EXHIBIT 99
Quarterly Operating Supplements
[LOGO] Radian Asset Assurance Inc.
Quarterly
Operating Supplement
Fourth Quarter 2002
Quarterly Operating Supplement
Table of Contents
- --------------------------------------------------------------------------------
Page
----
Company Profile ......................................................... 2
Company Information ..................................................... 2
Key Financial Highlights ................................................ 3
Statutory Income Statements ............................................. 4
Statutory Balance Sheets ................................................ 5
Gross Premiums Written by Product ....................................... 6
Total Claims-Paying Resources and Leverage Ratios ....................... 6
Investment Portfolio Highlights ......................................... 7
Insured Portfolio Highlights ............................................ 8
Management Team ......................................................... 11
1 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Table of Contents
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Quarterly Operating Supplement
December 31, 2002
- --------------------------------------------------------------------------------
Company Profile
Radian Asset Assurance Inc., founded in 1985 and rated AA by Standard & Poor's
and Fitch Ratings, provides financial guaranty insurance and reinsurance to the
holders of debt obligations and asset-backed securities. As a direct writer of
insurance for municipal bonds, asset-backed obligations, trade credit
reinsurance and other credit insurance, the company plays an important role in
extending the benefits of insurance to a broad range of issuers and securities.
Radian Asset Assurance Inc. is a subsidiary of Radian Group Inc., (NYSE:RDN), a
global credit enhancement provider headquartered in Philadelphia, with
significant operations in New York City and London.
Company Information
Radian Asset Assurance Inc. Contact:
335 Madison Avenue John C. DeLuca
New York, New York 10017 Senior Vice President, Market Development
1 877 337.4925 (within the U.S.) 1 212 984.9222
1 212 983.3100 john.deluca@radiangroupinc.com
2 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Company Profile / Company Information
Quarterly Operating Supplement
Radian Group Inc. and Subsidiaries
Key Financial Highlights* ($ Thousands)
Year ended December 31, 2002
-----------------------------------------------
Mortgage Mortgage Financial
Insurance Services Guaranty Total
---------- -------- ---------- ----------
Net premiums written ............................. $ 668,583 -- $ 286,336 $ 954,919
========== ======== ========== ==========
Net premiums earned .............................. $ 660,492 -- $ 186,633 $ 847,125
Net investment income ............................ 107,138 $ 162 71,541 178,841
Equity in net income of affiliates ............... -- 81,872 (123) 81,749
Other income ..................................... 20,390 22,471 1,514 44,375
---------- -------- ---------- ----------
Total revenues ................................ 788,020 104,505 259,565 1,152,090
---------- -------- ---------- ----------
Provision for losses ............................. 194,486 -- 48,846 243,332
Policy acquisition costs ......................... 66,814 -- 34,004 100,818
Other operating expenses ......................... 109,043 38,716 27,554 175,313
Interest expense ................................. 17,155 2,110 9,559 28,824
---------- -------- ---------- ----------
Total expenses ................................ 387,498 40,826 119,963 548,287
---------- -------- ---------- ----------
Gain on disposition of investments ............... 4,643 3,450 2,369 10,462
Change in fair value of derivative instruments ... 462 -- (13,451) (12,989)
---------- -------- ---------- ----------
Net gains/(losses) ............................ 5,105 3,450 (11,082) (2,527)
---------- -------- ---------- ----------
Pretax income .................................... 405,627 67,129 128,520 601,276
Income tax provision ............................. 111,823 26,854 35,430 174,107
---------- -------- ---------- ----------
Net income .................................... $ 293,804 $ 40,275 $ 93,090 $ 427,169
========== ======== ========== ==========
Total assets ..................................... $3,262,741 $246,156 $1,884,508 $5,393,405
Deferred policy acquisition costs ................ 75,673 -- 107,914 183,587
Reserve for losses and loss adjustment expenses .. 484,705 -- 139,872 624,577
Unearned premiums ................................ 112,575 -- 505,475 618,050
Equity ........................................... $1,639,205 $201,427 $ 912,803 $2,753,435
* Reported on a GAAP basis.
3 Quarterly Operating Supplement for the Period Ended December 31, 2002 / Key
Financial Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Statutory Income Statements ($ Thousands)
Quarter ended Twelve months ended
------------------------- -------------------------
December 31 December 31 December 31 December 31
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenues
Gross premiums written ......................... $ 50,048 $ 35,843 $195,530 $ 92,003
Reinsurance premiums ceded ..................... (2,310) (7,913) (24,616) (19,978)
-------- -------- -------- --------
Net premiums written ........................ 47,738 27,930 170,914 72,025
Change in unearned premiums .................... (19,466) (12,477) (76,766) (23,049)
-------- -------- -------- --------
Premiums earned ............................. 28,272 15,453 94,148 48,976
-------- -------- -------- --------
Net investment income .......................... 6,203 3,365 24,990 16,064
Net realized gains on sale of investments ...... 1,511 527 2,205 3,786
-------- -------- -------- --------
Net investment gains ........................ 7,714 3,892 27,195 19,850
-------- -------- -------- --------
Other income ................................... 120 924 594 2,870
-------- -------- -------- --------
Total revenues .............................. 36,106 20,269 121,937 71,696
-------- -------- -------- --------
Expenses
Losses and loss adjustment expenses incurred ... 7,191 8,929 32,150 25,635
Commissions incurred ........................... 3,959 483 12,386 5,136
Other underwriting expenses .................... 5,991 7,181 31,806 25,575
-------- -------- -------- --------
Total expenses .............................. 17,141 16,593 76,342 56,346
-------- -------- -------- --------
Income before income taxes .................. 18,965 3,676 45,595 15,350
Federal and foreign income taxes ............... 5,476 3,443 12,225 4,747
-------- -------- -------- --------
Net income .................................. $ 13,489 $ 233 $ 33,370 $ 10,603
======== ======== ======== ========
Financial Ratios
Loss and LAE Ratio ............................. 25.4% 57.8% 34.1% 52.3%
Underwriting Expense Ratio ..................... 20.8% 27.4% 25.9% 42.6%
-------- -------- -------- --------
Combined Ratio .............................. 46.2% 85.2% 60.0% 94.9%
======== ======== ======== ========
4 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Statutory Income Statements
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Statutory Balance Sheets ($ Thousands)
December 31 December 31
2002 2001
----------- -----------
Assets
Long-term bonds, at amortized cost ................................ $550,512 $308,964
Preferred stock, at market ........................................ 24,585 15,975
Common stock, at market ........................................... 1,156 1,109
Cash and short-term investments ................................... 46,100 34,182
Receivable for securities ......................................... 149 --
-------- --------
Total Investments .............................................. 622,502 360,230
Investment income due and accrued ................................. 6,919 3,873
Premiums receivable ............................................... 22,449 14,498
Funds held by reinsured companies ................................. 1,863 1,101
Current federal income tax recoverable ............................ -- 30
Net deferred tax asset ............................................ 1,531 --
Other assets ...................................................... 2,119 1,769
-------- --------
Total Assets ................................................... $657,383 $381,501
======== ========
Liabilities
Contingency reserve ............................................... $ 39,272 $ 36,665
Losses and loss adjustment expenses ............................... 50,453 38,148
Reinsurance payable on paid losses and loss adjustment expenses ... 4,843 5,325
Unearned premiums ................................................. 233,701 156,935
Provision for reinsurance ......................................... 284 288
Payable to affiliates ............................................. 2,200 5,287
Payable for securities ............................................ 6,660 --
Ceded reinsurance premiums payable ................................ 2,670 4,210
Federal and foreign income taxes payable .......................... 5,360 --
Accrued expenses and other liabilities ............................ 2,481 1,512
-------- --------
Total Liabilities .............................................. 347,924 248,370
-------- --------
Policyholders' Surplus
Common stock ...................................................... 15,000 15,000
Additional paid-in capital ........................................ 229,077 79,077
Unassigned funds .................................................. 65,382 39,054
-------- --------
Total Policyholders' Surplus ...................................... 309,459 133,131
-------- --------
Total Liabilities and Policyholders' Surplus ...................... $657,383 $381,501
======== ========
Qualified Statutory Capital ....................................... $348,731 $169,796
======== ========
5 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Statutory Balance Sheets
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Gross Premiums Written by Product ($ Thousands)
4th Qtr 4th Qtr YTD YTD
2002 2001 % Change 2002 2001 % Change
------- ------- -------- -------- ------- --------
Public Finance Direct ....... $19,575 $19,746 -0.9% $ 63,431 $38,332 65.5%
Structured Finance Direct ... 14,771 6,949 112.6% 72,788 20,791 250.1%
Public Finance Re ........... -- -- -- 2,468 1,003 146.1%
Structured Finance Re ....... 5,162 4,062 27.1% 18,878 10,203 85.0%
Trade Credit ................ 10,540 5,086 107.2% 37,965 21,674 75.2%
------- ------- -------- -------
$50,048 $35,843 39.6% $195,530 $92,003 112.5%
======= ======= ======== =======
Total Claims-Paying Resources and Leverage Ratios
($ Thousands except ratios)
December 31 December 31
2002 2001 % Change
----------- ----------- --------
Capital and Surplus ............................ $ 309,459 $ 133,131 132%
Contingency Reserve ............................ 39,272 36,665 7%
----------- -----------
Qualified Statutory Capital ................. 348,731 169,796 105%
----------- -----------
Unearned Premium Reserve ....................... 233,701 156,935 49%
Loss and Loss Expense Reserves ................. 50,453 38,148 32%
----------- -----------
Total Policyholders' Reserves ............... 284,154 195,083 46%
----------- -----------
Present Value of Future Installment Premiums ... 151,032 71,820 110%
Reinsurance and Soft-Capital Facilities ........ 15,000 40,000 -63%
----------- -----------
Total Claims-Paying Resources ............... $ 798,917 $ 476,699 68%
=========== ===========
Total Debt Service
(Principal and Interest) Outstanding ..... $22,081,339 $16,564,020 33%
Capital Leverage Ratio/1/ ...................... 63:1 98:1
Claims-Paying Ratio/2/ ......................... 28:1 35:1
/1/ Capital Leverage Ratio: Total debt service/Qualified statutory capital.
/2/ Claims-Paying Ratio: Total debt service/Total claims-paying resources.
6 Quarterly Operating Supplement for the Period Ended December 31, 2002/Gross
Premiums/Total Claims-Paying Resources
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Investment Portfolio Highlights
Asset Quality
As of December 31, 2002, the book value of our investment portfolio was $615.3
million, with an average duration of 5.5 years.
[CHART]
[Pie Chart]
Below
A BBB Investment-Grade Not rated Common Equities AAA AA
- ---- ----- ---------------- --------- --------------- ----- -----
5.4% 12.2% 0.8% 2.7% 0.2% 57.8% 20.9%
Asset Class
Our conservative portfolio is invested primarily in fixed-income securities. Our
primary objective is to achieve total return, with a secondary objective of
maximizing after-tax income.
[CHART]
[Pie Chart]
Short-Term Other Municipal Bonds Taxable Bonds Convertible Bonds
- ---------- ----- --------------- ------------- -----------------
4.3% 3.2% 54.4% 16.9% 21.2%
7 Quarterly Operating Supplement for the Period Ended December 31, 2002/
Investment Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Insured Portfolio Highlights ($ Thousands)
Geographic Diversification
Net Par Percent Net Par Percent
State (12/31/2002) of total (12/31/2001) of total
- --------------------------------------------------------------------------------
Texas $ 1,133,571 7.4% $ 918,059 9.1%
- --------------------------------------------------------------------------------
New York 1,019,026 6.7% 1,112,238 11.1%
- --------------------------------------------------------------------------------
Pennsylvania 993,019 6.5% 822,342 8.2%
- --------------------------------------------------------------------------------
Florida 649,067 4.3% 622,378 6.2%
- --------------------------------------------------------------------------------
California 494,536 3.2% 507,441 5.0%
- --------------------------------------------------------------------------------
Connecticut 463,912 3.0% 380,409 3.8%
- --------------------------------------------------------------------------------
Colorado 371,126 2.4% 324,332 3.2%
- --------------------------------------------------------------------------------
Illinois 362,451 2.4% 288,514 2.9%
- --------------------------------------------------------------------------------
Washington 323,379 2.1% 340,453 3.4%
- --------------------------------------------------------------------------------
Massachusetts 266,640 1.7% 239,214 2.4%
- --------------------------------------------------------------------------------
Total of top ten states 6,076,727 39.8% 5,555,381 55.3%
- --------------------------------------------------------------------------------
Total of other states 3,297,969 21.6% 2,683,700 26.7%
- --------------------------------------------------------------------------------
Domestic structured finance 5,282,486 34.6% 1,574,508 15.7%
- --------------------------------------------------------------------------------
International 608,706 4.0% 230,731 2.3%
- --------------------------------------------------------------------------------
Total $15,265,889 100.0% $10,044,319 100.0%
8 Quarterly Operating Supplement for the Period Ended December 31, 2002/
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Insured Portfolio Highlights ($ Thousands)
Sector Breakout
Net Par Percent Net Par Percent
Public Finance (12/31/2002) of total (12/31/2001) of total
- -------------------------------------------------------------------------------
General Obligations $2,105,718 13.8% $1,991,941 19.8%
- -------------------------------------------------------------------------------
Healthcare 1,997,820 13.1% 1,645,469 16.4%
- -------------------------------------------------------------------------------
Education 1,549,056 10.1% 1,347,859 13.4%
- -------------------------------------------------------------------------------
Long-Term Care 840,073 5.5% 431,620 4.3%
- -------------------------------------------------------------------------------
Utilities 827,500 5.4% 831,319 8.3%
- -------------------------------------------------------------------------------
Tax-Backed 497,104 3.3% 415,871 4.1%
- -------------------------------------------------------------------------------
Other Public Finance 468,386 3.1% 380,245 3.8%
- -------------------------------------------------------------------------------
AAA Wrap Municipal 442,891 2.9% 514,836 5.1%
- -------------------------------------------------------------------------------
Transportation 408,275 2.7% 408,291 4.1%
- -------------------------------------------------------------------------------
Housing 208,523 1.4% 236,667 2.4%
- -------------------------------------------------------------------------------
Investor-Owned Utilities 59,856 0.4% 36,771 0.4%
- -------------------------------------------------------------------------------
Subtotal Public Finance $9,405,202 61.6% $8,240,889 82.0%
Net Par Percent Net Par Percent
Structured Finance (12/31/2002) of total (12/31/2001) of total
- ---------------------------------------------------------------------------------------
Collateralized Debt Obligations 4,227,312 27.7% 521,031 5.2%
- ---------------------------------------------------------------------------------------
Asset-Backed - Consumer 649,398 4.3% 669,533 6.7%
- ---------------------------------------------------------------------------------------
Asset-Backed - Commercial and Other 490,718 3.2% 314,891 3.1%
- ---------------------------------------------------------------------------------------
Other Structured Finance 300,373 2.0% 45,526 0.5%
- ---------------------------------------------------------------------------------------
Asset-Backed - Mortgage and MBS 192,886 1.3% 252,450 2.5%
- ---------------------------------------------------------------------------------------
Subtotal Structured Finance $ 5,860,687 38.4% $ 1,803,431 18.0%
- ---------------------------------------------------------------------------------------
Total $15,265,889 100.0% $10,044,319 100.0%
9 Quarterly Operating Supplement for the Period Ended December 31, 2002/
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Insured Portfolio Highlights ($ Thousands)
Rating Distribution
Net Par Percent Net Par Percent
Rating* (12/31/2002) of total (12/31/2001) of total
- --------------------------------------------------------------------------------
AAA $ 2,434,385 15.9% $ 2,095,712 20.9%
- --------------------------------------------------------------------------------
AA 2,903,551 19.0% 935,372 9.3%
- --------------------------------------------------------------------------------
A 2,638,433 17.3% 964,544 9.6%
- --------------------------------------------------------------------------------
BBB 5,682,251 37.2% 4,598,861 45.8%
- --------------------------------------------------------------------------------
Investment-Grade 198,467 1.3% 346,075 3.4%
- --------------------------------------------------------------------------------
Below Investment-Grade 719,055 4.7% 762,626 7.6%
- --------------------------------------------------------------------------------
Not Rated 689,747 4.5% 341,129 3.4%
- --------------------------------------------------------------------------------
Total $15,265,889 100.0% $10,044,319 100.0%
*Indicated category reflects highest rating of the three rating agencies.
10 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Management Team
Martin A. Kamarck
President
David J. Beidler
Senior Vice President, Chief Legal Officer
Edward McC. Bowers
Senior Vice President, Global Structured Products
Sally B. Campbell
Senior Vice President, Public Finance
John C. DeLuca
Senior Vice President, Market Development
Bonita Z. Dorland
Senior Vice President, Chief Risk Officer
Andrew C.J. Poole
Managing Director, Radian Representatives Ltd.
Patrick Rossi
Senior Vice President, Controller
Jeffrey C. Salton
Senior Vice President, Operations and Analysis
11 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Radian Asset Assurance Inc. Management Team
[LOGO] Radian Reinsurance Inc.
Quarterly
Operating Supplement
Fourth Quarter 2002
Quarterly Operating Supplement
Table of Contents
Page
----
Company Profile ......................................................... 2
Company Information ..................................................... 2
Key Financial Highlights ................................................ 3
Statutory Income Statements ............................................. 4
Statutory Balance Sheets ................................................ 5
Gross Premiums Written by Product ....................................... 6
Total Claims-Paying Resources and Leverage Ratios ....................... 6
Investment Portfolio Highlights ......................................... 7
Insured Portfolio Highlights ............................................ 8
Management Team ......................................................... 11
1 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Table of Contents
Quarterly Operating Supplement
Radian Reinsurance Inc.
Quarterly Operating Supplement
December 31, 2002
- --------------------------------------------------------------------------------
Company Profile
Radian Reinsurance Inc., founded in 1986 and rated AA by Fitch Ratings and
Standard & Poor's and Aa2 by Moody's, was the first company dedicated
exclusively to the reinsurance of investment-grade securities. The company
provides financial guaranty reinsurance to the primary insurers of municipal
bonds, asset-backed securities and structured finance obligations.
Radian Reinsurance Inc. is a subsidiary of Radian Group Inc., (NYSE:RDN), a
global credit enhancement provider headquartered in Philadelphia, with
significant operations in New York City and London.
Company Information
Radian Reinsurance Inc. Contact:
335 Madison Avenue John C. DeLuca
New York, New York 10017 Senior Vice President, Market Development
1 877 337.4925 (within the U.S.) 1 212 984.9222
1 212 983.3100 john.deluca@radiangroupinc.com
2 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Company Profile/Company Information
Quarterly Operating Supplement
Radian Group Inc. and Subsidiaries
Key Financial Highlights* ($ Thousands)
Year ended December 31, 2002
-----------------------------------------------
Mortgage Mortgage Financial
Insurance Services Guaranty Total
---------- -------- ---------- ----------
Net premiums written ............................. $ 668,583 -- $ 286,336 $ 954,919
========== ======== ========== ==========
Net premiums earned .............................. $ 660,492 -- $ 186,633 $ 847,125
Net investment income ............................ 107,138 $ 162 71,541 178,841
Equity in net income of affiliates ............... -- 81,872 (123) 81,749
Other income ..................................... 20,390 22,471 1,514 44,375
---------- -------- ---------- ----------
Total revenues ................................ 788,020 104,505 259,565 1,152,090
---------- -------- ---------- ----------
Provision for losses ............................. 194,486 -- 48,846 243,332
Policy acquisition costs ......................... 66,814 -- 34,004 100,818
Other operating expenses ......................... 109,043 38,716 27,554 175,313
Interest expense ................................. 17,155 2,110 9,559 28,824
---------- -------- ---------- ----------
Total expenses ................................ 387,498 40,826 119,963 548,287
---------- -------- ---------- ----------
Gain on disposition of investments ............... 4,643 3,450 2,369 10,462
Change in fair value of derivative instruments ... 462 -- (13,451) (12,989)
---------- -------- ---------- ----------
Net gains/(losses) ............................ 5,105 3,450 (11,082) (2,527)
---------- -------- ---------- ----------
Pretax income .................................... 405,627 67,129 128,520 601,276
Income tax provision ............................. 111,823 26,854 35,430 174,107
---------- -------- ---------- ----------
Net Income .................................... $ 293,804 $ 40,275 $ 93,090 $ 427,169
========== ======== ========== ==========
Total assets ..................................... $3,262,741 $246,156 $1,884,508 $5,393,405
Deferred policy acquisition costs ................ 75,673 -- 107,914 183,587
Reserve for losses and loss adjustment expenses .. 484,705 -- 139,872 624,577
Unearned premiums ................................ 112,575 -- 505,475 618,050
Equity ........................................... $1,639,205 $201,427 $ 912,803 $2,753,435
* Reported on a GAAP basis.
3 Quarterly Operating Supplement for the Period Ended December 31, 2002 / Key
Financial Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Statutory Income Statements ($ Thousands)
Quarter ended Twelve months ended
------------------------- -------------------------
December 31 December 31 December 31 December 31
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenues
Gross premiums written ............................... $28,775 $ 29,334 $111,713 $ 83,84
Reinsurance premiums ceded ........................... (8) -- (1,576) (1,357)
------- -------- -------- -------
Net premiums written .............................. 28,767 29,334 110,137 82,484
Change in unearned premiums .......................... (5,205) (11,118) (29,385) (28,635)
------- -------- -------- -------
Premiums earned ................................... 23,562 18,216 80,752 53,849
------- -------- -------- -------
Net investment income ................................ 11,698 11,495 47,864 45,477
Net realized (losses)/gains on sale of investments ... (181) 3,872 6,139 (876)
------- -------- -------- -------
Net investment gains .............................. 11,517 15,367 54,003 44,601
------- -------- -------- -------
Other income ......................................... 47 (221) 106 (288)
------- -------- -------- -------
Total revenues .................................... 35,126 33,362 134,861 98,162
------- -------- -------- -------
Expenses
Losses and loss adjustment expenses incurred ......... 7,427 7,954 14,304 9,697
Commissions incurred ................................. 9,228 9,269 34,182 26,856
Other underwriting expenses .......................... 2,321 1,912 9,230 8,355
------- -------- -------- -------
Total expenses .................................... 18,976 19,135 57,716 44,908
------- -------- -------- -------
Income before income taxes ........................ 16,150 14,227 77,145 53,254
Federal and foreign income tax (benefits)/expenses ... (2,849) 1,904 (1,206) 13,284
------- -------- -------- -------
Net Income ........................................ $18,999 $ 12,323 $ 78,351 $39,970
======= ======== ======== =======
Financial Ratios
Loss and LAE Ratio ................................... 31.5% 43.7% 17.7% 18.0%
Underwriting Expense Ratio ........................... 40.1% 38.1% 39.4% 42.7%
------- -------- -------- -------
Combined Ratio .................................... 71.6% 81.8% 57.1% 60.7%
======= ======== ======== =======
4 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Statutory Income Statements
Quarterly Operating Supplement
Radian Reinsurance Inc.
Statutory Balance Sheets ($ Thousands)
December 31 December 31
2002 2001
----------- -----------
Assets
Long-term bonds, at amortized cost ................................ $905,719 $802,887
Cash and short-term investments ................................... 21,971 59,451
Other invested assets ............................................. 13,132 --
Receivable for securities ......................................... 654 97
-------- --------
Total Investments .............................................. 941,476 862,435
Investment income due and accrued ................................. 12,817 10,241
Premiums receivable ............................................... 5,100 4,074
Funds held by reinsured companies ................................. 524 --
Current federal income tax recoverable ............................ 1,991 5,266
Net deferred tax asset ............................................ 3,174 --
Receivable from affiliates ........................................ 790 5,316
Other assets ...................................................... 1,360 1,292
-------- --------
Total Assets ................................................... $967,232 $888,624
======== ========
Liabilities
Contingency reserve ............................................... $280,376 $308,865
Losses and loss adjustment expenses ............................... 29,246 27,605
Reinsurance payable on paid losses and loss adjustment expenses ... 1,262 550
Unearned premiums ................................................. 369,310 339,925
Payable to affiliates ............................................. -- 3,315
Payable for securities ............................................ 3,840 --
Contingent profit commissions ..................................... 735 1,898
Accrued expenses and other liabilities ............................ 10,327 17,831
-------- --------
Total Liabilities .............................................. 695,096 699,989
-------- --------
Policyholders' Surplus
Common stock ...................................................... 15,000 4,000
Additional paid-in capital ........................................ 186,500 197,500
Unassigned funds .................................................. 70,636 (12,865)
-------- --------
Total Policyholders' Surplus ...................................... 272,136 188,635
-------- --------
Total Liabilities and Policyholders' Surplus ...................... $967,232 $888,624
======== ========
Qualified Statutory Capital ....................................... $552,512 $497,500
======== ========
5 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Statutory Balance Sheets
Quarterly Operating Supplement
Radian Reinsurance Inc.
Gross Premiums Written by Product ($ Thousands)
4th Qtr 4th Qtr YTD YTD
2002 2001 % Change 2002 2001 % Change
------- ------- -------- -------- ------- --------
Public Finance ............. $13,910 $18,626 -25.3% $ 58,171 $46,317 25.6%
Structured Finance ......... 11,281 10,502 7.4% 41,647 37,149 12.1%
Trade Credit Reinsurance ... 3,584 205 1648.3% 11,894 375 3071.7%
------- ------- -------- -------
$28,775 $29,333 -1.9% $111,712 $83,841 33.2%
======= ======= ======== =======
Total Claims-Paying Resources and Leverage Ratios
($ Thousands except ratios)
December 31 December 31
2002 2001 % Change
----------- ----------- --------
Capital and Surplus ............................ $ 272,136 $ 188,635 44%
Contingency Reserve ............................ 280,376 308,865 -9%
----------- -----------
Qualified Statutory Capital ................. 552,512 497,500 11%
----------- -----------
Unearned Premium Reserve ....................... 369,310 339,925 9%
Loss and Loss Expense Reserves ................. 29,246 27,605 6%
----------- -----------
Total Policyholders' Reserves ............... 398,556 367,530 8%
----------- -----------
Present Value of Future Installment Premiums ... 249,108 182,215 37%
Reinsurance and Soft-Capital Facilities ........ 150,000 115,000 30%
----------- -----------
Total Claims-Paying Resources ............... $ 1,350,176 $ 1,162,245 16%
=========== ===========
Total Debt Service
(Principal and Interest) Outstanding ..... $82,674,463 $81,375,649 2%
Capital Leverage Ratio/1/....................... 150:1 164:1
Claims-Paying Ratio/2/.......................... 61:1 70:1
/1/ Capital Leverage Ratio: Total debt service/Qualified statutory capital.
/2/ Claims-Paying Ratio: Total debt service/Total claims-paying resources.
6 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Gross Premiums / Total Claims-Paying Resources
Quarterly Operating Supplement
Radian Reinsurance Inc.
Investment Portfolio Highlights
Asset Quality
As of December 31, 2002, the book value of our investment portfolio was $924.4
million, with an average duration of 6.2 years.
[CHART]
[Pie Chart]
A BBB Not rated AAA AA
- --- --- --------- ---- ----
4.1% 0.8% 6.0% 60.1% 29.0%
Asset Class
Our conservative portfolio is invested primarily in fixed-income securities. Our
primary objective is to achieve total return, with a secondary objective of
maximizing after-tax income.
[CHART]
[PIE CHART]
Short-Term Other Municipal Bonds Taxable Bonds
- ---------- ----- --------------- -------------
1.8% 7.9% 79.5% 10.8%
7 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Investment Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Insured Portfolio Highlights ($ Thousands)
Geographic Diversification
Net Par Percent Net Par Percent
State (12/31/2002) of total (12/31/2001) of total
- --------------------------------------------------------------------------------
California $ 5,054,594 9.9% $ 5,274,723 10.7%
- --------------------------------------------------------------------------------
New York 3,361,363 6.6% 3,452,115 7.0%
- --------------------------------------------------------------------------------
Florida 2,376,386 4.7% 2,687,876 5.4%
- --------------------------------------------------------------------------------
Illinois 2,298,487 4.5% 2,229,366 4.5%
- --------------------------------------------------------------------------------
Texas 2,221,825 4.4% 2,060,165 4.2%
- --------------------------------------------------------------------------------
New Jersey 1,935,968 3.8% 1,903,246 3.8%
- --------------------------------------------------------------------------------
Massachusetts 1,791,923 3.5% 1,612,804 3.3%
- --------------------------------------------------------------------------------
Pennsylvania 1,791,052 3.5% 1,793,440 3.6%
- --------------------------------------------------------------------------------
Puerto Rico 1,092,288 2.1% 1,068,372 2.2%
- --------------------------------------------------------------------------------
Washington 928,918 1.8% 821,507 1.7%
- --------------------------------------------------------------------------------
Total of top ten states 22,852,803 44.7% 22,903,616 46.3%
- --------------------------------------------------------------------------------
Total of other states 14,208,643 27.8% 14,233,137 28.7%
- --------------------------------------------------------------------------------
Domestic structured finance 9,885,628 19.4% 8,971,573 18.1%
- --------------------------------------------------------------------------------
International 4,124,348 8.1% 3,391,516 6.9%
- --------------------------------------------------------------------------------
Total $51,071,421 100.0% $49,499,842 100.0%
8 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Insured Portfolio Highlights ($ Thousands)
Sector Breakout
Net Par Percent Net Par Percent
Public Finance (12/31/2002) of total (12/31/2001) of total
- --------------------------------------------------------------------------------
General Obligations $10,560,096 20.7% $10,437,034 21.1%
- --------------------------------------------------------------------------------
Utilities 6,802,514 13.3% 6,795,753 13.7%
- --------------------------------------------------------------------------------
Healthcare 6,204,510 12.1% 6,221,655 12.6%
- --------------------------------------------------------------------------------
Transportation 5,952,153 11.7% 5,758,459 11.6%
- --------------------------------------------------------------------------------
Tax-Backed 3,377,458 6.6% 3,683,331 7.4%
- --------------------------------------------------------------------------------
Investor-Owned Utilities 1,904,838 3.7% 1,834,863 3.7%
- --------------------------------------------------------------------------------
Education 1,575,248 3.1% 1,389,789 2.8%
- --------------------------------------------------------------------------------
Housing 1,184,544 2.3% 1,133,870 2.3%
- --------------------------------------------------------------------------------
Other Public Finance 672,199 1.3% 573,721 1.2%
- --------------------------------------------------------------------------------
AAA Wrap Municipal 405,496 0.8% 613,220 1.2%
- --------------------------------------------------------------------------------
Long-Term Care 94,790 0.2% 45,505 0.1%
- --------------------------------------------------------------------------------
Subtotal Public Finance $38,733,846 75.8% $38,487,199 77.8%
Net Par Percent Net Par Percent
Structured Finance (12/31/2002) of total (12/31/2001) of total
- ----------------------------------------------------------------------------------------
Asset-Backed -- Consumer 5,514,421 10.8% 4,619,360 9.3%
- ----------------------------------------------------------------------------------------
Collateralized Debt Obligations 2,552,035 5.0% 2,356,377 4.8%
- ----------------------------------------------------------------------------------------
Asset-Backed -- Commercial and Other 2,489,820 4.9% 2,008,480 4.1%
- ----------------------------------------------------------------------------------------
Asset-Backed -- Mortgage and MBS 992,167 1.9% 1,261,964 2.5%
- ----------------------------------------------------------------------------------------
Other Structured Finance 789,132 1.5% 766,461 1.5%
- ----------------------------------------------------------------------------------------
Subtotal Structured Finance $12,337,575 24.2% $11,012,642 22.2%
- ----------------------------------------------------------------------------------------
Total $51,071,421 100.0% $49,499,842 100.0%
9 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Insured Portfolio Highlights ($ Thousands)
Rating Distribution
Net Par Percent Net Par Percent
Rating* (12/31/2002) of total (12/31/2001) of total
- --------------------------------------------------------------------------------
AAA $ 4,107,704 8.0% $ 4,381,205 8.0%
- --------------------------------------------------------------------------------
AA 12,018,943 23.5% 10,969,268 22.2%
- --------------------------------------------------------------------------------
A 21,409,661 41.9% 21,115,435 42.7%
- --------------------------------------------------------------------------------
BBB 9,616,900 18.8% 9,995,395 20.2%
- --------------------------------------------------------------------------------
Investment -- Grade 445,010 0.9% 746,273 1.3%
- --------------------------------------------------------------------------------
Below Investment-Grade 512,053 1.0% 615,472 1.2%
- --------------------------------------------------------------------------------
Not Rated 2,961,149 5.8% 1,676,794 3.4%
- --------------------------------------------------------------------------------
Total $51,071,421 100.0% $49,499,842 100.0%
* Indicated category reflects highest rating of the three rating agencies.
10 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Management Team
Martin A. Kamarck
President
David J. Beidler
Senior Vice President, Chief Legal Officer
Edward McC. Bowers
Senior Vice President, Global Structured Products
Sally B. Campbell
Senior Vice President, Public Finance
John C. DeLuca
Senior Vice President, Market Development
Bonita Z. Dorland
Senior Vice President, Chief Risk Officer
Andrew C.J. Poole
Managing Director, Radian Representatives Ltd.
Patrick Rossi
Senior Vice President, Controller
Jeffrey C. Salton
Senior Vice President, Operations and Analysis
11 Quarterly Operating Supplement for the Period Ended December 31, 2002 /
Radian Reinsurance Inc. Management Team
[LOGO] Radian Asset Assurance Inc.
Quarterly
Operating Supplement
First Quarter 2003
Quarterly Operating Supplement
Table of Contents
- --------------------------------------------------------------------------------
Page
----
Company Profile ......................................................... 2
Company Information ..................................................... 2
Key Financial Highlights ................................................ 3
Statutory Income Statements ............................................. 4
Statutory Balance Sheets ................................................ 5
Gross Premiums Written by Product ....................................... 6
Total Claims-Paying Resources and Leverage Ratios ....................... 6
Investment Portfolio Highlights ......................................... 7
Insured Portfolio Highlights ............................................ 8
Management Team ......................................................... 11
1 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Table of Contents
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Quarterly Operating Supplement
March 31, 2003
- --------------------------------------------------------------------------------
Company Profile
Radian Asset Assurance Inc., founded in 1985 and rated AA by Standard &
Poor's and Fitch Ratings, provides financial guaranty insurance and reinsurance
to the holders of debt obligations and asset-backed securities. As a direct
writer of insurance for municipal bonds, asset-backed obligations, trade credit
reinsurance and other credit insurance, the company plays an important role in
extending the benefits of insurance to a broad range of issuers and securities.
Radian Asset Assurance Inc. is a subsidiary of Radian Group Inc., (NYSE:RDN), a
global credit enhancement provider headquartered in Philadelphia, with
significant operations in New York City and London.
Company Information
Radian Asset Assurance Inc. Contact:
335 Madison Avenue John C. DeLuca
New York, New York 10017 Senior Vice President, Market Development
1 877 337.4925 (within the U.S.) 1 212 984.9222
1 212 983.3100 john.deluca@radiangroupinc.com
2 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Company Profile / Company Information
Quarterly Operating Supplement
Radian Group Inc. and Subsidiaries
Key Financial Highlights* ($ Thousands)
Quarter ended March 31, 2003
-----------------------------------------------
Mortgage Mortgage Financial
Insurance Services Guaranty Total
---------- -------- ---------- ----------
Net premiums written ............................................ $ 164,772 -- $ 87,588 $ 252,360
========== ======== ========== ==========
Net premiums earned ............................................. $ 168,032 -- $ 58,097 $ 226,129
Net investment income ........................................... 27,829 $ 34 18,809 46,672
Equity in net income (loss) of affiliates ....................... -- 14,944 (56) 14,888
Other income .................................................... 6,599 6,361 1,597 14,557
---------- -------- ---------- ----------
Total revenues ............................................... 202,460 21,339 78,447 302,246
---------- -------- ---------- ----------
Provision for losses ............................................ 54,167 -- 13,591 67,758
Policy acquisition costs ........................................ 17,479 -- 13,538 31,017
Other operating expenses ........................................ 29,408 7,161 7,872 44,441
Interest expense ................................................ 5,100 612 2,872 8,584
---------- -------- ---------- ----------
Total expenses ............................................... 106,154 7,773 37,873 151,800
---------- -------- ---------- ----------
Gain on disposition of investments .............................. 390 119 3,516 4,025
Change in fair value of derivative instruments .................. (3,584) -- (4,314) (7,898)
---------- -------- ---------- ----------
Net gain/(losses) ............................................ (3,194) 119 (798) (3,873)
---------- -------- ---------- ----------
Pretax income ................................................... 93,112 13,685 39,776 146,573
Income tax provision ............................................ 25,454 5,474 10,873 41,801
---------- -------- ---------- ----------
Net income ................................................... $ 67,658 $ 8,211 $ 28,903 $ 104,772
========== ======== ========== ==========
Total assets .................................................... $3,590,043 $253,591 $1,945,273 $5,788,907
Deferred policy acquisition costs ............................... 74,931 -- 120,550 195,481
Reserve for losses .............................................. 484,069 -- 148,827 632,896
Unearned premiums ............................................... 108,592 -- 535,312 643,904
Equity .......................................................... $1,694,518 $201,884 $ 947,650 $2,844,052
* Reported on a GAAP basis.
3 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Key Financial Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Statutory Income Statements ($ Thousands)
Quarter ended
-------------------
March 31 March 31
2003 2002
-------- --------
Revenues
Gross premiums written .................................. $ 47,028 $ 39,434
Reinsurance premiums ceded .............................. (7,780) (10,315)
-------- --------
Net premiums written ................................. 39,248 29,119
Increase in unearned premiums ........................... (10,125) (8,707)
-------- --------
Premiums earned ...................................... 29,123 20,412
-------- --------
Net investment income ................................... 6,893 6,655
Net realized gain/(loss) on sale of investments ......... 1,188 (269)
-------- --------
Net investment gains ................................. 8,081 6,386
-------- --------
Other income ............................................ 1,483 104
-------- --------
Total revenues ....................................... 38,687 26,902
-------- --------
Expenses
Losses and loss adjustment expenses incurred ............ 6,279 9,579
Commissions incurred .................................... 2,703 2,148
Other underwriting expenses ............................. 9,887 7,922
-------- --------
Total expenses ....................................... 18,869 19,649
-------- --------
Income before income taxes ........................... 19,818 7,253
Federal and foreign income taxes ........................ 2,280 480
-------- --------
Net income ........................................... $ 17,538 $ 6,773
======== ========
Financial Ratios
Loss and LAE Ratio ...................................... 21.6% 46.9%
Underwriting Expense Ratio .............................. 32.1% 34.6%
-------- --------
Combined Ratio ....................................... 53.6% 81.5%
======== ========
4 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Statutory Income Statements
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Statutory Balance Sheets ($ Thousands)
March 31 December 31
2003 2002
-------- -----------
Assets
Long-term bonds, at amortized cost ................................. $596,176 $550,512
Preferred stock, at market ......................................... 27,129 24,585
Common stock, at market ............................................ 1,156 1,156
Cash and short-term investments .................................... 29,427 46,100
Receivable for securities .......................................... 2,541 149
-------- --------
Total Investments ............................................... 656,429 622,502
Investment income due and accrued .................................. 7,006 6,919
Premiums receivable ................................................ 28,215 22,449
Funds held by reinsured companies .................................. 2,108 1,863
Net deferred tax asset ............................................. 1,686 1,531
Other assets ....................................................... 1,019 2,119
-------- --------
Total Assets .................................................... $696,463 $657,383
======== ========
Liabilities
Contingency reserve ................................................ $ 42,548 $ 39,272
Losses and loss adjustment expenses ................................ 54,131 50,453
Reinsurance payable on paid losses and loss adjustment expenses .... 3,070 4,843
Unearned premiums .................................................. 243,826 233,701
Provision for reinsurance .......................................... 179 284
Payable to affiliates .............................................. 6,462 2,200
Payable for securities ............................................. 12,087 6,660
Ceded reinsurance premiums payable ................................. 6,533 2,670
Federal and foreign income taxes payable ........................... 2,274 5,360
Accrued expenses and other liabilities ............................. 1,291 2,481
-------- --------
Total Liabilities ............................................... 372,401 347,924
-------- --------
Policyholders' Surplus
Common stock ....................................................... 15,000 15,000
Additional paid-in capital ......................................... 229,077 229,077
Unassigned funds ................................................... 79,985 65,382
-------- --------
Total Policyholders' Surplus ....................................... 324,062 309,459
-------- --------
Total Liabilities and Policyholders' Surplus ....................... $696,463 $657,383
======== ========
Qualified Statutory Capital ........................................ $366,610 $348,731
======== ========
5 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Statutory Balance Sheets
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Gross Premiums Written by Product ($ Thousands)
1st Qtr 1st Qtr
2003 2002 % Change
------- ------- --------
Public Finance Direct ........................... $10,844 $14,584 -25.6%
Structured Finance Direct ....................... 16,578 8,124 104.1%
Public Finance Reinsurance ...................... 2,780 628 342.7%
Structured Finance Reinsurance .................. 4,556 7,562 -39.8%
Trade Credit Reinsurance ........................ 12,271 8,536 43.8%
------- -------
$47,029 $39,434 19.3%
======= =======
Total Claims-Paying Resources and Leverage Ratios
($ Thousands except ratios)
March 31 December 31
2003 2002 % Change
----------- ----------- --------
Capital and Surplus ..................................... $ 324,062 $ 309,459 5%
Contingency Reserve ..................................... 42,548 39,272 8%
----------- -----------
Qualified Statutory Capital .......................... 366,610 348,731 5%
----------- -----------
Unearned Premium Reserve ................................ 243,826 233,701 4%
Loss and Loss Expense Reserves .......................... 54,131 50,453 7%
----------- -----------
Total Policyholders' Reserves ........................ 297,957 284,154 5%
----------- -----------
Present Value of Future Installment Premiums ............ 181,227 151,032 20%
Reinsurance and Soft Capital Facilities ................. -- 15,000 -100%
----------- -----------
Total Claims-Paying Resources ........................ $ 845,794 $ 798,917 6%
=========== ===========
Total Debt Service
(Principal and Interest) Outstanding .............. $24,246,324 $22,081,339 10%
Capital Leverage Ratio (1) .............................. 66:1 63:1
Claims-Paying Ratio (2) ................................. 29:1 28:1
1 Capital Leverage Ratio: Total debt service/Qualified statutory capital.
2 Claims-Paying Ratio: Total debt service/Total claims-paying resources.
6 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Gross Premiums / Total Claims-Paying Resources
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Investment Portfolio Highlights
Asset Quality
As of March 31, 2003, the book value of our investment portfolio was $643.1
million, with an average duration of 5.6 years.
[CHART]
[Pie Chart]
Below
A BBB Investment-Grade Not rated AAA AA
- --- ---- ---------------- --------- ---- ----
8.3% 13.0% 0.8% 3.1% 55.0% 19.8%
Asset Class
Our conservative portfolio is invested primarily in fixed-income securities. Our
primary objective is to achieve total return, with a secondary objective of
maximizing after-tax income.
[CHART]
[Pie Chart]
Convertible
Taxable Bonds Bonds Short-Term Other Municipal Bonds
- ------------- ----------- ---------- ----- ---------------
16.1% 19.7% 2.8% 2.9% 58.4%
7 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Investment Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Insured Portfolio Highlights ($ Thousands)
Geographic Diversification
Net Par Percent Net Par Percent
State (3/31/2003) of total (12/31/2002) of total
- ------------------------------------------------------------------------------
Pennsylvania $ 1,050,000 6.0% $ 993,019 6.5%
- ------------------------------------------------------------------------------
New York 1,048,584 6.0% 1,019,026 6.7%
- ------------------------------------------------------------------------------
Texas 1,001,552 5.7% 1,133,571 7.4%
- ------------------------------------------------------------------------------
Florida 648,297 3.7% 649,067 4.3%
- ------------------------------------------------------------------------------
Connecticut 462,440 2.6% 463,912 3.0%
- ------------------------------------------------------------------------------
California 448,538 2.6% 494,536 3.2%
- ------------------------------------------------------------------------------
Colorado 425,096 2.4% 371,126 2.4%
- ------------------------------------------------------------------------------
Illinois 387,177 2.2% 362,451 2.4%
- ------------------------------------------------------------------------------
Washington 321,692 1.8% 323,379 2.1%
- ------------------------------------------------------------------------------
Indiana 285,807 1.6% 141,088 0.9%
- ------------------------------------------------------------------------------
Total of top ten states 6,079,182 34.7% 5,951,175 39.0%
- ------------------------------------------------------------------------------
Total of other states 3,458,928 19.8% 3,423,522 22.4%
- ------------------------------------------------------------------------------
Domestic structured finance 7,362,591 42.1% 5,282,486 34.6%
- ------------------------------------------------------------------------------
International 599,150 3.4% 608,706 4.0%
- ------------------------------------------------------------------------------
Total $17,499,851 100.0% $15,265,889 100.0%
8 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Insured Portfolio Highlights ($ Thousands)
Sector Breakout
Net Par Percent Net Par Percent
Public Finance (3/31/2003) of total (12/31/2002) of total
- --------------------------------------------------------------------------------------
Healthcare $2,126,160 12.1% $1,997,820 13.1%
- --------------------------------------------------------------------------------------
General Obligations 1,956,265 11.2% 2,105,718 13.8%
- --------------------------------------------------------------------------------------
Education 1,576,404 9.0% 1,549,056 10.1%
- --------------------------------------------------------------------------------------
Long-Term Care 859,218 4.9% 840,073 5.5%
- --------------------------------------------------------------------------------------
Utilities 853,157 4.9% 827,500 5.4%
- --------------------------------------------------------------------------------------
Other Public Finance 620,688 3.5% 468,386 3.1%
- --------------------------------------------------------------------------------------
Tax-Backed 484,076 2.8% 497,104 3.3%
- --------------------------------------------------------------------------------------
AAA Wrap Municipals 442,891 2.5% 442,891 2.9%
- --------------------------------------------------------------------------------------
Transportation 395,054 2.3% 408,275 2.7%
- --------------------------------------------------------------------------------------
Housing 194,858 1.1% 208,523 1.4%
- --------------------------------------------------------------------------------------
Investor-Owned Utilities 55,048 0.3% 59,856 0.4%
- --------------------------------------------------------------------------------------
Subtotal Public Finance $9,563,818 54.7% $9,405,202 61.6%
Net Par Percent Net Par Percent
Structured Finance (3/31/2003) of total (12/31/2002) of total
- --------------------------------------------------------------------------------------
Collateralized Debt Obligations $ 5,837,440 33.4% $ 4,227,312 27.7%
- --------------------------------------------------------------------------------------
Asset-Backed - Mortgage and MBS 739,845 4.2% 192,886 1.3%
- --------------------------------------------------------------------------------------
Asset-Backed - Consumer 588,254 3.4% 649,398 4.3%
- --------------------------------------------------------------------------------------
Asset-Backed - Commercial and Other 496,429 2.8% 490,718 3.2%
- --------------------------------------------------------------------------------------
Other Structured Finance 274,065 1.6% 300,373 2.0%
- --------------------------------------------------------------------------------------
Subtotal Structured Finance $ 7,936,033 45.3% $ 5,860,687 38.4%
- --------------------------------------------------------------------------------------
Total $17,499,851 100.0% $15,265,889 100.0%
9 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Insured Portfolio Highlights ($ Thousands)
Rating Distribution
Net Par Percent Net Par Percent
Rating* (3/31/2003) of total (12/31/2002) of total
- --------------------------------------------------------------------------------
AAA $ 4,571,163 26.1% $ 2,434,385 15.9%
- --------------------------------------------------------------------------------
AA 2,851,111 16.3% 2,903,551 19.0%
- --------------------------------------------------------------------------------
A 2,719,145 15.5% 2,638,433 17.3%
- --------------------------------------------------------------------------------
BBB 5,987,814 34.2% 5,682,251 37.2%
- --------------------------------------------------------------------------------
Investment Grade 192,601 1.1% 198,467 1.3%
- --------------------------------------------------------------------------------
Below Investment Grade 582,995 3.3% 719,055 4.7%
- --------------------------------------------------------------------------------
Not Rated 595,023 3.4% 689,746 4.5%
- --------------------------------------------------------------------------------
Total $17,499,851 100.0% $15,265,889 100.0%
* Indicated category reflects highest rating of the three rating agencies.
10 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Asset Assurance Inc.
Management Team
Martin A. Kamarck
President
David J. Beidler
Senior Vice President, Chief Legal Officer
Edward McC. Bowers
Senior Vice President, Global Structured Products
Sally B. Campbell
Senior Vice President, Public Finance
John C. DeLuca
Senior Vice President, Market Development
Bonita Z. Dorland
Senior Vice President, Chief Risk Officer
Andrew C.J. Poole
Managing Director, Radian Representatives Ltd.
Jack Praschnik
Senior Vice President, Global Strategies
Patrick Rossi
Senior Vice President, Controller
Jeffrey C. Salton
Senior Vice President, Operations and Analysis
11 Quarterly Operating Supplement for the Period Ended March 31, 2003/
Radian Asset Assurance Inc. Management Team
[LOGO] Radian Reinsurance Inc.
Quarterly
Operating Supplement
First Quarter 2003
Quarterly Operating Supplement
Table of Contents
- --------------------------------------------------------------------------------
Page
----
Company Profile ......................................................... 2
Company Information ..................................................... 2
Key Financial Highlights ................................................ 3
Statutory Income Statements ............................................. 4
Statutory Balance Sheets ................................................ 5
Gross Premiums Written by Product ....................................... 6
Total Claims-Paying Resources and Leverage Ratios ....................... 6
Investment Portfolio Highlights ......................................... 7
Insured Portfolio Highlights ............................................ 8
Management Team ......................................................... 11
1 Quarterly Operating Supplement for the Period Ended March 31, 2003/
Table of Contents
Quarterly Operating Supplement
Radian Reinsurance Inc.
Quarterly Operating Supplement
March 31, 2003
- --------------------------------------------------------------------------------
Company Profile
Radian Reinsurance Inc., founded in 1986 and rated AA by Fitch Ratings and
Standard & Poor's and Aa2 by Moody's, was the first company dedicated
exclusively to the reinsurance of investment-grade securities. The company
provides financial guaranty reinsurance to the primary insurers of municipal
bonds, asset-backed securities and structured finance obligations.
Radian Reinsurance Inc. is a subsidiary of Radian Group Inc., (NYSE:RDN), a
global credit enhancement provider headquartered in Philadelphia, with
significant operations in New York City and London.
Company Information
Radian Reinsurance Inc. Contact:
335 Madison Avenue John C. DeLuca
New York, New York 10017 Senior Vice President, Market Development
1 877 337.4925 (within the U.S.) 1 212 984.9222
1 212 983.3100 john.deluca@radiangroupinc.com
2 Quarterly Operating Supplement for the Period Ended March 31, 2003/
Company Profile/Company Information
Quarterly Operating Supplement
Radian Group Inc. and Subsidiaries
Key Financial Highlights* ($ Thousands)
Quarter ended March 31, 2003
-----------------------------------------------
Mortgage Mortgage Financial
Insurance Services Guaranty Total
---------- -------- ---------- ----------
Net premiums written ............................. $ 164,772 -- $ 87,588 $ 252,360
========== ======== ========== ==========
Net premiums earned .............................. $ 168,032 -- $ 58,097 $ 226,129
Net investment income ............................ 27,829 $ 34 18,809 46,672
Equity in net income (loss) of affiliates ........ -- 14,944 (56) 14,888
Other income ..................................... 6,599 6,361 1,597 14,557
---------- -------- ---------- ----------
Total revenues ................................ 202,460 21,339 78,447 302,246
---------- -------- ---------- ----------
Provision for losses ............................. 54,167 -- 13,591 67,758
Policy acquisition costs ......................... 17,479 -- 13,538 31,017
Other operating expenses ......................... 29,408 7,161 7,872 44,441
Interest expense ................................. 5,100 612 2,872 8,584
---------- -------- ---------- ----------
Total expenses ................................ 106,154 7,773 37,873 151,800
---------- -------- ---------- ----------
Gain on disposition of investments ............... 390 119 3,516 4,025
Change in fair value of derivative instruments ... (3,584) -- (4,314) (7,898)
---------- -------- ---------- ----------
Net gain/(losses) ............................. (3,194) 119 (798) (3,873)
---------- -------- ---------- ----------
Pretax income .................................... 93,112 13,685 39,776 146,573
Income tax provision ............................. 25,454 5,474 10,873 41,801
---------- -------- ---------- ----------
Net income .................................... $ 67,658 $ 8,211 $ 28,903 $ 104,772
========== ======== ========== ==========
Total assets ..................................... $3,590,043 $253,591 $1,945,273 $5,788,907
Deferred policy acquisition costs ................ 74,931 -- 120,550 195,481
Reserve for losses ............................... 484,069 -- 148,827 632,896
Unearned premiums ................................ 108,592 -- 535,312 643,904
Equity ........................................... $1,694,518 $201,884 $ 947,650 $2,844,052
* Reported on a GAAP basis.
3 Quarterly Operating Supplement for the Period Ended March 31, 2003 / Key
Financial Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Statutory Income Statements ($ Thousands)
Quarter ended
-------------------
March 31 March 31
2003 2002
-------- --------
Revenues
Gross premiums written .................................. $ 45,804 $ 34,316
Reinsurance premiums ceded .............................. (166) (1,568)
-------- --------
Net premiums written ................................. 45,638 32,748
Change in unearned premiums ............................. (20,057) (16,010)
-------- --------
Premiums earned ...................................... 25,581 16,738
-------- --------
Net investment income ................................... 12,212 11,985
Net realized gain on sale of investments ................ 2,700 1,266
-------- --------
Net investment gains ................................. 14,912 13,251
-------- --------
Other income ............................................ 58 41
-------- --------
Total revenues ....................................... 40,551 30,030
-------- --------
Expenses
Losses and loss adjustment expenses incurred ............ 3,478 56
Commissions incurred .................................... 16,591 10,280
Other underwriting expenses ............................. 1,846 2,902
-------- --------
Total expenses ....................................... 21,915 13,238
-------- --------
Income before income taxes ........................... 18,636 16,792
Federal and foreign income tax expenses/(benefits) ...... 2,711 (12,519)
-------- --------
Net income ........................................... $ 15,925 $ 29,311
======== ========
Financial Ratios
Loss and LAE Ratio ...................................... 13.6% 0.3%
Underwriting Expense Ratio .............................. 40.4% 40.3%
-------- --------
Combined Ratio ....................................... 54.0% 40.6%
======== ========
4 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Statutory Income Statements
Quarterly Operating Supplement
Radian Reinsurance Inc.
Statutory Balance Sheets ($ Thousands)
March 31 December 31
2003 2002
---------- -----------
Assets
Long-term bonds, at amortized cost ................................ $ 927,206 $905,719
Cash and short-term investments ................................... 15,323 21,971
Other invested assets ............................................. 13,132 13,132
Receivable for securities ......................................... 20,121 654
---------- --------
Total Investments .............................................. 975,782 941,476
Investment income due and accrued ................................. 12,026 12,817
Premiums receivable ............................................... 11,020 5,100
Funds held by reinsured companies ................................. 756 524
Current federal income tax recoverable ............................ -- 3,174
Net deferred tax asset ............................................ 1,983 1,991
Receivable from affiliates ........................................ 5,632 790
Other assets ...................................................... 1,182 1,360
---------- --------
Total Assets ................................................... $1,008,381 $967,232
========== ========
Liabilities
Contingency reserve ............................................... $ 256,825 $280,376
Losses and loss adjustment expenses ............................... 30,937 29,246
Reinsurance payable on paid losses and loss adjustment expenses ... 1,448 1,262
Unearned premiums ................................................. 389,367 369,310
Payable for securities ............................................ 7,617 3,840
Commissions and contingent profit commissions ..................... 2,942 735
Federal and foreign income taxes payable .......................... 2,079 --
Accrued expenses and other liabilities ............................ 5,687 10,327
---------- --------
Total Liabilities .............................................. 696,902 695,096
---------- --------
Policyholders' Surplus
Common stock ...................................................... 15,000 15,000
Additional paid-in capital ........................................ 186,500 186,500
Unassigned funds .................................................. 109,979 70,636
---------- --------
Total Policyholders' Surplus ...................................... 311,479 272,136
---------- --------
Total Liabilities and Policyholders' Surplus ...................... $1,008,381 $967,232
========== ========
Qualified Statutory Capital ....................................... $ 568,304 $552,512
========== ========
5 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Statutory Balance Sheets
Quarterly Operating Supplement
Radian Reinsurance Inc.
Gross Premiums Written by Product ($ Thousands)
1st Qtr 1st Qtr
2003 2002 % Change
------- ------- --------
Public Finance .................................. $26,790 $23,071 16.1%
Structured Finance .............................. 11,792 11,078 6.4%
Trade Credit Reinsurance ........................ 7,222 167 4224.6%
------- -------
$45,804 $34,316 33.5%
======= =======
Total Claims-Paying Resources and Leverage Ratios
($ Thousands except ratios)
March 31 December 31
2003 2002 % Change
----------- ----------- --------
Capital and Surplus ............................ $ 311,479 $ 272,136 14%
Contingency Reserve ............................ 256,825 280,376 -8%
----------- -----------
Qualified Statutory Capital ................. 568,304 552,512 3%
----------- -----------
Unearned Premium Reserve ....................... 389,367 369,310 5%
Loss and Loss Expense Reserves ................. 30,937 29,246 6%
----------- -----------
Total Policyholders' Reserves ............... 420,304 398,556 5%
----------- -----------
Present Value of Future Installment Premiums ... 252,524 249,108 1%
Reinsurance and Soft-Capital Facilities ........ 125,000 150,000 -17%
----------- -----------
Total Claims-Paying Resources ............... $ 1,366,132 $ 1,350,176 1%
=========== ===========
Total Debt Service
(Principal and Interest) Outstanding ..... 85,823,227 82,674,463 4%
Capital Leverage Ratio (1) ..................... 151:1 150:1
Claims-Paying Ratio (2) ........................ 63:1 61:1
1 Capital Leverage Ratio: Total debt service/Qualified statutory capital.
2 Claims-Paying Ratio: Total debt service/Total claims-paying resources.
6 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Gross Premiums / Total Claims-Paying Resources
Quarterly Operating Supplement
Radian Reinsurance Inc.
Investment Portfolio Highlights
Asset Quality
As of March 31, 2003, the book value of our investment portfolio was $938.8
million, with an average duration of 6.0 years.
[CHART]
[Pie Chart]
Not rated AAA AA A BBB
- --------- ---- ---- --- ---
5.8% 61.6% 25.8% 5.6% 1.2%
Asset Class
Our conservative portfolio is invested primarily in fixed-income securities. Our
primary objective is to achieve total return, with a secondary objective of
maximizing after-tax income.
[CHART]
[Pie Chart]
Short-Term Other Municipal Bonds Taxable Bonds
- ---------- ----- --------------- --------------
1.0% 7.7% 80.3% 11.0%
7 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Investment Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Insured Portfolio Highlights ($ Thousands)
Geographic Diversification
Net Par Percent Net Par Percent
State (3/31/2003) of total (12/31/2002) of total
- --------------------------------------------------------------------------------
California $ 5,217,051 9.7% $ 5,054,594 9.9%
- --------------------------------------------------------------------------------
New York 3,277,394 6.1% 3,361,363 6.6%
- --------------------------------------------------------------------------------
Texas 2,420,478 4.5% 2,221,825 4.4%
- --------------------------------------------------------------------------------
Florida 2,409,819 4.5% 2,376,386 4.7%
- --------------------------------------------------------------------------------
Illinois 2,264,562 4.2% 2,298,487 4.5%
- --------------------------------------------------------------------------------
New Jersey 1,962,136 3.6% 1,935,968 3.8%
- --------------------------------------------------------------------------------
Massachusetts 1,812,209 3.4% 1,791,923 3.5%
- --------------------------------------------------------------------------------
Pennsylvania 1,782,083 3.3% 1,791,052 3.5%
- --------------------------------------------------------------------------------
Puerto Rico 1,086,389 2.0% 1,092,288 2.1%
- --------------------------------------------------------------------------------
Washington 931,445 1.7% 928,918 1.8%
- --------------------------------------------------------------------------------
Total of top ten states 23,163,566 42.9% 22,852,803 44.7%
- --------------------------------------------------------------------------------
Total of other states 14,373,365 26.6% 14,208,643 27.8%
- --------------------------------------------------------------------------------
Domestic structured finance 11,702,268 21.7% 9,885,628 19.4%
- --------------------------------------------------------------------------------
International 4,734,759 8.8% 4,124,348 8.1%
- --------------------------------------------------------------------------------
Total $53,973,957 100.0% $51,071,421 100.0%
8 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Insured Portfolio Highlights ($ Thousands)
Sector Breakout
Net Par Percent Net Par Percent
Public Finance (3/31/2003) of total (12/31/2002) of total
- --------------------------------------------------------------------------------
General Obligations $10,789,539 20.0% $10,560,096 20.7%
- --------------------------------------------------------------------------------
Utilities 6,863,891 12.7% 6,802,514 13.3%
- --------------------------------------------------------------------------------
Healthcare 6,216,778 11.5% 6,204,510 12.1%
- --------------------------------------------------------------------------------
Transportation 6,119,319 11.3% 5,952,153 11.7%
- --------------------------------------------------------------------------------
Tax-Backed 3,397,400 6.3% 3,377,458 6.6%
- --------------------------------------------------------------------------------
Investor-Owned Utilities 2,011,023 3.7% 1,904,838 3.7%
- --------------------------------------------------------------------------------
Education 1,648,098 3.1% 1,575,248 3.1%
- --------------------------------------------------------------------------------
Housing 1,215,894 2.3% 1,184,544 2.3%
- --------------------------------------------------------------------------------
Other Public Finance 531,691 1.0% 672,199 1.3%
- --------------------------------------------------------------------------------
AAA Wrap Municipal 405,496 0.8% 405,496 0.8%
- --------------------------------------------------------------------------------
Long-Term Care 94,787 0.2% 94,790 0.2%
- --------------------------------------------------------------------------------
Subtotal Public Finance $39,293,916 72.8% $38,733,846 75.8%
Net Par Percent Net Par Percent
Structured Finance (3/31/2003) of total (12/31/2002) of total
- --------------------------------------------------------------------------------------
Asset-Backed - Consumer $ 5,688,828 10.5% $ 5,514,421 10.8%
- --------------------------------------------------------------------------------------
Collateralized Debt Obligations 3,899,187 7.2% 2,552,035 5.0%
- --------------------------------------------------------------------------------------
Asset-Backed - Commercial and Other 2,858,579 5.3% 2,489,820 4.9%
- --------------------------------------------------------------------------------------
Asset-Backed - Mortgage and MBS 1,518,731 2.8% 992,167 1.9%
- --------------------------------------------------------------------------------------
Other Structured Finance 714,715 1.3% 789,132 1.5%
- --------------------------------------------------------------------------------------
Subtotal Structured Finance $14,680,041 27.2% $12,337,575 24.2%
- --------------------------------------------------------------------------------------
Total $53,973,957 100.0% $51,071,421 100.0%
9 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Insured Portfolio Highlights ($ Thousands)
Rating Distribution
Net Par Percent Net Par Percent
Rating* (3/31/2003) of total (12/31/2002) of total
- --------------------------------------------------------------------------------
AAA $ 6,285,822 11.6% $ 4,107,704 8.0%
- --------------------------------------------------------------------------------
AA 12,457,211 23.1% 12,018,943 23.5%
- --------------------------------------------------------------------------------
A 21,428,542 39.7% 21,409,661 41.9%
- --------------------------------------------------------------------------------
BBB 9,733,085 18.0% 9,616,900 18.8%
- --------------------------------------------------------------------------------
Investment Grade 403,982 0.7% 445,010 0.9%
- --------------------------------------------------------------------------------
Below Investment Grade 711,913 1.3% 512,053 1.0%
- --------------------------------------------------------------------------------
Not Rated 2,953,401 5.5% 2,961,149 5.8%
- --------------------------------------------------------------------------------
Total $53,973,957 100.0% $51,071,421 100.0%
* Indicated category reflects highest rating of the three rating agencies.
10 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Insured Portfolio Highlights
Quarterly Operating Supplement
Radian Reinsurance Inc.
Management Team
Martin A. Kamarck
President
David J. Beidler
Senior Vice President, Chief Legal Officer
Edward McC. Bowers
Senior Vice President, Global Structured Products
Sally B. Campbell
Senior Vice President, Public Finance
John C. DeLuca
Senior Vice President, Market Development
Bonita Z. Dorland
Senior Vice President, Chief Risk Officer
Andrew C.J. Poole
Managing Director, Radian Representatives Ltd.
Jack Praschnik
Senior Vice President, Global Strategies
Patrick Rossi
Senior Vice President, Controller
Jeffrey C. Salton
Senior Vice President, Operations and Analysis
11 Quarterly Operating Supplement for the Period Ended March 31, 2003 /
Radian Reinsurance Inc. Management Team