RDN Radian Group Inc

PHILADELPHIA, Sept. 5 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE:RDN) ("the Company"), in response to the negative ratings actions taken today by Fitch Ratings with regard to Radian Asset Assurance, the Company's principal financial guaranty subsidiary, has formally requested that Fitch immediately withdraw all of its ratings for the Company and its subsidiaries. The Company made the following statement regarding its decision: "Fitch's action is inconsistent with Radian Asset's strong capital and liquidity position, highly rated and diversified insured portfolio, business platform and prospects, and creates unmerited uncertainty concerning its capital strength. As a result, we believe the action taken today by Fitch is unwarranted." Radian noted that Fitch's recently implemented financial guaranty capital model, "Matrix," significantly diverges from other rating agency and industry models, as well as Radian Asset's own internal capital model. Contrary to Fitch's assertions, the Company believes Radian Asset's direct business niche is strong. Radian Asset has enjoyed meaningful compound annual growth rate increases in its global structured products and public finance sectors. In addition, Radian Asset's total significant unearned premium reserves and future installment premiums provide a meaningful, ongoing embedded earnings stream. Fitch also cited a "seasoned $100 million collateralized debt obligation of asset-backed securities that is subject to market value risk" as a concern. Radian does not foresee making a payment on this transaction since no event has occurred that would trigger a liquidation of the high investment grade quality assets in the underlying pool. Approximately 65% of the total pool is rated AAA, with the remaining 35% rated AA. Subprime RMBS accounts for 25% of the pool; however, there are no subprime assets from the 2006 or 2007 vintages. In light of the recent mortgage market and merger-related developments, Radian's focus is to efficiently and prudently run its core insurance businesses. The Company is confident that it can effectively execute its business plan with ratings from Moody's and S&P. The Company is pleased with the actions taken today by Moody's and S&P with respect to Radian Asset. The Company is working diligently to address the concerns of Moody's and S&P with respect to Radian Group and its mortgage insurance subsidiaries, with the goal of stabilizing their ratings. Radian Group Inc. is a global credit risk management company headquartered in Philadelphia with significant operations in 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 credit-based consumer asset businesses. Additional information may be found at http://www.radian.biz/. 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, which include projections regarding revenues and losses as well as other statements regarding our future financial condition, are made on the basis of management's current views and assumptions with respect to future events. These forward-looking statements, as well as our 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 demand or mortgage originations, changes in housing values, population trends and changes in household formation patterns, changes in unemployment rates, changes or volatility in interest rates, consumer confidence, or changes in credit spreads; 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 our insurance; the loss of a customer with whom we have a concentration of our insurance in force or the influence of large customers; increased severity or frequency of losses associated with certain of our products that are riskier than traditional mortgage insurance and financial guaranty insurance policies; material changes in the persistency rates of our mortgage insurance policies; losses associated with the aging of our mortgage insurance portfolio; ratings actions with respect to our credit ratings or the insurance financial-strength ratings assigned by the major ratings agencies to our 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 changes in these laws and regulations or the way they are interpreted; 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; vulnerability to the performance of our strategic investments and the amount of the impairment charge related to our interest in Credit Based Asset Servicing and Securitization LLC ("C-BASS"), which has not yet been determined and may be influenced by: (i) changes in the market for subprime mortgages and the amount, timing and severity of market dislocations occurring in the subprime market; (ii) the amount, timing and severity of any future margin calls that C-BASS may receive; (iii) C-BASS's ability to obtain sufficient and timely financing to support its liquidity position; and (iv) our ability to sell part or all of our interest in C-BASS and the amount that may be received in connection with any such sale; legal and other limitations on the amount of dividends that we may receive from our insurance subsidiaries; international expansion of our mortgage insurance and financial guaranty businesses into new markets and risks associated with our international business activities; and risks and uncertainties associated with the termination of our merger with MGIC Investment Corporation, including, without limitation: possible customer attrition and disruption from the transaction making it more difficult to maintain relationships with customers, employees or other business relationships, which may have a materially adverse impact on our financial results and prospects. 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, 2006. 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. We do not intend to, and disclaim 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: Investors, Mona Zeehandelaar of Radian Group Inc., +1-215-231-1674, ; Media, Steve Frankel or Jeremy Jacobs of Joele Frank, Wilkinson Brimmer Katcher, +1-212-355-4449, both for Radian Group Inc. Web site: http://www.radian.biz/

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