Radian Announces Settlement Agreement with CFPB Related to Legacy Captive Reinsurance Arrangements

  Radian Announces Settlement Agreement with CFPB Related to Legacy Captive
  Reinsurance Arrangements

               Settlement ends five-year federal investigation

Business Wire

PHILADELPHIA -- April 4, 2013

Radian Guaranty Inc., the mortgage insurance subsidiary of Radian Group Inc.
(NYSE: RDN), today announced that it has reached a settlement agreement with
the Consumer Financial Protection Bureau (CFPB) to resolve a previously
disclosed federal investigation of the company’s participation in captive
reinsurance arrangements. As part of this settlement, which was filed earlier
today in the U.S. District Court for the Southern District of Florida, Radian
agreed not to enter into new captive reinsurance arrangements for a period of
ten years and to pay a civil penalty of $3.75 million.

Radian has not entered into any new captive reinsurance arrangements since
2007. In the past, Radian and other private mortgage insurers entered into
captive arrangements pursuant to which affiliates of mortgage lenders
reinsured a portion of the risk originated by the lenders (and insured by us)
in return for a portion of the mortgage insurance premiums that would have
been paid to us. Radian relied on long-standing, written guidance from the
U.S. Department of Housing and Urban Development (HUD) in structuring these
captive reinsurance agreements and on analyses and opinions of reputable
actuarial firms that the terms of Radian’s reinsurance agreements met HUD’s
standards. During the high-claim years that followed the most recent economic
downturn, captive arrangements have proven to represent a critical component
of the Company’s loss mitigation strategy, effectively serving as designed to
protect our capital position during a period of stressed losses. As of
December 31, 2012, we had received total cash reinsurance recoveries from
these captive reinsurance arrangements of approximately $750 million.

Notwithstanding these facts, since 2008, HUD has been pursuing an
investigation into the captive reinsurance arrangements of private mortgage
insurers, including Radian, to determine whether these arrangements
constituted an unlawful payment under the federal Real Estate Settlement
Procedures Act (RESPA). This investigation was transferred to the CFPB in 2011
by the enactment of the Dodd-Frank legislation. The settlement agreement
announced today, which remains subject to Court approval, will conclude the
CFPB’s investigation with respect to Radian without the CFPB making any
findings of wrongdoing in its investigation or in the settlement.

“We are pleased to put this behind us,” stated Teresa Bryce Bazemore,
president of Radian Guaranty. “While we believe our captive arrangements
complied with RESPA and caused no harm to consumers, this settlement was an
opportunity to eliminate distractions at an acceptable cost so that we can
continue our primary focus of writing new, profitable mortgage insurance and
helping low down-payment borrowers realize the dream of homeownership,” Ms.
Bazemore said.

As previously disclosed, we and other mortgage insurers remain subject to an
investigation by the Minnesota Department of Commerce relating to our captive
reinsurance arrangements, and we are currently facing private lawsuits
alleging, among other things, that our captive reinsurance arrangements
constitute unlawful payments to mortgage lenders under RESPA. We intend to
vigorously defend the company in this investigation and against these claims.

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.

Forward-looking Statements

Some of the statements in this press release may constitute “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933,
Section 21E of the Securities and Exchange Act of 1934 and the United States
Private Securities Litigation Reform Act of 1995. Words such as "will,"
"expects," "believes" and similar expressions are used to identify these
forward-looking statements. These forward-looking 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. The
forward-looking statements, as well as our prospects as a whole, are subject
to risks and uncertainties, including, without limitation, the possibility
that our settlement agreement with the CFPB may not receive court approval and
that we may be unable to successfully defend our remaining outstanding, and
any potential future, investigations and litigation relating to captive
reinsurance arrangements under RESPA. Any forward-looking 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. 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, 2012 and subsequent reports and
registration statements filed from time to time with the Securities and
Exchange Commission.


Radian Group Inc.
Emily Riley, 215.231.1035
email: emily.riley@radian.biz
Press spacebar to pause and continue. Press esc to stop.