RDN Radian Group Inc

Radian's Smart Home Solution Manages Non-Prime Mortgage Risk, Enhances Revenue Opportunities PHILADELPHIA, Feb. 7 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE:RDN), a leading provider of global credit enhancement products and services, today announced that it has completed its second structured finance transaction to help the company manage its non-prime mortgage risk. The solution involved a transaction with Smart Home Reinsurance 2005-1 Limited, a company which was created and funded through the sale of $98.5 million of credit-linked notes backed by a $1.68 billion pool of Radian-insured Alt-A mortgage loans. Smart Home enables Radian to transfer non-prime mortgage risk, while simultaneously increasing capacity and improving new business opportunities in the profitable non-prime segment of the market. The Smart Home transaction reflects Radian's innovative strategy toward the mortgage insurance and financial guaranty markets. By combining its history of mortgage insurance success with its structured finance expertise, Smart Home better positions Radian to create high-return growth opportunities in the non-prime mortgage market. "The non-prime segment of the mortgage insurance market is profitable, but it also requires a disciplined approach to risk management," said Roy J. Kasmar, president and chief operating officer of Radian. "Radian's experience in mortgage insurance and structured finance has enabled us to create a risk management solution so that we can continue to take advantage of growing opportunities in the non-prime market." Radian is the only mortgage insurance provider to employ Smart Home's structure as part of an overall risk management strategy. Competitors can acquire reinsurance on their pools of loans, but the Smart Home structured transaction transfers part of the associated risk to the capital markets, which is much broader and deeper than traditional reinsurance. Also, because Smart Home is formed with the sale of credit-linked notes, the effectiveness of that risk transfer is stable and strong, whereas the effectiveness of traditional reinsurance depends only on the creditworthiness of the reinsurance provider. As a result, Smart Home enables Radian to continue to expand its presence in the non-prime market. Smart Home Reinsurance 2005-1 Limited is the second transaction of its kind: in August 2004, Radian launched Smart Home Reinsurance 2004-1 to manage non-prime mortgage risk on an $882 million portfolio of first-lien, non-prime residential mortgages. "Both Smart Home transactions are testaments to Radian's leadership position in financial services and mortgage markets. Our innovation has been recognized by ratings agencies and industry experts. We look forward to continued success in the non-prime mortgage market as we integrate our mortgage insurance, reinsurance, and securitization capabilities," Kasmar added. About Radian Group Inc. Radian Group Inc. is a leading credit enhancement provider to the global financial and capital markets, headquartered in Philadelphia. Radian's subsidiaries provide products and services through three business lines: financial guaranty, mortgage insurance and other financial services. Additional information may be found at http://www.radian.biz/. All statements in this press release that address operating performance, events or developments that we expect or anticipate may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These statements are made on the basis of management's current views and assumptions with respect to future events. The forward-looking statements are subject to risks and uncertainties including the following: changes in general financial and political conditions, such as extended national or regional economic recessions (or expansions), changes in housing values, changes or volatility in interest rates, or other political instability; changes in investor perception of the strength of private mortgage insurers or financial guaranty providers, and risks faced by the businesses, municipalities or pools of assets covered by Radian's insurance; the loss of significant customers with whom Radian has a concentration of its insurance in force; rising delinquencies in mortgage loans insured by Radian resulting from increased consolidation of mortgage lenders and servicers; increased severity or frequency of losses associated with certain Radian products that are riskier than traditional mortgage insurance and municipal guaranty insurance policies; material changes in persistency rates of Radian's mortgage insurance policies; downgrades of the insurance financial-strength ratings assigned by the major ratings agencies to Radian's operating subsidiaries; intense competition from others and from alternative products to private mortgage insurance and financial guaranty insurance; changes in the business practices of Fannie Mae and Freddie Mac; legislative and regulatory changes affecting demand for private mortgage insurance and financial guaranty insurance; changes in claims against mortgage insurance products resulting from the aging of Radian's mortgage insurance policies; changes in Radian's ability to maintain sufficient reinsurance capacity in an increasingly concentrated reinsurance market; vulnerability to the performance of Radian's strategic investments; and the loss of executive officers or other key personnel. Investors are also directed to other risks discussed in documents filed by Radian with the SEC, including the factors detailed in our annual report on Form 10-K for the year ended December 31, 2003 in the section immediately preceding Part I of the report. Radian does not intend to and disclaims any duty or obligation to update or revise any forward-looking statements made in this press release to reflect new information, future events or for any other reason. Contact: For investors - Mona Zeehandelaar - phone: 215 231.1674 email: For the media - David Cheung - phone: 215.231.1362 email: DATASOURCE: Radian Group Inc. CONTACT: For investors - Mona Zeehandelaar, +1-215-231-1674, email: , or For the media - David Cheung, +1-215-231-1362, email: , both of Radian Group Web site: http://www.radian.biz/

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