RDN Radian Group Inc

Radian Creates New Structured Solution for Managing Mortgage Risk; SMART HOME Leverages Credit-Linked Notes to Transfer Non-Prime Mortgage Risk PHILADELPHIA, Aug. 5 /PRNewswire-FirstCall/ -- Radian Guaranty Inc. today announced that it has developed an innovative, new reinsurance solution to manage its non-prime mortgage risk. This transaction, which was completed on an $882 million portfolio of first-lien, non-prime residential mortgage loans insured by Radian, will help the company to increase capacity and exploit revenue growth opportunities in this profitable segment of the market. The company will reduce its exposure on this portfolio by transferring a significant portion of the risk to a Bermuda reinsurance company, Smart Home Reinsurance 2004-1 Limited. "The Smart Home transaction offers the best of Radian to investors worldwide - innovation, creativity and sound risk management," stated President and Chief Operating Officer Roy J. Kasmar. "By combining our structured finance, reinsurance and mortgage market expertise, Smart Home helps us to grow our mortgage business and take advantage of the higher- return, non-prime mortgage market - while carefully managing our portfolio mix and risk limits." Smart Home was funded in the global capital markets through the sale of credit-linked notes rated between AA and BB by Standard & Poor's and between Aa2 and Ba1 by Moody's Investors Service. Smart Home was formed solely to enter into the reinsurance arrangement and is not affiliated with Radian. "Radian was very innovative in devising this structure which allowed them to transfer a portion of risk on the subject mortgage pool off their books," stated Terry Osterweil, Director for Standard & Poor's. "Standard & Poor's was then able to analyze and quantify the risk associated with this unique structure in order to appropriately assign ratings to each tranche." Radian Guaranty Inc. is the mortgage insurance subsidiary of Radian Group Inc. (NYSE:RDN), a global credit enhancement company headquartered in Philadelphia. Radian Guaranty provides risk management products and services to mortgage lenders nationwide; these services increase opportunities for people to buy homes with little or no downpayment, protect lenders from default-related losses on residential first mortgages and facilitate the sale of low-downpayment mortgages in the secondary market. Additional information may be found at http://www.radianmi.com/. All statements in this press release that address operating performance, 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 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, 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 significant customers 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; intense competition from others and from alternative products to private mortgage insurance and financial guaranty insurance; changes in the business practices of Fannie Mae and Freddie Mac; legislative and regulatory changes affecting demand for private mortgage insurance and financial guaranty insurance; changes in claims against mortgage insurance products resulting from the aging of Radian's mortgage insurance policies; changes in Radian's ability to maintain sufficient reinsurance capacity in an increasingly concentrated reinsurance market; vulnerability to the performance of Radian's strategic investments; 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, 2003 in the section immediately preceding Part I of the report. 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 Guaranty Inc. CONTACT: For the media - Azlen Theobald, +1-215-231-1701, , or for investors - Mona Zeehandelaar, +1-215-231-1674, , both of Radian Guaranty Web site: http://www.radianmi.com/

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