RDN Radian Group Inc

Radian Reports Record Third Quarter 2004 Net Income of $122 Million PHILADELPHIA, Oct. 20 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE:RDN) today reported its results for the quarter ended September 30, 2004. The key financial highlights of the quarter and nine months ended September 30, 2004 are shown in the following tables: Key Financial Highlights (dollars in millions, except per share data) Third Quarter: Quarter Ended Quarter Ended Percent September 30, September 30, Change 2004 2003 Net income $122.2 $114.0 7% Net income per share $1.31 $1.20 9% Net premiums written $282.5 $285.5 (1%) Premiums earned $264.0 $261.0 1% Revenues* $377.3 $349.0 8% Book value per share (as of 9/30) $37.90 $33.35 14% Equity in net income of affiliates $45.9 $21.3 116% Nine Months: Nine Months Nine Months Percent Ended Ended Change September 30, September 30, 2004 2003 Net income $362.7 $330.4 10% Net income per share $3.84 $3.50 10% Net premiums written $795.2 $811.8 (2%) Net premiums written** $891.6 $811.8 10% Premiums earned $766.7 $742.2 3% Premiums earned** $791.6 $742.2 7% Revenues* $1,112.9 $1,009.3 10% Equity in net income of affiliates $130.6 $70.0 87% * In conformity with the current period presentation, prior period revenues have been adjusted to include gain/loss on sales of investments. The adjusted presentation appears in the financial information that accompanies this release. Certain other prior-period amounts included in the accompanying financial information also have been reclassified to conform to the current period presentation. ** These amounts exclude the impact of one of the primary insurer's recapture of business from Radian's financial guaranty reinsurance business, which is described in Radian's Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 11, 2004. A reconciliation and additional information about the impact of this recapture can be found in Schedules 1 and 2 to this release. "We're pleased to report a record quarter for Radian," stated Radian's Chairman and CEO Frank P. Filipps. "The contributions from each business segment together helped Radian achieve its highest quarterly net income of $122 million and revenues of more than $377 million." Radian will hold a conference call to discuss its third quarter results on Thursday, October 21, 2004, at 9:00 a.m. Eastern time. This call will be broadcast live over the Internet at http://www.ir.radiangroupinc.com/phoenix.zhtml?c=112301&p=irol-audioarchives, or at http://www.radiangroupinc.com/, under "News." A replay of the webcast will be available at this site approximately two hours after the live broadcast ends and a transcript of the call will be available at this site approximately 24 hours after the call ends, both 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 "Investor Information - News and Events - Webcasts and Presentations" or will be accessible by clicking on http://www.ir.radiangroupinc.com/phoenix.zhtml?c=112301&p=irol-audioarchives. Radian Group Inc. is a leading credit enhancement provider to the global financial and capital markets, headquartered in Philadelphia. Radian's subsidiaries provide products and services through three business lines: financial guaranty, mortgage insurance and other financial services. Additional information may be found at http://www.radiangroupinc.com/. Financial Results and Supplemental Information Contents Exhibit A: Condensed Consolidated Statements of Income Exhibit B: Condensed Consolidated Balance Sheets Exhibit C: Segment Information Quarter Ended September 30, 2004 Exhibit D: Segment Information Quarter Ended September 30, 2003 Exhibit E: Segment Information Nine Months Ended September 30, 2004 Exhibit F: Segment Information Nine Months Ended September 30, 2003 Exhibit G: Financial Guaranty Insurance Supplemental Information - Quarter and Nine Months Ended and as of September 30, 2004 Exhibit H: Financial Guaranty Insurance Supplemental Information - Quarter and Nine Months Ended and as of September 30, 2004 Exhibit I: Mortgage Insurance Supplemental Information: New Insurance Written, Risk Written and Captives 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 Exhibit L: Mortgage Insurance Supplemental Information: Claims and Defaults Exhibit M: Mortgage Insurance Supplemental Information: ALT A Exhibit N: Financial Services Supplemental Information Exhibit O: Supplemental Schedule 1: Reinsurance Clawback Impact on Radian Group Exhibit P: Supplemental Schedule 2: Reinsurance Clawback Impact on Financial Guaranty Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Income Exhibit A Quarter Ended Nine Months Ended September 30 September 30 2004 2003 2004 2003 (Thousands of dollars, except per share data) Revenues: Net premiums written $282,530 $285,517 $795,227 $811,773 Premiums earned $264,048 $261,043 $766,717 $742,184 Net investment income 51,086 46,365 151,670 140,041 Equity in net income of affiliates 45,926 21,287 130,580 70,034 Gain/loss on sales of investments 8,993 1,778 40,956 8,627 Other income 7,200 18,489 22,996 48,449 Total revenues 377,253 348,962 1,112,919 1,009,335 Expenses: Provision for losses 114,125 100,762 345,452 264,060 Policy acquisition costs 35,903 33,787 89,558 96,172 Other operating expenses 47,659 51,423 153,242 152,429 Interest expense 7,996 9,652 26,014 27,888 Total expenses 205,683 195,624 614,266 540,549 Change in fair value of derivative instruments (2,083) 6,072 2,576 (6,655) Pretax income 169,487 159,410 501,229 462,131 Provision for income taxes 47,316 45,432 138,545 131,707 Net income available to common stockholders $122,171 $113,978 $362,684 $330,424 Net income per share $1.31 $1.20 $3.84 $3.50 Weighted average shares outstanding (in thousands) 93,387 94,886 94,456 94,514 Radian Group Inc. and Subsidiaries Condensed Consolidated Balance Sheets Exhibit B (Thousands of dollars, except per Sept. 30 Dec. 31 Sept. 30 share data) 2004 2003 2003 Assets: Cash and investments $5,303,946 $5,074,531 $4,845,309 Investments in affiliates 347,404 328,478 300,465 Deferred policy acquisition costs 207,453 218,779 212,078 Prepaid federal income taxes 426,813 358,840 322,711 Other assets 414,404 465,139 472,831 Total assets $6,700,020 $6,445,767 $6,153,394 Liabilities and stockholders' equity: Unearned premiums $742,691 $718,649 $684,931 Reserve for losses and loss adjustment expenses 776,903 790,380 669,046 Long-term debt 717,579 717,404 717,347 Deferred federal income taxes 769,342 712,354 684,310 Other liabilities 209,901 281,136 274,879 Total liabilities 3,216,416 3,219,923 3,030,513 Common stock 96 96 95 Additional paid-in capital 1,096,793 1,199,056 1,186,481 Retained earnings 2,243,400 1,886,548 1,832,950 Accumulated other comprehensive income 143,315 140,144 103,355 Total common stockholders' equity 3,483,604 3,225,844 3,122,881 Total liabilities and stockholders' equity $6,700,020 $6,445,767 $6,153,394 Book value per share $37.90 $34.31 $33.35 Radian Group Inc. and Subsidiaries Segment Information Quarter Ended September 30, 2004 Exhibit C Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $209,085 $- $73,445 $282,530 Premiums earned $205,313 $- $58,735 $264,048 Net investment income 29,391 8 21,687 51,086 Equity in net income of affiliates - 43,893 2,033 45,926 Gain/loss on sales of investments 6,359 64 2,570 8,993 Other income 5,381 1,438 381 7,200 Total revenues 246,444 45,403 85,406 377,253 Expenses: Provision for losses 101,000 - 13,125 114,125 Policy acquisition costs 22,538 - 13,365 35,903 Other operating expenses 31,817 2,184 13,658 47,659 Interest expense 4,694 559 2,743 7,996 Total expenses 160,049 2,743 42,891 205,683 Change in fair value of derivative instruments (7,035) (145) 5,097 (2,083) Pretax income 79,360 42,515 47,612 169,487 Income tax provision 21,212 14,879 11,225 47,316 Net income $58,148 $27,636 $36,387 $122,171 Assets $4,003,276 $328,072 $2,368,672 $6,700,020 Deferred policy acquisition costs 72,076 - 135,377 207,453 Reserve for losses and loss adjustment expenses 533,060 - 243,843 776,903 Unearned premiums 129,873 - 612,818 742,691 Equity 1,958,326 284,300 1,240,978 3,483,604 Radian Group Inc. and Subsidiaries Segment Information Quarter Ended September 30, 2003 Exhibit D Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $195,360 $- $90,157 $285,517 Premiums earned $199,787 $- $61,256 $261,043 Net investment income 26,626 - 19,739 46,365 Equity in net income of affiliates - 19,138 2,149 21,287 Gain/loss on sales of investments 506 (748) 2,020 1,778 Other income 10,729 7,509 251 18,489 Total revenues 237,648 25,899 85,415 348,962 Expenses: Provision for losses 82,074 - 18,688 100,762 Policy acquisition costs 18,374 - 15,413 33,787 Other operating expenses 33,846 7,942 9,635 51,423 Interest expense 5,403 873 3,376 9,652 Total expenses 139,697 8,815 47,112 195,624 Change in fair value of derivative instruments (580) 8 6,644 6,072 Pretax income 97,371 17,092 44,947 159,410 Income tax provision 26,256 6,848 12,328 45,432 Net income $71,115 $10,244 $32,619 $113,978 Assets $3,692,010 $286,546 $2,174,838 $6,153,394 Deferred policy acquisition costs 76,844 - 135,234 212,078 Reserve for losses and loss adjustment expenses 499,583 - 169,463 669,046 Unearned premiums 104,064 - 580,867 684,931 Equity 1,760,328 234,106 1,128,447 3,122,881 Radian Group Inc. and Subsidiaries Segment Information Nine Months Ended September 30, 2004 Exhibit E Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $651,213 $- $144,014 $795,227 Premiums earned $611,916 $- $154,801 $766,717 Net investment income 87,607 82 63,981 151,670 Equity in net income of affiliates - 129,180 1,400 130,580 Gain/loss on sales of investments 34,582 2,663 3,711 40,956 Other income 16,601 5,160 1,235 22,996 Total revenues 750,706 137,085 225,128 1,112,919 Expenses: Provision for losses 300,162 - 45,290 345,452 Policy acquisition costs 56,757 - 32,801 89,558 Other operating expenses 106,015 10,499 36,728 153,242 Interest expense 15,106 1,869 9,039 26,014 Total expenses 478,040 12,368 123,858 614,266 Change in fair value of derivative instruments (3,821) (110) 6,507 2,576 Pretax income 268,845 124,607 107,777 501,229 Income tax provision 73,510 43,611 21,424 138,545 Net income $195,335 $80,996 $86,353 $362,684 Radian Group Inc. and Subsidiaries Segment Information Nine Months Ended September 30, 2003 Exhibit F Mortgage Financial Financial (Thousands of dollars) Insurance Services Guaranty Total Revenues: Net premiums written $550,359 $- $261,414 $811,773 Premiums earned $557,537 $- $184,647 $742,184 Net investment income 81,208 36 58,797 140,041 Equity in net income of affiliates - 62,427 7,607 70,034 Gain/loss on sales of investments 1,371 (1,666) 8,922 8,627 Other income 25,145 20,294 3,010 48,449 Total revenues 665,261 81,091 262,983 1,009,335 Expenses: Provision for losses 212,278 - 51,782 264,060 Policy acquisition costs 53,297 - 42,875 96,172 Other operating expenses 96,442 28,166 27,821 152,429 Interest expense 16,065 2,346 9,477 27,888 Total expenses 378,082 30,512 131,955 540,549 Change in fair value of derivative instruments (606) 35 (6,084) (6,655) Pretax income 286,573 50,614 124,944 462,131 Income tax provision 77,614 20,247 33,846 131,707 Net income $208,959 $30,367 $91,098 $330,424 Radian Group Inc. Financial Guaranty Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2004 Exhibit G Quarter Ended Nine Months Ended (Thousands of dollars, except ratios) September 30 September 30 2004 2003 2004 2003 Net Premiums Written: Public finance direct 10,006 21,570 35,871 43,118 Public finance reinsurance 19,305 19,380 56,202 66,930 Structured direct 23,293 24,743 76,526 62,445 Structured reinsurance 6,407 10,749 23,813 38,481 Trade credit 14,434 13,715 48,019 50,440 73,445 90,157 240,431 261,414 Impact of recapture (1) - - (96,417) - Net Premiums Written 73,445 90,157 144,014 261,414 Net Premiums Earned: Public finance direct 7,327 4,799 19,516 13,074 Public finance reinsurance 9,725 13,802 30,810 37,655 Structured direct 19,961 17,119 57,542 55,593 Structured reinsurance 7,285 11,282 24,948 36,631 Trade credit 14,437 14,254 46,877 41,694 58,735 61,256 179,693 184,647 Impact of recapture (1) - - (24,892) - Net Premiums Earned 58,735 61,256 154,801 184,647 Claims paid: Trade credit 3,288 7,274 18,478 15,595 Financial guaranty 7,474 4,708 24,640 6,530 Conseco 8,225 - 23,307 - Total 18,987 11,982 66,425 22,125 Impact of recapture (1) - - 11,488 - Claims paid 18,987 11,982 77,913 22,125 Incurred losses: Trade credit 6,907 9,440 23,541 23,538 Financial guaranty 6,218 9,248 21,749 28,244 Conseco - - - - Total 13,125 18,688 45,290 51,782 Loss ratio- GAAP Basis 22.3% 30.5% 29.3% 28.0% Expense ratio- GAAP Basis 46.0% 40.9% 44.9% 38.3% 68.3% 71.4% 74.2% 66.3% Refundings included in earned premium 1,895 1,400 4,167 6,305 (1) Amounts recorded related to the recapture of previously ceded business by one of the primary insurer customers of the financial guaranty insurance business in the first quarter of 2004. Radian Group Inc. Financial Guaranty Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2004 Exhibit H (Thousands of dollars, except ratios) September 30 December 31 September 30 2004 2003 2003 Capital and surplus 996,657 826,550 798,354 Contingency reserve 239,493 321,312 307,697 Qualified statutory capital 1,236,150 1,147,862 1,106,051 Unearned premium reserve 709,302 735,156 690,525 Loss and loss expense reserve 126,466 95,130 83,556 Total policyholders' reserves 2,071,918 1,978,148 1,880,132 Present value of installment premiums 363,166 444,368 438,750 Reinsurance and soft capital facilities 245,000 275,000 275,000 Total claims paying resources 2,680,084 2,697,516 2,593,882 Net debt service outstanding 100,219,130 117,900,058 116,241,337 Capital leverage ratio (2) 81 103 105 Claims paying leverage ratio (3) 37 44 45 Reserve for losses and LAE Specific 43,970 86,378 82,421 Conseco 87,693 111,000 - Non-specific 112,180 79,529 87,042 Total 243,843 276,907 169,463 (2) Net debt service outstanding divided by qualified statutory capital (3) 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, 2004 Exhibit I Quarter Ended September 30 2004 % 2003 % Primary New Insurance Written (in millions) Flow 9,123 78.1% 14,311 88.0% Structured 2,563 21.9% 1,958 12.0% Total 11,686 100.0% 16,269 100.0% Prime 7,181 61.5% 11,740 72.2% Alt-A 2,633 22.5% 3,362 20.7% A minus and below 1,872 16.0% 1,167 7.1% Total 11,686 100.0% 16,269 100.0% Total Primary New Insurance Written by FICO Score (in millions) =740 2,395 20.5% 4,112 25.3% Total 11,686 100.0% 16,269 100.0% Percentage of primary new insurance written Monthlies 94% 80% Refinances 37% 48% 95.01% LTV and above 11% ARMs 46% 15% Primary risk written (in millions) Flow 2,287 73.9% 3,339 86.4% Structured 809 26.1% 524 13.6% Total 3,096 100.0% 3,863 100.0% Pool risk written (in millions) 52 88 Other risk written (in millions) Seconds 70 NIMS and other 33 Total other risk written 103 Net Premiums Written (in thousands) Primary and Pool Insurance 177,818 173,092 Seconds, NIMS and other 31,267 22,268 Net Premiums Written 209,085 195,360 Net Premiums Earned (in thousands) Primary and Pool Insurance 169,684 173,773 Seconds, NIMS and other 35,629 26,014 Net Premiums Earned 205,313 199,787 Captives Premiums ceded to captives ($ millions) $22.6 $18.6 % of total premiums 11.6% 9.8% NIW subject to captives ($ millions) $3,988 $6,501 % of primary NIW 34.1% 40.0% IIF subject to captives 32.8% 28.2% RIF subject to captives 34.6% 30.4% Persistency (twelve months ended September 30) 57.4% 46.1% Nine Months Ended September 30 2004 % 2003 % Primary New Insurance Written (in millions) Flow 28,392 85.7% 38,167 68.6% Structured 4,726 14.3% 17,503 31.4% Total 33,118 100.0% 55,670 100.0% Prime 21,462 64.8% 36,950 66.4% Alt-A 7,523 22.7% 12,535 22.5% A minus and below 4,133 12.5% 6,185 11.1% Total 33,118 100.0% 55,670 100.0% Total Primary New Insurance Written by FICO Score (in millions) =740 7,403 22.4% 14,324 25.7% Total 33,118 100.0% 55,670 100.0% Percentage of primary new insurance written Monthlies 93% 87% Refinances 38% 53% 95.01% LTV and above 11% ARMs 39% 31% Primary risk written (in millions) Flow 7,196 83.2% 9,053 65.6% Structured 1,448 16.8% 4,743 34.4% Total 8,644 100.0% 13,796 100.0% Pool risk written (in millions) 376 654 Other risk written (in millions) Seconds 132 NIMS and other 253 Total other risk written 385 Net Premiums Written (in thousands) Primary and Pool Insurance 560,276 485,589 Seconds, NIMS and other 90,937 64,770 Net Premiums Written 651,213 550,359 Net Premiums Earned (in thousands) Primary and Pool Insurance 511,453 494,550 Seconds, NIMS and other 100,463 62,987 Net Premiums Earned 611,916 557,537 Captives Premiums ceded to captives ($ millions) $64.5 $54.6 % of total premiums 11.2% 10.0% NIW subject to captives ($ millions) $13,394 $17,192 % of primary NIW 40.4% 30.9% IIF subject to captives RIF subject to captives Persistency (twelve months ended September 30) Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2004 - Exhibit J (Thousands of dollars, except ratios) September 30 December 31 September 30 2004 % 2003 % 2003 % Primary insurance in force (in millions) Flow 90,964 78.8% 91,709 76.5% 91,170 75.1% Structured 24,516 21.2% 28,178 23.5% 30,164 24.9% Total 115,480 100.0% 119,887 100.0% 121,334 100.0% Prime 79,900 69.2% 82,096 68.5% 84,957 70.0% Alt-A 22,393 19.4% 23,710 19.8% 21,940 18.1% A minus and below 13,187 11.4% 14,081 11.7% 14,437 11.9% Total 115,480 100.0% 119,887 100.0% 121,334 100.0% Primary risk in force (in millions) Flow 22,234 83.0% 22,261 82.1% 21,957 80.8% Structured 4,562 17.0% 4,845 17.9% 5,230 19.2% Total 26,796 100.0% 27,106 100.0% 27,187 100.0% Prime 18,349 68.5% 18,449 68.0% 19,138 70.4% Alt-A 5,166 19.3% 5,253 19.4% 4,581 16.8% A minus and below 3,281 12.2% 3,404 12.6% 3,468 12.8% Total 26,796 100.0% 27,106 100.0% 27,187 100.0% Total Primary Risk in Force by FICO Score (in millions) =740 5,791 21.6% 5,728 21.1% 5,626 20.7% Total 26,796 100.0% 27,106 100.0% 27,187 100.0% Percentage of primary risk in force Monthlies 92% Refinances 37% 95.01% LTV and above 13% ARMs 28% Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2004 - Exhibit K (Thousands of dollars, except ratios) September 30 December 31 September 30 2004 % 2003 % 2003 % Total Primary Risk in Force by LTV (in millions) 95.01% and above 3,381 12.6% 3,067 11.3% 2,796 10.3% 90.01% to 95.00% 9,911 37.0% 10,184 37.6% 10,253 37.7% 85.01% to 90.00% 10,119 37.8% 10,024 37.0% 10,125 37.2% 85.00% and below 3,385 12.6% 3,831 14.1% 4,013 14.8% Total 26,796 100.0% 27,106 100.0% 27,187 100.0% Total Primary Risk in Force by Policy Year (in millions) 2001 and prior 4,764 17.8% 7,837 28.9% 9,362 34.4% 2002 3,977 14.8% 6,198 22.9% 7,234 26.6% 2003 10,094 37.7% 13,071 48.2% 10,591 39.0% 2004 7,961 29.7% - - - - Total 26,796 100.0% 27,106 100.0% 27,187 100.0% Pool risk in force (in millions) 2,363 2,415 2,394 GSE Pool risk in force (in millions) 1,567 1,393 1,391 Other risk in force (in millions) Seconds 693 725 675 NIMS and other 559 328 286 Total other risk in force ($ millions) 1,252 1,053 961 Risk to capital ratio-STAT Basis 10.1:1 11.4:1 11.7:1 Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2004 - Exhibit L Quarter Ended Nine Months Ended September 30 September 30 2004 2003 2004 2003 Direct claims paid (in thousands) Prime 36,036 32,411 105,683 88,746 Alt-A 21,123 15,072 64,025 35,771 A Minus and below 25,223 19,175 71,666 50,279 Seconds 9,836 4,561 33,134 17,602 Total 92,218 71,219 274,508 192,398 Average claim paid (in thousands) Prime 22.5 23.6 23.8 24.0 Alt-A 36.5 42.6 39.0 40.4 A Minus and below 26.3 26.0 26.8 25.7 Seconds 25.7 28.5 27.3 26.7 Total 26.2 27.2 27.5 26.7 Loss ratio- GAAP Basis 49.2% 41.1% 49.1% 38.1% Expense ratio- GAAP Basis 26.5% 26.1% 26.6% 26.8% 75.7% 67.2% 75.7% 64.9% Sept. 30 Dec. 31 Sept. 30 2004 2003 2003 Default Statistics Primary insurance: Prime Number of insured loans 616,468 640,778 663,870 Number of loans in default 19,199 22,156 21,232 Percentage of loans in default 3.11% 3.46% 3.20% Alt A Number of insured loans 130,860 138,571 128,278 Number of loans in default 8,213 7,343 5,832 Percentage of loans in default 6.28% 5.30% 4.55% A Minus and below Number of insured loans 102,599 110,054 112,498 Number of loans in default 12,078 12,497 11,768 Percentage of loans in default 11.77% 11.36% 10.46% Total Number of insured loans 849,927 889,403 904,646 Number of loans in default 39,490 41,996 38,832 Percentage of loans in default 4.65% 4.72% 4.29% Pool insurance: Number of insured loans 580,533 599,140 595,833 Number of loans in default 6,489 5,738 5,440 Percentage of loans in default 1.12% 0.96% 0.91% Radian Group Inc. Mortgage Insurance Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2004 - Exhibit M ALT-A Quarter Ended (Thousands of dollars, except ratios) September 30 2004 % 2003 % Primary New Insurance Written by FICO Score (in millions) =740 491 18.6% 737 21.9% Total Alt A 2,633 100.0% 3,362 100.0% Primary Risk in Force by FICO Score (in millions) =740 891 17.3% 766 16.7% Total Alt A 5,166 100.0% 4,581 100.0% Primary Risk in Force by LTV (in millions) 95.01% and above 415 8.0% 389 8.5% 90.01% to 95.00% 1,842 35.7% 1,545 33.7% 85.01% to 90.00% 2,154 41.7% 1,801 39.3% 85.00% and below 755 14.6% 846 18.5% Total Alt A 5,166 100.0% 4,581 100.0% Primary Risk in Force by Policy Year (in millions) 2001 and prior 443 8.6% 858 18.7% 2002 799 15.5% 1,546 33.8% 2003 2,067 39.9% 2,177 47.5% 2004 1,857 36.0% - - Total Alt A 5,166 100.0% 4,581 100.0% Nine Months Ended (Thousands of dollars, except ratios) September 30 2004 % 2003 % Primary New Insurance Written by FICO Score (in millions) =740 1,427 19.0% 3,346 26.7% Total Alt A 7,523 100.0% 12,535 100.0% Radian Group Inc. Financial Services Supplemental Information For the Quarter and Nine Months Ended and as of September 30, 2004 - Exhibit N Quarter Ended Nine Months Ended September 30 September 30 (Thousands of dollars) 2004 2003 2004 2003 Investment in Affiliate Reconciliation: C-BASS Balance, beginning of period 248,759 204,229 226,710 175,630 Net income for period 18,095 12,276 72,644 43,375 Dividends received - 5,000 32,500 7,500 Balance, end of period 266,854 211,505 266,854 211,505 Sherman Balance, beginning of period 48,709 46,228 65,979 52,142 Net income for period 25,798 6,862 56,536 19,052 Dividends received - - 49,800 12,450 Other comprehensive income (914) 1,416 878 (4,238) Balance, end of period 73,593 54,506 73,593 54,506 Portfolio Information: C-BASS Servicing portfolio 22,270,000 16,010,000 Total assets 4,466,115 2,757,036 Servicing income 38,931 32,259 112,958 90,476 Net interest income 37,025 32,287 109,207 90,210 Total revenues 105,115 79,065 354,174 256,510 Sherman Total assets 444,368 490,806 Net revenues 129,661 79,898 353,314 193,223 Supplemental Schedule Schedule 1 Radian Group Inc. and Subsidiaries-Consolidated - Exhibit O The following schedule shows the Financial Guaranty Segment Income Statement as reported (Column 1) and adjustments (Column 2) to reflect the income statement impact of the recapture (referred to below as the clawback) of business previously ceded to the Company by one of the primary insurer customers of the financial guaranty segment. The adjusted numbers are shown in Column 3. The impact of the clawback (Column 2) reflects the clawback of business ceded to the Company in prior periods. This clawback only affected the first quarter (and, as a result, the year-to-date periods) of 2004. Accordingly, management believes that Column 3 provides useful information to investors by presenting a more meaningful basis of comparison for the Company's past and future results. As Adjusted As Reported Nine Months Nine Months Ended Nine Months Ended Impact Sept. 30 Ended Sept. 30 of Excluding Sept. 30 2004 Clawback Clawback 2003 (Thousands of dollars, except per-share data) Revenues: Net premiums written $795,227 $(96,417) $891,644 $811,773 Premiums earned $766,717 $(24,892) $791,609 $742,184 Net investment income 151,670 - 151,670 140,041 Equity in net income of affiliates 130,580 - 130,580 70,034 Gain/loss on sales of investments 40,956 - 40,956 8,627 Other income 22,996 - 22,996 48,449 Total revenues 1,112,919 (24,892) 1,137,811 1,009,335 Expenses: Provision for losses 345,452 - 345,452 264,060 Policy acquisition costs 89,558 (9,766) 99,324 96,172 Other operating expenses 153,242 - 153,242 152,429 Interest expense 26,014 - 26,014 27,888 Total expenses 614,266 (9,766) 624,032 540,549 Change in fair value of derivative instruments 2,576 (791) 3,367 (6,655) Pretax income 501,229 (15,917) 517,146 462,131 Provision for income taxes 138,545 (5,571) 144,116 131,707 Net income $362,684 $(10,346) $373,030 $330,424 Net income available to common stockholders $362,684 $(10,346) $373,030 $330,424 Net income per share $3.84 $(0.11) $3.95 $3.50 Weighted average shares outstanding (in thousands) 94,456 94,456 94,514 Supplemental Schedule Schedule 2 Segment Information-Financial Guaranty Exhibit P The following schedule shows the Financial Guaranty Segment Income Statement as reported (Column 1) and adjustments (Column 2) to reflect the income statement impact of the recapture (referred to below as the clawback) of business previously ceded to the Company by one of the primary insurer customers of the financial guaranty segment. The adjusted numbers are shown in Column 3. The impact of the clawback (Column 2) reflects the clawback of business ceded to the Company in prior periods. This clawback only affected the first quarter (and, as a result, the year-to-date periods) of 2004. Accordingly, management believes that Column 3 provides useful information to investors by presenting a more meaningful basis of comparison for the Company's past and future results. As Adjusted As Reported Nine Months Nine Months Ended Nine Months Ended Impact Sept. 30 Ended Sept. 30 of Excluding Sept. 30 (Thousands of dollars) 2004 Clawback Clawback 2003 Revenues: Net premiums written $144,014 $(96,417) $240,431 $261,414 Premiums earned $154,801 $(24,892) $179,693 $184,647 Net investment income 63,981 - 63,981 58,797 Equity in net income of affiliates 1,400 - 1,400 7,607 Gain/loss on sales of investments 3,711 - 3,711 8,922 Other income 1,235 - 1,235 3,010 Total revenues 225,128 (24,892) 250,020 262,983 Expenses: Provision for losses 45,290 - 45,290 51,782 Policy acquisition costs 32,801 (9,766) 42,567 42,875 Other operating expenses 36,728 - 36,728 27,821 Interest expense 9,039 - 9,039 9,477 Total expenses 123,858 (9,766) 133,624 131,955 Change in fair value of derivative instruments 6,507 (791) 7,298 (6,084) Pretax income 107,777 (15,917) 123,694 124,944 Income tax provision 21,424 (5,571) 26,995 33,846 Net income $86,353 $(10,346) $96,699 $91,098 Loss ratio-excluding Clawback 25.2% 28.0% Expense ratio-excluding Clawback 44.1% 38.3% 69.3% 66.3% 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 Group Inc. CONTACT: For investors - Mona Zeehandelaar, +1-215-231-1674 or , or For the media - Emily Riley, +1-215-231-1328 or , both of Radian Group Web site: http://www.radiangroupinc.com/

Copyright