Company also added to book value and exceeded return on equity
target PHILADELPHIA, July 19 /PRNewswire-FirstCall/ -- Radian Group
Inc. (NYSE:RDN) today reported strong results for the quarter ended
June 30, 2006, as diluted net income per share rose by more than
14% year over year to $1.79, book value per share rose more than
11% to $46.84 and return on equity exceeded the company's target.
"Our second quarter results validate the strategy we outlined last
year," said S.A. Ibrahim, Chief Executive Officer. "Our businesses
performed well, illustrating our success in leveraging Radian's
blended expertise in mortgage insurance and financial guaranty to
benefit customers and to effectively manage our own credit risk
exposure." Regarding its Mortgage Insurance business, Radian noted
that credit conditions were favorable, and that it experienced
strong volume in both flow and structured products. Primary
insurance in force grew to $116 billion at June 30, 2006, from $108
billion at June 30, 2005. Total defaults and paid claims continued
to decline. The company's Financial Guaranty business also posted a
strong performance, closing several deals in the pipeline and
earning attractive risk-adjusted returns. This was accomplished
notwithstanding the persistence of tight credit spreads and an
increase in competitive pressures, and demonstrates the viability
of the company's AA franchise. In addition, Standard & Poor's
affirmed the AA financial strength rating of Radian Asset
Assurance, Radian's primary financial guaranty subsidiary, and
revised upward its outlook to stable. In the Financial Services
segment, C-BASS and Sherman continued to be very strong
contributors to Radian's results. The key financial highlights of
the quarter ended June 30, 2006, are as follows: Key Financial
Highlights (dollars in millions, except per share data) Second
quarter Quarter ended Quarter ended Percent June 30, 2006 June 30,
2005 change Revenue $304.6 $310.3 (1.8)% Net income $148.1 $140.2
5.6% Diluted net income per share $1.79 $1.56 14.7% Net premiums
written $298.9 $299.2 (0.1)% Net premiums earned $259.1 $244.0 6.2%
Equity in net income of affiliates $72.0 $63.9 12.7% Book value per
share $46.84 $41.99 11.6% Six months Six months Six months ended
June 30, ended June 30, Percent 2006 2005 change Revenue $658.2
$616.9 6.7% Net income $311.8 $255.8 21.9% Diluted net income per
share $3.75 $2.79 34.4% Net premiums written $578.5 $514.1 12.5%
Net premiums earned $512.8 $491.0 4.4% Equity in net income of
affiliates $130.4 $115.2 13.2% Radian will hold a conference call
on Thursday, July 20, 2006, at 9:00 a.m. Eastern time to discuss
the company's second quarter 2006 results. This call 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/ > 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. Statistical and
financial information, which is expected to be referred to during
the conference call, will be available on Radian's website under
Investors > 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 global credit risk management company
headquartered in Philadelphia with significant operations in both
New York and London. Radian develops innovative financial solutions
by applying its core mortgage credit risk expertise and structured
finance capabilities to the credit enhancement needs of the capital
markets worldwide, primarily through credit insurance products. The
company also provides credit enhancement for public finance and
other corporate and consumer assets on both a direct and
reinsurance basis and holds strategic interests in active
credit-based consumer asset businesses. Additional information may
be found at http://www.radian.biz/. Financial Results and
Supplemental Information Contents For trend information on all
schedules, refer to Radian's quarterly financial statistics at
http://www.radian.biz/investors/financial/corporate.aspx. Exhibit
A: Condensed Consolidated Statements of Income Exhibit B: Condensed
Consolidated Balance Sheets Exhibit C: Segment Information Quarter
Ended June 30, 2006 Exhibit D: Segment Information Quarter Ended
June 30, 2005 Exhibit E: Segment Information Six Months Ended June
30, 2006 Exhibit F: Segment Information Six Months Ended June 30,
2005 Exhibit G: Financial Guaranty Insurance Supplemental
Information - Quarter and Six Months Ended and as of June 30, 2006
Exhibit H: Financial Guaranty Insurance Supplemental Information -
Quarter and Six Months Ended and as of June 30, 2006 Exhibit I:
Mortgage Insurance Supplemental Information: New Insurance Written,
Risk Written 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 and Other Risk in Force Exhibit L: Mortgage
Insurance Supplemental Information: Claims and Reserves Exhibit M:
Mortgage Insurance Supplemental Information: Defaults Exhibit N:
Mortgage Insurance Supplemental Information: Net Premiums Written,
Net Premiums Earned and Captives Exhibit O: Mortgage Insurance
Supplemental Information: ALT-A Exhibit P: Financial Services
Supplemental Information Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income Exhibit A Quarter Ended
Six Months Ended June 30 June 30 2006 2005 2006 2005 (In thousands,
except per-share data) Revenues: Net premiums written $298,875
$299,218 $578,480 $514,058 Net premiums earned $259,086 $243,978
$512,783 $491,003 Net investment income 59,678 50,004 113,938
100,866 Net gains on securities 5,324 8,723 28,178 20,249 Change in
fair value of derivative instruments (25,287) 987 (7,657) (7,973)
Other income 5,778 6,635 10,989 12,743 Total revenues 304,579
310,327 658,231 616,888 Expenses: Provision for losses 84,860
83,827 163,494 193,327 Policy acquisition costs 26,820 31,072
54,184 60,428 Other operating expenses 58,099 52,418 118,376
104,088 Interest expense 12,538 9,978 24,378 18,936 Total expenses
182,317 177,295 360,432 376,779 Equity in net income of affiliates
72,038 63,878 130,378 115,174 Pretax income 194,300 196,910 428,177
355,283 Provision for income taxes 46,155 56,686 116,334 99,447 Net
income $148,145 $140,224 $311,843 $255,836 Diluted net income per
share (1) $1.79 $1.56 $3.75 $2.79 (1) Net income per share
reconciliation Net income $148,145 $140,224 $311,843 $255,836
Interest expense on convertible senior debentures (net of tax) -
802 - 1,604 Net income available to common stockholders $148,145
$141,026 $311,843 $257,440 Weighted average shares outstanding (in
thousands) Average common shares outstanding 81,921 85,464 82,355
87,476 Increase in shares-potential exercise of options-diluted
basis 835 854 745 913 Increase in shares-contingently convertible
debt (2) - 3,798 - 3,798 Weighted average shares outstanding (in
thousands) 82,756 90,116 83,100 92,187 (2) The 2005 period includes
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 $0.06
per share for the quarter ended June 30, 2005 and $0.10 per share
for the six months ended June 30, 2005. For Trend Information,
refer to our Quarterly Financial Statistics on Radian's (RDN)
website. Radian Group Inc. and Subsidiaries Condensed Consolidated
Balance Sheets Exhibit B (In thousands, except share and per-share
data) June 30 December 31 June 30 2006 2005 2005 Assets: Cash and
investments $5,598,167 $5,521,561 $5,580,578 Investments in
affiliates 492,175 446,151 437,765 Deferred policy acquisition
costs 215,803 208,325 201,253 Prepaid federal income taxes 709,304
585,514 530,549 Other assets 491,898 469,059 418,058 Total assets
$7,507,347 $7,230,610 $7,168,203 Liabilities and stockholders'
equity: Unearned premiums $913,879 $849,360 $789,878 Reserve for
losses and loss adjustment expenses 789,701 801,002 786,942
Long-term debt 747,615 747,466 966,658 Deferred federal income
taxes 1,020,720 961,993 870,129 Other liabilities 214,437 207,909
187,021 Total liabilities 3,686,352 3,567,730 3,600,628 Common
stock 97 97 97 Additional paid-in capital 538,698 629,019 748,205
Retained earnings 3,213,016 2,913,649 2,649,991 Accumulated other
comprehensive income 69,184 120,115 169,282 Total common
stockholders' equity 3,820,995 3,662,880 3,567,575 Total
liabilities and stockholders' equity $7,507,347 $7,230,610
$7,168,203 Book value per share $46.84 $44.11 $41.99 Treasury Stock
Repurchases (Year-to-Date for Periods Presented) Total number of
shares repurchased 2,000,000(1) 10,767,800 7,767,800 Average price
paid per share $60.96 $49.58 $48.13 Total cost of repurchased
shares $121,921,937 $533,888,969 $373,856,933 (1) 1.0 million
shares were repurchased in the 2nd quarter of 2006 at a cost of
$61.7 million. Radian Group Inc. and Subsidiaries Segment
Information Quarter Ended June 30, 2006 Exhibit C Mortgage
Financial Financial (In thousands) Insurance Guaranty Services
Total Revenues: Net premiums written $217,050 $81,825 $- $298,875
Net premiums earned $208,670 $50,416 $- $259,086 Net investment
income 36,150 23,520 8 59,678 Net gains(losses) on securities 3,684
1,709 (69) 5,324 Change in fair value of derivative instruments
(3,998) (21,289) - (25,287) Other income 3,475 120 2,183 5,778
Total revenues 247,981 54,476 2,122 304,579 Expenses: Provision for
losses 77,577 7,283 - 84,860 Policy acquisition costs 15,720 11,100
- 26,820 Other operating expenses 40,542 15,297 2,260 58,099
Interest expense 6,984 4,325 1,229 12,538 Total expenses 140,823
38,005 3,489 182,317 Equity in net income of affiliates - - 72,038
72,038 Pretax income 107,158 16,471 70,671 194,300 Provision for
income taxes 23,986 (2,565) 24,734 46,155 Net income $83,172
$19,036 $45,937 $148,145 Assets $4,505,679 $2,500,483 $501,185
$7,507,347 Deferred policy acquisition costs 68,843 146,960 -
215,803 Reserve for losses and loss adjustment expenses 592,526
197,175 - 789,701 Unearned premiums 241,012 672,867 - 913,879
Stockholders' equity 2,220,255 1,263,231 337,509 3,820,995 Radian
Group Inc. and Subsidiaries Segment Information Quarter Ended June
30, 2005 Exhibit D Mortgage Financial Financial (Thousands of
dollars) Insurance Guaranty Services Total Revenues: Net premiums
written $236,271 $62,947 $- $299,218 Net premiums earned $195,664
$48,314 $- $243,978 Net investment income 28,101 21,887 16 50,004
Net gains on securities 6,653 2,027 43 8,723 Change in fair value
of derivative instruments (7,920) 8,909 (2) 987 Other income 5,679
267 689 6,635 Total revenues 228,177 81,404 746 310,327 Expenses:
Provision for losses 80,225 3,602 - 83,827 Policy acquisition costs
19,206 11,866 - 31,072 Other operating expenses 35,481 15,390 1,547
52,418 Interest expense 5,627 3,473 878 9,978 Total expenses
140,539 34,331 2,425 177,295 Equity in net income of affiliates -
13 63,865 63,878 Pretax income 87,638 47,086 62,186 196,910
Provision for income taxes 24,786 10,136 21,764 56,686 Net income
$62,852 $36,950 $40,422 $140,224 Assets $4,290,331 $2,427,686
$450,186 $7,168,203 Deferred policy acquisition costs 66,456
134,797 - 201,253 Reserve for losses and loss adjustment expenses
571,127 215,815 - 786,942 Unearned premiums 189,699 600,179 -
789,878 Stockholders' equity 1,920,283 1,309,608 337,684 3,567,575
Radian Group Inc. and Subsidiaries Segment Information Six Months
Ended June 30, 2006 Exhibit E Mortgage Financial Financial
(Thousands of dollars) Insurance Guaranty Services Total Revenues:
Net premiums written $440,816 $137,664 $- $578,480 Net premiums
earned $411,376 $101,407 $- $512,783 Net investment income 67,815
46,038 85 113,938 Net gains on securities 17,261 8,887 2,030 28,178
Change in fair value of derivative instruments 5,123 (12,780) -
(7,657) Other income 7,109 334 3,546 10,989 Total revenues 508,684
143,886 5,661 658,231 Expenses: Provision for losses 148,674 14,820
- 163,494 Policy acquisition costs 29,065 25,119 - 54,184 Other
operating expenses 84,809 30,053 3,514 118,376 Interest expense
13,685 8,351 2,342 24,378 Total expenses 276,233 78,343 5,856
360,432 Equity in net income of affiliates - - 130,378 130,378
Pretax income 232,451 65,543 130,183 428,177 Provision for income
taxes 61,135 9,635 45,564 116,334 Net income $171,316 $55,908
$84,619 $311,843 Radian Group Inc. and Subsidiaries Segment
Information Six Months Ended June 30, 2005 Exhibit F Mortgage
Financial Financial (Thousands of dollars) Insurance Guaranty
Services Total Revenues: Net premiums written $436,508 $77,550 $-
$514,058 Net premiums earned $388,129 $102,874 $- $491,003 Net
investment income 56,894 43,946 26 100,866 Net gains on securities
13,772 5,600 877 20,249 Change in fair value of derivative
instruments (4,734) (3,048) (191) (7,973) Other income 10,271 583
1,889 12,743 Total revenues 464,332 149,955 2,601 616,888 Expenses:
Provision for losses 178,152 15,175 - 193,327 Policy acquisition
costs 33,884 26,544 - 60,428 Other operating expenses 69,150 29,784
5,154 104,088 Interest expense 10,751 6,572 1,613 18,936 Total
expenses 291,937 78,075 6,767 376,779 Equity in net income of
affiliates - 13 115,161 115,174 Pretax income 172,395 71,893
110,995 355,283 Provision for income taxes 46,822 13,777 38,848
99,447 Net income $125,573 $58,116 (1) $72,147 $255,836 (1) (1)
Reflects a $4.1 million net loss from 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 $(4.1) Radian Group Inc. Financial Guaranty Supplemental
Information For the Quarter and Six Months Ended and as of June 30,
2006 Exhibit G Quarter Ended Six Months Ended ($ in thousands,
except ratios) June 30 June 30 2006 2005 2006 2005 Net Premiums
Written: Public finance direct $24,854 $13,313 $38,407 $28,746
Public finance reinsurance 28,712 20,954 46,695 37,980 Structured
direct 21,334 17,359 39,606 32,416 Structured reinsurance 5,452
4,753 8,505 13,263 Trade credit reinsurance 1,473 6,568 4,451
19,887 81,825 62,947 137,664 132,292 Impact of recapture (1) - - -
(54,742) Net Premiums Written $81,825 $62,947 $137,664 $77,550 Net
Premiums Earned: Public finance direct $7,450 $8,053 $15,293
$17,016 Public finance reinsurance 7,865 7,090 16,158 15,603
Structured direct 22,807 18,881 44,310 37,100 Structured
reinsurance 5,642 3,753 10,283 11,019 Trade credit reinsurance
6,652 10,537 15,363 26,675 50,416 48,314 101,407 107,413 Impact of
recapture (2) - - - (4,539) Net Premiums Earned $50,416 $48,314
$101,407 $102,874 Refundings included in earned premium $928 $2,654
$3,310 $5,095 Claims paid: Trade credit reinsurance $4,354 $5,230
$8,354 $10,228 Other financial guaranty 6,919 (567) 6,809 11,917
Conseco 4,428 7,981 8,745 15,950 Total $15,701 $12,644 $23,908
$38,095 Incurred losses: Trade credit reinsurance $3,244 $272
$7,194 $7,313 Other financial guaranty 4,039 3,330 8,658 7,862
Conseco - - (1,032) - Total $7,283 $3,602 $14,820 $15,175 Loss
ratio- GAAP Basis 14.4% 7.5% 14.6% 14.7% Expense ratio- GAAP Basis
52.4% 56.4% 54.4% 54.8% 66.8% 63.9% 69.0% 69.5% Net claims paid
(received) under derivatives contracts $(1,226) $(2,140) $65,413
$(4,376) (1) Reflects the impact on net premiums written of the
first quarter 2005 recapture of previously ceded business by one of
the primary Financial Guaranty insurers: (In thousands) Public
reinsurance 48,238 Structured reinsurance 6,504 (2) Reflects the
impact on net premiums earned of the first quarter 2005 recapture
of previously ceded business by one of the primary Financial
Guaranty insurers: (In thousands) Public reinsurance 3,870
Structured reinsurance 669 Radian Group Inc. Financial Guaranty
Supplemental Information For the Quarter and Six Months Ended and
as of June 30, 2006 Exhibit H ($ in thousands, except ratios) June
30 December 31 June 30 2006 2005 2005 Capital and surplus $989,716
$1,004,505 $1,057,364 Contingency reserve 301,364 271,907 266,775
Qualified statutory capital 1,291,080 1,276,412 1,324,139 Unearned
premium reserve 794,989 751,656 708,425 Loss and loss expense
reserve 106,494 108,576 119,796 Total policyholders' reserves
2,192,563 2,136,644 2,152,360 Present value of installment premiums
310,178 302,953 249,901 Reinsurance and soft capital facilities
150,000 150,000 150,000 Total claims paying resources $2,652,741
$2,589,597 $2,552,261 Net debt service outstanding $126,568,891
$110,344,057 $96,731,753 Capital leverage ratio (1) 98 86 73 Claims
paying leverage ratio (2) 48 43 38 Net par outstanding by product:
Public finance direct $14,717,373 $14,043,786 $12,521,798 Public
finance reinsurance 36,020,773 33,047,512 31,197,417 Structured
direct 35,152,186 24,608,489 17,310,352 Structured reinsurance
4,792,978 4,952,146 4,708,548 Total $90,683,310 $76,651,933
$65,738,115 Reinsurance business net par outstanding: Treaty 59%
58% 59% Facultative 41% 42% 41% Reserve for losses and LAE Specific
$36,569 $29,311 $36,582 Conseco 40,993 50,770 64,393 Non-specific
119,613 124,712 114,840 Total $197,175 $204,793 $215,815 (1) Net
debt service outstanding divided by qualified statutory capital (2)
Net debt service outstanding divided by total claims paying
resources Radian Group Inc. Mortgage Insurance Supplemental
Information For the Quarter and Six Months Ended and as of June 30,
2006 Exhibit I Quarter Ended June 30 2006 % 2005 % Primary New
Insurance Written ($ in millions) Flow $6,662 57.7% $6,128 47.3%
Structured 4,886 42.3% 6,814 52.7% Total Primary $11,548 100.0%
$12,942 100.0% Flow Prime $4,879 73.2% $4,635 75.7% Alt-A 1,266
19.0% 909 14.8% A minus and below 517 7.8% 584 9.5% Total Flow
$6,662 100.0% $6,128 100.0% Structured Prime $1,287 26.3% $2,024
29.7% Alt-A 3,555 72.8% 2,603 38.2% A minus and below 44 0.9% 2,187
32.1% Total Structured $4,886 100.0% $6,814 100.0% Total Prime
$6,166 53.4% $6,659 51.5% Alt-A 4,821 41.7% 3,512 27.1% A minus and
below 561 4.9% 2,771 21.4% Total Primary $11,548 100.0% $12,942
100.0% Total Primary New Insurance Written by FICO Score ($ in
millions) Flow =740 1,817 27.3% 1,683 27.5% Total Flow $6,662
100.0% $6,128 100.0% Structured =740 1,011 20.7% 895 13.1% Total
Structured $4,886 100.0% $6,814 100.0% Total =740 2,828 24.5% 2,578
19.9% Total Primary $11,548 100.0% $12,942 100.0% Percentage of
primary new insurance written Monthlies 92% 85% Refinances 35% 48%
95.01% LTV and above 13% 9% ARMs Less than 5 years 12% 42% 5 years
and longer 17% 14% Primary risk written ($ in millions) Flow $1,695
94.1% $1,516 53.2% Structured 107 5.9% 1,332 46.8% Total Primary
$1,802 100.0% $2,848 100.0% Pool risk written (In millions) $208
$248 Other risk written (In millions) Seconds 1st loss $18 $9 2nd
loss 45 40 NIMs 17 38 International 1st loss-Hong Kong primary
mortgage insurance 5 157 Reinsurance 3 1 Credit default swaps - -
Other Domestic credit default swaps 12 - Financial guaranty wrap -
Total other risk written $100 $245 Six Months Ended June 30 2006 %
2005 % Primary New Insurance Written ($ in millions) Flow $11,896
48.9% $11,790 62.1% Structured 12,455 51.1% 7,196 37.9% Total
Primary $24,351 100.0% $18,986 100.0% Flow Prime $8,650 72.7%
$8,790 74.6% Alt-A 2,371 19.9% 1,853 15.7% A minus and below 875
7.4% 1,147 9.7% Total Flow $11,896 100.0% $11,790 100.0% Structured
Prime $3,551 28.5% $2,152 29.9% Alt-A 7,472 60.0% 2,802 38.9% A
minus and below 1,432 11.5% 2,242 31.2% Total Structured $12,455
100.0% $7,196 100.0% Total Prime $12,201 50.1% $10,942 57.6% Alt-A
9,843 40.4% 4,655 24.5% A minus and below 2,307 9.5% 3,389 17.9%
Total Primary $24,351 100.0% $18,986 100.0% Total Primary New
Insurance Written by FICO Score ($ in millions) Flow =740 3,235
27.2% 3,133 26.5% Total Flow $11,896 100.0% $11,790 100.0%
Structured =740 2,506 20.1% 952 13.2% Total Structured $12,455
100.0% $7,196 100.0% Total =740 5,741 23.6% 4,085 21.5% Total
Primary $24,351 100.0% $18,986 100.0% Percentage of primary new
insurance written Monthlies 88% 87% Refinances 37% 45% 95.01% LTV
and above 10% 11% ARMs Less than 5 years 27% 36% 5 years and longer
18% 14% Primary risk written ($ in millions) Flow $3,024 72.3%
$2,930 67.8% Structured 1,157 27.7% 1,392 32.2% Total Primary
$4,181 100.0% $4,322 100.0% Pool risk written (In millions) $269
$304 Other risk written (In millions) Seconds 1st loss $42 $13 2nd
loss 177 46 NIMs 106 66 International 1st loss-Hong Kong primary
mortgage insurance 22 207 Reinsurance 5 11 Credit default swaps - -
Other Domestic credit default swaps 32 - Financial guaranty wrap -
511 Total other risk written $384 $854 Radian Group Inc. Mortgage
Insurance Supplemental Information For the Quarter and Six Months
Ended and as of June 30, 2006 Exhibit J June 30 June 30 2006 % 2005
% Primary insurance in force ($ in millions) Flow $81,828 70.5%
$85,093 78.5% Structured 34,168 29.5% 23,334 21.5% Total Primary
$115,996 100.0% $108,427 100.0% Prime $76,868 66.3% $74,555 68.8%
Alt-A 25,998 22.4% 19,869 18.3% A minus and below 13,130 11.3%
14,003 12.9% Total Primary $115,996 100.0% $108,427 100.0% Primary
risk in force ($ in millions) Flow $20,191 78.5% $20,795 80.0%
Structured 5,528 21.5% 5,192 20.0% Total Primary $25,719 100.0%
$25,987 100.0% Flow Prime $15,756 78.0% $15,773 75.9% Alt-A 2,902
14.4% 3,395 16.3% A minus and below 1,533 7.6% 1,627 7.8% Total
Flow $20,191 100.0% $20,795 100.0% Structured Prime $2,207 39.9%
$2,050 39.5% Alt-A 1,540 27.9% 1,256 24.2% A minus and below 1,781
32.2% 1,886 36.3% Total Structured $5,528 100.0% $5,192 100.0%
Total Prime $17,963 69.8% $17,823 68.6% Alt-A 4,442 17.3% 4,651
17.9% A minus and below 3,314 12.9% 3,513 13.5% Total Primary
$25,719 100.0% $25,987 100.0% Total Primary Risk in Force by FICO
Score ($ in millions) Flow =740 5,251 26.0% 5,135 24.7% Total Flow
$20,191 100.0% $20,795 100.0% Structured =740 544 9.8% 448 8.6%
Total Structured $5,528 100.0% $5,192 100.0% Total =740 5,795 22.5%
5,583 21.4% Total Primary $25,719 100.0% $25,987 100.0% Percentage
of primary risk in force Monthlies 90% 91% Refinances 35% 38%
95.01% LTV and above 15% 13% ARMs Less than 5 years 23% 24% 5 years
and longer 9% 8% Pool risk in force ($ in millions) Prime $2,210
75.0% $2,010 78.5% Alt-A 266 9.0% 273 10.7% A minus and below 470
16.0% 275 10.8% Total $2,946 100.0% $2,558 100.0% Radian Group Inc.
Mortgage Insurance Supplemental Information For the Quarter and Six
Months Ended and as of June 30, 2006 Exhibit K June 30 June 30 2006
% 2005 % Total Primary Risk in Force by LTV ($ in millions) 95.01%
and above $3,901 15.2% $3,442 13.3% 90.01% to 95.00% 8,293 32.2%
9,106 35.0% 85.01% to 90.00% 9,291 36.1% 9,902 38.1% 85.00% and
below 4,234 16.5% 3,537 13.6% Total $25,719 100.0% $25,987 100.0%
Total Primary Risk in Force by Policy Year ($ in millions) 2002 and
prior $3,923 15.3% $5,872 22.6% 2003 4,561 17.7% 7,180 27.6% 2004
5,761 22.4% 8,792 33.8% 2005 7,496 29.1% 4,143 16.0% 2006 3,978
15.5% - - Total $25,719 100.0% $25,987 100.0% Total Pool Risk in
Force by Policy Year ($ in millions) 2002 and prior $1,652 56.1%
$1,727 67.5% 2003 151 5.1% 220 8.6% 2004 291 9.9% 304 11.9% 2005
651 22.1% 307 12.0% 2006 201 6.8% - - Total Pool risk in Force
$2,946 100.0% $2,558 100.0% Other risk in force (In millions)
Seconds 1st loss $653 $568 2nd loss 776 112 NIMs 289 311
International 1st loss-Hong Kong primary mortgage insurance 293 207
Reinsurance 31 29 Credit default swaps 7,889 180 Other Domestic
credit default swaps 224 - Financial guaranty wrap 159 448 Total
other risk in force $10,314 $1,855 Risk to capital ratio-STAT Basis
10.7:1 9.9:1 Radian Group Inc. Mortgage Insurance Supplemental
Information For the Quarter and Six Months Ended and as of June 30,
2006 Exhibit L Quarter Ended Six Months Ended June 30 June 30 2006
2005 2006 2005 Direct claims paid ($ in thousands) Prime $29,722
$31,901 $59,831 $63,772 Alt-A 15,231 19,573 34,021 41,905 A minus
and below 22,390 20,024 45,781 40,908 Seconds 10,264 8,165 18,167
18,772 Total $77,607 $79,663 $157,800 $165,357 Average claim paid
($ in thousands) Prime $25.3 $22.7 $26.1 $23.6 Alt-A 33.7 34.3 37.1
35.7 A minus and below 26.7 25.6 27.9 26.0 Seconds 28.4 20.0 25.7
22.7 Total $27.4 $25.2 $28.4 $26.3 Loss ratio - GAAP Basis 37.2%
41.0% 36.1% 45.9% Expense ratio - GAAP Basis 26.9% 28.0% 27.7%
26.5% 64.1% 69.0% 63.8% 72.4% Reserve for losses by category ($ in
thousands): Prime $177,692 $163,194 Alt-A 134,940 160,504 A minus
and below 207,077 158,154 Pool Insurance 33,149 45,512 Seconds
30,862 36,847 Other 8,806 6,916 Total $592,526 $571,127 Radian
Group Inc. Mortgage Insurance Supplemental Information For the
Quarter and Six Months Ended and as of June 30, 2006 Exhibit M June
30 December 31 June 30 2006 2005 2005 Default Statistics Primary
insurance: Flow Prime Number of insured loans 499,435 508,117
529,171 Number of loans in default 14,283 18,045 14,929 Percentage
of loans in default 2.86% 3.55% 2.82% Alt-A Number of insured loans
63,985 67,339 73,224 Number of loans in default 4,167 4,946 4,894
Percentage of loans in default 6.51% 7.34% 6.68% A minus and below
Number of insured loans 52,348 54,066 56,961 Number of loans in
default 6,765 7,543 6,339 Percentage of loans in default 12.92%
13.95% 11.13% Total Flow Number of insured loans 615,768 629,522
659,356 Number of loans in default 25,215 30,534 26,162 Percentage
of loans in default 4.09% 4.85% 3.97% Structured Prime Number of
insured loans 70,416 59,457 51,023 Number of loans in default 2,540
2,640 1,952 Percentage of loans in default 3.61% 4.44% 3.83% Alt-A
Number of insured loans 76,131 50,997 44,266 Number of loans in
default 2,589 2,564 2,493 Percentage of loans in default 3.40%
5.03% 5.63% A minus and below Number of insured loans 46,500 47,348
49,103 Number of loans in default 8,193 8,472 6,899 Percentage of
loans in default 17.62% 17.89% 14.05% Total Structured Number of
insured loans 193,047 157,802 144,392 Number of loans in default
13,322 13,676 11,344 Percentage of loans in default 6.90% 8.67%
7.86% Total Primary Insurance Prime Number of insured loans 569,851
567,574 580,194 Number of loans in default 16,823 20,685 16,881
Percentage of loans in default 2.95% 3.64% 2.91% Alt-A Number of
insured loans 140,116 118,336 117,490 Number of loans in default
6,756 7,510 7,387 Percentage of loans in default 4.82% 6.35% 6.29%
A minus and below Number of insured loans 98,848 101,414 106,064
Number of loans in default 14,958 16,015 13,238 Percentage of loans
in default 15.13% 15.79% 12.48% Total Primary Insurance Number of
insured loans 808,815 787,324 803,748 Number of loans in default
38,537 (1) 44,210 (1) 37,506 Percentage of loans in default 4.76%
5.62% 4.67% Pool insurance: Number of loans in default 15,338 (2)
10,194 (2) 6,691 (1) Includes approximately 551 and 452 defaults at
June 30, 2006 and December 31, 2005, respectively, where reserves
have not been established because no claim payment is currently
anticipated. (2) Includes approximately 9,867 and 3,699 defaults at
June 30, 2006 and December 31, 2005, respectively, where reserves
have not been established because no claim payment is currently
anticipated. Radian Group Inc. Mortgage Insurance Supplemental
Information For the Quarter and Six Months Ended and as of June 30,
2006 Exhibit N Quarter Ended Six Months Ended June 30 June 30 2006
2005 2006 2005 Net Premiums Written (In thousands) Primary and Pool
Insurance $187,686 $191,674 $381,132 $368,548 Seconds 15,245 17,530
25,784 29,331 NIMs 7,085 10,520 19,708 19,880 International 3,391
16,442 5,952 18,644 Domestic credit default swaps 3,631 - 8,180 -
Financial guaranty wrap 12 105 60 105 Net Premiums Written $217,050
$236,271 $440,816 $436,508 Net Premiums Earned (In thousands)
Primary and Pool Insurance $185,020 $173,285 $360,828 $342,996
Seconds 13,848 11,568 28,758 23,963 NIMs 5,866 9,684 13,664 19,538
International 2,706 1,022 5,917 1,527 Domestic credit default swaps
1,218 - 2,149 - Financial guaranty wrap 12 105 60 105 Net Premiums
Earned $208,670 $195,664 $411,376 $388,129 Captives Premiums ceded
to captives (In millions) $24.3 $21.8 $47.2 $45.6 % of total
premiums 11.4% 11.2% 11.4% 11.7% NIW subject to captives (In
millions) $3,764 $3,011 $6,540 $5,297 % of primary NIW 32.6% 23.3%
26.9% 27.9% IIF included in captives (1) 32.1% 33.6% RIF included
in captives (1) 36.5% 34.7% Persistency (twelve months ended June
30) 62.8% 56.9% June 30 December 31 June 30 2006 2005 2005 SMART
HOME % of Primary RIF included in Smart Home Transactions (1) 11.8%
7.8% 2.0% (1) Radian reinsures the middle layer risk positions,
while retaining a significant portion of the total risk comprising
the first loss and most remote risk positions. Radian Group Inc.
Mortgage Insurance Supplemental Information For the Quarter Ended
and as of June 30, 2006 ALT-A Exhibit O Quarter Ended Six Months
Ended ($ millions) June 30 June 30 2006 % 2005 % 2006 % 2005 %
Primary New Insurance Written by FICO Score =740 1,131 23.5% 832
23.7% 2,480 25.2% 1,107 23.8% Total $4,821 100.0% $3,512 100.0%
$9,843 100.0% $4,655 100.0% Primary Risk in Force by FICO Score
=740 882 19.9% 818 17.6% Total $4,442 100.0% $4,651 100.0% Primary
Risk in Force by LTV 95.01% and above $142 3.2% $274 5.9% 90.01% to
95.00% 1,309 29.5% 1,549 33.3% 85.01% to 90.00% 1,882 42.3% 2,023
43.5% 85.00% and below 1,109 25.0% 805 17.3% Total $4,442 100.0%
$4,651 100.0% Primary Risk in Force by Policy Year 2002 and prior
$398 9.0% $708 15.2% 2003 666 15.0% 1,243 26.7% 2004 1,008 22.7%
1,879 40.4% 2005 1,391 31.3% 821 17.7% 2006 979 22.0% - - Total
$4,442 100.0% $4,651 100.0% Radian Group Inc. Financial Services
Supplemental Information For the Quarter and Six Months Ended and
as of June 30, 2006 Exhibit P Quarter Ended Six Months Ended June
30 June 30 (In thousands) 2006 2005 2006 2005 Investment in
Affiliates - Selected Information C-BASS Balance, beginning of
period $387,043 $309,690 $364,364 $290,073 Net income for period
44,855 31,427 74,881 59,544 Dividends received 16,547 8,750 23,894
17,250 Balance, end of period $415,351 $332,367 $415,351 $332,367
Sherman Balance, beginning of period $49,608 $71,874 $81,753
$101,492 Net income for period 27,182 32,439 55,497 55,618
Dividends received - - 60,515 51,875 Other comprehensive income -
(482) 55 671 Sale of ownership interest - - - - Warrant repurchase
- - - (2,075) Balance, end of period $76,790 $103,831 $76,790
$103,831 Portfolio Information: C-BASS Servicing portfolio
$56,460,000 $37,010,000 Total assets 6,289,258 3,694,071 Servicing
income 79,800 63,419 $153,869 $123,213 Net interest income 69,872
44,306 134,912 85,558 Total revenues 211,493 174,237 382,617
321,537 Sherman Total assets $1,058,989 $826,810 Net revenues
$236,113 $209,927 $473,785 $358,552 Radian owns a 46% interest in
C-BASS and a 34.58% interest in Sherman. All statements made in
this news 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, and changes or
volatility in interest rates; changes in investor perception of the
strength of private mortgage insurers or financial guaranty
providers; 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;
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; changes in Radian's credit ratings or 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
charters or business practices of Fannie Mae and Freddie Mac; the
application of 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,
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 inquiries that we and other mortgage insurers have
received from the New York Insurance Department and public reports
that other state insurance departments are investigating or
planning to investigate captive reinsurance arrangements used in
the mortgage insurance industry), or (ii) 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; changes in the availability of affordable or adequate
reinsurance for our non-prime risk; and international expansion of
our mortgage insurance and financial guaranty businesses into new
markets and risks associated with our international business
activities. For more information regarding these risks and
uncertainties, as well as certain additional risks that we face,
investors should refer to the risk factors detailed in Part I, Item
1A in our annual report on Form 10-K for the year ended December
31, 2005. We caution you not to place undue reliance on these
forward-looking statements, which are current only as of the date
of this news release. Radian does not intend to and disclaims any
duty or obligation to update or revise any forward-looking
statements made in this news release to reflect new information,
future events or for any other reason. DATASOURCE: Radian Group
Inc. CONTACT: For investors: Mona Zeehandelaar, Radian Group Inc.,
+1-215-231-1674, ; For the media: Radian Corporate Communications,
+1-888-NEWS-520, Web site: http://www.radian.biz/
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