Radian Reports Fourth Quarter and Full Year 2013 Financial Results

  Radian Reports Fourth Quarter and Full Year 2013 Financial Results

 – Reports fourth quarter net income of $36 million, or 19 cents per diluted
                                   share –

 – Writes $47 billion of new MI business in 2013, a 27% increase from 2012 –

– Earns position as largest MI company with $161 billion in insurance in force
                                      –

Business Wire

PHILADELPHIA -- February 5, 2014

Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended
December 31, 2013, of $36.4 million, or $0.19 per diluted share, which
included $30.6 million of combined net gains from the change in fair value of
derivatives and other financial instruments and net losses on investments.
This compares to a net loss for the quarter ended December 31, 2012, of $177.3
million, or $1.34 per diluted share, which included $7.4 million of combined
net gains from the change in fair value of derivatives and other financial
instruments and net gains on investments.

The company has introduced non-GAAP financial measures as performance
indicators to facilitate evaluation of its fundamental financial performance.
Included in these measures is adjusted pretax operating income which, for the
quarter ended December 31, 2013, was $9.1 million, consisting of $1.7 million
from the mortgage insurance segment and $7.4 million from the financial
guaranty segment. Adjusted diluted net operating income per share for the
quarter ended December 31, 2013, was $0.03.

The net loss for the full year 2013 was $197.0 million, or $1.18 per diluted
share, which included $186.2 million of combined net losses from the change in
fair value of derivatives and other financial instruments and a net loss on
investments. This compares to net losses for the full year 2012 of $451.5
million, or $3.41 per diluted share, which included $41.4 million of combined
net losses from the change in fair value of derivatives and other financial
instruments and net gains on investments. Book value per share at December 31,
2013, was $5.43.

“Radian’s performance in 2013 reflects the solid progress we have made against
our top priorities. I am pleased to report that we achieved operating
profitability in our mortgage insurance business, and we expect that the size
and credit quality of our MI portfolio will fuel improved levels of operating
profitability this year,” said Chief Executive Officer S.A. Ibrahim.

Ibrahim continued, “We were successful in writing 27% more new MI business in
2013 than 2012, earning the position as the largest MI company with $161
billion in insurance in force. We also made consistent strides in managing our
legacy mortgage insurance and financial guaranty exposure, including a 35%
decline in the total number of MI delinquencies and a 29% reduction in our
total financial guaranty portfolio from 2012. As we look ahead to 2014, we are
encouraged by the improved housing and economic environment that promise new
opportunities for Radian.”

CAPITAL AND LIQUIDITY UPDATE

Radian Guaranty’s risk-to-capital ratio was 19.4:1 as of December 31, 2013,
which included a contribution of $100 million of capital from Radian Group to
Radian Guaranty to support continued growth in the company’s net risk in
force. After the $100 million contribution, Radian Group maintains
approximately $615 million of currently available liquidity.

  *As of December 31, 2013, Radian Guaranty’s statutory capital was $1,346
    million compared to $1,256 million at September 30, 2013, and $926 million
    a year ago.
  *In 2012, Radian Guaranty entered into two quota share reinsurance
    agreements with the same third-party reinsurance provider, in order to
    proactively manage its risk-to-capital position. On April 1, 2013, Radian
    reduced the amount of new business ceded under these reinsurance
    agreements on a prospective basis from 20 percent to 5 percent. As of
    December 31, 2013, a total of $2.6 billion of risk in force had been ceded
    under those agreements. Radian will have the option to recapture a portion
    of the ceded risk outstanding on December 31, 2014, and on December 31,
    2015.

FOURTH QUARTER AND FULL YEAR HIGHLIGHTS

  *New mortgage insurance written (NIW) was $9.3 billion during the quarter,
    compared to $13.7 billion in the third quarter of 2013 and $11.7 billion
    in the fourth quarter of 2012. For the full-year 2013, NIW was $47.3
    billion, compared to $37.1 billion for the full-year 2012. Radian wrote an
    additional $2.4 billion in NIW in January 2014, compared to $4.0 billion
    in January 2013.

       *The Home Affordable Refinance Program (HARP) accounted for $0.9
         billion of insurance not included in Radian Guaranty’s NIW total for
         the quarter. This compares to $1.8 billion in the third quarter of
         2013, and $2.9 billion in the fourth quarter of 2012.
       *Of the $9.3 billion of new business written in the fourth quarter of
         2013, 70 percent was written with monthly premiums and 30 percent
         with single premiums. This compares with 65 percent monthly premium
         and 35 percent single premium in the fourth quarter of 2012.
       *NIW continued to consist of loans with excellent risk
         characteristics.

  *The total primary mortgage insurance risk-in-force at year-end 2013
    consisted of 71 percent of business written after 2008 and 60 percent
    excluding HARP volume.
  *The mortgage insurance provision for losses was $144.3 million in the
    fourth quarter of 2013, compared to $152.0 million in the third quarter of
    2013, and $306.9 million in the fourth quarter of 2012.

       *The loss ratio in the fourth quarter for Radian Guaranty was 72.0
         percent, compared to 76.0 percent in the third quarter of 2013, and
         171.0 percent in the fourth quarter of 2012.
       *Mortgage insurance loss reserves were approximately $2.2 billion as
         of December 31, 2013, which decreased from $2.3 billion in the third
         quarter of 2013, and from $3.1 billion a year ago.
       *Primary reserves (excluding IBNR and other reserves) per default were
         $26,717 as of December 31, 2013. This compares to primary reserves
         per default of $27,202 as of September 30, 2013, and $26,408 as of
         December 31, 2012.

  *The total number of primary delinquent loans decreased by 7 percent in the
    fourth quarter from the third quarter of 2013, and by 35 percent from the
    fourth quarter of 2012. The total number of primary delinquent loans at
    December 31, 2013, excludes loans related to the Master Transaction
    Agreement with Freddie Mac entered into on August 29, 2013. In addition,
    the total number of primary delinquent loans declined by 3.5 percent in
    January 2014. Additional details related to the company’s delinquency
    inventory in January 2014 may be found on Slide 20 of the fourth quarter
    presentation slides. The primary mortgage insurance delinquency rate
    decreased to 7.3 percent in the fourth quarter of 2013, compared to 7.8
    percent in the third quarter of 2013, and 12.1 percent in the fourth
    quarter of 2012.
  *Total mortgage insurance claims paid were $283.4 million in the fourth
    quarter, compared to $519.3 million (which included $254.7 million related
    to the Freddie Mac Agreement) in the third quarter of 2013 and $263.4
    million in the fourth quarter of 2012. Claims paid in the fourth quarter
    of 2013 exclude $50.0 million of claims processed in the quarter in
    accordance with the terms of the Freddie Mac Agreement. For the full-year
    2013, total claims paid were $1.4 billion, compared to $1.0 billion for
    the full-year 2012. The company currently expects mortgage insurance net
    claims paid for the full-year 2014 of $900 million to $1.0 billion.
  *Other operating expenses were $72.5 million in the fourth quarter,
    compared to $71.0 million in the third quarter and $55.9 million in the
    fourth quarter of last year. In the quarter, $11.8 million represented
    long-term incentive compensation, compared to $28.1 million in the third
    quarter of 2013. The compensation expense in both periods was impacted by
    an increase in the fair value of cash-settled awards. The component of the
    fair value change that resulted from the stock price increase was $1.5
    million in the fourth quarter of 2013, compared to $16.8 million in the
    third quarter of 2013. The reduction in long-term incentive compensation
    in the fourth quarter was fully offset by outside legal and consulting
    expenses, other year-end compensation expenses, and investments in
    technology improvements.
  *Radian Asset Assurance Inc. serves 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, 2013, Radian Asset had approximately $1.2 billion
         in statutory surplus with an additional $400 million in claims-paying
         resources.
       *Since June 30, 2008, Radian Asset has successfully reduced its total
         net par exposure by 79 percent to $23.9 billion as of December 31,
         2013, including large declines in the riskier segments of the
         portfolio.

CONFERENCE CALL

Radian will discuss these items in its conference call today, Wednesday,
February 5, 2014, at 10:00 a.m. Eastern time. The conference call will be
broadcast live over the Internet at Webcasts or at www.radian.biz. The call
may also be accessed by dialing 800.230.1085 inside the U.S., or 612.288.0337
for international callers, using passcode 317235 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 317235.

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 Quarterly Results.

NON-GAAP FINANCIAL MEASURES

Radian believes that measures of income excluding certain items (“non-GAAP”
measures) facilitate evaluation of the company’s fundamental financial
performance and provide relevant and meaningful information to investors about
the ongoing operating results of the company. Such measurements are not
recognized in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) and should not be viewed as an alternative
to GAAP measures of performance. The measures described below have been
established in order to increase transparency for the purpose of evaluating
the company’s core operating trends and enable more meaningful comparisons
with Radian’s competitors.

Adjusted pretax operating income is defined as earnings excluding the impact
of certain items that are not viewed as part of the operating performance of
the company’s primary activities, or not expected to result in an economic
impact equal to the GAAP measure. See Exhibit O or Radian’s website Non-GAAP
Financial Measures for a description of these items, as well as a
reconciliation of adjusted pretax operating (loss) income to “pretax (loss)
income” and adjusted diluted net operating (loss) income per share to “diluted
net (loss) income per share.”

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 Financial Reports.

           
Exhibit A:   Condensed Consolidated Statements of Income
Exhibit B:   Condensed Consolidated Balance Sheets
Exhibit C:   Segment Information Quarter Ended December 31, 2013
Exhibit D:   Segment Information Quarter Ended December 31, 2012
Exhibit E:   Segment Information Year Ended December 31, 2013
Exhibit F:   Segment Information Year Ended December 31, 2012
Exhibit G:   Financial Guaranty Supplemental Information
Exhibit H:   Mortgage Insurance Supplemental Information
             New Insurance Written
Exhibit I:   Mortgage Insurance Supplemental Information
             Insurance in Force and Risk in Force by Product
Exhibit J:   Mortgage Insurance Supplemental Information
             Risk in Force by FICO, LTV and Policy Year
Exhibit K:   Mortgage Insurance Supplemental Information
             Pool and Other Risk in Force, Risk-to-Capital
Exhibit L:   Mortgage Insurance Supplemental Information
             Claims, Reserves and Reserve per Default
Exhibit M:   Mortgage Insurance Supplemental Information
             Default Statistics
Exhibit N:   Mortgage Insurance Supplemental Information
             Captives, QSR and Persistency
Exhibit O:   Use of Non-GAAP Financial Measures
             GAAP to Non-GAAP Reconciliations
             


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      2013         2012           2013          2012
data)
                                                                  
Revenues:
Net premiums          $ 231,561    $ 217,743     $ 940,817     $ 686,630  
written - insurance
                                                                  
Net premiums earned   $ 213,198     $ 193,875      $ 830,894      $ 738,982
- insurance
Net investment        26,868        23,112         108,088        114,337
income
Net (losses) gains    (6,829    )   6,351          (149,720   )   184,888
on investments
Net impairment
losses recognized     (3        )   (3         )   (3         )   (3         )
in earnings
Change in fair
value of derivative   38,586        2,912          (31,771    )   (144,025   )
instruments
Net losses on other
financial             (1,151    )   (1,815     )   (4,736     )   (82,269    )
instruments
Gain on sale of       —             —              —              7,708
affiliate
Other income          916          1,627         6,235         5,790      
Total revenues        271,585      226,059       758,987       825,408    
                                                                  
Expenses:
Provision for         137,610       305,797        567,134        959,171
losses
Change in reserve
for premium           (198      )   (1,464     )   (1,901     )   41
deficiency
Policy acquisition    6,505         10,098         41,664         61,876
costs
Other operating       72,473        55,896         284,528        196,672
expenses
Interest expense      19,747       12,583        74,618        51,832     
Total expenses        236,137      382,910       966,043       1,269,592  
                                                                  
Equity in net
income (loss) of      —            —             1             (13        )
affiliates
                                                                  
Pretax income         35,448        (156,851   )   (207,055   )   (444,197   )
(loss)
Income tax            (921      )   20,451        (10,070    )   7,271      
(benefit) provision
                                                                  
Net income (loss)     $ 36,369     $ (177,302 )   $ (196,985 )   $ (451,468 )
                                                                  
Diluted net income    $ 0.19       $ (1.34    )   $ (1.18    )   $ (3.41    )
(loss) per share
                                                                             


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)            2013            2012
                                                                 
Assets:
Cash and investments                             $ 4,977,542     $ 5,208,199
Deferred policy acquisition costs                66,926          88,202
Deferred income taxes, net                       17,902          —
Reinsurance recoverables                         46,846          89,204
Derivative assets                                16,642          13,609
Other assets                                     495,833        503,986     
Total assets                                     $ 5,621,691    $ 5,903,200 
                                                                 
Liabilities and stockholders' equity:
Unearned premiums                                $ 768,871       $ 648,682
Reserve for losses and loss adjustment           2,185,421       3,149,936
expenses
Reserve for premium deficiency                   1,785           3,685
Long-term debt                                   930,072         663,571
VIE debt                                         94,645          108,858
Derivative liabilities                           307,185         266,873
Other liabilities                                394,067        325,270     
Total liabilities                                4,682,046      5,166,875   
                                                                 
Common stock                                     191             151
Additional paid-in capital                       1,454,297       1,075,320
Retained deficit                                 (552,226    )   (355,241    )
Accumulated other comprehensive income           37,383         16,095      
Total common stockholders’ equity                939,645        736,325     
Total liabilities and stockholders’ equity       $ 5,621,691    $ 5,903,200 
                                                                 
Book value per share                             $ 5.43          $ 5.51
                                                                             

                                                             
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended December 31, 2013
Exhibit C
                                                                   
                                 Mortgage        Financial
(In thousands)                   Insurance       Guaranty        Total
Revenues:
Net premiums written -           $ 231,754      $ (193      )   $ 231,561   
insurance
                                                                   
Net premiums earned -            $ 200,356       $ 12,842        $ 213,198
insurance
Net investment income              16,379          10,489          26,868
Net losses on investments          (2,818    )     (4,011    )     (6,829    )
Net impairment losses              —               (3        )     (3        )
recognized in earnings
Change in fair value of            635             37,951          38,586
derivative instruments
Net losses on other financial      (869      )     (282      )     (1,151    )
instruments
Other income                      903           13            916       
Total revenues                    214,586       56,999        271,585   
                                                                   
Expenses:
Provision for losses               144,270         (6,660    )     137,610
Change in reserve for premium      (198      )     —               (198      )
deficiency
Policy acquisition costs           4,413           2,092           6,505
Other operating expenses           60,294          12,179          72,473
Interest expense                  7,175          12,572        19,747    
Total expenses                    215,954        20,183        236,137   
                                                                   
Pretax (loss) income             $ (1,368    )   $ 36,816       $ 35,448
Income tax benefit                                                (921      )
                                                                   
Net income                                                       $ 36,369    
                                                                   
Cash and investments             $ 2,683,467     $ 2,294,075     $ 4,977,542
Deferred policy acquisition        29,741          37,185          66,926
costs
Total assets                       3,120,904       2,500,787       5,621,691
Unearned premiums                  567,072         201,799         768,871
Reserve for losses and loss        2,164,353       21,068          2,185,421
adjustment expenses
VIE Debt                           2,845           91,800          94,645
Derivative liabilities             —               307,185         307,185
                                                                             

                                                             
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended December 31, 2012
Exhibit D
                                                                   
                                 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
Year Ended December 31, 2013
Exhibit E
                                                                    
                               Mortgage      Financial
(In thousands)                 Insurance     Guaranty             Total
Revenues:
Net premiums written -         $ 950,998    $ (10,181  )   (1)   $ 940,817  
insurance
                                                                    
Net premiums earned -          $ 781,420     $ 49,474       (1)   $ 830,894
insurance
Net investment income            61,615        46,473               108,088
Net losses on investments        (93,821 )     (55,899  )           (149,720 )
Net impairment losses            —             (3       )           (3       )
recognized in earnings
Change in fair value of          635           (32,406  )           (31,771  )
derivative instruments
Net losses on other              (2,840  )     (1,896   )           (4,736   )
financial instruments
Other income                    6,024       211                6,235    
Total revenues                  753,033     5,954              758,987  
                                                                    
Expenses:
Provision for losses             564,648       2,486                567,134
Change in reserve for            (1,901  )     —                    (1,901   )
premium deficiency
Policy acquisition costs         28,485        13,179               41,664
Other operating expenses         236,959       47,569               284,528
Interest expense                17,995      56,623             74,618   
Total expenses                  846,186     119,857            966,043  
                                                                    
Equity in net income of         —           1                  1        
affiliates
                                                                    
Pretax loss                    $ (93,153 )   $ (113,902 )         $ (207,055 )
Income tax benefit                                                 (10,070  )
                                                                    
Net loss                                                          $ (196,985 )
                                                                             

(1) Reflects the impact of the commutation of reinsurance business.


                                                              
Radian Group Inc. and Subsidiaries
Segment Information
Year Ended December 31, 2012
Exhibit F
                                                                  
                                    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
Financial Guaranty Supplemental
Information
Exhibit G
                                              
                       Quarter Ended             Year Ended
                       December 31               December 31
(In thousands)         2013        2012         2013             2012
                                                                             
Total Premiums         $ 12,842     $ 14,389     $ 51,921           $ 58,861
Earned - insurance
Impact of
commutations and       —           —           (2,447   )         (22,264  )
reinsurance
Net Premiums Earned    $ 12,842    $ 14,389    $ 49,474          $ 36,597 
- insurance
                                                                             
Refundings included    $ 8,573     $ 7,956     $ 30,593          $ 33,985 
in earned premium
                                                                             
Net premiums earned    $ 3,879     $ 5,652     $ 17,898          $ 28,693 
- derivatives (1)
                                                                             
Claims paid            $ 4,365     $ 5,465     $ 47,745    (2)   $ 34,338 
                                                                             

                                                        
                                          December 31,     December 31,
($ in thousands, except ratios)           2013             2012
                                                           
Statutory Information:
                                                           
Capital and surplus                       $ 1,198,034      $ 1,144,112
Contingency reserve                       263,963         300,138      
Qualified statutory capital               1,461,997        1,444,250
                                                           
Unearned premium reserve                  195,303          256,920
Loss and loss expense reserve             (180,168     )   (53,441      )
Total statutory policyholders' reserves   1,477,132        1,647,729
                                                           
Present value of installment premiums     90,852          114,292      
Total statutory claims paying resources   $ 1,567,984     $ 1,762,021  
                                                           
Net debt service outstanding              $ 30,778,401    $ 42,526,289 
                                                           
Capital leverage ratio (3)                21               29
Claims paying leverage ratio (4)          20               24
                                                           
Net par outstanding by product:
Public finance direct                     $ 8,051,124      $ 9,796,131
Public finance reinsurance                4,383,643        5,542,217
Structured direct                         10,872,379       17,615,383
Structured reinsurance                    547,733         787,758      
Total (5)                                 $ 23,854,879    $ 33,741,489 
                                                             

(1)  Included in change in fair value of derivative instruments.
(2)   Primarily related to commutation of reinsurance business.
(3)   The capital leverage ratio is derived by dividing net debt service
      outstanding by qualified statutory capital.
(4)   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 $0.9 billion and $1.0
      billion at December 31, 2013 and December 31, 2012, respectively, for
(5)   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.
      


Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit H
                                                       
             Quarter Ended                                Year Ended
             December 31                                  December 31
             2013                 2012                   2013                  2012
($ in        $          %         $           %         $           %         $           %
millions)
Primary
new                                                                                      
insurance
written
Prime        $ 9,252     100.0 %   $ 11,657     99.9  %   $ 47,251     100.0 %   $ 37,041     99.9  %
Alt -A and
A minus      —         —        6          0.1      4          —        20         0.1   
and below
Total Flow   $ 9,252   100.0 %   $ 11,663   100.0 %   $ 47,255   100.0 %   $ 37,061   100.0 %
                                                                                              
Total
primary
new
insurance
written by
FICO score
>=740        $ 6,082     65.7  %   $ 8,838      75.8  %   $ 33,466     70.8  %   $ 28,151     75.9  %
680-739      2,675       28.9      2,519        21.6      11,971       25.3      7,994        21.6
620-679      495       5.4      306        2.6      1,818      3.9      916        2.5   
Total Flow   $ 9,252   100.0 %   $ 11,663   100.0 %   $ 47,255   100.0 %   $ 37,061   100.0 %

Percentage
of primary
new
insurance
written
Monthly      70      %             65       %             68       %             65       %
premiums
Single       30      %             35       %             32       %             35       %
premiums
                                                                                              
Refinances   17      %             44       %             30       %             40       %
LTV
95.01% and   3.4     %             1.5      %             2.6      %             1.4      %
above
90.01% to    48.7    %             40.5     %             45.4     %             41.2     %
95.00%
85.01% to    36.0    %             40.5     %             37.3     %             41.0     %
90.00%
85.00% and   11.9    %             17.5     %             14.7     %             16.4     %
below
                                                                                              

                                                      
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit I
                                                         
                                 December 31             December 31
                                 2013                    2012
($ in millions)                  $            %         $            %
Primary insurance in force (1)                                      
Flow                             $ 151,383     93.9  %   $ 129,079     92.0  %
Structured                       9,857       6.1      11,284      8.0   
Total Primary                    $ 161,240   100.0 %   $ 140,363   100.0 %
                                                                       
Prime                            $ 147,072     91.2  %   $ 123,437     87.9  %
Alt-A                            8,634         5.4       10,447        7.5
A minus and below                5,534       3.4      6,479       4.6   
Total Primary                    $ 161,240   100.0 %   $ 140,363   100.0 %
                                                                       
Primary risk in force (1)
Flow                             $ 37,792      94.4  %   $ 31,891      92.8  %
Structured                       2,225       5.6      2,481       7.2   
Total Primary                    $ 40,017    100.0 %   $ 34,372    100.0 %
                                                                       
Flow
Prime                            $ 35,294      93.4  %   $ 28,898      90.6  %
Alt-A                            1,541         4.1       1,852         5.8
A minus and below                957         2.5      1,141       3.6   
Total Flow                       $ 37,792    100.0 %   $ 31,891    100.0 %
                                                                       
Structured
Prime                            $ 1,319       59.3  %   $ 1,450       58.5  %
Alt-A                            476           21.4      552           22.2
A minus and below                430         19.3     479         19.3  
Total Structured                 $ 2,225     100.0 %   $ 2,481     100.0 %
                                                                       
Total
Prime                            $ 36,613      91.5  %   $ 30,348      88.3  %
Alt-A                            2,017         5.0       2,404         7.0
A minus and below                1,387       3.5      1,620       4.7   
Total Primary                    $ 40,017    100.0 %   $ 34,372    100.0 %
                                                                             

(1) Includes amounts related to the Freddie Mac Agreement.



Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit J
                                                       
                               December 31                December 31
                               2013                       2012
($ in millions)                $              %         $           %
Total primary risk in force                                         
by FICO score
Flow
>=740                          $ 21,525         57.0  %   $ 16,448     51.6  %
680-739                        11,019           29.2      9,686        30.4
620-679                        4,555            12.0      4,918        15.4
<=619                          693           1.8      839        2.6   
Total Flow                     $ 37,792      100.0 %   $ 31,891   100.0 %
                                                                       
Structured
>=740                          $ 602            27.0  %   $ 661        26.6  %
680-739                        640              28.8      716          28.9
620-679                        585              26.3      661          26.6
<=619                          398           17.9     443        17.9  
Total Structured               $ 2,225       100.0 %   $ 2,481    100.0 %
                                                                       
Total
>=740                          $ 22,127         55.3  %   $ 17,109     49.8  %
680-739                        11,659           29.1      10,402       30.3
620-679                        5,140            12.9      5,579        16.2
<=619                          1,091         2.7      1,282      3.7   
Total Primary                  $ 40,017      100.0 %   $ 34,372   100.0 %
                                                                       
Total primary risk in force
by LTV
95.01% and above               $ 4,171          10.4  %   $ 4,643      13.5  %
90.01% to 95.00%               17,239           43.1      13,303       38.7
85.01% to 90.00%               14,750           36.9      13,134       38.2
85.00% and below               3,857         9.6      3,292      9.6   
Total                          $ 40,017      100.0 %   $ 34,372   100.0 %
                                                                       
Total primary risk in force
by policy year
2005 and prior                 $ 4,461          11.1  %   $ 5,657      16.5  %
2006                           2,326            5.8       2,735        8.0
2007                           5,247            13.1      6,059        17.6
2008                           3,950            9.9       4,582        13.3
2009                           1,448            3.6       2,021        5.9
2010                           1,206            3.0       1,726        5.0
2011                           2,263            5.7       2,956        8.6
2012                           7,710            19.3      8,636        25.1
2013                           11,406        28.5     —          —     
Total                          $ 40,017      100.0 %   $ 34,372   100.0 %
                                                                       
Primary risk in force on       $ 2,786    (1)            $ 4,320
defaulted loans
                                                                       

(1) Excludes risk related to loans subject to the Freddie Mac Agreement.


                                                         
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit K
                                                            
                               December 31                  December 31
($ in millions)                2013                         2012
                               $               %         $         %
Pool risk in force                                                 
Prime                          $ 1,252            78.1  %   $ 1,411    76.9  %
Alt-A                            74               4.6         104      5.7
A minus and below               278          17.3      319     17.4  
Total                          $ 1,604        100.0 %   $ 1,834   100.0 %
                                                                       
Total pool risk in force by
policy year
2005 and prior                 $ 1,503            93.7  %   $ 1,663    90.7  %
2006                          31               1.9         76       4.1
2007                          68               4.2         85       4.6
2008                         2            0.2       10      0.6   
Total pool risk in force       $ 1,604        100.0 %   $ 1,834   100.0 %
                                                                       
Other risk in force
Second-lien
1st loss                       $ 56                         $ 81
2nd loss                         17                           13
NIMS                             5                            14
1st loss-Hong Kong primary      19                         40
mortgage insurance
Total other risk in force      $ 97                        $ 148
                                                                       
Risk to capital ratio-Radian     19.4  :1   (1)             20.8:1
Guaranty only
Risk to capital
ratio-Mortgage Insurance         23.9  :1   (1)             29.9:1
combined
                                                                       
(1) Preliminary
                                                                       

                                              
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit L
                                                 
                 Quarter Ended                   Year Ended
                 December 31                     December 31
($ in            2013           2012            2013           2012
thousands)
                                                                 
Net claims
paid
Prime            $ 192,014       $ 171,727       $ 770,500       $ 638,820
Alt-A            42,222          43,806          183,846         165,776
A minus and      26,286         26,982         111,828        112,216     
below
Total primary    260,522         242,515         1,066,174       916,812
claims paid
Pool             22,451          20,360          115,192         92,206
Second-lien      417            555            2,995          8,598       
and other
Subtotal         283,390         263,430         1,184,361       1,017,616
Impact of
Freddie Mac      —               —               254,667         —
Agreement
Impact of
captive          —              —              —              (148        )
terminations
Total            $ 283,390      $ 263,430      $ 1,439,028    $ 1,017,468 
                                                                 
Average claim
paid (1)
Prime            $ 47.7          $ 48.0          $ 47.4          $ 48.6
Alt-A            56.4            56.3            56.3            57.9
A minus and      37.8            36.7            37.0            37.7
below
Total primary
average claims   47.6            47.6            47.3            47.8
paid
Pool             54.2            73.0            65.6            67.9
Second-lien      13.0            11.1            15.9            25.1
and other
Total            $ 47.9          $ 48.6          $ 48.4          $ 48.7
                                                                 
Average
primary claim    $ 50.0          $ 50.0          $ 49.6          $ 50.4
paid (2) (3)
Average total
claim paid (2)   $ 50.1          $ 50.8          $ 50.5          $ 51.1
(3)
                                                                 
Loss ratio -     72.0        %   171.0       %   72.3        %   131.2       %
GAAP basis
Expense ratio    32.3        %   29.0        %   34.0        %   26.6        %
- GAAP basis
                 104.3       %   200.0       %   106.3       %   157.8       %
                                                                 
Reserve for
losses by
category
Prime            $ 937,307       $ 1,508,140
Alt-A            384,841         490,728
A minus and      215,545         314,068
below
IBNR and other   347,698         289,032
LAE              51,245          64,252
Reinsurance
recoverable      38,363         83,238      
(4)
Total primary    1,974,999      2,749,458   
reserves
Pool insurance   169,682         281,937
IBNR and other   8,938           34,000
LAE              5,439          7,466       
Total pool       184,059        323,403     
reserves
Total 1st lien   2,159,058      3,072,861   
reserves
Second lien      5,295          10,747      
and other
Total reserves   $ 2,164,353    $ 3,083,608 
                                                                 
1st lien
reserve per
default (5)
Primary
reserve per
primary          26,717          26,408
default
excluding IBNR
and other
Pool reserve
per pool
default          14,690          15,948
excluding IBNR
and other
                                                                 

(1)  Calculated net of reinsurance recoveries and without giving effect to
      the impact of the Freddie Mac Agreement and captive terminations.
(2)   Calculated without giving effect to the impact of the Freddie Mac
      Agreement and captive terminations.
(3)   Before reinsurance recoveries.
(4)   Represents ceded losses on captive transactions, Smart Home and quota
      share reinsurance transactions.
      If calculated before giving effect to deductibles and stop losses in
(5)   pool transactions, this would be $24,640 and $28,125 at December 31,
      2013 and 2012, respectively.
      

                                            
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit M
                                                               
                                              December 31         December 31
                                              2013                2012
Default Statistics
Primary Insurance:
                                                                  
Prime
Number of insured loans                       741,554             667,622
Number of loans in default                    37,932              60,854
Percentage of loans in default                5.12     %          9.12     %
                                                                  
Alt-A
Number of insured loans                       44,905              54,069
Number of loans in default                    11,209              16,005
Percentage of loans in default                24.96    %          29.60    %
                                                                  
A minus and below
Number of insured loans                       40,930              49,307
Number of loans in default                    11,768              16,310
Percentage of loans in default                28.75    %          33.08    %
                                                                  
Total Primary
Number of insured loans                       839,249     (1)     770,998
Number of loans in default                    60,909      (2)     93,169
Percentage of loans in default                7.26     %          12.08    %
                                                                  
Pool insurance
Number of loans in default                    11,921              18,147
                                                                  

(1)  Includes 11,860 insured loans subject to the Freddie Mac Agreement.
      Excludes 7,221 loans subject to the Freddie Mac Agreement that are in
(2)   default at December 31, 2013, as we no longer have claims exposure on
      these loans.
      

                                                    
Radian Group Inc.
and Subsidiaries
Mortgage Insurance
Supplemental
Information
Exhibit N
                                                       
                       Quarter Ended                   Year Ended
                       December 31                     December 31
($ in thousands)       2013           2012            2013        2012
                                                                    
1st Lien Captives
Premiums ceded to      $ 3,801         $ 5,371         $ 17,901     $ 23,416
captives
% of total premiums    1.8         %   2.8         %   2.1      %   3.2      %
IIF included in        4.0         %   6.5         %
captives (1)
RIF included in        3.8         %   6.3         %
captives (1)
                                                                    
Initial Quota Share
Reinsurance ("QSR")
Transaction
QSR ceded premiums     $ 5,474         $ 10,296        $ 23,047     $ 52,151
written
% of premiums          2.2         %   4.3         %   2.2      %   5.9      %
written
QSR ceded premiums     $ 7,035         $ 7,700         $ 29,746     $ 16,088
earned
% of premiums earned   3.2         %   4.0         %   3.5      %   2.2      %
Ceding commissions     $ 1,369         $ 2,574         $ 5,762      $ 13,038
RIF included in QSR    $ 1,329,544     $ 1,525,840
(2)
                                                                    
Second QSR
Transaction
QSR ceded premiums     $ 7,972         $ 9,648         $ 40,225     $ 9,648
written
% of premiums          3.2         %   4.0         %   3.9      %   1.1      %
written
QSR ceded premiums     $ 6,137         $ 504           $ 18,356     $ 504
earned
% of premiums earned   2.8         %   0.3         %   2.2      %   0.1      %
Ceding commissions     $ 2,790         $ 3,377         $ 14,079     $ 3,377
RIF included in QSR    $ 1,298,631     $ 368,429
(2)
                                                                    
Persistency (twelve
months ended           81.1        %   81.8        %
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.
      


Radian Group Inc. and Subsidiaries
Use of Non-GAAP Financial Measures
Exhibit O (page 1 of 4)

In addition to the traditional GAAP financial measures, the Company has begun
to include certain non-GAAP financial measures, “adjusted pretax operating
income,” “adjusted net operating income” and “adjusted diluted net operating
income per share” among its key performance indicators to facilitate
evaluation of its fundamental financial performance. These measures have been
established in order to increase transparency for the purpose of evaluating
our core operating trends and enable more meaningful comparisons with our
competitors. We believe these measures aid in understanding the underlying
performance of our operations.

Adjusted pretax operating income adjusts GAAP pretax income to remove the
effects of net gains (losses) on investments and other financial instruments
and net impairment losses recognized in earnings. It also excludes gains and
losses related to changes in fair value estimates on insured credit
derivatives and includes the impact of changes in the present value of
insurance claims and recoveries on insured credit derivatives, based on the
Company's ongoing insurance loss monitoring, as well as premiums earned on
insured credit derivatives.

Although this measure excludes certain items that have occurred in the past
and are expected to occur in the future, the excluded items represent those
that are (1) not viewed as part of the operating performance of the Company’s
primary activities, or (2) not expected to result in an economic impact equal
to the GAAP measure. These adjustments, along with the reasons for their
treatment, are described below.

      
          Net gains (losses) on investments and other financial instruments.
          The recognition of realized investment gains or losses can vary
          significantly across periods as the activity is highly discretionary
          based on the timing of individual securities sales due to such
          factors as market opportunities, the Company’s tax and capital
          profile and overall market cycles. Unrealized investment gains and
          losses arise primarily from changes in the market value of the
    (1)   Company’s investments that are classified as trading. These
          valuation adjustments may not necessarily result in economic gains
          or losses. The Company does not view them to be indicative of its
          fundamental operating activities. Trends in the profitability of the
          Company’s fundamental operating activities can be more clearly
          identified without the fluctuations of these realized and unrealized
          gains or losses. Therefore, these items are excluded from the
          Company’s calculation of adjusted pretax operating income.
          
          Net impairment losses recognized in earnings. The recognition of net
          impairment losses on investments can vary significantly in both size
    (2)   and timing, depending on market credit cycles. The Company does not
          view them to be indicative of its fundamental operating activities.
          Therefore, these losses are excluded from the Company’s calculation
          of adjusted pretax operating income.
          
          Change in fair value of derivative instruments. Gains and losses
          related to changes in the fair value of insured credit derivatives
          are subject to significant fluctuation based on changes in interest
          rates, credit spreads (of both the underlying collateral as well as
          the Company's credit spread), credit ratings and other market,
          asset-class and transaction-specific conditions and factors that may
    (3)   be unrelated or only indirectly related to our obligation to pay
          future claims. With the exception of the change in present value of
          estimated credit loss payments (recoveries) and net premiums earned
          on derivatives, discussed in items 4 and 5 below, the Company
          believes these gains and losses will reverse over time and
          consequently these changes are not expected to result in economic
          gains or losses. Therefore, these gains and losses are excluded from
          the Company’s calculation of adjusted pretax operating income.
          
          Change in present value of estimated credit loss payments
          (recoveries). The change in present value of insurance claims the
          Company expects to pay or recover on insured credit derivatives
    (4)   represents the amount of the change in credit derivatives from item
          3, above, that the Company expects to result in an economic loss or
          recovery based on its ongoing loss monitoring analytics. Therefore,
          this item is expected to have an economic impact and is included in
          the Company’s calculation of adjusted pretax operating income.
          
          Net premiums earned on derivatives. The net premiums earned on
          insured credit derivatives are classified as part of the change in
          fair value of derivative instruments discussed in item 3 above.
    (5)   However, since net premiums earned on derivatives are considered
          part of the Company’s fundamental operating activities, these
          premiums are included in the Company’s calculation of adjusted
          pretax operating income.
          

Adjusted pretax operating income is not a measure of total profitability, and
therefore should not be viewed as a substitute for GAAP pretax income. The
Company’s definition of adjusted pretax operating income may not be comparable
to similarly-named measures reported by other companies.

Adjusted net operating income consists of adjusted pretax operating income
reduced by income taxes computed at the statutory tax rate of 35%. Adjusted
diluted net operating income per share consists of adjusted net operating
income divided by the weighted-average number of common and common equivalent
shares outstanding on a diluted basis. Interest expense on convertible debt,
share dilution from convertible debt and the impact of stock-based
compensation arrangements have been reflected in the per share calculations
consistent with the accounting standard regarding earnings per share, whenever
the impact is dilutive.

These non-GAAP financial measures align with the way the Company’s business
performance is evaluated by both management and the board of directors. The
following tables provide reconciliations of pretax income (loss) to adjusted
pretax operating income (loss) for each business segment and the consolidated
company, in addition to a reconciliation of net income (loss) to adjusted net
operating income (loss) for the consolidated company.

               
Radian Group
Inc. and
Subsidiaries
GAAP to
Non-GAAP
Reconciliation
by Segment
Exhibit O
(page 2 of 4)
                 
                 2013 Quarters
(In thousands)   First         Second       Third       Fourth      Year
Mortgage
Insurance:
Pretax loss      $ (16,816  )   $ (67,096 )   $ (7,873 )   $ (1,368 )   $ (93,153  )
Less:
Net losses on    (3,237     )   (83,386   )   (4,380   )   (2,818   )   (93,821    )
investments
Net impairment
losses           —              —             —            —            —
recognized in
earnings
Change in fair
value of         —              —             —            635          635
derivative
instruments
Net (losses)
gains on other   (1,877     )   74           (168     )   (869     )   (2,840     )
financial
instruments
Total            (5,114     )   (83,312   )   (4,548   )   (3,052   )   (96,026    )
exclusions
Plus:
Change in
present value
of estimated     299            (323      )   74           (29      )   21
credit loss
payments
(recoveries)
Net premiums
earned on        —             —            —           —           —          
derivatives
Total            299           (323      )   74          (29      )   21         
additions
Adjusted
pretax
operating        $ (11,403  )   $ 15,893     $ (3,251 )   $ 1,655     $ 2,894    
(loss) income
- Mortgage
Insurance
                                                                        
Financial
Guaranty:
Pretax (loss)    $ (185,407 )   $ 35,589     $ (900   )   $ 36,816    $ (113,902 )
income
Less:
Net losses on    (2,268     )   (46,868   )   (2,752   )   (4,011   )   (55,899    )
investments
Net impairment
losses           —              —             —            (3       )   (3         )
recognized in
earnings
Change in fair
value of         (167,670   )   86,535        10,778       37,951       (32,406    )
derivative
instruments
Net (losses)
gains on other   (3,798     )   1,114        1,070       (282     )   (1,896     )
financial
instruments
Total            (173,736   )   40,781       9,096       33,655      (90,204    )
exclusions
Plus:
Change in
present value
of estimated     2,845          618           (3,347   )   393          509
credit loss
payments
(recoveries)
Net premiums
earned on        4,992         4,857        4,170       3,879       17,898     
derivatives
Total            7,837         5,475        823         4,272       18,407     
additions
Adjusted
pretax
operating        $ (3,834   )   $ 283        $ (9,173 )   $ 7,433     $ (5,291   )
(loss) income
- Financial
Guaranty
                                                                                   

               
Radian Group
Inc. and
Subsidiaries
GAAP to
Non-GAAP
Reconciliation
Consolidated
Exhibit O
(page 3 of 4)
                 
                 2013 Quarters
(In thousands)   First         Second       Third        Fourth      Year
Consolidated:
Pretax (loss)    $ (202,223 )   $ (31,507 )   $ (8,773  )   $ 35,448    $ (207,055 )
income
Less:
Net losses on    (5,505     )   (130,254  )   (7,132    )   (6,829   )   (149,720   )
investments
Net impairment
losses           —              —             —             (3       )   (3         )
recognized in
earnings
Change in fair
value of         (167,670   )   86,535        10,778        38,586       (31,771    )
derivative
instruments
Net (losses)
gains on other   (5,675     )   1,188        902          (1,151   )   (4,736     )
financial
instruments
Total            (178,850   )   (42,531   )   4,548        30,603      (186,230   )
exclusions
Plus:
Change in
present value
of estimated     3,144          295           (3,273    )   364          530
credit loss
payments
(recoveries)
Net premiums
earned on        4,992         4,857        4,170        3,879       17,898     
derivatives
Total            8,136         5,152        897          4,243       18,428     
additions
Adjusted
pretax
operating        $ (15,237  )   $ 16,176     $ (12,424 )   $ 9,088     $ (2,397   )
(loss) income
- Consolidated
                                                                         
Consolidated:
Net (loss)       $ (187,500 )   $ (33,172 )   $ (12,682 )   $ 36,369    $ (196,985 )
income
Less:
Net losses on    (5,505     )   (130,254  )   (7,132    )   (6,829   )   (149,720   )
investments
Net impairment
losses           —              —             —             (3       )   (3         )
recognized in
earnings
Change in fair
value of         (167,670   )   86,535        10,778        38,586       (31,771    )
derivative
instruments
Net (losses)
gains on other   (5,675     )   1,188         902           (1,151   )   (4,736     )
financial
instruments
Income tax
benefit          14,723        (1,665    )   (3,909    )   921         10,070     
(provision)
Total            (164,127   )   (44,196   )   639          31,524      (176,160   )
exclusions
Plus:
Change in
present value
of estimated     3,144          295           (3,273    )   364          530
credit loss
payments
(recoveries)
Net premiums
earned on        4,992          4,857         4,170         3,879        17,898
derivatives
Income tax
benefit
(provision)      5,333         (5,661    )   4,348        (3,181   )   839        
computed at
the statutory
tax rate
Total            13,469        (509      )   5,245        1,062       19,267     
additions
Adjusted net
operating        $ (9,904   )   $ 10,515     $ (8,076  )   $ 5,907     $ (1,558   )
(loss) income
- Consolidated
                                                                                    

                    
Radian Group Inc.
and Subsidiaries
GAAP to Non-GAAP
Reconciliation
Consolidated
Exhibit O (page 4
of 4)
                      
                      2013 Quarters
                      First      Second     Third      Fourth    Year
Consolidated:
Diluted net (loss)    $ (1.30 )   $ (0.19 )   $ (0.07 )   $ 0.19     $ (1.18 )
income per share
Adjustments:
Total adjustments
from net (loss)
income to adjusted    1.23        0.25        0.02        (0.14  )   1.17
net operating
(loss) income (1)
Change in dilutive
impact of
convertible debt      —          —          —          (0.02  )   —       
and stock-based
compensation
arrangements (2)
Adjusted diluted
net operating         $ (0.07 )   $ 0.06     $ (0.05 )   $ 0.03    $ (0.01 )
(loss) income per
share (2)
                                                                             

(1)  EPS impact of adjustments from net (loss) income to adjusted net
      operating (loss) income as detailed in the previous table.
      “Adjusted diluted net operating (loss) income per share” consists of
      “Adjusted net operating (loss) income” divided by the weighted-average
      number of common and common equivalent shares outstanding on a diluted
      basis. Interest expense, shares issuable on convertible debt and the
      impact of stock-based compensation arrangements have been reflected in
(2)   the per share calculations consistent with the accounting standard
      regarding earnings per share, whenever the impact is dilutive. The
      “Change in dilutive impact of convertible debt and stock-based
      compensation arrangements” reflects the change in dilution due to the
      impact of the “Total adjustments from net (loss) income to adjusted net
      operating (loss) income.”
      

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:

  *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, actual or threatened
    downgrades of U.S. government credit ratings, or actual or threatened
    defaults on U.S. government obligations;
  *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 the fact that certain of our former
    competitors have ceased writing new insurance business and have been
    placed under supervision or receivership by insurance regulators;
  *catastrophic events, municipal and sovereign bankruptcy filings or other
    economic changes in geographic regions 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;
  *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”);
  *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, and
    an adequate minimum policyholder position and surplus for our insurance
    subsidiaries that provide reinsurance to Radian Guaranty;
  *our ability to continue to effectively mitigate our mortgage insurance and
    financial guaranty losses;
  *a more rapid than expected decrease in the 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 net rescissions or denials resulting from: an increase in the
    number of successful challenges to previously rescinded policies or claim
    denials (including as part of one or more settlements of disputed
    rescissions or denials), or by the government-sponsored entities (“GSEs”)
    intervening in or otherwise limiting our loss mitigation practices,
    including settlements of disputes regarding loss mitigation activities;
  *the negative impact that our loss mitigation activities may have on our
    relationships with our customers and potential customers, including the
    potential loss of current or future business and the heightened risk of
    disputes and litigation;
  *the need, in the event that we are unsuccessful in defending our loss
    mitigation activities, to increase our loss reserves for, and reassume
    risk on, rescinded or cancelled loans or denied claims, 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 on our monthly premium
    policies and could decrease the profitability of our mortgage insurance
    business;
  *heightened competition for our mortgage insurance business from others
    such as the Federal Housing Administration, the U.S. Department of
    Veterans Affairs and other private mortgage insurers, including in
    particular, those that have been assigned higher ratings than we have,
    that may have access to greater amounts of capital than we do, that are
    less dependent on capital support from their subsidiaries than we are or
    that are new entrants to the industry, and therefore, are not burdened by
    legacy obligations;
  *changes in requirements to remain an eligible insurer to the GSEs (which
    are expected to be released in 2014 and implemented following a transition
    period), which may include more onerous risk-to-capital ratio
    requirements, higher capital requirements for loans insured prior to 2009
    and a limitation on the amount of capital credit available for our
    subsidiaries, including capital attributable to our financial guaranty
    business;
  *changes in the charters or business practices of, or rules or regulations
    applicable to, the GSEs;
  *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 private
    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 (including in
    particular investigations and litigation relating to captive reinsurance
    arrangements under the Real Estate Settlement Practices Act of 1974); 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, including adjustments proposed by the
    Internal Revenue Service resulting from the examination of our 2000
    through 2007 tax years;
  *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, substantially all of our investment portfolio and certain of
    our long-term incentive compensation awards;
  *our ability to realize some or all of the tax benefits associated with our
    gross deferred tax assets, which will depend, in part, on our ability to
    generate sufficient sustainable taxable income in future periods;
  *changes in accounting principles generally accepted in the United States
    of America 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, 2012, Item 1A of Part II of our Quarterly Reports on Form
10-Q filed in 2013 and subsequent reports and registration statements filed
from time to time with the U.S. Securities and Exchange Commission. We caution
you not to place undue reliance on these forward-looking statements, which are
current only as of the date on which we issued this press release. We do not
intend to, and we disclaim any duty or obligation to, update or revise any
forward-looking statements to reflect new information or future events or for
any other reason.

Contact:

Radian Group Inc.
Emily Riley, 215-231-1035
emily.riley@radian.biz
 
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