Company grew book value per share by 14% from year earlier and
nine-month diluted net income per share by 10.1% PHILADELPHIA, Oct.
18 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE:RDN) today
reported results for the quarter ended September 30, 2006, with net
income of $112 million and diluted net income per share of $1.36.
Book value per share at September 30, 2006, was $49.11, an increase
of 14% from a year earlier. For the nine months ended September 30,
2006, Radian reported net income of $424 million, up from a year
earlier, and diluted net income per share of $5.12, an increase of
10.1%. "While our results for the quarter were affected by
additions to loss reserves for our mortgage insurance business, I
am pleased with the strong performance we achieved in the first
nine months of the year, with double- digit increases in diluted
earnings per share and book value per share," said Chief Executive
Officer S.A. Ibrahim. "We remain disciplined in our approach to
risk and capital management, and are focused on delivering
long-term value." Mr. Ibrahim said the addition to loss reserves
for the mortgage insurance business was attributable to several
factors, including new delinquencies, an aging of existing
delinquencies, and an increase in severity due primarily to larger
average loan balances. Regarding the mortgage insurance business,
Radian said it continued to experience good flow volume, which is
benefiting from positive cyclical trends, including stable interest
rates and increased MI penetration. The company added that it did
less structured business in the quarter, reflecting market
conditions and the tight-spread environment. The company's
financial guaranty business continued to perform well in a
difficult environment, further demonstrating the viability of its
double-A franchise. In the Financial Services segment both C-BASS
and Sherman continued to be important and steady contributors to
Radian's results. The key financial highlights of the quarter and
nine months ended September 30, 2006, are as follows: Key Financial
Highlights (dollars in millions, except per share data) Third
quarter Quarter ended Quarter ended September 30, September 30,
Percent 2006 2005 Change Revenue $321,831 $382,622 (15.9)% Net
income $111,959 $162,557 (31.1)% Diluted net income per share $1.36
$1.88 (27.7)% Net premiums written $254,805 $313,908 (18.8)% Net
premiums earned $254,144 $265,636 (4.3)% Equity in net income of
affiliates $55,870 $46,772 19.5% Book value per share $49.11 $43.08
14.0% Nine months Nine Months Nine Months Ended Ended September 30,
September 30, Percent 2006 2005 Change Revenue $980,062 $999,510
(1.9)% Net income $423,802 $418,393 1.3% Diluted net income per
share $5.12 $4.65 10.1% Net premiums written $833,285 $827,966 0.6%
Net premiums earned $766,927 $756,639 1.4% Equity in net income of
affiliates $186,248 $161,946 15.0% Radian will hold a conference
call on Thursday, October 19, 2006, at 9:00 a.m. Eastern time to
discuss the company's third 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 will hold an Investor Day on Thursday, November 9, 2006, in
Philadelphia. A webcast of the event will be broadcast live over
the Internet at http://www.radian.biz/. 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 September 30, 2006 Exhibit D: Segment Information Quarter
Ended September 30, 2005 Exhibit E: Segment Information Nine Months
Ended September 30, 2006 Exhibit F: Segment Information Nine Months
Ended September 30, 2005 Exhibit G: Financial Guaranty Insurance
Supplemental Information - Quarter and Nine Months Ended and as of
September 30, 2006 Exhibit H: Financial Guaranty Insurance
Supplemental Information - Quarter and Nine Months Ended and as of
September 30, 2006 Exhibit I: Mortgage Insurance Supplemental
Information: New Insurance Written and 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 and Earned, Smart Home, Captives
and Persistency 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 Nine
Months Ended September 30 September 30 2006 2005 2006 2005 (In
thousands, except per-share data) Revenues: Net premiums written
$254,805 $313,908 $833,285 $827,966 Net premiums earned $254,144
$265,636 $766,927 $756,639 Net investment income 60,185 53,253
174,123 154,119 Net gains on securities 1,409 5,194 29,587 25,443
Change in fair value of derivative instruments 626 53,274 (7,031)
45,301 Other income 5,467 5,265 16,456 18,008 Total revenues
321,831 382,622 980,062 999,510 Expenses: Provision for losses
121,395 92,441 284,889 285,768 Policy acquisition costs 26,351
27,927 80,535 88,355 Other operating expenses 62,706 58,931 181,082
163,019 Interest expense 11,515 12,167 35,893 31,103 Total expenses
221,967 191,466 582,399 568,245 Equity in net income of affiliates
55,870 46,772 186,248 161,946 Pretax income 155,734 237,928 583,911
593,211 Provision for income taxes 43,775 75,371 160,109 174,818
Net income $111,959 $162,557 $423,802 $418,393 Diluted net income
per share (1) $1.36 $1.88 $5.12 $4.65 (1) Net income per share
reconciliation Net income $111,959 $162,557 $423,802 $418,393
Interest expense on convertible senior debentures (net of tax) -
267 - 1,871 Net income available to common stockholders $111,959
$162,824 $423,802 $420,264 Weighted average shares outstanding (in
thousands) Average common shares outstanding 81,233 84,567 81,995
86,507 Increase in shares-potential exercise of options-diluted
basis 817 860 754 895 Increase in shares-contingently convertible
debt (2) - 1,266 - 2,954 Weighted average shares outstanding (in
thousands) 82,050 86,693 82,749 90,356 (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 $0.03
per share for the quarter ended September 30, 2005 and $0.14 per
share for the nine months ended September 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 September December 31 September and per-share data)
2006 2005 2005 Assets: Cash and investments $5,761,913 $5,521,561
$5,508,189 Investments in affiliates 560,570 446,151 398,054
Deferred policy acquisition costs 219,573 208,325 206,013 Prepaid
federal income taxes 760,963 585,514 539,973 Other assets 434,302
469,059 446,068 Total assets $7,737,321 $7,230,610 $7,098,297
Liabilities and stockholders' equity: Unearned premiums $914,422
$849,360 $838,042 Reserve for losses and loss adjustment expenses
840,938 801,002 792,600 Long-term debt 747,692 747,466 747,393
Deferred federal income taxes 1,071,002 961,993 863,859 Other
liabilities 196,234 207,909 281,388 Total liabilities 3,770,288
3,567,730 3,523,282 Common stock 97 97 97 Additional paid-in
capital 489,389 629,019 634,901 Retained earnings 3,332,517
2,913,649 2,810,853 Accumulated other comprehensive income 145,030
120,115 129,164 Total common stockholders' equity 3,967,033
3,662,880 3,575,015 Total liabilities and stockholders' equity
$7,737,321 $7,230,610 $7,098,297 Book value per share $49.11 $44.11
$43.08 Treasury Stock Repurchases (Year-to-Date for Periods
Presented) Total number of shares repurchased 3,000,000 (1)
10,767,800 10,344,500 Average price paid per share $60.85 $49.58
$49.21 Total cost of repurchased shares $182,548,056 $533,888,969
$509,094,714 (1) 1.0 million shares were repurchased in the 3rd
quarter of 2006 at a cost of $60.6 million. Radian Group Inc. and
Subsidiaries Segment Information Quarter Ended September 30, 2006
Exhibit C Mortgage Financial Financial (In thousands) Insurance
Guaranty Services Total Revenues: Net premiums written $205,933
$48,872 $- $254,805 Net premiums earned $201,432 $52,712 $-
$254,144 Net investment income 35,548 24,589 48 60,185 Net gains on
securities 946 8 455 1,409 Change in fair value of derivative
instruments (3,293) 3,919 - 626 Other income 2,999 284 2,184 5,467
Total revenues 237,632 81,512 2,687 321,831 Expenses: Provision for
losses 119,616 1,779 - 121,395 Policy acquisition costs 15,271
11,080 - 26,351 Other operating expenses 43,933 16,039 2,734 62,706
Interest expense 6,357 3,961 1,197 11,515 Total expenses 185,177
32,859 3,931 221,967 Equity in net income of affiliates - - 55,870
55,870 Pretax income 52,455 48,653 54,626 155,734 Provision for
income taxes 11,127 13,529 19,119 43,775 Net income $41,328 $35,124
$35,507 $111,959 Assets $4,598,975 $2,572,079 $566,267 $7,737,321
Deferred policy acquisition costs 71,691 147,882 - 219,573 Reserve
for losses and loss adjustment expenses 651,249 189,689 - 840,938
Unearned premiums 246,033 668,389 - 914,422 Stockholders' equity
2,232,606 1,339,627 394,800 3,967,033 Radian Group Inc. and
Subsidiaries Segment Information Quarter Ended September 30, 2005
Exhibit D Mortgage Financial Financial (In thousands) Insurance
Guaranty Services 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 23,069 62 53,253 Net gains
(losses) on securities 4,185 3,849 (2,840) 5,194 Change in fair
value of derivative instruments 11,675 41,617 (18) 53,274 Other
income 4,353 287 625 5,265 Total revenues 259,237 125,556 (2,171)
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 18,683 1,953 58,931 Interest expense 6,790 4,282
1,095 12,167 Total expenses 141,378 47,040 3,048 191,466 Equity in
net income of affiliates - (374) 47,146 46,772 Pretax income
117,859 78,142 41,927 237,928 Provision for income taxes 36,528
24,168 14,675 75,371 Net income $81,331 $53,974 $27,252 $162,557
Assets $4,152,704 $2,534,678 $410,915 $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
1,311,582 300,000 3,575,015 Radian Group Inc. and Subsidiaries
Segment Information Nine Months Ended September 30, 2006 Exhibit E
Mortgage Financial Financial (In thousands) Insurance Guaranty
Services Total Revenues: Net premiums written $646,749 $186,536 $-
$833,285 Net premiums earned $612,808 $154,119 $- $766,927 Net
investment income 103,363 70,627 133 174,123 Net gains on
securities 18,207 8,895 2,485 29,587 Change in fair value of
derivative instruments 1,830 (8,861) - (7,031) Other income 10,108
618 5,730 16,456 Total revenues 746,316 225,398 8,348 980,062
Expenses: Provision for losses 268,290 16,599 - 284,889 Policy
acquisition costs 44,336 36,199 - 80,535 Other operating expenses
128,742 46,092 6,248 181,082 Interest expense 20,042 12,312 3,539
35,893 Total expenses 461,410 111,202 9,787 582,399 Equity in net
income of affiliates - - 186,248 186,248 Pretax income 284,906
114,196 184,809 583,911 Provision for income taxes 72,262 23,164
64,683 160,109 Net income $212,644 $91,032 $120,126 $423,802 Radian
Group Inc. and Subsidiaries Segment Information Nine Months Ended
September 30, 2005 Exhibit F Mortgage Financial Financial (In
thousands) Insurance Guaranty Services 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 67,015 88 154,119
Net gains (losses) on securities 17,957 9,449 (1,963) 25,443 Change
in fair value of derivative instruments 6,941 38,569 (209) 45,301
Other income 14,624 870 2,514 18,008 Total revenues 723,569 275,511
430 999,510 Expenses: Provision for losses 259,703 26,065 - 285,768
Policy acquisition costs 48,626 39,729 - 88,355 Other operating
expenses 107,445 48,467 7,107 163,019 Interest expense 17,541
10,854 2,708 31,103 Total expenses 433,315 125,115 9,815 568,245
Equity in net income of affiliates - (361) 162,307 161,946 Pretax
income 290,254 150,035 152,922 593,211 Provision for income taxes
83,350 37,945 53,523 174,818 Net income $206,904 $112,090 (1)
$99,399 $418,393 (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 $(4.1) Radian Group Inc. Financial
Guaranty Supplemental Information For the Quarter and Nine Months
Ended and as of September 30, 2006 Exhibit G Quarter Ended Nine
Months Ended ($ in thousands, except ratios) September 30 September
30 2006 2005 2006 2005 Net Premiums Written: Public finance direct
$11,191 $22,539 $49,598 $51,285 Public finance reinsurance 13,844
23,374 60,539 61,354 Structured direct 19,520 19,872 59,126 52,288
Structured reinsurance 4,414 3,092 12,919 16,355 Trade credit
reinsurance (97) 9,241 4,354 29,128 48,872 78,118 186,536 210,410
Impact of recapture (1) - - - (54,742) Net Premiums Written $48,872
$78,118 $186,536 $155,668 Net Premiums Earned: Public finance
direct $8,388 $7,651 $23,681 $24,667 Public finance reinsurance
12,097 10,058 28,255 25,661 Structured direct 22,829 20,158 67,139
57,258 Structured reinsurance 5,479 4,544 15,762 15,563 Trade
credit reinsurance 3,919 14,323 19,282 40,998 52,712 56,734 154,119
164,147 Impact of recapture (2) - - - (4,539) Net Premiums Earned
$52,712 $56,734 $154,119 $159,608 Refundings included in earned
premium $5,357 $4,419 $8,667 $9,514 Claims paid: Trade credit
reinsurance $5,452 $6,550 $13,806 $16,778 Other financial guaranty
472 1,015 7,281 12,932 Conseco 3,505 7,443 12,250 23,393 Total
$9,429 $15,008 $33,337 $53,103 Incurred losses: Trade credit
reinsurance $(2,173) $7,120 $5,021 $14,433 Other financial guaranty
3,952 3,770 12,610 11,632 Conseco - - (1,032) - Total $1,779
$10,890 $16,599 $26,065 Loss ratio - GAAP Basis 3.4% 19.2% 10.8%
16.3% Expense ratio - GAAP Basis 51.4% 56.2% 53.4% 55.3% 54.8%
75.4% 64.2% 71.6% Net claims paid (received) under derivatives
contracts $(1,136) $(1,799) $64,277 $(6,175) (1) Reflects the
impact on net premiums written of the first quarter 2005 recapture
of previously ceded business by one of the primary Financial
Guaranty insurers: (In thousands) Public reinsurance 48,238
Structured reinsurance 6,504 (2) Reflects the impact on net
premiums earned of the first quarter 2005 recapture of previously
ceded business by one of the primary Financial Guaranty insurers:
(In thousands) Public reinsurance 3,870 Structured reinsurance 669
Radian Group Inc. Financial Guaranty Supplemental Information For
the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit H ($ in thousands, except ratios) September December 31
September 2006 2005 2005 Capital and surplus $1,011,787 $1,004,505
$1,069,988 Contingency reserve 311,642 271,907 282,389 Qualified
statutory capital 1,323,429 1,276,412 1,352,377 Unearned premium
reserve 797,019 751,656 731,505 Loss and loss expense reserve
97,272 108,576 116,256 Total policyholders' reserves 2,217,720
2,136,644 2,200,138 Present value of installment premiums 335,571
302,953 284,511 Reinsurance and soft capital facilities 150,000
150,000 150,000 Total claims paying resources $2,703,291 $2,589,597
$2,634,649 Net debt service outstanding $133,144,153 $110,344,057
$103,260,772 Capital leverage ratio (1) 101 86 76 Claims paying
leverage ratio (2) 49 43 39 Net par outstanding by product: Public
finance direct $15,130,925 $14,043,786 $13,173,444 Public finance
reinsurance 36,617,518 33,047,512 31,834,150 Structured direct
39,538,488 24,608,489 21,653,988 Structured reinsurance 4,775,458
4,952,146 4,651,046 Total $96,062,389 $76,651,933 $71,312,628
Reinsurance business net par outstanding: Treaty 59% 58% 59%
Facultative 41% 42% 41% Reserve for losses and LAE Specific $33,649
$29,311 $33,609 Conseco 37,487 50,770 56,950 Non-specific 118,553
124,712 121,077 Total $189,689 $204,793 $211,636 (1) Net debt
service outstanding divided by qualified statutory capital (2) Net
debt service outstanding divided by total claims paying resources
Radian Group Inc. Mortgage Insurance Supplemental Information For
the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit I Quarter Ended September 30 2006 % 2005 % Primary New
Insurance Written ($ in millions) Flow $7,017 85.7% $7,066 55.7%
Structured 1,175 14.3% 5,612 44.3% Total Primary $8,192 100.0%
$12,678 100.0% Flow Prime $5,320 75.8% $5,361 75.9% Alt-A 1,189
16.9% 1,081 15.3% A minus and below 508 7.3% 624 8.8% Total Flow
$7,017 100.0% $7,066 100.0% Structured Prime $108 9.2% $1,830 32.6%
Alt-A 1,065 90.6% 2,638 47.0% A minus and below 2 0.2% 1,144 20.4%
Total Structured $1,175 100.0% $5,612 100.0% Total Prime $5,428
66.3% $7,191 56.7% Alt-A 2,254 27.5% 3,719 29.3% A minus and below
510 6.2% 1,768 14.0% Total Primary $8,192 100.0% $12,678 100.0%
Total Primary New Insurance Written by FICO Score ($ in millions)
Flow =740 1,965 28.0% 1,927 27.3% Total Flow $7,017 100.0% $7,066
100.0% Structured =740 375 31.9% 1,029 18.4% Total Structured
$1,175 100.0% $5,612 100.0% Total =740 2,340 28.6% 2,956 23.3%
Total Primary $8,192 100.0% $12,678 100.0% Percentage of primary
new insurance written Refinances 28% 38% 95.01% LTV and above 22%
9% ARMs Less than 5 years 21% 36% 5 years and longer 9% 16% Primary
risk written ($ in millions) Flow $1,772 94.4% $1,752 67.6%
Structured 105 5.6% 840 32.4% Total Primary $1,877 100.0% $2,592
100.0% Pool risk written (In millions) $64 $163 Other risk written
(In millions) Seconds 1st loss $1 $43 2nd loss 29 279 NIMs 132 -
International 1st loss-Hong Kong primary mortgage insurance 9 33
Reinsurance 2 - Other Domestic credit default swaps - 150 Financial
guaranty wrap - - Total other risk written $173 $505 Nine Months
Ended September 30 2006 % 2005 % Primary New Insurance Written ($
in millions) Flow $18,913 58.1% $18,856 59.6% Structured 13,630
41.9% 12,808 40.4% Total Primary $32,543 100.0% $31,664 100.0% Flow
Prime $13,970 73.9% $14,151 75.0% Alt-A 3,560 18.8% 2,934 15.6% A
minus and below 1,383 7.3% 1,771 9.4% Total Flow $18,913 100.0%
$18,856 100.0% Structured Prime $3,659 26.8% $3,982 31.1% Alt-A
8,537 62.7% 5,440 42.5% A minus and below 1,434 10.5% 3,386 26.4%
Total Structured $13,630 100.0% $12,808 100.0% Total Prime $17,629
54.1% $18,133 57.3% Alt-A 12,097 37.2% 8,374 26.4% A minus and
below 2,817 8.7% 5,157 16.3% Total Primary $32,543 100.0% $31,664
100.0% Total Primary New Insurance Written by FICO Score ($ in
millions) Flow =740 5,200 27.5% 5,060 26.8% Total Flow $18,913
100.0% $18,856 100.0% Structured =740 2,881 21.1% 1,981 15.5% Total
Structured $13,630 100.0% $12,808 100.0% Total =740 8,081 24.8%
7,041 22.2% Total Primary $32,543 100.0% $31,664 100.0% Percentage
of primary new insurance written Refinances 35% 42% 95.01% LTV and
above 13% 10% ARMs Less than 5 years 26% 36% 5 years and longer 16%
15% Primary risk written ($ in millions) Flow $4,796 79.2% $4,682
67.7% Structured 1,262 20.8% 2,232 32.3% Total Primary $6,058
100.0% $6,914 100.0% Pool risk written (In millions) $333 $467
Other risk written (In millions) Seconds 1st loss $43 $56 2nd loss
206 325 NIMs 238 66 International 1st loss-Hong Kong primary
mortgage insurance 31 240 Reinsurance 7 11 Other Domestic credit
default swaps 32 150 Financial guaranty wrap - 511 Total other risk
written $557 $1,359 Radian Group Inc. Mortgage Insurance
Supplemental Information For the Quarter and Nine Months Ended and
as of September 30, 2006 Exhibit J September 30 September 30 2006 %
2005 % Primary insurance in force ($ in millions) Flow $82,561
71.6% $82,827 75.8% Structured 32,700 28.4% 26,457 24.2% Total
Primary $115,261 100.0% $109,284 100.0% Prime $77,030 66.8% $74,207
67.9% Alt-A 25,906 22.5% 21,137 19.3% A minus and below 12,325
10.7% 13,940 12.8% Total Primary $115,261 100.0% $109,284 100.0%
Primary risk in force ($ in millions) Flow $20,464 79.9% $20,283
79.1% Structured 5,141 20.1% 5,374 20.9% Total Primary $25,605
100.0% $25,657 100.0% Flow Prime $16,072 78.5% $15,512 76.4% Alt-A
2,857 14.0% 3,197 15.8% A minus and below 1,535 7.5% 1,574 7.8%
Total Flow $20,464 100.0% $20,283 100.0% Structured Prime $2,065
40.2% $2,130 39.6% Alt-A 1,492 29.0% 1,321 24.6% A minus and below
1,584 30.8% 1,923 35.8% Total Structured $5,141 100.0% $5,374
100.0% Total Prime $18,137 70.8% $17,642 68.8% Alt-A 4,349 17.0%
4,518 17.6% A minus and below 3,119 12.2% 3,497 13.6% Total Primary
$25,605 100.0% $25,657 100.0% Total Primary Risk in Force by FICO
Score ($ in millions) Flow =740 5,365 26.2% 5,067 25.0% Total Flow
$20,464 100.0% $20,283 100.0% Structured =740 542 10.5% 463 8.6%
Total Structured $5,141 100.0% $5,374 100.0% Total =740 5,907 23.1%
5,530 21.6% Total Primary $25,605 100.0% $25,657 100.0% Percentage
of primary risk in force Refinances 34% 37% 95.01% LTV and above
16% 14% ARMs Less than 5 years 21% 24% 5 years and longer 9% 8%
Pool risk in force ($ in millions) Prime $2,190 73.2% $2,073 78.6%
Alt-A 301 10.1% 262 9.9% A minus and below 501 16.7% 304 11.5%
Total $2,992 100.0% $2,639 100.0% Radian Group Inc. Mortgage
Insurance Supplemental Information For the Quarter and Nine Months
Ended and as of September 30, 2006 Exhibit K September 30 September
30 2006 % 2005 % Total Primary Risk in Force by LTV ($ in millions)
95.01% and above $4,182 16.3% $3,550 13.8% 90.01% to 95.00% 8,174
31.9% 8,736 34.1% 85.01% to 90.00% 9,187 35.9% 9,606 37.4% 85.00%
and below 4,062 15.9% 3,765 14.7% Total $25,605 100.0% $25,657
100.0% Total Primary Risk in Force by Policy Year ($ in millions)
2002 and prior $3,584 14.0% $5,189 20.2% 2003 4,159 16.2% 6,224
24.3% 2004 5,137 20.1% 7,808 30.4% 2005 7,072 27.6% 6,436 25.1%
2006 5,653 22.1% - - Total $25,605 100.0% $25,657 100.0% Total Pool
Risk in Force by Policy Year ($ in millions) 2002 and prior $1,647
55.0% $1,676 63.5% 2003 138 4.6% 190 7.2% 2004 291 9.7% 296 11.2%
2005 651 21.8% 477 18.1% 2006 265 8.9% - - Total Pool risk in Force
$2,992 100.0% $2,639 100.0% Other risk in force (In millions)
Seconds 1st loss $557 $641 2nd loss 714 330 NIMs 382 283
International 1st loss-Hong Kong primary mortgage insurance 301 238
Reinsurance 33 30 Credit default swaps 7,678 168 Other Domestic
credit default swaps 212 150 Financial guaranty wrap 125 358 Total
other risk in force $10,002 $2,198 Risk to capital ratio-STAT Basis
10.4:1 9.8:1 Radian Group Inc. Mortgage Insurance Supplemental
Information For the Quarter and Nine Months Ended and as of
September 30, 2006 Exhibit L Quarter Ended Nine Months Ended
September 30 September 30 2006 2005 2006 2005 Direct claims paid
(In thousands) Prime $28,737 $24,369 $88,568 $88,141 Alt-A 13,343
17,498 47,364 59,403 A minus and below 21,885 21,310 67,666 62,218
Seconds and other 10,447 7,883 28,614 26,655 Total $74,412 $71,060
$232,212 $236,417 Average claim paid (In thousands) Prime $25.5
$23.6 $25.9 $23.6 Alt-A 30.3 36.5 34.9 35.9 A minus and below 27.1
27.6 27.6 26.5 Seconds 26.9 22.0 26.2 22.5 Total $26.9 $26.9 $27.9
$26.5 Loss ratio - GAAP Basis 59.4% 39.0% 43.8% 43.5% Expense ratio
- GAAP Basis 29.4% 25.4% 28.2% 26.1% 88.8% 64.4% 72.0% 69.6%
Reserve for losses by category (In thousands): Prime $187,223
$164,626 Alt-A 143,006 156,937 A minus and below 222,399 169,135
Pool Insurance 33,500 47,195 Seconds 57,471 (1) 35,093 Other 7,650
7,978 Total $651,249 $580,964 (1) Includes $19.0 million of
reinsurance recoverable on a first-loss second lien captive. Radian
Group Inc. Mortgage Insurance Supplemental Information For the
Quarter and Nine Months Ended and as of September 30, 2006 Exhibit
M September 30 December 31 September 30 2006 2005 2005 Default
Statistics Primary insurance: Flow Prime Number of insured loans
499,623 508,117 514,805 Number of loans in default 14,761 18,045
15,355 Percentage of loans in default 2.95% 3.55% 2.98% Alt-A
Number of insured loans 63,156 67,339 69,210 Number of loans in
default 4,236 4,946 4,730 Percentage of loans in default 6.71%
7.34% 6.83% A minus and below Number of insured loans 51,875 54,066
55,077 Number of loans in default 6,970 7,543 6,910 Percentage of
loans in default 13.44% 13.95% 12.55% Total Flow Number of insured
loans 614,654 629,522 639,092 Number of loans in default 25,967
30,534 26,995 Percentage of loans in default 4.22% 4.85% 4.22%
Structured Prime Number of insured loans 66,982 59,457 56,691
Number of loans in default 2,845 2,640 2,274 Percentage of loans in
default 4.25% 4.44% 4.01% Alt-A Number of insured loans 73,511
50,997 51,905 Number of loans in default 2,940 2,564 2,841
Percentage of loans in default 4.00% 5.03% 5.47% A minus and below
Number of insured loans 41,889 47,348 49,843 Number of loans in
default 8,693 8,472 7,921 Percentage of loans in default 20.75%
17.89% 15.89% Total Structured Number of insured loans 182,382
157,802 158,439 Number of loans in default 14,478 13,676 13,036
Percentage of loans in default 7.94% 8.67% 8.23% Total Primary
Insurance Prime Number of insured loans 566,605 567,574 571,496
Number of loans in default 17,606 20,685 17,629 Percentage of loans
in default 3.11% 3.64% 3.08% Alt-A Number of insured loans 136,667
118,336 121,115 Number of loans in default 7,176 7,510 7,571
Percentage of loans in default 5.25% 6.35% 6.25% A minus and below
Number of insured loans 93,764 101,414 104,920 Number of loans in
default 15,663 16,015 14,831 Percentage of loans in default 16.70%
15.79% 14.14% Total Primary Insurance Number of insured loans
797,036 787,324 797,531 Number of loans in default 40,445 (1)
44,210 (1) 40,031 Percentage of loans in default 5.07% 5.62% 5.02%
Pool insurance: Number of loans in default 18,096 (2) 10,194 (2)
7,683 (1) Includes approximately 800 and 452 defaults at September
30, 2006 and December 31, 2005, respectively, where reserves have
not been established because no claim payment is currently
anticipated. (2) Includes approximately 12,634 and 3,699 defaults
at September 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 Nine Months Ended and
as of September 30, 2006 Exhibit N Quarter Ended Nine Months Ended
September 30 September 30 2006 2005 2006 2005 Net Premiums Written
(In thousands) Primary and Pool Insurance $179,206 $198,277
$560,338 $566,825 Seconds 16,682 18,370 42,466 47,701 NIMs 2,943
12,268 22,651 32,148 International 6,295 4,067 12,247 22,711
Domestic credit default swaps 777 2,724 8,957 2,724 Financial
guaranty wrap 30 84 90 189 Net Premiums Written $205,933 $235,790
$646,749 $672,298 Net Premiums Earned (In thousands) Primary and
Pool Insurance $180,895 $182,380 $541,723 $525,376 Seconds 12,266
12,810 41,024 36,773 NIMs 4,359 12,826 18,023 32,364 International
2,279 583 8,196 2,110 Domestic credit default swaps 1,603 219 3,752
219 Financial guaranty wrap 30 84 90 189 Net Premiums Earned
$201,432 $208,902 $612,808 $597,031 SMART HOME (In millions) Ceded
Premiums Written $3.5 $0.9 $8.5 $2.5 Ceded Premiums Earned $3.3
$0.6 $8.6 $2.1 Captives Premiums ceded to captives (In millions)
$24.1 $22.0 $71.3 $67.6 % of total premiums 11.6% 10.8% 11.5% 11.4%
NIW subject to captives (In millions) $3,160 $2,701 $9,700 $7,998 %
of primary NIW 38.6% 21.3% 29.8% 25.3% IIF included in captives (1)
34.2% 32.1% RIF included in captives (1) 38.9% 34.0% Persistency
(twelve months ended September 30) 65.7% 57.1% September 30
December 31 September 30 2006 2005 2005 SMART HOME % of Primary RIF
included in Smart Home Transactions (1) 10.9% 7.8% 1.7% (1) Radian
reinsures the middle layer risk positions, while retaining a
significant portion of the total risk comprising the first loss and
most remote risk positions. Radian Group Inc. Mortgage Insurance
Supplemental Information For the Quarter Ended and as of September
30, 2006 ALT-A Exhibit O ($ in millions) Quarter Ended Nine Months
Ended September 30 September 30 2006 % 2005 % 2006 % 2005 % Primary
New Insurance Written by FICO Score =740 679 30.1% 979 26.3% 3,159
26.1% 2,086 24.9% Total $2,254 100.0% $3,719 100.0% $12,097 100.0%
$8,374 100.0% Primary Risk in Force by FICO Score =740 900 20.7%
813 18.0% Total $4,349 100.0% $4,518 100.0% Primary Risk in Force
by LTV 95.01% and above $126 2.9% $228 5.0% 90.01% to 95.00% 1,272
29.3% 1,462 32.4% 85.01% to 90.00% 1,840 42.3% 1,958 43.3% 85.00%
and below 1,111 25.5% 870 19.3% Total $4,349 100.0% $4,518 100.0%
Primary Risk in Force by Policy Year 2002 and prior $354 8.1% $608
13.5% 2003 591 13.6% 1,034 22.9% 2004 841 19.3% 1,619 35.8% 2005
1,287 29.6% 1,257 27.8% 2006 1,276 29.4% - - Total $4,349 100.0%
$4,518 100.0% Radian Group Inc. Financial Services Supplemental
Information For the Quarter and Nine Months Ended and as of
September 30, 2006 Exhibit P Quarter Ended Nine Months Ended
September 30 September 30 (In thousands) 2006 2005 2006 2005
Investment in Affiliates- Selected Information C-BASS Balance,
beginning of period $415,351 $332,367 $364,364 $290,073 Net income
for period 27,421 20,727 102,302 80,271 Dividends received 11,300
9,750 35,194 27,000 Balance, end of period $431,472 $343,344
$431,472 $343,344 Sherman Balance, beginning of period $76,790
$103,831 $81,753 $101,492 Net income for period 29,192 26,418
84,689 82,036 Dividends received 43,225 58,786 103,740 110,661
Other comprehensive income - 797 55 1,468 Purchase (sale) of
ownership interest 66,307 (18,947) 66,307 (18,947) Warrant
repurchase - - - (2,075) Balance, end of period $129,064 $53,313
$129,064 $53,313 Portfolio Information: C-BASS Servicing portfolio
$60,400,000 $40,900,000 Total assets 8,431,896 3,765,804 Servicing
income 77,734 62,210 $231,603 $185,423 Net interest income 77,096
51,280 212,008 136,838 Total revenues 173,851 134,539 556,468
456,076 Sherman Total assets $1,078,387 $868,957 Net revenues
$229,835 $213,799 $703,620 $572,351 Radian owns a 46% interest in
C-BASS and a 40.3% interest in Sherman, consisting of 40.96% of the
Class A Common Units of Sherman (Class A Common Units represent 94%
of the total equity in Sherman) and 50% of the Preferred Units of
Sherman (Preferred Units represent 3.6% of the total equity 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, or 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 financial
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. 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. 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 of our annual report
on Form 10-K for the year ended December 31, 2005 and the material
changes to these risk factors detailed in Part II, Item 1A of our
quarterly report on Form 10-Q for the quarter ended June 30, 2006.
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/
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