RDN Radian Group Inc

Year-Over-Year Increase of 13.7% in Book Value Per Share PHILADELPHIA, Oct. 19 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE:RDN) today reported its results for the quarter ended September 30, 2005. The key financial highlights of the quarter and nine months ended September 30, 2005 are shown in the following tables: Key Financial Highlights (dollars in millions, except per share data) Third Quarter: Quarter Ended Quarter Ended Percent September 30, 2005 September 30, 2004 Change Net income $162.6 $122.2 33.1% Diluted net income per share $1.88 $1.27 48.0% Net premiums written $313.9 $282.5 11.1% Net premiums earned $265.6 $264.0 0.6% Revenues $382.6 $329.2 16.2% Book value per share (as of September 30) $43.08 $37.90 13.7% Equity in net income of affiliates $46.8 $45.9 2.0% Persistency (12 months ended September 30) 57.1%* 57.4% * Persistency for the 12 months ended September 30, 2005 includes the impact of a cancellation of a structured transaction that occurred in the second quarter of 2005 in the amount of $3.6 billion of primary insurance in force, which reduced persistency by approximately 3 percentage points. Nine Months: Nine Months Ended Nine Months Ended Percent September 30, 2005 September 30, 2004 Change Net income $418.4 $362.7 15.4% Diluted net income per share $4.65 $3.72 25.0% Net premiums written $828.0 $795.2 4.1% Net premiums earned $756.6 $766.7 (1.3)% Revenues $999.5 $984.9 1.5% Equity in net income of affiliates $161.9 $130.6 24.0% "The company continues to produce solid financial results, an attractive ROE and growth in book value," said S.A. Ibrahim, Chief Executive Officer of Radian. "We continue to steadily grow our existing business as evidenced by double digit increases in net premiums written over last year, while identifying and pursuing new and profitable opportunities," Mr. Ibrahim added. Radian will hold a conference call on Thursday, October 20, 2005, at 9:00 a.m. Eastern time to discuss the company's third quarter results. This call can be accessed by dialing 800.622.9923, passcode 1295564, and will be broadcast live over the Internet at http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives or at http://www.radian.biz/, under "News." A replay of the webcast will be available at this site approximately two hours after the live broadcast ends for a period of one year. In addition, a replay of the conference call will be available two hours after the call from October 20, 2005, through October 27, 2005, using the same dial-in information listed above. Statistical and financial information which is expected to be referred to during the conference call will be available on Radian's website under "Investor Information -- Webcasts, Presentations and Transcripts" or by clicking on http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives. 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/. Financial Results and Supplemental Information Contents Exhibit A: Condensed Consolidated Statements of Income Exhibit B: Condensed Consolidated Balance Sheets Exhibit C: Segment Information - Quarter Ended September 30, 2005 Exhibit D: Segment Information - Quarter Ended September 30, 2004 Exhibit E: Segment Information - Nine Months Ended September 30, 2005 Exhibit F: Segment Information - Nine Months Ended September 30, 2004 Exhibit G: Financial Guaranty Insurance Supplemental Information - Quarter and Nine Months Ended and as of September 30, 2005 Exhibit H: Financial Guaranty Insurance Supplemental Information - Quarter and Nine Months Ended and as of September 30, 2005 Exhibit I: Mortgage Insurance Supplemental Information: New Insurance Written, Risk Written and Captives Exhibit J: Mortgage Insurance Supplemental Information: Insurance in Force and Risk in Force Exhibit K: Mortgage Insurance Supplemental Information: Risk in Force by LTV and Policy Year Exhibit L: Mortgage Insurance Supplemental Information: Claims and Defaults Exhibit M: Mortgage Insurance Supplemental Information: ALT A Exhibit N: Financial Services Supplemental Information Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Income Exhibit A Quarter Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 (Thousands of dollars, except per-share data) Revenues: Net premiums written $313,908 $282,530 $827,966 $795,227 Net premiums earned $265,636 $264,048 $756,639 $766,717 Net investment income 53,253 51,086 154,119 151,670 Gains on sales of investments 5,194 8,993 25,443 40,956 Change in fair value of derivative instruments 53,274 (2,083) 45,301 2,576 Other income 5,265 7,200 18,008 22,996 Total revenues 382,622 329,244 999,510 984,915 Expenses: Provision for losses 92,441 114,125 285,768 345,452 Policy acquisition costs 27,927 35,903 88,355 89,558 Other operating expenses 58,931 47,659 163,019 153,242 Interest expense 12,167 7,996 31,103 26,014 Total expenses 191,466 205,683 568,245 614,266 Equity in net income of affiliates 46,772 45,926 161,946 130,580 Pretax income 237,928 169,487 593,211 501,229 Provision for income taxes 75,371 47,316 174,818 138,545 Net income $162,557 $122,171 $418,393 $362,684 Diluted net income per share (1) $1.88 $1.27 $4.65 $3.72 (1) Net income per share reconciliation Net income $162,557 $122,171 $418,393 $362,684 Interest expense on convertible senior debentures (net of tax) 267 805 1,871 2,413 Net income available to common stockholders $162,824 $122,976 $420,264 $365,097 Weighted average shares outstanding (in thousands) Average common shares outstanding 84,567 92,384 86,507 93,416 Increase in shares - potential exercise of options - diluted basis 860 1,003 895 1,040 Increase in shares - contingently convertible debt (2) 1,266 3,810 2,954 3,810 Weighted average shares outstanding (in thousands) 86,693 97,197 90,356 98,266 (2) All periods include the impact of shares underlying convertible debt that was redeemed on August 1, 2005. The impact on diluted net income per share of including these shares in the calculation was a reduction of $0.03 per share and $0.04 per share for the quarters ended September 30, 2005 and September 30, 2004, respectively, and $0.14 and $0.12 per share for the nine months ended September 30, 2005 and September 30, 2004. Radian Group Inc. and Subsidiaries Condensed Consolidated Balance Sheets Exhibit B (Thousands of dollars, except share and per- September 30 December 31 September 30 share data) 2005 2004 2004 Assets: Cash and investments $5,508,189 $5,500,748 $5,303,946 Investments in affiliates 398,054 393,025 347,404 Deferred policy acquisition costs 206,013 211,928 207,453 Prepaid federal income taxes 539,973 460,149 426,813 Other assets 446,068 434,970 414,404 Total assets $7,098,297 $7,000,820 $6,700,020 Liabilities and stockholders' equity: Unearned premiums $838,042 $770,208 $742,691 Reserve for losses and loss adjustment expenses 792,600 801,012 776,903 Long-term debt 747,393 717,640 717,579 Deferred federal income taxes 863,859 848,224 769,342 Other liabilities 281,388 174,681 209,901 Total liabilities 3,523,282 3,311,765 3,216,416 Common stock 97 97 96 Additional paid-in capital 634,901 1,106,191 1,096,793 Retained earnings 2,810,853 2,397,626 2,243,400 Accumulated other comprehensive income 129,164 185,141 143,315 Total common stockholders' equity 3,575,015 3,689,055 3,483,604 Total liabilities and stockholders' equity $7,098,297 $7,000,820 $6,700,020 Book value per share $43.08 $39.98 $37.90 Treasury Stock Repurchases (Year-to- Date for Periods Presented) Total number of shares repurchased 10,344,500 (1) 2,817,200 2,717,200 Average price paid per share $49.21 $45.38 $45.41 Total cost of repurchased shares $509,094,714 $127,831,591 $123,380,201 (1) 2.6 million shares were repurchased in the 3rd quarter of 2005 at a cost of $135.2 million, under the new repurchase program. Radian Group Inc. and Subsidiaries Segment Information Quarter Ended September 30, 2005 Exhibit C Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $235,790 $- $78,118 $313,908 Net premiums earned $208,902 $- $56,734 $265,636 Net investment income 30,122 62 23,069 53,253 Gains (losses) on sales of investments 4,185 (2,840) 3,849 5,194 Change in fair value of derivative instruments 11,675 (18) 41,617 53,274 Other income 4,353 625 287 5,265 Total revenues 259,237 (2,171) 125,556 382,622 Expenses: Provision for losses 81,551 - 10,890 92,441 Policy acquisition costs 14,742 - 13,185 27,927 Other operating expenses 38,295 1,953 18,683 58,931 Interest expense 6,790 1,095 4,282 12,167 Total expenses 141,378 3,048 47,040 191,466 Equity in net income of affiliates - 47,146 (374) 46,772 Pretax income 117,859 41,927 78,142 237,928 Provision for income taxes 36,528 14,675 24,168 75,371 Net income $81,331 $27,252 $53,974 $162,557 Assets $4,152,704 $410,915 $2,534,678 $7,098,297 Deferred policy acquisition costs 67,327 - 138,686 206,013 Reserve for losses and loss adjustment expenses 580,964 - 211,636 792,600 Unearned premiums 216,603 - 621,439 838,042 Stockholders' equity 1,963,433 300,000 1,311,582 3,575,015 Radian Group Inc. and Subsidiaries Segment Information Quarter Ended September 30, 2004 Exhibit D Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $209,085 $- $73,445 $282,530 Net premiums earned $205,313 $- $58,735 $264,048 Net investment income 29,391 8 21,687 51,086 Gains on sales of investments 6,359 64 2,570 8,993 Change in fair value of derivative instruments (7,035) (145) 5,097 (2,083) Other income 5,381 1,438 381 7,200 Total revenues 239,409 1,365 88,470 329,244 Expenses: Provision for losses 101,000 - 13,125 114,125 Policy acquisition costs 22,538 - 13,365 35,903 Other operating expenses 31,817 2,184 13,658 47,659 Interest expense 4,694 559 2,743 7,996 Total expenses 160,049 2,743 42,891 205,683 Equity in net income of affiliates - 43,893 2,033 45,926 Pretax income 79,360 42,515 47,612 169,487 Income tax provision 21,212 14,879 11,225 47,316 Net income $58,148 $27,636 $36,387 $122,171 Assets $4,003,276 $328,072 $2,368,672 $6,700,020 Deferred policy acquisition costs 72,076 - 135,377 207,453 Reserve for losses and loss adjustment expenses 533,060 - 243,843 776,903 Unearned premiums 129,873 - 612,818 742,691 Stockholders' equity 1,958,326 284,300 1,240,978 3,483,604 Radian Group Inc. and Subsidiaries Segment Information Nine Months Ended September 30, 2005 Exhibit E Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $672,298 $- $155,668 $827,966 Net premiums earned $597,031 $- $159,608 $756,639 Net investment income 87,016 88 67,015 154,119 Gains (losses) on sales of investments 17,957 (1,963) 9,449 25,443 Change in fair value of derivative instruments 6,941 (209) 38,569 45,301 Other income 14,624 2,514 870 18,008 Total revenues 723,569 430 275,511 999,510 Expenses: Provision for losses 259,703 - 26,065 285,768 Policy acquisition costs 48,626 - 39,729 88,355 Other operating expenses 107,445 7,107 48,467 163,019 Interest expense 17,541 2,708 10,854 31,103 Total expenses 433,315 9,815 125,115 568,245 Equity in net income of affiliates - 162,307 (361) 161,946 Pretax income 290,254 152,922 150,035 593,211 Provision for income taxes 83,350 53,523 37,945 174,818 Net income $206,904 $99,399 $112,090 (1) $418,393 (1) (1) Reflects a $4.1 million net loss from the 1st quarter 2005 recapture of previously ceded business by one of the primary Financial Guaranty insurers (in millions): Incr/(Decr) Net premiums earned $(4.6) Policy acquisition costs 1.7 Provision for income taxes (2.2) Net loss $(4.1) Radian Group Inc. and Subsidiaries Segment Information Nine Months Ended September 30, 2004 Exhibit F Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $651,213 $- $144,014 $795,227 Net premiums earned $611,916 $- $154,801 $766,717 Net investment income 87,607 82 63,981 151,670 Gains on sales of investments 34,582 2,663 3,711 40,956 Change in fair value of derivative instruments (3,821) (110) 6,507 2,576 Other income 16,601 5,160 1,235 22,996 Total revenues 746,885 7,795 230,235 984,915 Expenses: Provision for losses 300,162 - 45,290 345,452 Policy acquisition costs 56,757 - 32,801 89,558 Other operating expenses 106,015 10,499 36,728 153,242 Interest expense 15,106 1,869 9,039 26,014 Total expenses 478,040 12,368 123,858 614,266 Equity in net income of affiliates - 129,180 1,400 130,580 Pretax income 268,845 124,607 107,777 501,229 Provision for income taxes 73,510 43,611 21,424 138,545 Net income $195,335 $80,996 $86,353 (1) $362,684 (1) (1) Reflects a $10.3 million net loss from the 1st quarter 2004 recapture of previously ceded business by one of the primary Financial Guaranty insurers (in millions): Incr/(Decr) Net premiums earned $(24.9) Policy acquisition costs (9.8) Change in fair value of derivative instruments (0.8) Provision for income taxes (5.6) Net loss $(10.3) Radian Group Inc. Financial Guaranty Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 Exhibit G Quarter Ended Nine Months Ended (Thousands of dollars, except ratios) September 30 September 30 2005 2004 2005 2004 Net Premiums Written: Public finance direct 22,539 10,006 51,285 35,871 Public finance reinsurance 23,374 19,305 61,354 56,202 Structured direct 19,872 23,293 52,288 76,526 Structured reinsurance 3,092 6,407 16,355 23,813 Trade credit 9,241 14,434 29,128 48,019 78,118 73,445 210,410 240,431 Impact of recapture (1) - - (54,742) (96,417) Net Premiums Written 78,118 73,445 155,668 144,014 Net Premiums Earned: Public finance direct 7,651 7,327 24,667 19,516 Public finance reinsurance 10,058 9,725 25,661 30,810 Structured direct 20,158 19,961 57,258 57,542 Structured reinsurance 4,544 7,285 15,563 24,948 Trade credit 14,323 14,437 40,998 46,877 56,734 58,735 164,147 179,693 Impact of recapture (2) - - (4,539) (24,892) Net Premiums Earned 56,734 58,735 159,608 154,801 Claims paid: Trade credit 6,550 3,288 16,778 18,478 Financial guaranty 1,015 7,474 12,932 24,640 Conseco 7,443 8,225 23,393 23,307 Total 15,008 18,987 53,103 66,425 Impact of recapture (3) - - - 11,488 Claims paid 15,008 18,987 53,103 77,913 Incurred losses: Trade credit 7,120 6,907 14,433 23,541 Financial guaranty 3,770 6,218 11,632 21,749 Total 10,890 13,125 26,065 45,290 Loss ratio - GAAP Basis 19.2% 22.3% 16.3% 29.3% Expense ratio - GAAP Basis 56.2% 46.0% 55.3% 44.9% 75.4% 68.3% 71.6% 74.2% Refundings included in earned premium 4,419 1,895 9,514 4,167 (1) Reflects the impact on net premiums written of the first quarter 2005 and 2004 recapture of previously ceded business by one of the primary Financial Guaranty insurers: (Thousands of dollars) Public reinsurance 48,238 88,819 Structured reinsurance 6,504 7,596 (2) Reflects the impact on net premiums earned of the first quarter 2005 and 2004 recapture of previously ceded business by one of the primary Financial Guaranty insurers: (Thousands of dollars) Public reinsurance 3,870 23,418 Structured reinsurance 669 1,476 (3) Comprised of claims payments related to the first quarter 2004 recapture of previously ceded business. Radian Group Inc. Financial Guaranty Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 Exhibit H (Thousands of dollars, except ratios) September 30 December 31 September 30 2005 2004 2004 Capital and surplus 1,069,988 1,008,423 996,657 Contingency reserve 282,389 251,674 239,493 Qualified statutory capital 1,352,377 1,260,097 1,236,150 Unearned premium reserve 731,505 730,604 709,302 Loss and loss expense reserve 116,256 132,767 126,466 Total policyholders' reserves 2,200,138 2,123,468 2,071,918 Present value of installment premiums 284,511 252,000 363,166 Reinsurance and soft capital facilities 150,000 245,000 245,000 Total claims paying resources 2,634,649 2,620,468 2,680,084 Net debt service outstanding 103,260,772 101,619,835 100,219,130 Capital leverage ratio (1) 76 81 81 Claims paying leverage ratio (2) 39 39 37 Reserve for losses and LAE Specific 33,609 52,142 48,437 Conseco 56,950 80,343 87,693 Non-specific 121,077 108,895 107,713 Total 211,636 241,380 243,843 (1) Net debt service outstanding divided by qualified statutory capital (2) Net debt service outstanding divided by total claims paying resources Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 Exhibit I Quarter Ended September 30 2005 % 2004 % Primary New Insurance Written ($ millions) Flow $7,066 55.7% $9,123 78.1% Structured 5,612 44.3% 2,563 21.9% Total $12,678 100.0% $11,686 100.0% Prime $7,191 56.7% $7,181 61.5% Alt-A 3,719 29.3% 2,633 22.5% A minus and below 1,768 14.0% 1,872 16.0% Total $12,678 100.0% $11,686 100.0% Total Primary New Insurance Written by FICO Score ($ millions) =740 2,956 23.3% 2,395 20.5% Total $12,678 100.0% $11,686 100.0% Percentage of primary new insurance written Monthlies 88% 94% Refinances 38% 37% 95.01% LTV and above 9% 11% ARMs 52% 46% Primary risk written ($ millions) Flow $1,752 67.6% $2,287 73.9% Structured 840 32.4% 809 26.1% Total $2,592 100.0% $3,096 100.0% Other risk written ($ millions) Pool $163 $52 Seconds 322 70 NIMs - 20 International 33 13 Other 150 - Total other risk written $668 $155 Net Premiums Written ($ thousands) Primary and Pool Insurance $197,645 $177,818 Seconds 18,370 15,130 NIMs 12,350 12,875 International 4,067 2,377 Other 3,358 885 Net Premiums Written $235,790 $209,085 Net Premiums Earned ($ thousands) Primary and Pool Insurance $181,748 $169,684 Seconds 12,812 15,723 NIMs 12,906 18,521 International 583 500 Other 853 885 Net Premiums Earned $208,902 $205,313 Captives Premiums ceded to captives ($ millions) $22.0 $22.6 % of total premiums 10.8% 11.6% NIW subject to captives ($ millions) $2,701 $3,988 % of primary NIW 21.3% 34.1% IIF subject to captives 32.1% 32.8% RIF subject to captives 34.0% 34.6% Persistency (twelve months ended September 30) 57.1% 57.4% Nine Months Ended September 30 2005 % 2004 % Primary New Insurance Written ($ millions) Flow $18,856 59.6% $28,392 85.7% Structured 12,808 40.4% 4,726 14.3% Total $31,664 100.0% $33,118 100.0% Prime $18,133 57.3% $21,462 64.8% Alt-A 8,374 26.4% 7,523 22.7% A minus and below 5,157 16.3% 4,133 12.5% Total $31,664 100.0% $33,118 100.0% Total Primary New Insurance Written by FICO Score ($ millions) =740 7,041 22.2% 7,403 22.4% Total $31,664 100.0% $33,118 100.0% Percentage of primary new insurance written Monthlies 87% 93% Refinances 42% 38% 95.01% LTV and above 10% 11% ARMs 51% 39% Primary risk written ($ millions) Flow $4,682 67.7% $7,196 83.2% Structured 2,232 32.3% 1,448 16.8% Total $6,914 100.0% $8,644 100.0% Other risk written ($ millions) Pool $467 $376 Seconds 381 132 NIMs 66 91 International 251 162 Other 661 - Total other risk written $1,826 $761 Net Premiums Written ($ thousands) Primary and Pool Insurance $564,841 $560,276 Seconds 47,701 48,311 NIMs 32,217 36,799 International 22,711 2,941 Other 4,828 2,886 Net Premiums Written $672,298 $651,213 Net Premiums Earned ($ thousands) Primary and Pool Insurance $523,392 $511,453 Seconds 36,775 50,091 NIMs 32,431 46,610 International 2,110 876 Other 2,323 2,886 Net Premiums Earned $597,031 $611,916 Captives Premiums ceded to captives ($ millions) $67.6 $64.5 % of total premiums 11.4% 11.2% NIW subject to captives ($ millions) $7,998 $13,394 % of primary NIW 25.3% 40.4% IIF subject to captives RIF subject to captives Persistency (twelve months ended September 30) Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 Exhibit J September 30 December 31 September 30 2005 % 2004 % 2004 % Primary insurance in force ($ millions) Flow $82,827 75.8% $89,741 77.8% $90,964 78.8% Structured 26,457 24.2% 25,574 22.2% 24,516 21.2% Total $109,284 100.0% $115,315 100.0% $115,480 100.0% Prime $74,207 67.9% $79,628 69.0% $79,900 69.2% Alt-A 21,137 19.3% 22,092 19.2% 22,393 19.4% A minus and below 13,940 12.8% 13,595 11.8% 13,187 11.4% Total $109,284 100.0% $115,315 100.0% $115,480 100.0% Primary risk in force ($ millions) Flow $20,283 79.1% $21,991 81.4% $22,234 83.0% Structured 5,374 20.9% 5,021 18.6% 4,562 17.0% Total $25,657 100.0% $27,012 100.0% $26,796 100.0% Prime $17,642 68.8% $18,422 68.2% $18,349 68.5% Alt-A 4,518 17.6% 5,146 19.1% 5,166 19.3% A minus and below 3,497 13.6% 3,444 12.7% 3,281 12.2% Total $25,657 100.0% $27,012 100.0% $26,796 100.0% Total Primary Risk in Force by FICO Score ($ millions) =740 5,530 21.6% 5,765 21.3% 5,791 21.6% Total $25,657 100.0% $27,012 100.0% $26,796 100.0% Percentage of primary risk in force Monthlies 91% 92% 92% Refinances 37% 37% 37% 95.01% LTV and above 14% 13% 13% ARMs 32% 31% 28% Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 Exhibit K September 30 December 31 September 30 2005 % 2004 % 2004 % Total Primary Risk in Force by LTV ($ millions) 95.01% and above $3,550 13.8% $3,429 12.7% $3,381 12.6% 90.01% to 95.00% 8,736 34.1% 9,822 36.4% 9,911 37.0% 85.01% to 90.00% 9,606 37.4% 10,290 38.1% 10,119 37.8% 85.00% and below 3,765 14.7% 3,471 12.8% 3,385 12.6% Total $25,657 100.0% $27,012 100.0% $26,796 100.0% Total Primary Risk in Force by Policy Year ($ millions) 2001 and prior $2,927 11.4% $4,202 15.6% $4,764 17.8% 2002 2,262 8.8% 3,410 12.6% 3,977 14.8% 2003 6,224 24.3% 9,046 33.5% 10,094 37.7% 2004 7,808 30.4% 10,354 38.3% 7,961 29.7% 2005 6,436 25.1% - - - - Total $25,657 100.0% $27,012 100.0% $26,796 100.0% Other risk in force ($ millions) Pool $2,639 $2,384 $2,363 Seconds 971 673 693 NIMs 283 312 365 International 436 214 186 Other 508 6 8 Total other risk in force $4,837 $3,589 $3,615 Risk to capital ratio- STAT Basis 9.8:1 10.0:1 10.1:1 Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 Exhibit L Quarter Ended Nine Months Ended September 30 September 30 2005 2004 2005 2004 Direct claims paid ($ thousands) Prime $24,369 $36,036 $88,141 $105,683 Alt-A 17,498 21,123 59,403 64,025 A Minus and below 21,310 25,223 62,218 71,666 Seconds 7,883 9,836 26,655 33,134 Total $71,060 $92,218 $236,417 $274,508 Average claim paid ($ thousands) Prime $23.6 $22.5 $23.6 $23.8 Alt-A 36.5 36.5 35.9 39.0 A Minus and below 27.6 26.3 26.5 26.8 Seconds 22.0 25.7 22.5 27.3 Total $26.9 $26.2 $26.5 $27.5 Loss ratio - GAAP Basis 39.0% 49.2% 43.5% 49.1% Expense ratio - GAAP Basis 25.4% 26.5% 26.1% 26.6% 64.4% 75.7% 69.6% 75.7% Sept. 30 Dec. 31 Sept. 30 2005 2004 2004 Default Statistics Primary insurance: Prime Number of insured loans 571,496 610,480 616,468 Number of loans in default 17,629 19,434 19,199 Percentage of loans in default 3.08% 3.18% 3.11% Alt A Number of insured loans 121,115 128,010 130,860 Number of loans in default 7,571 8,339 8,213 Percentage of loans in default 6.25% 6.51% 6.28% A Minus and below Number of insured loans 104,920 104,672 102,599 Number of loans in default 14,831 12,678 12,078 Percentage of loans in default 14.14% 12.11% 11.77% Total Number of insured loans 797,531 843,162 849,927 Number of loans in default 40,031 40,451 39,490 Percentage of loans in default 5.02% 4.80% 4.65% Pool insurance: Number of insured loans 685,648 583,568 580,533 Number of loans in default 7,683 6,749 6,489 Percentage of loans in default 1.12% 1.16% 1.12% Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 ALT-A Exhibit M Quarter Ended Nine Months Ended ($ millions) September 30 September 30 2005 % 2004 % 2005 % 2004 % Primary New Insurance Written by FICO Score =740 979 26.3% 491 18.6% 2,086 24.9% 1,427 19.0% Total $3,719 100.0% $2,633 100.0% $8,374 100.0% $7,523 100.0% Primary Risk in Force by FICO Score =740 813 18.0% 891 17.3% Total $4,518 100.0% $5,166 100.0% Primary Risk in Force by LTV 95.01% and above $228 5.0% $415 8.0% 90.01% to 95.00% 1,462 32.4% 1,842 35.7% 85.01% to 90.00% 1,958 43.3% 2,154 41.7% 85.00% and below 870 19.3% 755 14.6% Total $4,518 100.0% $5,166 100.0% Primary Risk in Force by Policy Year 2001 and prior $217 4.8% $443 8.6% 2002 391 8.7% 799 15.5% 2003 1,034 22.9% 2,067 39.9% 2004 1,619 35.8% 1,857 36.0% 2005 1,257 27.8% - - Total $4,518 100.0% $5,166 100.0% Radian Group Inc. Financial Services Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2005 Exhibit N Quarter Ended Nine Months Ended ($ thousands ) September 30 September 30 2005 2004 2005 2004 Investment in Affiliates - Selected Information C-BASS Balance, beginning of period $332,367 $248,759 $290,073 $226,710 Net income for period 20,727 18,095 80,271 72,644 Dividends received 9,750 - 27,000 32,500 Balance, end of period $343,344 $266,854 $343,344 $266,854 Sherman Balance, beginning of period $103,831 $48,709 $101,492 $65,979 Net income for period 26,418 25,798 82,036 56,536 Dividends received 58,786 - 110,661 49,800 Other comprehensive income 797 (914) 1,468 878 Sale of ownership interest (18,947) - (18,947) - Warrant repurchase - - (2,075) - Balance, end of period $53,313 $73,593 $53,313 $73,593 Portfolio Information: C-BASS Servicing portfolio $36,500,000 $22,270,000 Total assets 3,765,804 4,466,115 Servicing income 62,210 38,931 $185,423 $112,958 Net interest income 51,280 37,025 136,838 109,207 Total revenues 134,539 105,115 456,076 354,174 Sherman Total assets $868,957 $444,368 Net revenues $213,799 $129,661 $572,351 $353,314 All statements made in this press release that address 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, as well as Radian's prospects as a whole, 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, population trends and changes in household formation patterns, changes in unemployment rates, 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 a customer 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; heightened competition from other insurance providers and from alternative products to private mortgage insurance and financial guaranty insurance; changes in the business practices of Fannie Mae and Freddie Mac; the application of existing federal or state consumer lending, insurance and other applicable laws and regulations, or unfavorable changes in these laws and regulations or the way they are interpreted or applied, including: (i) the possibility of private lawsuits or 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 (particularly in light of public reports that some state insurance departments may review or investigate captive reinsurance arrangements used in the mortgage insurance industry), (ii) the outcome of private lawsuits that have been brought against us and other mortgage insurers under the Fair Credit Reporting Act or (iii) legislative and regulatory changes affecting demand for private mortgage insurance or financial guaranty insurance; 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 to estimate accurately the fair value amounts of derivative financial guaranty contracts in determining gains and losses on these contracts; changes in accounting guidance from the SEC or the Financial Accounting Standards Board regarding income recognition and the treatment of loss reserves in the mortgage insurance or financial guaranty industries; changes in claims against mortgage insurance products resulting from the aging of Radian's mortgage insurance policies; vulnerability to the performance of Radian's strategic investments; international expansion of our mortgage insurance and financial guaranty businesses into new markets and risks associated with our international business activities; 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, 2004 in the section immediately preceding Part I of the report. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date of this press release. 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. DATASOURCE: Radian Group Inc. CONTACT: Investors: Mona Zeehandelaar, +1-215-231-1674, , or Media: Corporate Communications, +1-888-NEWS-520, , both of Radian Group Web site: http://www.radian.biz/

Copyright