Radian Reports Fourth Quarter and Full Year 2012 Financial Results – Writes $37.1 billion of new MI business in 2012, compared to $15.5 billion in 2011 – – Risk-to-capital ratio of 20.8:1; Expects to remain below 25:1 through 2013 – Business Wire PHILADELPHIA -- February 11, 2013 Radian Group Inc. (NYSE: RDN) today reported a net loss for the quarter ended December 31, 2012, of $177.3 million, or $1.34 per diluted share, which included minimal net gains on investments and combined net gains from the change in fair value of derivatives and other financial instruments as well as an income tax provision of $20.5 million. This compares to a net loss for the quarter ended December 31, 2011, of $121.5 million, or $0.92 per diluted share, which included net gains on investments of $38.9 million, combined net gains from the change in fair value of derivatives and other financial instruments of $102.2 million and an income tax provision of $65.4 million. The net loss for the full year 2012 was $451.5 million, or $3.41 per diluted share, which included net gains on investments of $184.9 million and combined net loss from the change in fair value of derivatives and other financial instruments of $226.3 million as well as an income tax provision of $7.3 million. This compares to net income for the year ended December 31, 2011, of $302.2 million, or $2.26 per diluted share, which included net gains on investments of $202.2 million and combined net gains from the change in fair value of derivatives and other financial instruments of $821.7 million as well as an income tax provision of $66.4 million. Book value per share at December 31, 2012, was $5.51. “In 2012, we took advantage of every opportunity to position Radian for future success, including growing our volume of new, high-quality mortgage insurance business each quarter, reducing our portfolio of delinquent loans by 16%, maintaining a competitive risk-to-capital ratio and reducing our financial guaranty exposure by 51%,” said Chief Executive Officer S.A. Ibrahim. “Although our fourth quarter results were impacted by the continuing challenge of our legacy portfolio, our ability to write new, profitable business remains undiminished.” Ibrahim added, “We hit the ground running in 2013 with $4 billion of new business written in January and another decline in our delinquent loan inventory, which better positions Radian for a return to operating profitability.” CAPITAL AND LIQUIDITY UPDATE *Radian Guaranty’s risk-to-capital ratio was 20.8:1 as of December 31, 2012, compared to 20.1:1 as of September 30, 2012, and 21.5:1 as of December 31, 2011. *The change in the risk-to-capital ratio from September 30, 2012, was primarily driven by operating losses and an increase to the company’s gross risk in force resulting from strong, new mortgage insurance business volume, partially offset by external and intercompany reinsurance which decreased net risk in force. *The company expects to remain below a 25:1 risk-to-capital ratio through 2013 including, if necessary, by contributing from currently available holding company funds. *In order to proactively manage its risk-to-capital position, Radian Guaranty entered into two quota share reinsurance agreements in 2012 with the same third-party reinsurance provider. As of December 31, 2012, a total of $1.9 billion was ceded under those agreements. *The company also managed risk to capital through a new intercompany reinsurance agreement, which reduced Radian Guaranty’s net risk in force by $2.6 billion in the fourth quarter. *As of December 31, 2012, Radian Guaranty’s statutory capital was $926 million compared to $843 million a year ago. *Radian Group maintains approximately $336 million of currently available liquidity, before the repayment this month of $79 million of outstanding debt. After completion of the company’s debt exchange in January, the company has approximately $55 million of outstanding debt due in June 2015, with the balance of debt maturing in 2017. FOURTH QUARTER AND FULL YEAR HIGHLIGHTS *New mortgage insurance written (NIW) was $11.7 billion for the quarter, compared to $10.6 billion in the third quarter of 2012 and $6.5 billion in the prior-year quarter. Radian wrote an additional $4 billion in NIW in January 2013, compared to $2 billion in January 2012. *The product mix of Radian’s NIW in 2012 shifted to an increased level of monthly premium business. Of the $37.1 billion in new business written in 2012, 65 percent was written with monthly premiums and 35 percent with single premiums. This compares to a mix of 59 percent monthly premiums and 41 percent single premiums in 2011. *The Home Affordable Refinance Program (HARP) accounted for $2.9 billion of insurance not included in Radian Guaranty’s NIW total for the quarter. This compares to $2.7 billion in the third quarter of 2012 and $0.7 billion in the prior-year quarter. As of December 31, 2012, approximately 9 percent of the company’s total primary mortgage insurance risk in force had successfully completed a HARP refinance. *NIW continued to consist of loans with excellent risk characteristics, with 76 percent consisting of loans with FICO scores of 740 or greater. *The mortgage insurance provision for losses was $306.9 million in the fourth quarter of 2012, compared to $171.8 million in the third quarter and $333.3 million in the prior-year period. Mortgage insurance loss reserves were approximately $3.1 billion as of December 31, 2012, which was up slightly from $3.0 billion as of September 30, 2012, and down from $3.2 billion as of December 31, 2011. First-lien reserves per primary default were $29,510 as of December 31, 2012, compared to $28,561 as of September 30, 2012, and $26,007 as of December 31, 2011. *The total number of primary delinquent loans decreased by 2 percent in the fourth quarter from the third quarter of 2012, and by 16 percent from the fourth quarter of 2011. In addition, the total number of primary delinquent loans decreased by 2 percent in January. The primary mortgage insurance delinquency rate decreased to 12.1 percent in the fourth quarter of 2012, compared to 12.6 percent in the third quarter and 15.2 percent in the fourth quarter of 2011. The company’s primary risk in force on defaulted loans was $4.3 billion in the fourth quarter, compared to $4.4 billion in the third quarter and $5.2 billion in the fourth quarter of 2011. *Total mortgage insurance claims paid were $263.4 million in the fourth quarter, compared to $272.4 million in the third quarter and $291.6 million in the fourth quarter of 2011. The company expects mortgage insurance net claims paid for the full-year 2013 of $900 million to $1.0 billion. *Radian Asset Assurance Inc. continues to serve as an important source of capital support for Radian Guaranty and is expected to continue to provide Radian Guaranty with dividends over time. *As of December 31, 2012, Radian Asset had approximately $1.1 billion in statutory surplus with an additional $700 million in claims-paying resources. *In November, Radian Asset agreed to the commutation of its remaining reinsurance risk from Financial Guaranty Insurance Corporation (FGIC), which reduced the company’s total reinsurance portfolio by 13 percent. The commutation of the $822 million reinsurance portfolio was completed in January 2013. *Last week, Radian Asset received regulatory approval to release $61 million of contingency reserves, which will benefit Radian Guaranty's statutory capital position. The reserve release was based on a reduction in Radian Asset’s net par outstanding, resulting from the maturing of exposures and other terminations of coverage. The company had anticipated the majority of the reserve release and has included its impact in its projections of Radian Guaranty's risk-to-capital during 2013. *Radian Asset has paid a total of $384 million in dividends to Radian Guaranty since 2008, and expects to pay another dividend of approximately $35 million in 2013. *Since June 30, 2008, Radian Asset has successfully reduced its total net par exposure by 71 percent to $33.7 billion as of December 31, 2012, including large declines in many of the riskier segments of the portfolio. CONFERENCE CALL Radian will discuss these items in its conference call today, Monday, February 11, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at http://www.radian.biz/page?name=Webcasts or at www.radian.biz. The call may also be accessed by dialing 800-230-1092 inside the U.S., or 612-234-9960 for international callers, using passcode 280218 or by referencing Radian. A replay of the webcast will be available on the Radian website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available approximately two and a half hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 280218. In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's website under Investors >Quarterly Results, or by clicking on http://www.radian.biz/page?name=QuarterlyResults. ABOUT RADIAN Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance and related risk mitigation 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 www.radian.biz. FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS (Unaudited) For trend information on all schedules, refer to Radian’s quarterly financial statistics at http://www.radian.biz/page?name=FinancialReportsCorporate. Exhibit A: Condensed Consolidated Statements of Income Exhibit B: Condensed Consolidated Balance Sheets Exhibit C: Segment Information Quarter Ended December 31, 2012 Exhibit D: Segment Information Quarter Ended December 31, 2011 Exhibit E: Segment Information Year Ended December 31, 2012 Exhibit F: Segment Information Year Ended December 31, 2011 Exhibit G: Financial Guaranty Supplemental Information Exhibit H: Financial Guaranty Supplemental Information Exhibit I: Mortgage Insurance Supplemental Information New Insurance Written Exhibit J: Mortgage Insurance Supplemental Information Insurance in Force and Risk in Force by Product Exhibit K: Mortgage Insurance Supplemental Information Risk in Force by FICO, LTV and Policy Year Exhibit L: Mortgage Insurance Supplemental Information Primary, Pool and Other Risk in Force Exhibit M: Mortgage Insurance Supplemental Information Claims, Reserves and Reserve per Default Exhibit N: Mortgage Insurance Supplemental Information Default Statistics Exhibit O: Mortgage Insurance Supplemental Information Net Premiums Written and Earned, Captives, QSR and Persistency Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Income Exhibit A Quarter Ended Year Ended December 31 December 31 (In thousands except per-share 2012 2011 2012 2011 data) Revenues: Net premiums $ 217,743 $ 193,433 $ 686,630 $ 707,247 written - insurance Net premiums earned $ 193,875 $ 184,413 $ 738,982 $ 756,025 - insurance Net investment 23,112 38,694 114,337 163,520 income Net gains on 6,351 38,866 184,888 202,177 investments Net impairment losses recognized (3 ) (1,171 ) (3 ) (1,202 ) in earnings Change in fair value of derivative 2,912 69,769 (144,025 ) 628,395 instruments Net (losses) gains on other financial (1,815 ) 32,429 (82,269 ) 193,329 instruments Gain on sale of — — 7,708 — affiliate Other income 1,627 1,551 5,790 5,599 Total revenues 226,059 364,551 825,408 1,947,843 Expenses: Provision for 305,797 355,984 959,171 1,296,521 losses Change in reserve for premium (1,464 ) (665 ) 41 (7,092 ) deficiency Policy acquisition 10,098 12,796 61,876 52,763 costs Other operating 55,896 38,397 196,672 175,810 expenses Interest expense 12,583 14,197 51,832 61,394 Total expenses 382,910 420,709 1,269,592 1,579,396 Equity in net (loss) income of — — (13 ) 65 affiliates Pretax (loss) (156,851 ) (56,158 ) (444,197 ) 368,512 income Income tax 20,451 65,381 7,271 66,362 provision Net (loss) income $ (177,302 ) $ (121,539 ) $ (451,468 ) $ 302,150 Diluted net (loss) income per share $ (1.34 ) $ (0.92 ) $ (3.41 ) $ 2.26 (1) (1) Weighted average shares outstanding (in thousands) Weighted average common shares 132,525 132,369 132,533 132,372 outstanding Increase in weighted average shares-common stock — — — 1,491 equivalents-diluted basis Weighted average 132,525 132,369 132,533 133,863 shares outstanding 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 December 31 December 31 (In thousands, except per-share data) 2012 2011 Assets: Cash and investments $ 5,208,199 $ 5,846,168 Deferred policy acquisition costs 88,202 139,906 Deferred income taxes, net — 15,975 Reinsurance recoverables 89,204 157,985 Derivative assets 13,609 17,212 Other assets 503,986 479,519 Total assets $ 5,903,200 $ 6,656,765 Liabilities and stockholders' equity: Unearned premiums $ 648,682 $ 637,372 Reserve for losses and loss adjustment expenses 3,149,936 3,310,902 Reserve for premium deficiency 3,685 3,644 Long-term debt 663,571 818,584 VIE debt 108,858 228,240 Derivative liabilities 266,873 126,006 Other liabilities 325,270 349,726 Total liabilities 5,166,875 5,474,474 Common stock 151 151 Additional paid-in capital 1,075,320 1,074,513 Retained (deficit) earnings (355,241 ) 96,227 Accumulated other comprehensive income 16,095 11,400 Total common stockholders’ equity 736,325 1,182,291 Total liabilities and stockholders’ equity $ 5,903,200 $ 6,656,765 Book value per share $ 5.51 $ 8.88 Radian Group Inc. and Subsidiaries Segment Information Quarter Ended December 31, 2012 Exhibit C Mortgage Financial (In thousands) Insurance Guaranty Total Revenues: Net premiums written - $ 217,044 $ 699 $ 217,743 insurance Net premiums earned - 179,486 14,389 193,875 insurance Net investment income 12,814 10,298 23,112 Net gains on investments 1,447 4,904 6,351 Net impairment losses — (3 ) (3 ) recognized in earnings Change in fair value of (298 ) 3,210 2,912 derivative instruments Net losses on other financial (864 ) (951 ) (1,815 ) instruments Other income 1,588 39 1,627 Total revenues 194,173 31,886 226,059 Expenses: Provision for losses 306,895 (1,098 ) 305,797 Change in reserve for premium (1,464 ) — (1,464 ) deficiency Policy acquisition costs 7,469 2,629 10,098 Other operating expenses 44,661 11,235 55,896 Interest expense 2,099 10,484 12,583 Total expenses 359,660 23,250 382,910 Pretax (loss) income (165,487 ) 8,636 (156,851 ) Income tax provision 12,279 8,172 20,451 Net (loss) income $ (177,766 ) $ 464 $ (177,302 ) Cash and investments $ 3,118,153 $ 2,090,046 $ 5,208,199 Deferred policy acquisition 38,478 49,724 88,202 costs Total assets 3,575,427 2,327,773 5,903,200 Unearned premiums 382,413 266,269 648,682 Reserve for losses and loss 3,083,608 66,328 3,149,936 adjustment expenses VIE Debt 9,875 98,983 108,858 Derivative liabilities — 266,873 266,873 Radian Group Inc. and Subsidiaries Segment Information Quarter Ended December 31, 2011 Exhibit D Mortgage Financial (In thousands) Insurance Guaranty Total Revenues: Net premiums written - $ 194,009 $ (576 ) $ 193,433 insurance Net premiums earned - 167,000 17,413 184,413 insurance Net investment income 20,350 18,344 38,694 Net gains on investments 27,755 11,111 38,866 Net impairment losses (1,171 ) — (1,171 ) recognized in earnings Change in fair value of (696 ) 70,465 69,769 derivative instruments Net (losses) gains on other (457 ) 32,886 32,429 financial instruments Other income 1,488 63 1,551 Total revenues 214,269 150,282 364,551 Expenses: Provision for losses 333,293 22,691 355,984 Change in reserve for premium (665 ) — (665 ) deficiency Policy acquisition costs 9,400 3,396 12,796 Other operating expenses 28,093 10,304 38,397 Interest expense 1,944 12,253 14,197 Total expenses 372,065 48,644 420,709 Pretax (loss) income (157,796 ) 101,638 (56,158 ) Income tax provision (benefit) 110,315 (44,934 ) 65,381 Net (loss) income $ (268,111 ) $ 146,572 $ (121,539 ) Cash and investments $ 3,210,279 $ 2,635,889 $ 5,846,168 Deferred policy acquisition 52,094 87,812 139,906 costs Total assets 3,470,103 3,186,662 6,656,765 Unearned premiums 233,446 403,926 637,372 Reserve for losses and loss 3,247,900 63,002 3,310,902 adjustment expenses VIE Debt 9,450 218,790 228,240 Derivative liabilities — 126,006 126,006 Radian Group Inc. and Subsidiaries Segment Information Year Ended December 31, 2012 Exhibit E Mortgage Financial (In thousands) Insurance Guaranty Total Revenues: Net premiums written - insurance $ 806,305 $ (119,675 ) $ 686,630 Net premiums earned - insurance 702,385 36,597 738,982 Net investment income 63,191 51,146 114,337 Net gains on investments 103,666 81,222 184,888 Net impairment losses recognized — (3 ) (3 ) in earnings Change in fair value of (330 ) (143,695 ) (144,025 ) derivative instruments Net losses on other financial (3,491 ) (78,778 ) (82,269 ) instruments Gain on sale of affiliate — 7,708 7,708 Other income 5,516 274 5,790 Total revenues 870,937 (45,529 ) 825,408 Expenses: Provision for losses 921,507 37,664 959,171 Change in reserve for premium 41 — 41 deficiency Policy acquisition costs 34,131 27,745 61,876 Other operating expenses 152,448 44,224 196,672 Interest expense 7,454 44,378 51,832 Total expenses 1,115,581 154,011 1,269,592 Equity in net loss of affiliates — (13 ) (13 ) Pretax loss (244,644 ) (199,553 ) (444,197 ) Income tax (benefit) provision (30,045 ) 37,316 7,271 Net loss $ (214,599 ) $ (236,869 ) $ (451,468 ) Radian Group Inc. and Subsidiaries Segment Information Year Ended December 31, 2011 Exhibit F Mortgage Financial (In thousands) Insurance Guaranty Total Revenues: Net premiums written - insurance $ 717,264 $ (10,017 ) $ 707,247 Net premiums earned - insurance $ 680,895 $ 75,130 $ 756,025 Net investment income 93,678 69,842 163,520 Net gains on investments 126,205 75,972 202,177 Net impairment losses recognized in (1,202 ) — (1,202 ) earnings Change in fair value of derivative (632 ) 629,027 628,395 instruments Net gains on other financial 3,864 189,465 193,329 instruments Other income 5,369 230 5,599 Total revenues 908,177 1,039,666 1,947,843 Expenses: Provision for losses 1,293,857 2,664 1,296,521 Change in reserve for premium (7,092 ) — (7,092 ) deficiency Policy acquisition costs 36,051 16,712 52,763 Other operating expenses 132,225 43,585 175,810 Interest expense 13,894 47,500 61,394 Total expenses 1,468,935 110,461 1,579,396 Equity in net income of affiliates — 65 65 Pretax (loss) income (560,758 ) 929,270 368,512 Income tax provision (benefit) 83,157 (16,795 ) 66,362 Net (loss) income $ (643,915 ) $ 946,065 $ 302,150 Radian Group Inc. and Subsidiaries Financial Guaranty Supplemental Information Exhibit G Quarter Ended Year Ended December 31 December 31 (In thousands) 2012 2011 2012 2011 Net Premiums Earned: Public finance direct $ 10,723 $ 11,673 $ 43,727 $ 40,797 Public finance reinsurance 2,492 4,638 13,434 25,942 Structured direct 657 312 1,527 2,093 Structured reinsurance 515 795 173 3,434 Trade credit reinsurance 2 (5 ) — 35 Net Premiums Earned - 14,389 17,413 58,861 72,301 insurance Impact of commutations — — (22,264 ) 2,829 Total Net Premiums Earned - $ 14,389 $ 17,413 $ 36,597 $ 75,130 insurance Refundings included in $ 7,956 $ 8,459 $ 33,985 $ 27,187 earned premium Net premiums earned - $ 5,652 $ 10,054 $ 28,693 $ 41,743 derivatives (1) Claims paid $ 5,465 $ 5,392 $ 34,338 $ 11,427 (1) Included in change in fair value of derivative instruments. The impact of the Assured Transaction for the Year Ended December 31, 2012, was as follows: (In millions) Statement of Operations Decrease in premiums written $ (119.8 ) Decrease in premiums earned $ (22.2 ) Increase in change in fair value of derivative instruments—gain 1.4 Gain on sale of affiliate 7.7 Increase in amortization of policy acquisition costs (15.7 ) Decrease in pre-tax income $ (28.8 ) Balance Sheet Decrease in: Cash $ 93.6 Deferred policy acquisition costs 26.2 Accounts and notes receivable 1.1 Derivative assets 0.6 Unearned premiums 71.6 Derivative liabilities 2.1 Increase in other assets 19.1 Radian Group Inc. and Subsidiaries Financial Guaranty Supplemental Information Exhibit H December 31 December 31 ($ in thousands, except ratios) 2012 2011 Statutory Information: Capital and surplus $ 1,144,112 $ 974,874 Contingency reserve 300,138 421,406 Qualified statutory capital 1,444,250 1,396,280 Unearned premium reserve 256,920 448,669 Loss and loss expense reserve (53,441 ) 161,287 Total statutory policyholders' reserves 1,647,729 2,006,236 Present value of installment premiums 114,292 148,641 Total statutory claims paying resources $ 1,762,021 $ 2,154,877 Net debt service outstanding $ 42,526,289 $ 88,202,630 Capital leverage ratio (1) 29 63 Claims paying leverage ratio (2) 24 41 Net par outstanding by product: Public finance direct $ 9,796,131 $ 13,838,427 Public finance reinsurance 5,542,217 19,097,057 Structured direct 17,615,383 34,760,869 Structured reinsurance 787,758 1,492,859 Total (3) $ 33,741,489 (4) $ 69,189,212 (1) The capital leverage ratio is derived by dividing net debt service outstanding by qualified statutory capital. (2) The claims paying leverage ratio is derived by dividing net debt service outstanding by total statutory claims paying resources. Included in public finance net par outstanding is $1.0 billion and $1.4 billion at December 31, 2012 and December 31, 2011, respectively, for (3) legally defeased bond issues where our financial guaranty policy has not been extinguished but cash or securities have been deposited in an escrow account for the benefit of bondholders. Reductions in par caused by the following: $15.6 billion in connection (4) with the Assured Transaction, $10.2 billion in connection with the CDO terminations, and $1.2 billion in connection with the Commutation Transactions. Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information Exhibit I Quarter Ended Year Ended December 31 December 31 2012 2011 2012 2011 ($ in $ % $ % $ % $ % millions) Primary new insurance written Prime $ 11,657 99.9 % $ 6,532 99.9 % $ 37,041 99.9 % $ 15,499 99.9 % Alt-A — — 2 — 2 — 2 — A minus 6 0.1 3 0.1 18 0.1 9 0.1 and below Total Flow $ 11,663 100.0 % $ 6,537 100.0 % $ 37,061 100.0 % $ 15,510 100.0 % Total primary new insurance written by FICO score >=740 $ 8,838 75.8 % $ 5,051 77.3 % $ 28,151 75.9 % $ 12,142 78.3 % 680-739 2,519 21.6 1,364 20.9 7,994 21.6 3,192 20.6 620-679 306 2.6 121 1.8 916 2.5 175 1.1 <=619 — — 1 — — — 1 — Total Flow $ 11,663 100.0 % $ 6,537 100.0 % $ 37,061 100.0 % $ 15,510 100.0 % Percentage of primary new insurance written Monthly 65 % 57 % 65 % 59 % premiums Single 35 % 43 % 35 % 41 % premiums Refinances 44 % 46 % 40 % 39 % LTV 95.01% and 1.5 % 2.3 % 1.4 % 1.9 % above 90.01% to 40.5 % 37.7 % 41.2 % 36.3 % 95.00% ARMS Less than <1% <1% <1% <1% 5 years 5 years 1.1 % 3.2 % 1.9 % 4.8 % and longer Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information Exhibit J December 31 December 31 2012 2011 ($ in millions) $ % $ % Primary insurance in force Flow $ 129,079 92.0 % $ 113,438 89.9 % Structured 11,284 8.0 12,747 10.1 Total Primary $ 140,363 100.0 % $ 126,185 100.0 % Prime $ 123,437 87.9 % $ 106,407 84.3 % Alt-A 10,447 7.5 12,344 9.8 A minus and below 6,479 4.6 7,434 5.9 Total Primary $ 140,363 100.0 % $ 126,185 100.0 % Primary risk in force Flow $ 31,891 92.8 % $ 27,937 91.0 % Structured 2,481 7.2 2,755 9.0 Total Primary $ 34,372 100.0 % $ 30,692 100.0 % Flow Prime $ 28,898 90.6 % $ 24,401 87.3 % Alt-A 1,852 5.8 2,200 7.9 A minus and below 1,141 3.6 1,336 4.8 Total Flow $ 31,891 100.0 % $ 27,937 100.0 % Structured Prime $ 1,450 58.5 % $ 1,610 58.4 % Alt-A 552 22.2 625 22.7 A minus and below 479 19.3 520 18.9 Total Structured $ 2,481 100.0 % $ 2,755 100.0 % Total Prime $ 30,348 88.3 % $ 26,011 84.8 % Alt-A 2,404 7.0 2,825 9.2 A minus and below 1,620 4.7 1,856 6.0 Total Primary $ 34,372 100.0 % $ 30,692 100.0 % Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information Exhibit K December 31 December 31 2012 2011 ($ in millions) $ % $ % Total primary risk in force by FICO score Flow >=740 $ 16,448 51.6 % $ 12,242 43.8 % 680-739 9,686 30.4 9,205 32.9 620-679 4,918 15.4 5,503 19.8 <=619 839 2.6 987 3.5 Total Flow $ 31,891 100.0 % $ 27,937 100.0 % Structured >=740 $ 661 26.6 % $ 732 26.6 % 680-739 716 28.9 802 29.1 620-679 661 26.6 738 26.8 <=619 443 17.9 483 17.5 Total Structured $ 2,481 100.0 % $ 2,755 100.0 % Total >=740 $ 17,109 49.8 % $ 12,974 42.3 % 680-739 10,402 30.3 10,007 32.6 620-679 5,579 16.2 6,241 20.3 <=619 1,282 3.7 1,470 4.8 Total Primary $ 34,372 100.0 % $ 30,692 100.0 % Total primary risk in force by LTV 85.00% and below $ 3,292 9.6 % $ 2,772 9.0 % 85.01% to 90.00% 13,134 38.2 11,861 38.6 90.01% to 95.00% 13,303 38.7 10,735 35.0 95.01% and above 4,643 13.5 5,324 17.4 Total $ 34,372 100.0 % $ 30,692 100.0 % Total primary risk in force by policy year 2005 and prior $ 5,657 16.5 % $ 6,887 22.4 % 2006 2,735 8.0 3,172 10.3 2007 6,059 17.6 6,960 22.7 2008 4,582 13.3 5,206 17.0 2009 2,021 5.9 2,656 8.7 2010 1,726 5.0 2,244 7.3 2011 2,956 8.6 3,567 11.6 2012 8,636 25.1 — — Total $ 34,372 100.0 % $ 30,692 100.0 % Primary risk in force on $ 4,320 $ 5,198 defaulted loans Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information Exhibit L December 31 December 31 ($ in millions) 2012 2011 $ % $ % Percentage of primary risk in force Refinances 32 % 32 % ARMS Less than 5 4 % 5 % years 5 years and 5 % 7 % longer Pool risk in force Prime $ 1,411 76.9 % $ 1,601 77.4 % Alt-A 104 5.7 122 5.9 A minus and below 319 17.4 345 16.7 Total $ 1,834 100.0 % $ 2,068 100.0 % Total pool risk in force by policy year 2005 and prior $ 1,663 90.7 % $ 1,852 89.6 % 2006 76 4.1 92 4.4 2007 85 4.6 103 5.0 2008 10 0.6 21 1.0 Total pool risk in $ 1,834 100.0 % $ 2,068 100.0 % force Other risk in force Second-lien 1st loss $ 81 $ 102 2nd loss 13 29 NIMS 14 19 1st loss-Hong Kong primary 40 64 mortgage insurance Total other risk in $ 148 $ 214 force Risk to capital ratio-Radian Guaranty 20.8:1 (1) 21.5:1 only Risk to capital ratio-Mortgage 29.9:1 (1) 30.9:1 Insurance combined (1) Preliminary Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information Exhibit M Quarter Ended Year Ended December 31 December 31 ($ in 2012 2011 2012 2011 thousands) Net claims paid Prime $ 171,727 $ 152,202 $ 638,820 $ 796,940 Alt-A 43,806 36,934 165,776 257,448 A minus and 26,982 30,035 112,216 164,429 below Total primary 242,515 219,171 916,812 1,218,817 claims paid Pool 20,360 33,140 92,206 178,610 Second-lien 555 2,370 8,598 11,331 and other Subtotal 263,430 254,681 1,017,616 1,408,758 Impact of first-lien — 36,903 — 75,101 terminations Impact of captive — — (148 ) (1,166 ) terminations Impact of second-lien — — — 16,550 terminations Total $ 263,430 $ 291,584 $ 1,017,468 $ 1,499,243 Average claim paid (1) Prime $ 48.0 $ 49.9 $ 48.6 $ 49.6 Alt-A 56.3 58.6 57.9 60.7 A minus and 36.7 40.4 37.7 40.2 below Total primary 47.6 49.6 47.8 50.0 average claims paid Pool 73.0 72.2 67.9 76.2 Second-lien 11.1 19.9 25.1 25.8 and other Total $ 48.6 $ 50.9 $ 48.7 $ 51.9 Average primary $ 50.0 $ 52.4 $ 50.4 $ 54.6 claim paid (2) (3) Average total claim $ 50.8 $ 53.4 $ 51.1 $ 56.0 paid (2) (3) Loss ratio - 171.0 % 198.6 % 131.2 % 189.8 % GAAP basis Expense ratio - GAAP 29.0 % 22.3 % 26.6 % 24.7 % basis 200.0 % 220.9 % 157.8 % 214.5 % Reserve for losses by category Prime $ 1,739,968 $ 1,748,412 Alt-A 564,719 612,423 A minus and 361,533 370,806 below Reinsurance recoverable 83,238 151,569 (4) Total primary 2,749,458 2,883,210 reserves Pool 323,403 353,583 insurance Total 1st lien 3,072,861 3,236,793 reserves Second lien 7,237 11,070 Other 3,510 37 Total $ 3,083,608 $ 3,247,900 reserves 1st lien reserve per default (5) Primary reserve per $ 29,510 $ 26,007 primary default Primary reserve per primary 26,408 24,637 default excluding IBNR Pool reserve per pool 17,821 16,305 default (6) Total 1st lien reserve 27,605 24,420 per default (1) Calculated net of reinsurance recoveries and without giving effect to the impact of first-lien, second-lien and captive terminations. (2) Calculated without giving effect to the impact of terminations of captive reinsurance and first- and second-lien transactions. (3) Before reinsurance recoveries. (4) Represents ceded losses on captive transactions and Smart Home. (5) Calculated as total reserves divided by total defaults. If calculated before giving effect to deductibles and stop losses in (6) pool transactions, the pool reserve per default at December 31, 2012 and December 31, 2011, would be $28,125 and $25,402, respectively. Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information Exhibit N December 31 December 31 2012 2011 Default Statistics Primary Insurance: Flow Prime Number of insured loans 630,094 569,190 Number of loans in default 55,483 65,238 Percentage of loans in default 8.81 % 11.46 % Alt-A Number of insured loans 37,754 44,355 Number of loans in default 11,798 14,481 Percentage of loans in default 31.25 % 32.65 % A minus and below Number of insured loans 35,150 40,884 Number of loans in default 11,211 13,560 Percentage of loans in default 31.89 % 33.17 % Total Flow Number of insured loans 702,998 654,429 Number of loans in default 78,492 93,279 Percentage of loans in default 11.17 % 14.25 % Structured Prime Number of insured loans 37,528 41,248 Number of loans in default 5,371 6,308 Percentage of loans in default 14.31 % 15.29 % Alt-A Number of insured loans 16,315 18,484 Number of loans in default 4,207 5,563 Percentage of loans in default 25.79 % 30.10 % A minus and below Number of insured loans 14,157 15,477 Number of loans in default 5,099 5,711 Percentage of loans in default 36.02 % 36.90 % Total Structured Number of insured loans 68,000 75,209 Number of loans in default 14,677 17,582 Percentage of loans in default 21.58 % 23.38 % Total Primary Insurance Prime Number of insured loans 667,622 610,438 Number of loans in default 60,854 71,546 Percentage of loans in default 9.12 % 11.72 % Alt-A Number of insured loans 54,069 62,839 Number of loans in default 16,005 20,044 Percentage of loans in default 29.60 % 31.90 % A minus and below Number of insured loans 49,307 56,361 Number of loans in default 16,310 19,271 Percentage of loans in default 33.08 % 34.19 % Total Primary Number of insured loans 770,998 729,638 Number of loans in default 93,169 110,861 Percentage of loans in default 12.08 % 15.19 % Pool insurance Number of loans in default 18,147 21,685 Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information Exhibit O Quarter Ended Year Ended December 31 December 31 ($ in 2012 2011 2012 2011 thousands) Net Premiums Written Primary and Pool $ 216,609 $ 193,670 $ 804,371 $ 715,125 Insurance Second-lien 429 537 1,874 2,314 (1) International 6 (198 ) 60 (175 ) Total Net Premiums $ 217,044 $ 194,009 $ 806,305 $ 717,264 Written - Insurance Net Premiums Earned Primary and Pool $ 178,771 $ 166,233 $ 699,079 $ 673,869 Insurance Second-lien 429 537 1,874 2,314 International 286 230 1,432 4,712 Total Net Premiums $ 179,486 $ 167,000 $ 702,385 $ 680,895 Earned - Insurance 1st Lien Captives Premiums ceded to $ 5,371 $ 6,895 $ 23,416 $ 28,816 captives % of total 2.8 % 3.9 % 3.2 % 4.1 % premiums IIF included in captives 6.5 % 8.9 % (1) RIF included in captives 6.3 % 8.8 % (1) Initial Quota Share Reinsurance ("QSR") Transaction QSR ceded premiums $ 10,296 $ 52,151 written % of premiums 4.3 % 5.9 % written QSR ceded premiums $ 7,700 $ 16,088 earned % of premiums 4.0 % 2.2 % earned Ceding $ 2,574 $ 13,038 commissions RIF included $ 1,525,840 in QSR (2) Second QSR Transaction QSR ceded premiums $ 9,648 $ 9,648 written % of premiums 4.0 % 1.1 % written QSR ceded premiums $ 504 $ 504 earned % of premiums 0.3 % 0.1 % earned Ceding $ 3,377 $ 3,377 commissions RIF included $ 368,429 in QSR (2) Persistency (twelve 81.8 % 85.4 % months ended December 31) Radian reinsures the middle layer risk positions, while retaining a (1) significant portion of the total risk comprising the first loss and most remote risk positions. (2) Included in primary risk in force. FORWARD-LOOKING STATEMENTS All statements in this press 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 United States (“U.S.”) Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as “anticipate,” “may,” “will,” “could,” “should,” “would,” “expect,” “intend,” “plan,” “goal,” “contemplate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” or the negative or other variations on these words and other similar expressions. These statements, which may 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 statement. These statements speak only as of the date they were made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements including: *Losses in our mortgage insurance and financial guaranty businesses have reduced Radian Guaranty’s statutory surplus and increased Radian Guaranty’s risk-to-capital ratio; additional losses in these businesses, without a corresponding increase in new capital or capital relief, would further negatively impact this ratio, which could limit Radian Guaranty’s ability to write new insurance and increase restrictions and requirements placed on Radian Guaranty. We and our insurance subsidiaries are subject to comprehensive, detailed regulation by the insurance departments in the states where our insurance subsidiaries are licensed to transact business. These regulations are principally designed for the protection of our insured policyholders rather than for the benefit of investors. Insurance laws vary from state to state, but generally grant broad supervisory powers to state agencies or officials to examine insurance companies and enforce rules or exercise discretion affecting almost every significant aspect of the insurance business, including the power to revoke or restrict an insurance company’s ability to write new business. The GSEs and state insurance regulators impose various capital requirements on our insurance subsidiaries. These include risk-to-capital ratios, risk-based capital measures and surplus requirements that potentially limit the amount of insurance that each of our insurance subsidiaries may write. The GSEs and our state insurance regulators also possess significant discretion with respect to our insurance subsidiaries. Our failure to maintain adequate levels of capital, among other things, could lead to intervention by the various insurance regulatory authorities or the GSEs, which could materially and adversely affect our business, business prospects and financial condition. Under state insurance regulations, Radian Guaranty is required to maintain minimum surplus levels and, in certain states, a minimum amount of statutory capital relative to the level of risk in force (“RIF”), or “risk-to-capital.” Sixteen states (the risk-based capital or “RBC States”) currently impose a statutory or regulatory risk-based capital requirement (the “Statutory RBC Requirement”), the most common of which requires that a mortgage insurer’s risk-to-capital ratio not exceed 25 to 1. In some of the RBC States (the “MPP States”), Radian Guaranty is required to maintain a minimum policyholder position (the “MPP Requirement”). Unless an RBC State grants a waiver or other form of relief, if a mortgage insurer is not in compliance with the Statutory RBC Requirement of an RBC State, it may be prohibited from writing new mortgage insurance business in that state. Radian Guaranty’s domiciliary state, Pennsylvania, is not one of the RBC States. In 2012 and 2011, the RBC States accounted for approximately 54.3% and 50.5%, respectively, of Radian Guaranty’s total primary new insurance written. As of December31, 2012, Radian Guaranty’s risk-to-capital ratio was 20.8 to 1. Radian Guaranty’s risk-to-capital ratio has been negatively impacted in recent years by operating losses. The ultimate amount of losses and the timing of these losses will depend, in part, on general economic conditions and other factors, including the health of credit markets, home prices and unemployment rates, all of which are difficult to predict and beyond our control. Based on our current projections, in the absence of any further risk-to-capital support (which Radian Group expects to provide as discussed below), we anticipate that Radian Guaranty would exceed the 25 to 1 risk-to-capital ratio requirement during 2013. Further, Radian Guaranty’s policyholder position was below the MPP Requirement in two states as of the end of 2012. Each of these MPP States has issued to Radian Guaranty a waiver of its MPP Requirement. These waivers allow Radian Guaranty to continue writing new business in these states regardless of whether the MPP Requirement has been met. One of these waivers has no specified expiration date and the other expires on December 31, 2013. Our mortgage insurance incurred losses are driven primarily by new mortgage insurance defaults and adverse developments in the assumptions used to determine our loss reserves. Establishing loss reserves in our businesses requires significant judgment by management with respect to the likelihood, magnitude and timing of anticipated losses. This judgment has been made more difficult in the current period of prolonged economic uncertainty. Our estimate of the rate at which we expect defaults will ultimately result in paid claims (the “default to claim rate”) is a significant assumption in our reserving methodology. Our assumed aggregate weighted average default to claim rate (which incorporates the expected impact of rescissions and denials) was approximately 47% and 43% for the years ending December31, 2012 and 2011, respectively. Assuming all other factors remain constant, for each one percentage point increase in our aggregate weighted average default to claim rate as of December31, 2012, incurred losses would increase by approximately $55 million. Radian Guaranty’s statutory capital would be reduced by the after-tax impact of these incurred losses. Our level of incurred losses is also dependent on our estimate of anticipated rescissions and denials, including our estimate of the likely number of successful challenges to previously rescinded policies or claim denials, among other assumptions. If the actual losses we ultimately realize are in excess of the loss estimates we use in establishing loss reserves, we may be required to take unexpected charges to income, which could adversely affect Radian Guaranty’s statutory capital position. If Radian Guaranty is not in compliance with a state’s applicable Statutory RBC Requirement, it may be prohibited from writing new business in that state until it is back in compliance or it receives a waiver of or similar relief from the requirement from the applicable state insurance regulator, as discussed in more detail below. In those states that do not have a Statutory RBC Requirement, it is not clear what actions the applicable state regulators would take if a mortgage insurer fails to meet the Statutory RBC Requirement established by another state. Accordingly, if Radian Guaranty fails to meet the Statutory RBC Requirement in one or more states, it could be required to suspend writing business in some or all of the states in which it does business. In addition, the GSEs and our mortgage lending customers may decide not to conduct new business with Radian Guaranty (or may reduce current business levels) or impose restrictions on Radian Guaranty while its capital position remained at such levels. The franchise value of our mortgage insurance business would likely be significantly diminished if we were prohibited from writing new business or restricted in the amount of new business we could write in one or more states. Radian Guaranty’s capital position also is dependent on the performance of our financial guaranty portfolio. During the third quarter of 2008, we contributed our ownership interest in Radian Asset Assurance to Radian Guaranty. While this reorganization provided Radian Guaranty with substantial regulatory capital and dividends, it also makes the capital adequacy of our mortgage insurance business dependent, to a significant degree, on the successful run-off of our financial guaranty business. Any decrease in the statutory capital in our financial guaranty business would therefore have a negative impact on Radian Guaranty’s capital position and its ability to remain in compliance with the Statutory RBC Requirements. If our financial guaranty portfolio performs worse than anticipated, including if we are required to establish (or increase) statutory reserves on defaulted obligations that we have insured, or if we make net commutation payments to terminate insured financial guaranty obligations in excess of the then established statutory reserves for such obligations, the statutory capital of Radian Guaranty also would be negatively impacted. We actively manage Radian Guaranty’s capital position in various ways, including: (1) through internal and external reinsurance arrangements; (2) by seeking opportunities to reduce our risk exposure through commutations or other negotiated transactions; (3) by contributing additional capital from Radian Group to our mortgage insurance subsidiaries; and (4) by realizing gains in our investment portfolio through open market sales of securities. Radian Group had unrestricted cash and liquid investments of $375.6 million as of December31, 2012, which amount includes approximately $38.7 million of future expected corporate expenses and interest payments that have been accrued for and paid by certain subsidiaries to Radian Group as of that date. Radian Group currently has $79.4 million of outstanding debt due in February 2013, $54.8 million of outstanding debt due in 2015, $195.2 million of outstanding debt due in June 2017 and an additional $450 million of convertible debt due in November 2017. We intend to maintain Radian Guaranty’s risk to capital below 25:1 throughout 2013, including, if necessary by making contributions to Radian Guaranty from Radian Group’s remaining available liquidity. Depending on the extent of our future statutory incurred losses in our mortgage insurance subsidiaries and in Radian Asset Assurance, as well as the level of new insurance written and other factors, the amount of capital contributions required for Radian Guaranty to remain in compliance with the Statutory RBC Requirements could be substantial and could exceed amounts available at Radian Group. Our ability to continue to reduce Radian Guaranty’s risk through affiliated reinsurance arrangements may be limited. These arrangements are subject to regulation by state insurance regulators who could decide to limit, or require the termination of, such arrangements. In addition, certain of these affiliated reinsurance companies currently are operating at or near minimum capital levels and have required, and may continue to require, additional capital contributions from Radian Group in the future. One of these affiliated insurance companies, which provides reinsurance to Radian Guaranty for coverage in excess of 25% of certain loans insured by Radian Guaranty, is a sister company of Radian Guaranty, and therefore, any contributions to this insurer would not be consolidated with Radian Guaranty’s capital for purposes of calculating Radian Guaranty’s risk-to-capital position. In addition, we must obtain prior approval from one or both of the GSEs to enter into new, or to modify existing, reinsurance arrangements. If we are limited in, or prohibited from, using reinsurance arrangements to reduce Radian Guaranty’s risk, it would adversely affect Radian Guaranty’s risk-to-capital position. In order to maximize our financial flexibility, we have applied for waivers or similar relief for Radian Guaranty in each of the RBC States. Of the 16 RBC states, New York does not possess the regulatory authority to grant waivers and Iowa, Kansas and Ohio have declined to grant waivers to Radian Guaranty. In addition, Oregon has indicated that it will not consider our waiver application until such time that Radian Guaranty has exceeded its Statutory RBC Requirement, and we have a waiver application pending in Idaho. Currently, Radian Guaranty has waivers or similar relief from the following RBC States: Kentucky, Wisconsin, Arizona, Missouri, North Carolina, California and Texas. Waivers that were previously granted to Radian Guaranty from Illinois, New Jersey and Florida expired at the end of 2012, and we currently are pursuing a renewal of the waivers from these states. Certain of the existing waivers contain conditions, including requirements that Radian Guaranty’s risk-to-capital ratio may not exceed a revised maximum ratio, ranging from 30 to 1 up to 35 to 1. There can be no assurance that: (1) Radian Guaranty will be granted a waiver in Idaho or Oregon, or a renewal of the waivers that have expired in Illinois, New Jersey and Florida; (2) for any waiver granted, such regulator will not revoke or terminate the waiver, which the regulator generally has the authority to do at any time; (3) for any waiver granted, it will be renewed or extended after its original expiration date; or (4) additional requirements will not be imposed as a condition to such waivers or their renewal or extension and, if so, whether we will be able to comply with such conditions. In addition to filing for waivers in the RBC States, we intend to write new first-lien mortgage insurance business in Radian Mortgage Assurance Inc. (“RMAI”) in any RBC State that does not permit Radian Guaranty to continue writing insurance while it is out of compliance with applicable Statutory RBC Requirements. RMAI is a wholly-owned subsidiary of Radian Guaranty and is licensed to write mortgage insurance in each of the fifty states and the District of Columbia. Fannie Mae has approved RMAI to write new mortgage insurance business in any RBC State where Radian Guaranty would be prohibited from writing new business if it were not in compliance with the state’s Statutory RBC Requirement, without a waiver or other similar relief under the Fannie Mae Approval. The Fannie Mae Approval expires on December31, 2013. Freddie Mac also has approved RMAI as a limited mortgage insurer to write business in those RBC States for which we have been denied a waiver. On December20, 2012, Freddie Mac amended this approval to extend it for an additional one year period that will expire on December31, 2013 (the Freddie Mac Approval, and together with the Fannie Mae Approval, the “GSE Approvals”). Pursuant to the Freddie Mac Approval, RMAI currently is eligible to write business in New York, Ohio, Iowa, Kansas, and, subject to certain conditions, Oregon and Idaho. The GSE Approvals are temporary and are conditioned upon our compliance with a broad range of conditions and restrictions, including without limitation, minimum capital and liquidity requirements, a maximum risk-to-capital ratio of 20 to 1 for RMAI, restrictions on the payment of dividends and restrictions on affiliate transactions involving Radian Guaranty or RMAI. Under the GSE Approvals, Radian Group is required to contribute $50 million of additional capital to Radian Guaranty (which would then be contributed to RMAI) if Radian Guaranty exceeds a 25:1 risk-to-capital ratio, or if it fails to satisfy an MPP requirement in a state where it has not obtained a waiver or other similar relief. The Freddie Mac Approval also includes a condition specifying the time frame by which Radian Guaranty will evaluate and resolve claims. There can be no assurance that: (1)we will be able to comply with the conditions imposed by the GSEs’ approval for RMAI; (2)the GSEs will not revoke or terminate their approvals, which they generally have the authority to do at any time; (3)the approvals will be renewed or extended after their expiration dates; or (4)additional requirements will not be imposed as a condition to such on-going approvals, including their renewal or extension. The GSE Approvals are limited to the RBC States. It is possible that if Radian Guaranty were not able to comply with the Statutory RBC Requirements of one or more states, the insurance regulatory authorities in states other than the RBC States could prevent Radian Guaranty from continuing to write new business in such states. If this were to occur, we would need to seek approval from the GSEs to expand the scope of their approvals to allow RMAI to write business in states other than the RBC States. Our existing capital resources may not be sufficient to successfully manage Radian Guaranty’s capital position. Our ability to utilize waivers and RMAI to continue to write business if Radian Guaranty’s capital position is not in compliance with the Statutory RBC Requirements is subject to conditions that we may be unable to satisfy. As a result, even if we are successful in implementing this strategy, additional capital contributions or other risk-to-capital support or relief could be necessary, which we may not have the ability to provide. Further, regardless of the waivers and the GSEs’ approval of RMAI, we may choose to use our existing capital at Radian Group to maintain compliance with the Statutory RBC Requirements. Depending on the extent of our future incurred losses along with other factors, the amount of capital contributions that may be required to maintain compliance with the Statutory RBC Requirements could be significant and could exceed all of our remaining available capital. In the event we contribute a significant amount of Radian Group’s available capital to Radian Guaranty and RMAI, our financial flexibility would be significantly reduced, making it more difficult for Radian Group to meet its obligations in the future, including future principal payments on our outstanding debt. Other risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements include the following: *changes in general economic and political conditions, including high unemployment rates and weakness in the U.S. housing and mortgage credit markets, a significant downturn in the U.S. or global economies, a lack of meaningful liquidity in the capital or credit markets, changes or volatility in interest rates or consumer confidence and changes in credit spreads, each of which may be accelerated or intensified by, among other things, legislative activity or inactivity or actual or threatened downgrades of U.S. credit ratings; *changes in the way customers, investors, regulators or legislators perceive the strength of private mortgage insurers or financial guaranty providers, in particular in light of developments in the private mortgage insurance and financial guaranty industries in which certain of our former competitors have ceased writing new insurance business and have been placed under supervision or receivership by insurance regulators; *catastrophic events or economic changes in certain geographic regions, including those affecting governments and municipalities, where our mortgage insurance exposure is more concentrated or where we have financial guaranty exposure; *our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs, including in particular, the repayment of our long-term debt and additional capital contributions that may be required to support our mortgage insurance business; *a reduction in, or prolonged period of depressed levels of, home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards, and general reduced housing demand in the U.S., which may be exacerbated by regulations impacting home mortgage originations, including requirements established under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”); *the potential adverse impact on the mortgage origination market and on private mortgage insurers due to increased capital requirements for mortgage loans under proposed interagency rules to implement the third Basel Capital Accord (“Basel III”), including in particular, the possibility that loans insured by the Federal Housing Administration (“FHA”) will receive a more favorable regulatory capital treatment than loans with private mortgage insurance; *our ability to maintain an adequate risk-to-capital position, minimum policyholder position and other surplus requirements for Radian Guaranty Inc. (“Radian Guaranty”), our principal mortgage insurance subsidiary, including if necessary, our ability to write new mortgage insurance while maintaining a capital position that is in excess of risk-based capital limitations imposed in certain states, either through waivers of these limitations or through use of another mortgage insurance subsidiary, and the possibility that state regulators could pursue regulatory actions or proceedings, including possible supervisory or receivership actions, against Radian Guaranty, in the event Radian Guaranty’s capital position is not in compliance with levels that are acceptable to such regulators; *our ability to continue to effectively mitigate our mortgage insurance and financial guaranty losses; *a more rapid than expected decrease in the current elevated levels of mortgage insurance rescissions and claim denials, which have reduced our paid losses and resulted in a significant reduction in our loss reserves, including a decrease in rescissions or denials resulting from an increase in the number of successful challenges to previously rescinded policies or claim denials, or caused by the government-sponsored entities (“GSEs”) intervening in mortgage insurers’ loss mitigation practices, including settlements of disputes regarding loss mitigation activities; *the negative impact our mortgage insurance rescissions and claim denials or claim curtailments may have on our relationships with customers and potential customers, including the potential loss of business and the heightened risk of disputes and litigation; *the need, in the event that we are unsuccessful in defending our rescissions, denials or claim curtailments, to increase our loss reserves for, and reassume risk on, rescinded loans, and to pay additional claims, including amounts previously curtailed; *any disruption in the servicing of mortgages covered by our insurance policies, as well as poor servicer performance; *adverse changes in the severity or frequency of losses associated with certain products that we formerly offered (and which remain in our insured portfolio) that are riskier than traditional mortgage insurance or financial guaranty insurance policies; *a decrease in the persistency rates of our mortgage insurance policies, which has the effect of reducing our premium income; *heightened competition for our mortgage insurance business from others such as the FHA, the Department of Veterans Affairs (“VA”) and other private mortgage insurers (in particular, the FHA and those private mortgage insurers that have been assigned higher ratings than we have, that may have access to greater amounts of capital than we do, or that are new entrants to the industry and are therefore not burdened by legacy obligations); *changes in the charters or business practices of, or rules or regulations applicable to, 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 Fannie Mae and Freddie Mac; *changes to the current system of housing finance, including the possibility of a new system in which private mortgage insurers are not required or their products are significantly limited in effect or scope; *the effect of the Dodd-Frank Act on the financial services industry in general and on our mortgage insurance and financial guaranty businesses in particular, including whether and to what extent loans with mortgage insurance may be considered “qualified residential mortgages” for purposes of the Dodd-Frank Act securitization provisions; *the application of existing federal or state laws and regulations, or changes in these laws and regulations or the way they are interpreted, including, without limitation: (i) the resolution of existing, or the possibility of additional, lawsuits or investigations; and (ii) legislative and regulatory changes (a) impacting the demand for private mortgage insurance, (b) limiting or restricting the products we may offer or increasing the amount of capital we are required to hold, (c) affecting the form in which we execute credit protection, or (d) otherwise impacting our existing businesses; *the amount and timing of potential payments or adjustments associated with federal or other tax examinations; *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 instruments in determining gains and losses on these instruments; *volatility in our earnings caused by changes in the fair value of our assets and liabilities carried at fair value, including our derivative instruments; *our ability to realize some or all of the tax benefits associated with our gross deferred tax assets, which will depend on our ability to generate sufficient sustainable taxable income in future periods; *changes in GAAP or statutory accounting principles, rules and guidance, or their interpretation; and *legal and other limitations on amounts we may receive from our subsidiaries as dividends or through our tax- and expense-sharing arrangements with our subsidiaries. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2011, Item 1A of Part II of our Quarterly Reports on Form 10-Q filed in 2012, and subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. Contact: Radian Group Inc. Emily Riley, 215-231-1035 firstname.lastname@example.org
Radian Reports Fourth Quarter and Full Year 2012 Financial Results
Press spacebar to pause and continue. Press esc to stop.