Radian Reaffirms Capital Position; Comments on Moody's Rating Action
14 Février 2009 - 3:23AM
PR Newswire (US)
Liquidity and Cash Reserves to Pay All Expected Future Claims in
the MI Business for the Next 3 Years PHILADELPHIA, Feb. 13
/PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE: RDN) today
confirmed its expectation that its mortgage insurance business will
have sufficient capital and liquidity to pay all anticipated
claims, maintain a strong market position and continue to write new
mortgage insurance business throughout 2009. Noting Moody's
Investors Service's rating action today, S.A. Ibrahim, Chief
Executive Officer of Radian, commented, "We do not believe today's
action by Moody's reflects our substantial claims-paying resources
and the improving quality of our mortgage insurance portfolio.
Radian Guaranty is a long-standing approved mortgage insurer to the
GSEs. We do not expect that this action will result in any change
to our ability to insure loans that are sold to either Fannie Mae
or Freddie Mac. In addition, we remain encouraged by recent
government efforts including the allocation of $50 billion to aid
troubled home owners. Furthermore, we are optimistic regarding
recent comments by the FHFA, acknowledging the need to make TARP
funds available to the mortgage insurance industry." Radian
provided the following business highlights: -- The Company remains
adequately capitalized with a strong market position and believes
that it can write MI business throughout 2009 while maintaining a
risk to capital level below the 25 to 1 statutory limit. -- Radian
Asset, the principal financial guaranty subsidiary, continues to
serve as an important source of capital support for Radian
Guaranty, the principal mortgage insurance subsidiary, and is
expected to continue to provide this core business with cash
infusions over time. -- The Company continues to believe that it
has adequate liquidity in its mortgage insurance business to pay
all future claims for the next 3 years without including any of the
Financial Guaranty capital. -- In December, Radian further enhanced
its strong holding company liquidity position by amending its
credit agreement to provide the Company with greater financial
flexibility by limiting the scope of certain covenants. Radian has
no ratings, risk to capital, or debt to capitalization covenants.
Radian remains focused on efficiently managing its operations,
preserving capital through a variety of loss management strategies,
and maximizing opportunities to write profitable, new business that
will best position the Company for the long term. About Radian
Radian Group Inc. (NYSE:RDN), headquartered in Philadelphia,
provides private mortgage insurance and related risk management
products and services to mortgage lenders nationwide through its
principal operating subsidiary, Radian Guaranty Inc. These services
help promote and preserve homeownership opportunities for
homebuyers, while protecting lenders from default-related losses on
residential first mortgages and facilitating the sale of low
downpayment mortgages in the secondary market. Additional
information may be found at http://www.radian.biz/. Forward Looking
Statements All statements in this news release that address events,
developments or results 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,
without limitation, projections regarding our future performance
and financial condition are made on the basis of management's
current views and assumptions with respect to future events. Any
forward-looking statement is not a guarantee of future performance
and actual results could differ materially from those contained in
the forward-looking information. The 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 a deepening of the
existing national economic recession, further decreases in housing
demand, mortgage originations or housing values (in particular,
further deterioration in the housing, mortgage and related credit
markets, which would harm our future consolidated results of
operations and could cause losses for our businesses to be worse
than expected), a further reduction in the liquidity in the capital
markets and further contraction of credit markets, further
increases in unemployment rates, changes or volatility in interest
rates or consumer confidence, changes in credit spreads, changes in
the way investors perceive the strength of private mortgage
insurers or financial guaranty providers, investor concern over the
credit quality and specific risks faced by the particular
businesses, municipalities or pools of assets covered by our
insurance; -- Further economic changes or catastrophic events in
geographic regions where our mortgage insurance or financial
guaranty insurance in force is more concentrated; -- our ability to
successfully execute upon our internally sourced capital plan, and
if necessary, to obtain additional capital to support new business
writings in our mortgage insurance business and our long-term
liquidity needs and to protect our credit ratings and the financial
strength ratings of Radian Guaranty Inc., our primary mortgage
insurance subsidiary, from further downgrades; -- a further
decrease in the volume of home mortgage originations due to reduced
liquidity in the lending market, tighter underwriting standards and
the on-going deterioration in housing markets throughout the U.S.;
-- our ability to maintain adequate risk-to-capital ratios,
leverage ratios and surplus requirements in our mortgage insurance
business in light of on-going losses in this business; -- the
concentration of our mortgage insurance business among a relatively
small number of large customers; -- disruption in the servicing of
mortgages covered by our insurance policies; -- the aging of our
mortgage insurance portfolio and changes in severity or frequency
of losses associated with certain of our products that are riskier
than traditional mortgage insurance or financial guaranty insurance
policies; -- the performance of our insured portfolio of higher
risk loans, such as Alternative-A ("Alt-A") and subprime loans, and
adjustable rate products, such as adjustable rate mortgages and
interest-only mortgages, which have resulted in increased losses in
2007 and 2008 and are expected to result in further losses; --
reduced opportunities for loss mitigation in markets where housing
values fail to appreciate or continue to decline; -- changes in
persistency rates of our mortgage insurance policies caused by
changes in refinancing activity, in the rate of appreciation or
depreciation of home values and changes in the mortgage insurance
cancellation requirements of mortgage lenders and investors; --
further downgrades or threatened downgrades of, or other ratings
actions with respect to, our credit ratings or the ratings assigned
by the major rating agencies to any of our rated insurance
subsidiaries at any time (in particular, the credit rating of
Radian Group Inc. and the financial strength ratings assigned to
Radian Guaranty Inc.); -- heightened competition for our mortgage
insurance business from others such as the Federal Housing
Administration and the Veterans' Administration or other private
mortgage insurers (in particular those that have been assigned
higher ratings from the major rating agencies); -- changes in the
charters or business practices of Federal National Mortgage
Association ("Fannie Mae") and Freddie Mac, the largest purchasers
of mortgage loans that we insure, and our ability to remain an
eligible provider to both Freddie Mac and Fannie Mae; -- the
application of existing federal or state consumer, lending,
insurance, securities and other applicable laws and regulations, or
changes in these laws and regulations or the way they are
interpreted; including, without limitation: (i) the outcome of
existing investigations or the possibility of private lawsuits or
other formal 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,
(ii) legislative and regulatory changes affecting demand for
private mortgage insurance, or (iii) legislation and regulatory
changes limiting or restricting our use of (or requirements for)
additional capital, the products we may offer, the form in which we
may execute the credit protection we provide or the aggregate
notional amount of any product we may offer for any one transaction
or in the aggregate; -- 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 the premium
deficiencies for our first- and second-lien mortgage insurance
business, or to estimate accurately the fair value amounts of
derivative contracts in our mortgage insurance and financial
guaranty businesses in determining gains and losses on these
contracts; -- volatility in our earnings caused by changes in the
fair value of our derivative instruments and our need to reevaluate
the premium deficiencies in our mortgage insurance business on a
quarterly basis; -- changes in accounting guidance from the
Securities and Exchange Commission ("SEC") or the Financial
Accounting Standards Board; -- legal and other limitations on
amounts we may receive from our subsidiaries as dividends or
through tax and expense sharing arrangements with our subsidiaries;
and -- vulnerability to the performance of our investment in
Sherman Financial Group LLC. We caution you not to place undue
reliance on these forward-looking statements, which are current
only as of the date on which we issued this news release. We do not
intend to, and we disclaim any duty or obligation to, update or
revise any forward-looking statements made in this news release to
reflect new information or future events or for any other reason.
DATASOURCE: Radian Group Inc. CONTACT: Investors, Terri
Williams-Perry, +1-215-231-1486, , or media, Rick Gillespie,
+1-215-231-1061, , both of Radian Group Inc. Web Site:
http://www.radian.biz/
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