 747,816 | 753,107 | 738,160 | ||||||
Number of loans in default | 95,969 | 77,302 | 49,943 | ||||||
Percentage of loans in default | 12.83 | % | 10.26 | % | 6.77 | % | |||
Structured | |||||||||
Prime | |||||||||
Number of insured loans | 62,986 | 67,165 | 70,857 | ||||||
Number of loans in default | 7,911 | 6,692 | 5,447 | ||||||
Percentage of loans in default | 12.56 | % | 9.96 | % | 7.69 | % | |||
Alt-A | |||||||||
Number of insured loans | 76,814 | 80,491 | 84,369 | ||||||
Number of loans in default | 23,225 | 18,747 | 13,344 | ||||||
Percentage of loans in default | 30.24 | % | 23.29 | % | 15.82 | % | |||
A minus and below | |||||||||
Number of insured loans | 20,611 | 22,315 | 24,422 | ||||||
Number of loans in default | 7,680 | 7,812 | 8,003 | ||||||
Percentage of loans in default | 37.26 | % | 35.01 | % | 32.77 | % | |||
Total Structured | |||||||||
Number of insured loans | 160,411 | 169,971 | 179,648 | ||||||
Number of loans in default | 38,816 | 33,251 | 26,794 | ||||||
Percentage of loans in default | 24.20 | % | 19.56 | % | 14.91 | % | |||
Total Primary Insurance | |||||||||
Prime | |||||||||
Number of insured loans | 688,514 | 692,135 | 673,428 | ||||||
Number of loans in default | 65,923 | 51,267 | 32,051 | ||||||
Percentage of loans in default | 9.57 | % | 7.41 | % | 4.76 | % | |||
Alt-A | |||||||||
Number of insured loans | 141,791 | 149,439 | 157,084 | ||||||
Number of loans in default | 43,194 | 35,706 | 25,046 | ||||||
Percentage of loans in default | 30.46 | % | 23.89 | % | 15.94 | % | |||
A minus and below | |||||||||
Number of insured loans | 77,922 | 81,504 | 87,296 | ||||||
Number of loans in default | 25,668 | 23,580 | 19,640 | ||||||
Percentage of loans in default | 32.94 | % | 28.93 | % | 22.50 | % | |||
Total Primary Insurance | |||||||||
Number of insured loans | 908,227 | 923,078 | 917,808 | ||||||
Number of loans in default (1) | 134,785 | 110,553 | 76,737 | ||||||
Percentage of loans in default | 14.84 | % | 11.98 | % | 8.36 | % | |||
Pool insurance: | |||||||||
Number of loans in default (2) | 34,513 | 32,677 | 27,944 |
(1) | Includes approximately 343, 539 and 272 defaults at June 30, 2009, December 31, 2008 and June 30, 2008, respectively, where reserves have not been established because no claim payment is currently anticipated. |
(2) | Includes approximately 20,814, 21,719 and 20,880 defaults at June 30, 2009, December 31, 2008 and June 30, 2008, respectively, where reserves have not been established because no claim payment is currently anticipated. |
Page 13
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit N
Quarter Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net Premiums Written (In thousands) | ||||||||||||||||
Primary and Pool Insurance | $ | 153,278 | $ | 191,769 | $ | 314,692 | $ | 392,246 | ||||||||
Second-lien | 829 | 2,905 | 743 | 6,386 | ||||||||||||
International | 812 | 4,356 | 1,443 | 11,649 | ||||||||||||
Total Net Premiums Written—Insurance | $ | 154,919 | $ | 199,030 | $ | 316,878 | $ | 410,281 | ||||||||
Net Premiums Earned (In thousands) | ||||||||||||||||
Primary and Pool Insurance | $ | 164,641 | $ | 193,938 | $ | 335,188 | $ | 387,421 | ||||||||
Second-lien | 2,149 | 4,964 | 3,385 | 11,128 | ||||||||||||
International | 3,257 | 6,194 | 9,357 | 10,812 | ||||||||||||
Total Net Premiums Earned—Insurance | $ | 170,047 | $ | 205,096 | $ | 347,930 | $ | 409,361 | ||||||||
SMART HOME (In millions) | ||||||||||||||||
Ceded Premiums Written | $ | 2.9 | $ | 3.7 | $ | 5.6 | $ | 6.9 | ||||||||
Ceded Premiums Earned | $ | 2.9 | $ | 3.7 | $ | 5.6 | $ | 6.9 | ||||||||
1st Lien Captives | ||||||||||||||||
Premiums ceded to captives (In millions) | $ | 37.5 | $ | 34.1 | $ | 72.0 | $ | 69.8 | ||||||||
% of total premiums | 18.3 | % | 14.7 | % | 17.5 | % | 15.1 | % | ||||||||
NIW subject to captives (In millions) | $ | 430 | $ | 3,415 | $ | 1,471 | $ | 8,164 | ||||||||
% of primary NIW | 7.8 | % | 35.4 | % | 13.2 | % | 41.0 | % | ||||||||
IIF included in captives (1) | 34.8 | % | 37.2 | % | ||||||||||||
RIF included in captives (1) | 47.1 | % | 41.7 | % | ||||||||||||
Persistency (twelve months ended June 30) | 87.0 | % | 81.2 | % | ||||||||||||
June 30 2009 | June 30 2008 | |||||||||||||||
SMART HOME | ||||||||||||||||
% of Primary RIF included in Smart Home Transactions (1) | 3.5 | % | 4.3 | % |
(1) | Radian reinsures the middle layer risk positions, while retaining a significant portion of the total risk comprising the first loss and most remote risk positions. |
Page 14
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2009
Exhibit O
Reinsurance Progression Toward Attachment - Summary by Book Year (1) | |||||||||||||||||||||||||||||||||||
($ in millions) | June 30 2009 | December 31 2008 (5) | |||||||||||||||||||||||||||||||||
Book Year (2): | Original Book RIF | Progression to Attachment Point | Gross Current RIF | Ceded Current RIF(3) | Net Current RIF | Ever-to- Date Incurred Losses | Reinsurance Benefit (4) | Gross Current RIF | Ceded Current RIF(3) | Net Current RIF | Ever-to- Date Incurred Losses | Reinsurance Benefit (4) | |||||||||||||||||||||||
Pre-2006 | 0-50% | $ | 623 | $ | 142 | $ | 481 | $ | 170 | $ | 1,120 | $ | 558 | $ | 562 | $ | 239 | ||||||||||||||||||
Pre-2006 | 50-75% | 995 | 421 | 574 | 176 | 942 | 349 | 593 | 142 | ||||||||||||||||||||||||||
Pre-2006 | 75-99% | 320 | 155 | 165 | 80 | 1,084 | 397 | 687 | 160 | ||||||||||||||||||||||||||
Pre-2006 | Attached | 2,124 | 494 | 1,630 | 348 | $ | 120 | 1,355 | 237 | 1,118 | 184 | $ | 75 | ||||||||||||||||||||||
Pre-2006 Total | $ | 25,839 | $ | 4,062 | $ | 1,212 | $ | 2,850 | $ | 774 | $ | 120 | $ | 4,501 | $ | 1,541 | $ | 2,960 | $ | 725 | $ | 75 | |||||||||||||
2006 | 0-50% | $ | 2 | $ | — | $ | 2 | $ | — | $ | 32 | $ | 2 | $ | 30 | $ | 1 | ||||||||||||||||||
2006 | 50-75% | 30 | 2 | 28 | 1 | 62 | 4 | 58 | 3 | ||||||||||||||||||||||||||
2006 | 75-99% | 52 | 3 | 49 | 4 | 310 | 42 | 268 | 18 | ||||||||||||||||||||||||||
2006 | Attached | 2,223 | 313 | 1,910 | 344 | $ | 185 | 2,074 | 270 | 1,804 | 290 | $ | 161 | ||||||||||||||||||||||
2006 Total | $ | 3,529 | $ | 2,307 | $ | 318 | $ | 1,989 | $ | 349 | $ | 185 | $ | 2,478 | $ | 318 | $ | 2,160 | $ | 312 | $ | 161 | |||||||||||||
2007 | 0-50% | $ | 19 | $ | 1 | $ | 18 | $ | — | $ | 31 | $ | 2 | $ | 29 | $ | — | ||||||||||||||||||
2007 | 50-75% | 129 | 7 | 122 | 6 | 225 | 12 | 213 | 8 | ||||||||||||||||||||||||||
2007 | 75-99% | 139 | 12 | 127 | 7 | 71 | 7 | 64 | 3 | ||||||||||||||||||||||||||
2007 | Attached | 4,114 | 455 | 3,659 | 357 | $ | 151 | 4,329 | 454 | 3,875 | 350 | $ | 147 | ||||||||||||||||||||||
2007 Total | $ | 5,246 | $ | 4,401 | $ | 475 | $ | 3,926 | $ | 370 | $ | 151 | $ | 4,656 | $ | 475 | $ | 4,181 | $ | 361 | $ | 147 | |||||||||||||
2008 | 0-50% | $ | 1,797 | $ | 169 | $ | 1,628 | $ | 32 | $ | 2,167 | $ | 197 | $ | 1,970 | $ | 25 | ||||||||||||||||||
2008 | 50-75% | 306 | 35 | 271 | 8 | 42 | 4 | 38 | 1 | ||||||||||||||||||||||||||
2008 | 75-99% | 2 | — | 2 | — | — | — | — | — | ||||||||||||||||||||||||||
2008 | Attached | 222 | 18 | 204 | 18 | $ | 9 | 190 | 15 | 175 | 16 | $ | 9 | ||||||||||||||||||||||
2008 Total | $ | 2,564 | $ | 2,327 | $ | 222 | $ | 2,105 | $ | 58 | $ | 9 | $ | 2,399 | $ | 216 | $ | 2,183 | $ | 42 | $ | 9 | |||||||||||||
2009 | 0-50% | $ | 255 | $ | 11 | $ | 244 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
2009 | 50-75% | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
2009 | 75-99% | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
2009 | Attached | — | — | — | — | $ | — | — | — | — | — | $ | — | ||||||||||||||||||||||
2009 Total | $ | 258 | $ | 255 | $ | 11 | $ | 244 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Quota Share | 0-50% | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Quota Share | 50-75% | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Quota Share | 75-99% | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Quota Share | Attached | 108 | 35 | 73 | 31 | $ | 14 | 116 | 37 | 79 | 27 | $ | 12 | ||||||||||||||||||||||
Quota Share Total | $ | 313 | $ | 108 | $ | 35 | $ | 73 | $ | 31 | $ | 14 | $ | 116 | $ | 37 | $ | 79 | $ | 27 | $ | 12 | |||||||||||||
Total Captive (Including Quota Share) | $ | 37,749 | $ | 13,460 | $ | 2,273 | $ | 11,187 | $ | 1,582 | $ | 479 | $ | 14,150 | $ | 2,587 | $ | 11,563 | $ | 1,467 | $ | 404 | |||||||||||||
SmartHome | 0-50% | $ | 34 | $ | 16 | $ | 18 | $ | 10 | $ | 117 | $ | 51 | $ | 66 | $ | 27 | ||||||||||||||||||
SmartHome | 50-75% | 77 | 31 | 46 | 22 | — | — | — | — | ||||||||||||||||||||||||||
SmartHome | 75-99% | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
SmartHome | Attached | 1,108 | 511 | 597 | 392 | $ | 96 | 1,188 | 521 | 667 | 346 | $ | 91 | ||||||||||||||||||||||
Total SmartHome | $ | 3,900 | $ | 1,219 | $ | 558 | $ | 661 | $ | 424 | $ | 96 | $ | 1,305 | $ | 572 | $ | 733 | $ | 373 | $ | 91 | |||||||||||||
(1) | Data presented in aggregate for all trusts for captives active at each period end only. Actual trust attachment and exit points vary by individual contract. Attachment is calculated at the contract/deal level and is based on Total Incurred Losses which are defined as claims paid ever-to-date plus loss reserves. |
(2) | Book year figures may include loans from additional periods pursuant to reinsurance agreement terms and conditions. |
(3) | Risk ceded to reinsurers based on individual contract terms. |
(4) | Captive Benefit is defined as ceded reserves at period end plus ever-to-date claims paid by the trust. |
(5) | Revised from December 31, 2008 originally presented. |
Page 15
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2009
Exhibit P
($ in millions) | June 30 | June 30 | ||||||||||
2009 | % | 2008 | % | |||||||||
Modified Pool Risk in Force—Primary Only | ||||||||||||
Prime | ||||||||||||
2005 and prior | $ | 83 | 54.6 | % | $ | 90 | 56.6 | % | ||||
2006 | 44 | 29.0 | % | 44 | 27.7 | % | ||||||
2007 | 21 | 13.8 | % | 22 | 13.8 | % | ||||||
2008 | 4 | 2.6 | % | 3 | 1.9 | % | ||||||
Total | $ | 152 | 100.0 | % | $ | 159 | 100.0 | % | ||||
Alt-A | ||||||||||||
2005 and prior | $ | 191 | 29.0 | % | $ | 207 | 30.4 | % | ||||
2006 | 161 | 24.4 | % | 165 | 24.3 | % | ||||||
2007 | 303 | 46.0 | % | 304 | 44.7 | % | ||||||
2008 | 4 | 0.6 | % | 4 | 0.6 | % | ||||||
Total | $ | 659 | 100.0 | % | $ | 680 | 100.0 | % | ||||
A minus and below | ||||||||||||
2005 and prior | $ | 14 | 58.3 | % | $ | 16 | 61.6 | % | ||||
2006 | 3 | 12.5 | % | 3 | 11.5 | % | ||||||
2007 | 7 | 29.2 | % | 7 | 26.9 | % | ||||||
Total | $ | 24 | 100.0 | % | $ | 26 | 100.0 | % | ||||
Total | ||||||||||||
2005 and prior | $ | 288 | 34.5 | % | $ | 313 | 36.2 | % | ||||
2006 | 208 | 24.9 | % | 212 | 24.5 | % | ||||||
2007 | 331 | 39.6 | % | 333 | 38.5 | % | ||||||
2008 | 8 | 1.0 | % | 7 | 0.8 | % | ||||||
Total Modified Pool Risk in Force | $ | 835 | 100.0 | % | $ | 865 | 100.0 | % | ||||
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Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
ALT-A
Exhibit Q
($ in millions) | June 30 | |||||||||||
2009 | % | 2008 | % | |||||||||
Primary risk in force by FICO score | ||||||||||||
>=740 | 1,156 | 24.5 | % | $ | 1,287 | 24.5 | % | |||||
680-739 | 2,271 | 48.2 | % | 2,509 | 47.7 | % | ||||||
660-679 | 691 | 14.7 | % | 772 | 14.7 | % | ||||||
620-659 | 562 | 11.9 | % | 654 | 12.4 | % | ||||||
<=619 | 32 | 0.7 | % | 36 | 0.7 | % | ||||||
Total | $ | 4,712 | 100.0 | % | $ | 5,258 | 100.0 | % | ||||
Primary risk in force by LTV | ||||||||||||
85.00% and below | 1,222 | 25.9 | % | $ | 1,340 | 25.5 | % | |||||
85.01% to 90.00% | 1,951 | 41.4 | % | 2,187 | 41.6 | % | ||||||
90.01% to 95.00% | 1,215 | 25.8 | % | 1,367 | 26.0 | % | ||||||
95.01% and above | 324 | 6.9 | % | 364 | 6.9 | % | ||||||
Total | $ | 4,712 | 100.0 | % | $ | 5,258 | 100.0 | % | ||||
Primary risk in force by policy year | ||||||||||||
2005 and prior | $ | 1,483 | 31.5 | % | $ | 1,730 | 32.9 | % | ||||
2006 | 1,041 | 22.1 | % | 1,178 | 22.4 | % | ||||||
2007 | 1,944 | 41.3 | % | 2,112 | 40.2 | % | ||||||
2008 | 242 | 5.1 | % | 238 | 4.5 | % | ||||||
2009 | 2 | — | — | — | ||||||||
Total | $ | 4,712 | 100.0 | % | $ | 5,258 | 100.0 | % | ||||
Page 17
Radian Group Inc.
Financial Services Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2009
Exhibit R
(In thousands) | Quarter Ended June 30 | Six Months Ended June 30 | |||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||||
Investment in Affiliates—Selected Information | |||||||||||||||
Sherman | |||||||||||||||
Balance, beginning of period | $ | 103,236 | $ | 116,929 | $ | 99,656 | $ | 104,315 | |||||||
Net income for period | 5,110 | 15,704 | 15,662 | 28,230 | |||||||||||
Dividends received | — | 19,499 | 6,441 | 19,499 | |||||||||||
Other comprehensive income (loss) | 373 | (490 | ) | (158 | ) | (402 | ) | ||||||||
Balance, end of period | $ | 108,719 | $ | 112,644 | $ | 108,719 | $ | 112,644 | |||||||
Portfolio Information: | |||||||||||||||
Sherman | |||||||||||||||
Total assets | $ | 2,103,158 | $ | 2,432,122 | |||||||||||
Net revenues | $ | 320,449 | $ | 398,374 | $ | 668,483 | $ | 790,342 |
Page 18
1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | Forward-Looking Statements
Some of the statements in this release constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. Generally, words such as “may,” “will,” “should,” “could,” “would,” “anticipate,” “expect,” “intend,” “estimate,” “plan,” “project,” “continue,” “goal” and “believe,” or other variations on these and other similar expressions identify forward-looking statements. Forward-looking statements are only predictions and, as such, are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events or our future financial performance that may not prove to be accurate. These statements speak only as of the date of this news release, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Actual outcomes and results may differ materially from what is expressed or implied in these forward-looking statements. Factors that could cause actual results to differ from those projected in such forward-looking statements include, without limitation, the following:
• changes in general financial and political conditions, such as a deepening of the existing national economic recession, further decreases in housing demand, mortgage originations or housing values (in particular, further deterioration in the housing, mortgage and related credit markets, which would harm our future consolidated results of operations and could cause losses for our businesses to be worse than expected), a further reduction in the liquidity in the capital markets and further contraction of credit markets, further increases in unemployment rates, changes or volatility in interest rates or consumer confidence, changes in credit spreads, changes in the way investors perceive the strength of private mortgage insurers or financial guaranty providers, investor concern over the credit quality and specific risks faced by the particular businesses, municipalities or pools of assets covered by our insurance;
• catastrophic events or further economic changes in geographic regions where our mortgage insurance or financial guaranty insurance in force is more concentrated;
• our ability to successfully execute upon our internally sourced capital plan for our mortgage insurance business (which depends, in part, on the performance of our financial guaranty portfolio), and if necessary, to obtain additional capital to support new business writings in our mortgage insurance business and the long-term liquidity needs of our holding company (including significant payment obligations in 2010 and 2011); and to protect our credit ratings and the financial strength ratings of Radian Guaranty Inc., our principal mortgage insurance subsidiary, from further downgrades;
• a further decrease in the volume of home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards and the ongoing deterioration in housing markets throughout the U.S.;
• our ability to maintain adequate risk-to-capital ratios and surplus requirements in our mortgage insurance business in light of ongoing losses in this business and in our financial guaranty portfolio which, in the absence of new capital, may depend on our ability to execute upon strategies for which regulatory and other approvals are required and may not be obtained; |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | • our ongoing efforts to mitigate mortgage insurance losses (which have had a positive impact on our provision for losses due to increased levels of rescissions and denials) for which we may not continue to realize benefits at the levels we have recently experienced;
• the concentration of our mortgage insurance business among a relatively small number of large customers;
• disruption in the servicing of mortgages covered by our insurance policies;
• the aging of our mortgage insurance portfolio and changes in severity or frequency of losses associated with certain of our products that are riskier than traditional mortgage insurance or financial guaranty insurance policies;
• the performance of our insured portfolio of higher risk loans, such as Alternative-A (“Alt-A”) and subprime loans, and of adjustable rate products, such as adjustable rate mortgages and interest-only mortgages, which have resulted in increased losses and are expected to result in further losses;
• changes in persistency rates of our mortgage insurance policies;
• an increase in the risk profile of our existing mortgage insurance portfolio due to mortgage refinancing in the current housing market;
• further downgrades or threatened downgrades of, or other ratings actions with respect to, our credit ratings or the ratings assigned by the major rating agencies to any of our rated insurance subsidiaries at any time (in particular, the credit rating of Radian Group Inc. and the financial strength ratings assigned to Radian Guaranty Inc.);
• heightened competition for our mortgage insurance business from others such as the Federal Housing Administration and the Veterans’ Administration or other private mortgage insurers (in particular those that have been assigned higher ratings from the major rating agencies);
• changes in the charters or business practices of Federal National Mortgage Association (“Fannie Mae”) and Freddie Mac, the largest purchasers of mortgage loans that we insure, and our ability to remain an eligible provider to both Freddie Mac and Fannie Mae;
• the application of existing federal or state consumer, lending, insurance, securities and other applicable laws and regulations, or changes in these laws and regulations or the way they are interpreted; including, without limitation: (i) the outcome of existing investigations or the possibility of private lawsuits or other formal investigations by state insurance departments and state attorneys general alleging that services offered by the mortgage insurance industry, such as captive reinsurance, pool insurance and contract underwriting, are violative of the Real Estate Settlement Procedures Act and/or similar state regulations, (ii) legislative and regulatory changes affecting demand for private mortgage insurance, or (iii) legislation and regulatory changes limiting or restricting our use of (or requirements for) additional capital, the products we may offer, the form in which we may execute the credit protection we provide or the aggregate notional amount of any product we may offer for any one transaction or in the aggregate; |
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1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600 | • the possibility that we may fail to estimate accurately the likelihood, magnitude and timing of losses in connection with establishing loss reserves for our mortgage insurance or financial guaranty businesses or premium deficiencies for our mortgage insurance businesses, or to estimate accurately the fair value amounts of derivative contracts in our mortgage insurance and financial guaranty businesses in determining gains and losses on these contracts;
• the ability of our primary insurance customers in our financial guaranty reinsurance business to provide appropriate surveillance and to mitigate losses adequately with respect to our assumed insurance portfolio; and the significant concentration of our financial guaranty reinsurance business in customers owned by the same holding company;
• volatility in our earnings caused by changes in the fair value of our derivative instruments and our need to reevaluate the premium deficiency in our mortgage insurance business on a quarterly basis;
• changes in accounting guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board;
• legal and other limitations on amounts we may receive from our subsidiaries as dividends or through tax– and expense-sharing arrangements with our subsidiaries; and
• our investment in Sherman Financial Group LLC, which could be negatively affected in the current credit environment if Sherman is unable to maintain sufficient sources of funding for its business activities or remain in compliance with its credit facilities.
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should review the risks described under Item 1A, “Risk Factors” under our Annual Report on Form 10-K for the year ended December 31, 2008 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission. |
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