PHILADELPHIA, July 19 /PRNewswire-FirstCall/ -- Radian Group Inc. today reported strong results for the quarter ended June 30, 2006, as diluted net income per share rose by more than 14% year over year to $1.79, book value per share rose more than 11% to $46.84 and return on equity exceeded the company's target.
"Our second quarter results validate the strategy we outlined last year," said S.A. Ibrahim, Chief Executive Officer. "Our businesses performed well, illustrating our success in leveraging Radian's blended expertise in mortgage insurance and financial guaranty to benefit customers and to effectively manage our own credit risk exposure."
Regarding its Mortgage Insurance business, Radian noted that credit conditions were favorable, and that it experienced strong volume in both flow and structured products. Primary insurance in force grew to $116 billion at June 30, 2006, from $108 billion at June 30, 2005. Total defaults and paid claims continued to decline.
The company's Financial Guaranty business also posted a strong performance, closing several deals in the pipeline and earning attractive risk-adjusted returns. This was accomplished notwithstanding the persistence of tight credit spreads and an increase in competitive pressures, and demonstrates the viability of the company's AA franchise. In addition, Standard & Poor's affirmed the AA financial strength rating of Radian Asset Assurance, Radian's primary financial guaranty subsidiary, and revised upward its outlook to stable.
In the Financial Services segment, C-BASS and Sherman continued to be very strong contributors to Radian's results.
The key financial highlights of the quarter ended June 30, 2006, are as follows:
Key Financial Highlights (dollars in millions, except per share data)
Second quarter
Quarter ended Quarter ended Percent
June 30, 2006 June 30, 2005 change
Revenue $304.6 $310.3 (1.8)%
Net income $148.1 $140.2 5.6%
Diluted net income per share $1.79 $1.56 14.7%
Net premiums written $298.9 $299.2 (0.1)%
Net premiums earned $259.1 $244.0 6.2%
Equity in net income of affiliates $72.0 $63.9 12.7%
Book value per share $46.84 $41.99 11.6%
Six months
Six months Six months
ended June 30, ended June 30, Percent
2006 2005 change
Revenue $658.2 $616.9 6.7%
Net income $311.8 $255.8 21.9%
Diluted net income per share $3.75 $2.79 34.4%
Net premiums written $578.5 $514.1 12.5%
Net premiums earned $512.8 $491.0 4.4%
Equity in net income of
affiliates $130.4 $115.2 13.2%
Radian will hold a conference call on Thursday, July 20, 2006, at 9:00 a.m. Eastern time to discuss the company's second 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 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 June 30, 2006
Exhibit D: Segment Information Quarter Ended June 30, 2005
Exhibit E: Segment Information Six Months Ended June 30, 2006
Exhibit F: Segment Information Six Months Ended June 30, 2005
Exhibit G: Financial Guaranty Insurance Supplemental Information -
Quarter and Six Months Ended and as of June 30, 2006
Exhibit H: Financial Guaranty Insurance Supplemental Information -
Quarter and Six Months Ended and as of June 30, 2006
Exhibit I: Mortgage Insurance Supplemental Information: New Insurance
Written, 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, Net Premiums Earned and Captives
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 Six Months Ended
June 30 June 30
2006 2005 2006 2005
(In thousands, except per-share
data)
Revenues:
Net premiums written $298,875 $299,218 $578,480 $514,058
Net premiums earned $259,086 $243,978 $512,783 $491,003
Net investment income 59,678 50,004 113,938 100,866
Net gains on securities 5,324 8,723 28,178 20,249
Change in fair value of
derivative instruments (25,287) 987 (7,657) (7,973)
Other income 5,778 6,635 10,989 12,743
Total revenues 304,579 310,327 658,231 616,888
Expenses:
Provision for losses 84,860 83,827 163,494 193,327
Policy acquisition costs 26,820 31,072 54,184 60,428
Other operating expenses 58,099 52,418 118,376 104,088
Interest expense 12,538 9,978 24,378 18,936
Total expenses 182,317 177,295 360,432 376,779
Equity in net income of
affiliates 72,038 63,878 130,378 115,174
Pretax income 194,300 196,910 428,177 355,283
Provision for income taxes 46,155 56,686 116,334 99,447
Net income $148,145 $140,224 $311,843 $255,836
Diluted net income per
share (1) $1.79 $1.56 $3.75 $2.79
(1) Net income per share reconciliation
Net income $148,145 $140,224 $311,843 $255,836
Interest expense on convertible
senior debentures (net of tax) - 802 - 1,604
Net income available to common
stockholders $148,145 $141,026 $311,843 $257,440
Weighted average shares
outstanding (in thousands)
Average common shares
outstanding 81,921 85,464 82,355 87,476
Increase in shares-potential
exercise of options-diluted
basis 835 854 745 913
Increase in shares-contingently
convertible debt (2) - 3,798 - 3,798
Weighted average shares
outstanding (in thousands) 82,756 90,116 83,100 92,187
(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
$0.06 per share for the quarter ended June 30, 2005 and $0.10 per share
for the six months ended June 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
and per-share data) June 30 December 31 June 30
2006 2005 2005
Assets:
Cash and investments $5,598,167 $5,521,561 $5,580,578
Investments in affiliates 492,175 446,151 437,765
Deferred policy acquisition
costs 215,803 208,325 201,253
Prepaid federal income taxes 709,304 585,514 530,549
Other assets 491,898 469,059 418,058
Total assets $7,507,347 $7,230,610 $7,168,203
Liabilities and stockholders'
equity:
Unearned premiums $913,879 $849,360 $789,878
Reserve for losses and loss
adjustment expenses 789,701 801,002 786,942
Long-term debt 747,615 747,466 966,658
Deferred federal income
taxes 1,020,720 961,993 870,129
Other liabilities 214,437 207,909 187,021
Total liabilities 3,686,352 3,567,730 3,600,628
Common stock 97 97 97
Additional paid-in capital 538,698 629,019 748,205
Retained earnings 3,213,016 2,913,649 2,649,991
Accumulated other
comprehensive income 69,184 120,115 169,282
Total common stockholders'
equity 3,820,995 3,662,880 3,567,575
Total liabilities and
stockholders' equity $7,507,347 $7,230,610 $7,168,203
Book value per share $46.84 $44.11 $41.99
Treasury Stock Repurchases (Year-to-Date
for Periods Presented)
Total number of shares
repurchased 2,000,000(1) 10,767,800 7,767,800
Average price paid per share $60.96 $49.58 $48.13
Total cost of
repurchased shares $121,921,937 $533,888,969 $373,856,933
(1) 1.0 million shares were repurchased in the 2nd quarter of 2006 at a
cost of $61.7 million.
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2006
Exhibit C
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $217,050 $81,825 $- $298,875
Net premiums earned $208,670 $50,416 $- $259,086
Net investment income 36,150 23,520 8 59,678
Net gains(losses) on
securities 3,684 1,709 (69) 5,324
Change in fair value of
derivative instruments (3,998) (21,289) - (25,287)
Other income 3,475 120 2,183 5,778
Total revenues 247,981 54,476 2,122 304,579
Expenses:
Provision for losses 77,577 7,283 - 84,860
Policy acquisition costs 15,720 11,100 - 26,820
Other operating expenses 40,542 15,297 2,260 58,099
Interest expense 6,984 4,325 1,229 12,538
Total expenses 140,823 38,005 3,489 182,317
Equity in net income of
affiliates - - 72,038 72,038
Pretax income 107,158 16,471 70,671 194,300
Provision for income taxes 23,986 (2,565) 24,734 46,155
Net income $83,172 $19,036 $45,937 $148,145
Assets $4,505,679 $2,500,483 $501,185 $7,507,347
Deferred policy
acquisition costs 68,843 146,960 - 215,803
Reserve for losses and
loss adjustment expenses 592,526 197,175 - 789,701
Unearned premiums 241,012 672,867 - 913,879
Stockholders' equity 2,220,255 1,263,231 337,509 3,820,995
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2005
Exhibit D
Mortgage Financial Financial
(Thousands of dollars) Insurance Guaranty Services Total
Revenues:
Net premiums written $236,271 $62,947 $- $299,218
Net premiums earned $195,664 $48,314 $- $243,978
Net investment income 28,101 21,887 16 50,004
Net gains on securities 6,653 2,027 43 8,723
Change in fair value of
derivative instruments (7,920) 8,909 (2) 987
Other income 5,679 267 689 6,635
Total revenues 228,177 81,404 746 310,327
Expenses:
Provision for losses 80,225 3,602 - 83,827
Policy acquisition costs 19,206 11,866 - 31,072
Other operating expenses 35,481 15,390 1,547 52,418
Interest expense 5,627 3,473 878 9,978
Total expenses 140,539 34,331 2,425 177,295
Equity in net income of
affiliates - 13 63,865 63,878
Pretax income 87,638 47,086 62,186 196,910
Provision for income taxes 24,786 10,136 21,764 56,686
Net income $62,852 $36,950 $40,422 $140,224
Assets $4,290,331 $2,427,686 $450,186 $7,168,203
Deferred policy
acquisition costs 66,456 134,797 - 201,253
Reserve for losses and
loss adjustment expenses 571,127 215,815 - 786,942
Unearned premiums 189,699 600,179 - 789,878
Stockholders' equity 1,920,283 1,309,608 337,684 3,567,575
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2006
Exhibit E
Mortgage Financial Financial
(Thousands of dollars) Insurance Guaranty Services Total
Revenues:
Net premiums written $440,816 $137,664 $- $578,480
Net premiums earned $411,376 $101,407 $- $512,783
Net investment income 67,815 46,038 85 113,938
Net gains on securities 17,261 8,887 2,030 28,178
Change in fair value of
derivative instruments 5,123 (12,780) - (7,657)
Other income 7,109 334 3,546 10,989
Total revenues 508,684 143,886 5,661 658,231
Expenses:
Provision for losses 148,674 14,820 - 163,494
Policy acquisition costs 29,065 25,119 - 54,184
Other operating expenses 84,809 30,053 3,514 118,376
Interest expense 13,685 8,351 2,342 24,378
Total expenses 276,233 78,343 5,856 360,432
Equity in net income of
affiliates - - 130,378 130,378
Pretax income 232,451 65,543 130,183 428,177
Provision for income taxes 61,135 9,635 45,564 116,334
Net income $171,316 $55,908 $84,619 $311,843
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2005
Exhibit F
Mortgage Financial Financial
(Thousands of dollars) Insurance Guaranty Services Total
Revenues:
Net premiums written $436,508 $77,550 $- $514,058
Net premiums earned $388,129 $102,874 $- $491,003
Net investment income 56,894 43,946 26 100,866
Net gains on securities 13,772 5,600 877 20,249
Change in fair value of
derivative instruments (4,734) (3,048) (191) (7,973)
Other income 10,271 583 1,889 12,743
Total revenues 464,332 149,955 2,601 616,888
Expenses:
Provision for losses 178,152 15,175 - 193,327
Policy acquisition costs 33,884 26,544 - 60,428
Other operating expenses 69,150 29,784 5,154 104,088
Interest expense 10,751 6,572 1,613 18,936
Total expenses 291,937 78,075 6,767 376,779
Equity in net income of
affiliates - 13 115,161 115,174
Pretax income 172,395 71,893 110,995 355,283
Provision for income taxes 46,822 13,777 38,848 99,447
Net income $125,573 $58,116 (1) $72,147 $255,836 (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 $(4.1)
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit G
Quarter Ended Six Months Ended
($ in thousands, except ratios) June 30 June 30
2006 2005 2006 2005
Net Premiums Written:
Public finance direct $24,854 $13,313 $38,407 $28,746
Public finance reinsurance 28,712 20,954 46,695 37,980
Structured direct 21,334 17,359 39,606 32,416
Structured reinsurance 5,452 4,753 8,505 13,263
Trade credit reinsurance 1,473 6,568 4,451 19,887
81,825 62,947 137,664 132,292
Impact of recapture (1) - - - (54,742)
Net Premiums Written $81,825 $62,947 $137,664 $77,550
Net Premiums Earned:
Public finance direct $7,450 $8,053 $15,293 $17,016
Public finance reinsurance 7,865 7,090 16,158 15,603
Structured direct 22,807 18,881 44,310 37,100
Structured reinsurance 5,642 3,753 10,283 11,019
Trade credit reinsurance 6,652 10,537 15,363 26,675
50,416 48,314 101,407 107,413
Impact of recapture (2) - - - (4,539)
Net Premiums Earned $50,416 $48,314 $101,407 $102,874
Refundings included in earned
premium $928 $2,654 $3,310 $5,095
Claims paid:
Trade credit reinsurance $4,354 $5,230 $8,354 $10,228
Other financial guaranty 6,919 (567) 6,809 11,917
Conseco 4,428 7,981 8,745 15,950
Total $15,701 $12,644 $23,908 $38,095
Incurred losses:
Trade credit reinsurance $3,244 $272 $7,194 $7,313
Other financial guaranty 4,039 3,330 8,658 7,862
Conseco - - (1,032) -
Total $7,283 $3,602 $14,820 $15,175
Loss ratio- GAAP Basis 14.4% 7.5% 14.6% 14.7%
Expense ratio- GAAP Basis 52.4% 56.4% 54.4% 54.8%
66.8% 63.9% 69.0% 69.5%
Net claims paid (received) under
derivatives contracts $(1,226) $(2,140) $65,413 $(4,376)
(1) Reflects the impact on net premiums written of the first quarter 2005
recapture of previously ceded business by one of the primary Financial
Guaranty insurers:
(In thousands)
Public reinsurance 48,238
Structured reinsurance 6,504
(2) Reflects the impact on net premiums earned of the first quarter 2005
recapture of previously ceded business by one of the primary Financial
Guaranty insurers:
(In thousands)
Public reinsurance 3,870
Structured reinsurance 669
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit H
($ in thousands, except ratios) June 30 December 31 June 30
2006 2005 2005
Capital and surplus $989,716 $1,004,505 $1,057,364
Contingency reserve 301,364 271,907 266,775
Qualified statutory capital 1,291,080 1,276,412 1,324,139
Unearned premium reserve 794,989 751,656 708,425
Loss and loss expense reserve 106,494 108,576 119,796
Total policyholders'
reserves 2,192,563 2,136,644 2,152,360
Present value of installment
premiums 310,178 302,953 249,901
Reinsurance and soft capital
facilities 150,000 150,000 150,000
Total claims paying resources $2,652,741 $2,589,597 $2,552,261
Net debt service outstanding $126,568,891 $110,344,057 $96,731,753
Capital leverage ratio (1) 98 86 73
Claims paying leverage ratio (2) 48 43 38
Net par outstanding by product:
Public finance direct $14,717,373 $14,043,786 $12,521,798
Public finance reinsurance 36,020,773 33,047,512 31,197,417
Structured direct 35,152,186 24,608,489 17,310,352
Structured reinsurance 4,792,978 4,952,146 4,708,548
Total $90,683,310 $76,651,933 $65,738,115
Reinsurance business net par
outstanding:
Treaty 59% 58% 59%
Facultative 41% 42% 41%
Reserve for losses and LAE
Specific $36,569 $29,311 $36,582
Conseco 40,993 50,770 64,393
Non-specific 119,613 124,712 114,840
Total $197,175 $204,793 $215,815
(1) Net debt service outstanding divided by qualified statutory capital
(2) Net debt service outstanding divided by total claims paying resources
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit I
Quarter Ended
June 30
2006 % 2005 %
Primary New Insurance Written ($ in
millions)
Flow $6,662 57.7% $6,128 47.3%
Structured 4,886 42.3% 6,814 52.7%
Total Primary $11,548 100.0% $12,942 100.0%
Flow
Prime $4,879 73.2% $4,635 75.7%
Alt-A 1,266 19.0% 909 14.8%
A minus and below 517 7.8% 584 9.5%
Total Flow $6,662 100.0% $6,128 100.0%
Structured
Prime $1,287 26.3% $2,024 29.7%
Alt-A 3,555 72.8% 2,603 38.2%
A minus and below 44 0.9% 2,187 32.1%
Total Structured $4,886 100.0% $6,814 100.0%
Total
Prime $6,166 53.4% $6,659 51.5%
Alt-A 4,821 41.7% 3,512 27.1%
A minus and below 561 4.9% 2,771 21.4%
Total Primary $11,548 100.0% $12,942 100.0%
Total Primary New Insurance Written
by FICO Score
($ in millions)
Flow
<=619 $387 5.8% $400 6.5%
620-679 2,010 30.2% 1,823 29.7%
680-739 2,448 36.7% 2,222 36.3%
>=740 1,817 27.3% 1,683 27.5%
Total Flow $6,662 100.0% $6,128 100.0%
Structured
<=619 $57 1.2% $2,186 32.1%
620-679 1,604 32.8% 1,968 28.9%
680-739 2,214 45.3% 1,765 25.9%
>=740 1,011 20.7% 895 13.1%
Total Structured $4,886 100.0% $6,814 100.0%
Total
<=619 $444 3.8% $2,586 20.0%
620-679 3,614 31.3% 3,791 29.3%
680-739 4,662 40.4% 3,987 30.8%
>=740 2,828 24.5% 2,578 19.9%
Total Primary $11,548 100.0% $12,942 100.0%
Percentage of primary new insurance
written
Monthlies 92% 85%
Refinances 35% 48%
95.01% LTV and above 13% 9%
ARMs
Less than 5 years 12% 42%
5 years and longer 17% 14%
Primary risk written ($ in millions)
Flow $1,695 94.1% $1,516 53.2%
Structured 107 5.9% 1,332 46.8%
Total Primary $1,802 100.0% $2,848 100.0%
Pool risk written (In millions) $208 $248
Other risk written (In millions)
Seconds
1st loss $18 $9
2nd loss 45 40
NIMs 17 38
International
1st loss-Hong Kong primary
mortgage insurance 5 157
Reinsurance 3 1
Credit default swaps - -
Other
Domestic credit default swaps 12 -
Financial guaranty wrap -
Total other risk written $100 $245
Six Months Ended
June 30
2006 % 2005 %
Primary New Insurance Written ($ in
millions)
Flow $11,896 48.9% $11,790 62.1%
Structured 12,455 51.1% 7,196 37.9%
Total Primary $24,351 100.0% $18,986 100.0%
Flow
Prime $8,650 72.7% $8,790 74.6%
Alt-A 2,371 19.9% 1,853 15.7%
A minus and below 875 7.4% 1,147 9.7%
Total Flow $11,896 100.0% $11,790 100.0%
Structured
Prime $3,551 28.5% $2,152 29.9%
Alt-A 7,472 60.0% 2,802 38.9%
A minus and below 1,432 11.5% 2,242 31.2%
Total Structured $12,455 100.0% $7,196 100.0%
Total
Prime $12,201 50.1% $10,942 57.6%
Alt-A 9,843 40.4% 4,655 24.5%
A minus and below 2,307 9.5% 3,389 17.9%
Total Primary $24,351 100.0% $18,986 100.0%
Total Primary New Insurance Written
by FICO Score
($ in millions)
Flow
<=619 $665 5.6% $787 6.7%
620-679 3,557 29.9% 3,605 30.6%
680-739 4,439 37.3% 4,265 36.2%
>=740 3,235 27.2% 3,133 26.5%
Total Flow $11,896 100.0% $11,790 100.0%
Structured
<=619 $1,445 11.6% $2,242 31.2%
620-679 3,785 30.4% 2,136 29.7%
680-739 4,719 37.9% 1,866 25.9%
>=740 2,506 20.1% 952 13.2%
Total Structured $12,455 100.0% $7,196 100.0%
Total
<=619 $2,110 8.7% $3,029 16.0%
620-679 7,342 30.1% 5,741 30.2%
680-739 9,158 37.6% 6,131 32.3%
>=740 5,741 23.6% 4,085 21.5%
Total Primary $24,351 100.0% $18,986 100.0%
Percentage of primary new insurance
written
Monthlies 88% 87%
Refinances 37% 45%
95.01% LTV and above 10% 11%
ARMs
Less than 5 years 27% 36%
5 years and longer 18% 14%
Primary risk written ($ in millions)
Flow $3,024 72.3% $2,930 67.8%
Structured 1,157 27.7% 1,392 32.2%
Total Primary $4,181 100.0% $4,322 100.0%
Pool risk written (In millions) $269 $304
Other risk written (In millions)
Seconds
1st loss $42 $13
2nd loss 177 46
NIMs 106 66
International
1st loss-Hong Kong primary
mortgage insurance 22 207
Reinsurance 5 11
Credit default swaps - -
Other
Domestic credit default swaps 32 -
Financial guaranty wrap - 511
Total other risk written $384 $854
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit J
June 30 June 30
2006 % 2005 %
Primary insurance in force ($ in
millions)
Flow $81,828 70.5% $85,093 78.5%
Structured 34,168 29.5% 23,334 21.5%
Total Primary $115,996 100.0% $108,427 100.0%
Prime $76,868 66.3% $74,555 68.8%
Alt-A 25,998 22.4% 19,869 18.3%
A minus and below 13,130 11.3% 14,003 12.9%
Total Primary $115,996 100.0% $108,427 100.0%
Primary risk in force ($ in millions)
Flow $20,191 78.5% $20,795 80.0%
Structured 5,528 21.5% 5,192 20.0%
Total Primary $25,719 100.0% $25,987 100.0%
Flow
Prime $15,756 78.0% $15,773 75.9%
Alt-A 2,902 14.4% 3,395 16.3%
A minus and below 1,533 7.6% 1,627 7.8%
Total Flow $20,191 100.0% $20,795 100.0%
Structured
Prime $2,207 39.9% $2,050 39.5%
Alt-A 1,540 27.9% 1,256 24.2%
A minus and below 1,781 32.2% 1,886 36.3%
Total Structured $5,528 100.0% $5,192 100.0%
Total
Prime $17,963 69.8% $17,823 68.6%
Alt-A 4,442 17.3% 4,651 17.9%
A minus and below 3,314 12.9% 3,513 13.5%
Total Primary $25,719 100.0% $25,987 100.0%
Total Primary Risk in Force by FICO
Score
($ in millions)
Flow
<=619 $1,285 6.4% $1,430 6.9%
620-679 6,245 30.9% 6,594 31.7%
680-739 7,410 36.7% 7,636 36.7%
>=740 5,251 26.0% 5,135 24.7%
Total Flow $20,191 100.0% $20,795 100.0%
Structured
<=619 $1,782 32.2% $1,889 36.4%
620-679 1,993 36.1% 1,848 35.6%
680-739 1,209 21.9% 1,007 19.4%
>=740 544 9.8% 448 8.6%
Total Structured $5,528 100.0% $5,192 100.0%
Total
<=619 $3,067 11.9% $3,319 12.8%
620-679 8,238 32.1% 8,442 32.5%
680-739 8,619 33.5% 8,643 33.3%
>=740 5,795 22.5% 5,583 21.4%
Total Primary $25,719 100.0% $25,987 100.0%
Percentage of primary risk in force
Monthlies 90% 91%
Refinances 35% 38%
95.01% LTV and above 15% 13%
ARMs
Less than 5 years 23% 24%
5 years and longer 9% 8%
Pool risk in force ($ in millions)
Prime $2,210 75.0% $2,010 78.5%
Alt-A 266 9.0% 273 10.7%
A minus and below 470 16.0% 275 10.8%
Total $2,946 100.0% $2,558 100.0%
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit K
June 30 June 30
2006 % 2005 %
Total Primary Risk in Force by LTV
($ in millions)
95.01% and above $3,901 15.2% $3,442 13.3%
90.01% to 95.00% 8,293 32.2% 9,106 35.0%
85.01% to 90.00% 9,291 36.1% 9,902 38.1%
85.00% and below 4,234 16.5% 3,537 13.6%
Total $25,719 100.0% $25,987 100.0%
Total Primary Risk in Force by
Policy Year ($ in millions)
2002 and prior $3,923 15.3% $5,872 22.6%
2003 4,561 17.7% 7,180 27.6%
2004 5,761 22.4% 8,792 33.8%
2005 7,496 29.1% 4,143 16.0%
2006 3,978 15.5% - -
Total $25,719 100.0% $25,987 100.0%
Total Pool Risk in Force by Policy
Year ($ in millions)
2002 and prior $1,652 56.1% $1,727 67.5%
2003 151 5.1% 220 8.6%
2004 291 9.9% 304 11.9%
2005 651 22.1% 307 12.0%
2006 201 6.8% - -
Total Pool risk in Force $2,946 100.0% $2,558 100.0%
Other risk in force (In millions)
Seconds
1st loss $653 $568
2nd loss 776 112
NIMs 289 311
International
1st loss-Hong Kong primary
mortgage insurance 293 207
Reinsurance 31 29
Credit default swaps 7,889 180
Other
Domestic credit default swaps 224 -
Financial guaranty wrap 159 448
Total other risk in force $10,314 $1,855
Risk to capital ratio-STAT Basis 10.7:1 9.9:1
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit L
Quarter Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
Direct claims paid ($ in
thousands)
Prime $29,722 $31,901 $59,831 $63,772
Alt-A 15,231 19,573 34,021 41,905
A minus and below 22,390 20,024 45,781 40,908
Seconds 10,264 8,165 18,167 18,772
Total $77,607 $79,663 $157,800 $165,357
Average claim paid ($ in
thousands)
Prime $25.3 $22.7 $26.1 $23.6
Alt-A 33.7 34.3 37.1 35.7
A minus and below 26.7 25.6 27.9 26.0
Seconds 28.4 20.0 25.7 22.7
Total $27.4 $25.2 $28.4 $26.3
Loss ratio - GAAP Basis 37.2% 41.0% 36.1% 45.9%
Expense ratio - GAAP Basis 26.9% 28.0% 27.7% 26.5%
64.1% 69.0% 63.8% 72.4%
Reserve for losses by category
($ in thousands):
Prime $177,692 $163,194
Alt-A 134,940 160,504
A minus and below 207,077 158,154
Pool Insurance 33,149 45,512
Seconds 30,862 36,847
Other 8,806 6,916
Total $592,526 $571,127
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit M
June 30 December 31 June 30
2006 2005 2005
Default Statistics
Primary insurance:
Flow
Prime
Number of insured loans 499,435 508,117 529,171
Number of loans in default 14,283 18,045 14,929
Percentage of loans in default 2.86% 3.55% 2.82%
Alt-A
Number of insured loans 63,985 67,339 73,224
Number of loans in default 4,167 4,946 4,894
Percentage of loans in default 6.51% 7.34% 6.68%
A minus and below
Number of insured loans 52,348 54,066 56,961
Number of loans in default 6,765 7,543 6,339
Percentage of loans in default 12.92% 13.95% 11.13%
Total Flow
Number of insured loans 615,768 629,522 659,356
Number of loans in default 25,215 30,534 26,162
Percentage of loans in default 4.09% 4.85% 3.97%
Structured
Prime
Number of insured loans 70,416 59,457 51,023
Number of loans in default 2,540 2,640 1,952
Percentage of loans in default 3.61% 4.44% 3.83%
Alt-A
Number of insured loans 76,131 50,997 44,266
Number of loans in default 2,589 2,564 2,493
Percentage of loans in default 3.40% 5.03% 5.63%
A minus and below
Number of insured loans 46,500 47,348 49,103
Number of loans in default 8,193 8,472 6,899
Percentage of loans in default 17.62% 17.89% 14.05%
Total Structured
Number of insured loans 193,047 157,802 144,392
Number of loans in default 13,322 13,676 11,344
Percentage of loans in default 6.90% 8.67% 7.86%
Total Primary Insurance
Prime
Number of insured loans 569,851 567,574 580,194
Number of loans in default 16,823 20,685 16,881
Percentage of loans in default 2.95% 3.64% 2.91%
Alt-A
Number of insured loans 140,116 118,336 117,490
Number of loans in default 6,756 7,510 7,387
Percentage of loans in default 4.82% 6.35% 6.29%
A minus and below
Number of insured loans 98,848 101,414 106,064
Number of loans in default 14,958 16,015 13,238
Percentage of loans in default 15.13% 15.79% 12.48%
Total Primary Insurance
Number of insured loans 808,815 787,324 803,748
Number of loans in default 38,537 (1) 44,210 (1) 37,506
Percentage of loans in default 4.76% 5.62% 4.67%
Pool insurance:
Number of loans in default 15,338 (2) 10,194 (2) 6,691
(1) Includes approximately 551 and 452 defaults at June 30, 2006 and
December 31, 2005, respectively, where reserves have not been
established because no claim payment is currently anticipated.
(2) Includes approximately 9,867 and 3,699 defaults at June 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 Six Months Ended and as of June 30, 2006
Exhibit N
Quarter Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
Net Premiums Written (In
thousands)
Primary and Pool Insurance $187,686 $191,674 $381,132 $368,548
Seconds 15,245 17,530 25,784 29,331
NIMs 7,085 10,520 19,708 19,880
International 3,391 16,442 5,952 18,644
Domestic credit default swaps 3,631 - 8,180 -
Financial guaranty wrap 12 105 60 105
Net Premiums Written $217,050 $236,271 $440,816 $436,508
Net Premiums Earned (In thousands)
Primary and Pool Insurance $185,020 $173,285 $360,828 $342,996
Seconds 13,848 11,568 28,758 23,963
NIMs 5,866 9,684 13,664 19,538
International 2,706 1,022 5,917 1,527
Domestic credit default swaps 1,218 - 2,149 -
Financial guaranty wrap 12 105 60 105
Net Premiums Earned $208,670 $195,664 $411,376 $388,129
Captives
Premiums ceded to captives
(In millions) $24.3 $21.8 $47.2 $45.6
% of total premiums 11.4% 11.2% 11.4% 11.7%
NIW subject to captives
(In millions) $3,764 $3,011 $6,540 $5,297
% of primary NIW 32.6% 23.3% 26.9% 27.9%
IIF included in captives (1) 32.1% 33.6%
RIF included in captives (1) 36.5% 34.7%
Persistency (twelve months ended
June 30) 62.8% 56.9%
June 30 December 31 June 30
2006 2005 2005
SMART HOME
% of Primary RIF included in Smart
Home Transactions (1) 11.8% 7.8% 2.0%
(1) Radian reinsures the middle layer risk positions, while retaining a
significant portion of the total risk comprising the first loss and most
remote risk positions.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2006
ALT-A
Exhibit O
Quarter Ended Six Months Ended
($ millions) June 30 June 30
2006 % 2005 % 2006 % 2005 %
Primary New
Insurance
Written by
FICO Score
<=619 $17 0.4% $1 0.0% $23 0.2% $7 0.1%
620-659 550 11.4% 724 20.6% 1,259 12.8% 867 18.6%
660-679 754 15.6% 419 11.9% 1,388 14.1% 618 13.3%
680-739 2,369 49.1% 1,536 43.8% 4,693 47.7% 2,056 44.2%
>=740 1,131 23.5% 832 23.7% 2,480 25.2% 1,107 23.8%
Total $4,821 100.0% $3,512 100.0% $9,843 100.0% $4,655 100.0%
Primary Risk
in Force by
FICO Score
<=619 $32 0.7% $54 1.2%
620-659 865 19.5% 1,002 21.5%
660-679 730 16.4% 824 17.7%
680-739 1,933 43.5% 1,953 42.0%
>=740 882 19.9% 818 17.6%
Total $4,442 100.0% $4,651 100.0%
Primary Risk
in Force by
LTV
95.01%
and
above $142 3.2% $274 5.9%
90.01% to
95.00% 1,309 29.5% 1,549 33.3%
85.01% to
90.00% 1,882 42.3% 2,023 43.5%
85.00% and
below 1,109 25.0% 805 17.3%
Total $4,442 100.0% $4,651 100.0%
Primary Risk
in Force by
Policy Year
2002 and
prior $398 9.0% $708 15.2%
2003 666 15.0% 1,243 26.7%
2004 1,008 22.7% 1,879 40.4%
2005 1,391 31.3% 821 17.7%
2006 979 22.0% - -
Total $4,442 100.0% $4,651 100.0%
Radian Group Inc.
Financial Services Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2006
Exhibit P
Quarter Ended Six Months Ended
June 30 June 30
(In thousands) 2006 2005 2006 2005
Investment in Affiliates -
Selected Information
C-BASS
Balance, beginning of period $387,043 $309,690 $364,364 $290,073
Net income for period 44,855 31,427 74,881 59,544
Dividends received 16,547 8,750 23,894 17,250
Balance, end of period $415,351 $332,367 $415,351 $332,367
Sherman
Balance, beginning of period $49,608 $71,874 $81,753 $101,492
Net income for period 27,182 32,439 55,497 55,618
Dividends received - - 60,515 51,875
Other comprehensive income - (482) 55 671
Sale of ownership interest - - - -
Warrant repurchase - - - (2,075)
Balance, end of period $76,790 $103,831 $76,790 $103,831
Portfolio Information:
C-BASS
Servicing portfolio $56,460,000 $37,010,000
Total assets 6,289,258 3,694,071
Servicing income 79,800 63,419 $153,869 $123,213
Net interest income 69,872 44,306 134,912 85,558
Total revenues 211,493 174,237 382,617 321,537
Sherman
Total assets $1,058,989 $826,810
Net revenues $236,113 $209,927 $473,785 $358,552
Radian owns a 46% interest in C-BASS and a 34.58% interest 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, and 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 municipal 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. 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 in our annual report on Form 10-K for the year ended December 31, 2005. 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. 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.
