Company grew book value per share by 14% from year earlier and nine-month
diluted net income per share by 10.1%
PHILADELPHIA, Oct. 18 /PRNewswire-FirstCall/ -- Radian Group Inc.
(NYSE: RDN) today reported results for the quarter ended September 30,
2006, with net income of $112 million and diluted net income per share of
$1.36. Book value per share at September 30, 2006, was $49.11, an increase
of 14% from a year earlier.
For the nine months ended September 30, 2006, Radian reported net
income of $424 million, up from a year earlier, and diluted net income per
share of $5.12, an increase of 10.1%.
"While our results for the quarter were affected by additions to loss
reserves for our mortgage insurance business, I am pleased with the strong
performance we achieved in the first nine months of the year, with double-
digit increases in diluted earnings per share and book value per share,"
said Chief Executive Officer S.A. Ibrahim. "We remain disciplined in our
approach to risk and capital management, and are focused on delivering
long-term value."
Mr. Ibrahim said the addition to loss reserves for the mortgage
insurance business was attributable to several factors, including new
delinquencies, an aging of existing delinquencies, and an increase in
severity due primarily to larger average loan balances.
Regarding the mortgage insurance business, Radian said it continued to
experience good flow volume, which is benefiting from positive cyclical
trends, including stable interest rates and increased MI penetration. The
company added that it did less structured business in the quarter,
reflecting market conditions and the tight-spread environment.
The company's financial guaranty business continued to perform well in
a difficult environment, further demonstrating the viability of its
double-A franchise.
In the Financial Services segment both C-BASS and Sherman continued to
be important and steady contributors to Radian's results. The key financial
highlights of the quarter and nine months ended September 30, 2006, are as
follows:
Key Financial Highlights (dollars in millions, except per share data)
Third quarter
Quarter ended Quarter ended
September 30, September 30, Percent
2006 2005 Change
Revenue $321,831 $382,622 (15.9)%
Net income $111,959 $162,557 (31.1)%
Diluted net income per share $1.36 $1.88 (27.7)%
Net premiums written $254,805 $313,908 (18.8)%
Net premiums earned $254,144 $265,636 (4.3)%
Equity in net income of affiliates $55,870 $46,772 19.5%
Book value per share $49.11 $43.08 14.0%
Nine months
Nine Months Nine Months
Ended Ended
September 30, September 30, Percent
2006 2005 Change
Revenue $980,062 $999,510 (1.9)%
Net income $423,802 $418,393 1.3%
Diluted net income per share $5.12 $4.65 10.1%
Net premiums written $833,285 $827,966 0.6%
Net premiums earned $766,927 $756,639 1.4%
Equity in net income of affiliates $186,248 $161,946 15.0%
Radian will hold a conference call on Thursday, October 19, 2006, at
9:00 a.m. Eastern time to discuss the company's third quarter 2006 results.
This call will be broadcast live over the Internet at
http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives or at
http://www.radian.biz > News. A replay of the webcast will be available at
this site approximately two hours after the live broadcast ends for a
period of one year.
Statistical and financial information which is expected to be referred
to during the conference call will be available on Radian's website under
Investors > Webcasts, Presentations and Transcripts or by clicking on
http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives.
Radian will hold an Investor Day on Thursday, November 9, 2006, in
Philadelphia. A webcast of the event will be broadcast live over the
Internet at http://www.radian.biz.
Radian Group Inc. is a global credit risk management company
headquartered in Philadelphia with significant operations in both New York
and London. Radian develops innovative financial solutions by applying its
core mortgage credit risk expertise and structured finance capabilities to
the credit enhancement needs of the capital markets worldwide, primarily
through credit insurance products. The company also provides credit
enhancement for public finance and other corporate and consumer assets on
both a direct and reinsurance basis and holds strategic interests in active
credit-based consumer asset businesses. Additional information may be found
at http://www.radian.biz.
Financial Results and Supplemental Information Contents
For trend information on all schedules, refer to Radian's quarterly
financial statistics at
http://www.radian.biz/investors/financial/corporate.aspx.
Exhibit A: Condensed Consolidated Statements of Income
Exhibit B: Condensed Consolidated Balance Sheets
Exhibit C: Segment Information Quarter Ended September 30, 2006
Exhibit D: Segment Information Quarter Ended September 30, 2005
Exhibit E: Segment Information Nine Months Ended September 30, 2006
Exhibit F: Segment Information Nine Months Ended September 30, 2005
Exhibit G: Financial Guaranty Insurance Supplemental Information -
Quarter and Nine Months Ended and as of September 30, 2006
Exhibit H: Financial Guaranty Insurance Supplemental Information -
Quarter and Nine Months Ended and as of September 30, 2006
Exhibit I: Mortgage Insurance Supplemental Information: New Insurance
Written and Risk Written
Exhibit J: Mortgage Insurance Supplemental Information: Insurance in
Force and Risk in Force
Exhibit K: Mortgage Insurance Supplemental Information: Risk in Force by
LTV and Policy Year and Other Risk in Force
Exhibit L: Mortgage Insurance Supplemental Information: Claims and
Reserves
Exhibit M: Mortgage Insurance Supplemental Information: Defaults
Exhibit N: Mortgage Insurance Supplemental Information: Net Premiums
Written and Earned, Smart Home, Captives and Persistency
Exhibit O: Mortgage Insurance Supplemental Information: ALT A
Exhibit P: Financial Services Supplemental Information
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
Quarter Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
(In thousands,
except per-share data)
Revenues:
Net premiums written $254,805 $313,908 $833,285 $827,966
Net premiums earned $254,144 $265,636 $766,927 $756,639
Net investment income 60,185 53,253 174,123 154,119
Net gains on securities 1,409 5,194 29,587 25,443
Change in fair value of
derivative instruments 626 53,274 (7,031) 45,301
Other income 5,467 5,265 16,456 18,008
Total revenues 321,831 382,622 980,062 999,510
Expenses:
Provision for losses 121,395 92,441 284,889 285,768
Policy acquisition costs 26,351 27,927 80,535 88,355
Other operating expenses 62,706 58,931 181,082 163,019
Interest expense 11,515 12,167 35,893 31,103
Total expenses 221,967 191,466 582,399 568,245
Equity in net income of
affiliates 55,870 46,772 186,248 161,946
Pretax income 155,734 237,928 583,911 593,211
Provision for income taxes 43,775 75,371 160,109 174,818
Net income $111,959 $162,557 $423,802 $418,393
Diluted net income
per share (1) $1.36 $1.88 $5.12 $4.65
(1) Net income per share reconciliation
Net income $111,959 $162,557 $423,802 $418,393
Interest expense on convertible
senior debentures (net of tax) - 267 - 1,871
Net income available to common
stockholders $111,959 $162,824 $423,802 $420,264
Weighted average shares
outstanding (in thousands)
Average common shares
outstanding 81,233 84,567 81,995 86,507
Increase in shares-potential
exercise of options-diluted
basis 817 860 754 895
Increase in shares-contingently
convertible debt (2) - 1,266 - 2,954
Weighted average shares
outstanding (in thousands) 82,050 86,693 82,749 90,356
(2) The 2005 period includes the impact of shares underlying convertible
debt that was redeemed on August 1, 2005. The impact on diluted net
income per share of including these shares in the calculation was a
reduction of $0.03 per share for the quarter ended September 30, 2005
and $0.14 per share for the nine months ended September 30, 2005.
For Trend Information, refer to our Quarterly Financial Statistics on
Radian's (RDN) website.
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit B
(In thousands, except share September December 31 September
and per-share data) 2006 2005 2005
Assets:
Cash and investments $5,761,913 $5,521,561 $5,508,189
Investments in affiliates 560,570 446,151 398,054
Deferred policy acquisition
costs 219,573 208,325 206,013
Prepaid federal income
taxes 760,963 585,514 539,973
Other assets 434,302 469,059 446,068
Total assets $7,737,321 $7,230,610 $7,098,297
Liabilities and
stockholders' equity:
Unearned premiums $914,422 $849,360 $838,042
Reserve for losses and loss
adjustment expenses 840,938 801,002 792,600
Long-term debt 747,692 747,466 747,393
Deferred federal income
taxes 1,071,002 961,993 863,859
Other liabilities 196,234 207,909 281,388
Total liabilities 3,770,288 3,567,730 3,523,282
Common stock 97 97 97
Additional paid-in capital 489,389 629,019 634,901
Retained earnings 3,332,517 2,913,649 2,810,853
Accumulated other
comprehensive income 145,030 120,115 129,164
Total common
stockholders' equity 3,967,033 3,662,880 3,575,015
Total liabilities and
stockholders' equity $7,737,321 $7,230,610 $7,098,297
Book value per share $49.11 $44.11 $43.08
Treasury Stock Repurchases
(Year-to-Date for Periods
Presented)
Total number of shares
repurchased 3,000,000 (1) 10,767,800 10,344,500
Average price paid per
share $60.85 $49.58 $49.21
Total cost of repurchased
shares $182,548,056 $533,888,969 $509,094,714
(1) 1.0 million shares were repurchased in the 3rd quarter of 2006 at a
cost of $60.6 million.
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended September 30, 2006
Exhibit C
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $205,933 $48,872 $- $254,805
Net premiums earned $201,432 $52,712 $- $254,144
Net investment income 35,548 24,589 48 60,185
Net gains on securities 946 8 455 1,409
Change in fair value of
derivative instruments (3,293) 3,919 - 626
Other income 2,999 284 2,184 5,467
Total revenues 237,632 81,512 2,687 321,831
Expenses:
Provision for losses 119,616 1,779 - 121,395
Policy acquisition costs 15,271 11,080 - 26,351
Other operating expenses 43,933 16,039 2,734 62,706
Interest expense 6,357 3,961 1,197 11,515
Total expenses 185,177 32,859 3,931 221,967
Equity in net income of
affiliates - - 55,870 55,870
Pretax income 52,455 48,653 54,626 155,734
Provision for income taxes 11,127 13,529 19,119 43,775
Net income $41,328 $35,124 $35,507 $111,959
Assets $4,598,975 $2,572,079 $566,267 $7,737,321
Deferred policy
acquisition costs 71,691 147,882 - 219,573
Reserve for losses and
loss adjustment expenses 651,249 189,689 - 840,938
Unearned premiums 246,033 668,389 - 914,422
Stockholders' equity 2,232,606 1,339,627 394,800 3,967,033
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended September 30, 2005
Exhibit D
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $235,790 $78,118 $- $313,908
Net premiums earned $208,902 $56,734 $- $265,636
Net investment income 30,122 23,069 62 53,253
Net gains (losses) on
securities 4,185 3,849 (2,840) 5,194
Change in fair value of
derivative instruments 11,675 41,617 (18) 53,274
Other income 4,353 287 625 5,265
Total revenues 259,237 125,556 (2,171) 382,622
Expenses:
Provision for losses 81,551 10,890 - 92,441
Policy acquisition costs 14,742 13,185 - 27,927
Other operating expenses 38,295 18,683 1,953 58,931
Interest expense 6,790 4,282 1,095 12,167
Total expenses 141,378 47,040 3,048 191,466
Equity in net income of
affiliates - (374) 47,146 46,772
Pretax income 117,859 78,142 41,927 237,928
Provision for income taxes 36,528 24,168 14,675 75,371
Net income $81,331 $53,974 $27,252 $162,557
Assets $4,152,704 $2,534,678 $410,915 $7,098,297
Deferred policy
acquisition costs 67,327 138,686 - 206,013
Reserve for losses and
loss adjustment expenses 580,964 211,636 - 792,600
Unearned premiums 216,603 621,439 - 838,042
Stockholders' equity 1,963,433 1,311,582 300,000 3,575,015
Radian Group Inc. and Subsidiaries
Segment Information
Nine Months Ended September 30, 2006
Exhibit E
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $646,749 $186,536 $- $833,285
Net premiums earned $612,808 $154,119 $- $766,927
Net investment income 103,363 70,627 133 174,123
Net gains on securities 18,207 8,895 2,485 29,587
Change in fair value of
derivative instruments 1,830 (8,861) - (7,031)
Other income 10,108 618 5,730 16,456
Total revenues 746,316 225,398 8,348 980,062
Expenses:
Provision for losses 268,290 16,599 - 284,889
Policy acquisition costs 44,336 36,199 - 80,535
Other operating expenses 128,742 46,092 6,248 181,082
Interest expense 20,042 12,312 3,539 35,893
Total expenses 461,410 111,202 9,787 582,399
Equity in net income of
affiliates - - 186,248 186,248
Pretax income 284,906 114,196 184,809 583,911
Provision for income taxes 72,262 23,164 64,683 160,109
Net income $212,644 $91,032 $120,126 $423,802
Radian Group Inc. and Subsidiaries
Segment Information
Nine Months Ended September 30, 2005
Exhibit F
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $672,298 $155,668 $- $827,966
Net premiums earned $597,031 $159,608 $- $756,639
Net investment income 87,016 67,015 88 154,119
Net gains (losses) on
securities 17,957 9,449 (1,963) 25,443
Change in fair value of
derivative instruments 6,941 38,569 (209) 45,301
Other income 14,624 870 2,514 18,008
Total revenues 723,569 275,511 430 999,510
Expenses:
Provision for losses 259,703 26,065 - 285,768
Policy acquisition costs 48,626 39,729 - 88,355
Other operating expenses 107,445 48,467 7,107 163,019
Interest expense 17,541 10,854 2,708 31,103
Total expenses 433,315 125,115 9,815 568,245
Equity in net income of
affiliates - (361) 162,307 161,946
Pretax income 290,254 150,035 152,922 593,211
Provision for income taxes 83,350 37,945 53,523 174,818
Net income $206,904 $112,090 (1) $99,399 $418,393 (1)
(1) Reflects a $4.1 million net loss from 1st quarter 2005 recapture of
previously ceded business by one of the primary Financial Guaranty
insurers (in millions):
Incr/(Decr)
Net premiums earned $(4.6)
Policy acquisition costs 1.7
Provision for income taxes (2.2)
Net loss $(4.1)
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit G
Quarter Ended Nine Months Ended
($ in thousands, except ratios) September 30 September 30
2006 2005 2006 2005
Net Premiums Written:
Public finance direct $11,191 $22,539 $49,598 $51,285
Public finance reinsurance 13,844 23,374 60,539 61,354
Structured direct 19,520 19,872 59,126 52,288
Structured reinsurance 4,414 3,092 12,919 16,355
Trade credit reinsurance (97) 9,241 4,354 29,128
48,872 78,118 186,536 210,410
Impact of recapture (1) - - - (54,742)
Net Premiums Written $48,872 $78,118 $186,536 $155,668
Net Premiums Earned:
Public finance direct $8,388 $7,651 $23,681 $24,667
Public finance reinsurance 12,097 10,058 28,255 25,661
Structured direct 22,829 20,158 67,139 57,258
Structured reinsurance 5,479 4,544 15,762 15,563
Trade credit reinsurance 3,919 14,323 19,282 40,998
52,712 56,734 154,119 164,147
Impact of recapture (2) - - - (4,539)
Net Premiums Earned $52,712 $56,734 $154,119 $159,608
Refundings included in earned
premium $5,357 $4,419 $8,667 $9,514
Claims paid:
Trade credit reinsurance $5,452 $6,550 $13,806 $16,778
Other financial guaranty 472 1,015 7,281 12,932
Conseco 3,505 7,443 12,250 23,393
Total $9,429 $15,008 $33,337 $53,103
Incurred losses:
Trade credit reinsurance $(2,173) $7,120 $5,021 $14,433
Other financial guaranty 3,952 3,770 12,610 11,632
Conseco - - (1,032) -
Total $1,779 $10,890 $16,599 $26,065
Loss ratio - GAAP Basis 3.4% 19.2% 10.8% 16.3%
Expense ratio - GAAP Basis 51.4% 56.2% 53.4% 55.3%
54.8% 75.4% 64.2% 71.6%
Net claims paid (received) under
derivatives contracts $(1,136) $(1,799) $64,277 $(6,175)
(1) Reflects the impact on net premiums written of the first quarter 2005
recapture of previously ceded business by one of the primary Financial
Guaranty insurers:
(In thousands)
Public reinsurance 48,238
Structured reinsurance 6,504
(2) Reflects the impact on net premiums earned of the first quarter 2005
recapture of previously ceded business by one of the primary Financial
Guaranty insurers:
(In thousands)
Public reinsurance 3,870
Structured reinsurance 669
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit H
($ in thousands, except ratios) September December 31 September
2006 2005 2005
Capital and surplus $1,011,787 $1,004,505 $1,069,988
Contingency reserve 311,642 271,907 282,389
Qualified statutory
capital 1,323,429 1,276,412 1,352,377
Unearned premium reserve 797,019 751,656 731,505
Loss and loss expense reserve 97,272 108,576 116,256
Total policyholders'
reserves 2,217,720 2,136,644 2,200,138
Present value of installment
premiums 335,571 302,953 284,511
Reinsurance and soft capital
facilities 150,000 150,000 150,000
Total claims paying
resources $2,703,291 $2,589,597 $2,634,649
Net debt service outstanding $133,144,153 $110,344,057 $103,260,772
Capital leverage ratio (1) 101 86 76
Claims paying leverage ratio (2) 49 43 39
Net par outstanding by product:
Public finance direct $15,130,925 $14,043,786 $13,173,444
Public finance reinsurance 36,617,518 33,047,512 31,834,150
Structured direct 39,538,488 24,608,489 21,653,988
Structured reinsurance 4,775,458 4,952,146 4,651,046
Total $96,062,389 $76,651,933 $71,312,628
Reinsurance business net par
outstanding:
Treaty 59% 58% 59%
Facultative 41% 42% 41%
Reserve for losses and LAE
Specific $33,649 $29,311 $33,609
Conseco 37,487 50,770 56,950
Non-specific 118,553 124,712 121,077
Total $189,689 $204,793 $211,636
(1) Net debt service outstanding divided by qualified statutory capital
(2) Net debt service outstanding divided by total claims paying resources
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit I
Quarter Ended
September 30
2006 % 2005 %
Primary New Insurance Written
($ in millions)
Flow $7,017 85.7% $7,066 55.7%
Structured 1,175 14.3% 5,612 44.3%
Total Primary $8,192 100.0% $12,678 100.0%
Flow
Prime $5,320 75.8% $5,361 75.9%
Alt-A 1,189 16.9% 1,081 15.3%
A minus and below 508 7.3% 624 8.8%
Total Flow $7,017 100.0% $7,066 100.0%
Structured
Prime $108 9.2% $1,830 32.6%
Alt-A 1,065 90.6% 2,638 47.0%
A minus and below 2 0.2% 1,144 20.4%
Total Structured $1,175 100.0% $5,612 100.0%
Total
Prime $5,428 66.3% $7,191 56.7%
Alt-A 2,254 27.5% 3,719 29.3%
A minus and below 510 6.2% 1,768 14.0%
Total Primary $8,192 100.0% $12,678 100.0%
Total Primary New Insurance Written
by FICO Score
($ in millions)
Flow
<=619 $440 6.3% $375 5.3%
620-679 2,087 29.7% 2,061 29.2%
680-739 2,525 36.0% 2,703 38.2%
>=740 1,965 28.0% 1,927 27.3%
Total Flow $7,017 100.0% $7,066 100.0%
Structured
<=619 $2 0.2% $1,157 20.6%
620-679 185 15.7% 1,797 32.0%
680-739 613 52.2% 1,629 29.0%
>=740 375 31.9% 1,029 18.4%
Total Structured $1,175 100.0% $5,612 100.0%
Total
<=619 $442 5.4% $1,532 12.1%
620-679 2,272 27.7% 3,858 30.4%
680-739 3,138 38.3% 4,332 34.2%
>=740 2,340 28.6% 2,956 23.3%
Total Primary $8,192 100.0% $12,678 100.0%
Percentage of primary new insurance
written
Refinances 28% 38%
95.01% LTV and above 22% 9%
ARMs
Less than 5 years 21% 36%
5 years and longer 9% 16%
Primary risk written ($ in millions)
Flow $1,772 94.4% $1,752 67.6%
Structured 105 5.6% 840 32.4%
Total Primary $1,877 100.0% $2,592 100.0%
Pool risk written (In millions) $64 $163
Other risk written (In millions)
Seconds
1st loss $1 $43
2nd loss 29 279
NIMs 132 -
International
1st loss-Hong Kong primary
mortgage insurance 9 33
Reinsurance 2 -
Other
Domestic credit default swaps - 150
Financial guaranty wrap - -
Total other risk written $173 $505
Nine Months Ended
September 30
2006 % 2005 %
Primary New Insurance Written ($ in
millions)
Flow $18,913 58.1% $18,856 59.6%
Structured 13,630 41.9% 12,808 40.4%
Total Primary $32,543 100.0% $31,664 100.0%
Flow
Prime $13,970 73.9% $14,151 75.0%
Alt-A 3,560 18.8% 2,934 15.6%
A minus and below 1,383 7.3% 1,771 9.4%
Total Flow $18,913 100.0% $18,856 100.0%
Structured
Prime $3,659 26.8% $3,982 31.1%
Alt-A 8,537 62.7% 5,440 42.5%
A minus and below 1,434 10.5% 3,386 26.4%
Total Structured $13,630 100.0% $12,808 100.0%
Total
Prime $17,629 54.1% $18,133 57.3%
Alt-A 12,097 37.2% 8,374 26.4%
A minus and below 2,817 8.7% 5,157 16.3%
Total Primary $32,543 100.0% $31,664 100.0%
Total Primary New Insurance Written
by FICO Score
($ in millions)
Flow
<=619 $1,105 5.8% $1,162 6.2%
620-679 5,644 29.8% 5,666 30.0%
680-739 6,964 36.9% 6,968 37.0%
>=740 5,200 27.5% 5,060 26.8%
Total Flow $18,913 100.0% $18,856 100.0%
Structured
<=619 $1,447 10.6% $3,399 26.5%
620-679 3,970 29.2% 3,933 30.7%
680-739 5,332 39.1% 3,495 27.3%
>=740 2,881 21.1% 1,981 15.5%
Total Structured $13,630 100.0% $12,808 100.0%
Total
<=619 $2,552 7.9% $4,561 14.4%
620-679 9,614 29.5% 9,599 30.3%
680-739 12,296 37.8% 10,463 33.1%
>=740 8,081 24.8% 7,041 22.2%
Total Primary $32,543 100.0% $31,664 100.0%
Percentage of primary new insurance
written
Refinances 35% 42%
95.01% LTV and above 13% 10%
ARMs
Less than 5 years 26% 36%
5 years and longer 16% 15%
Primary risk written ($ in millions)
Flow $4,796 79.2% $4,682 67.7%
Structured 1,262 20.8% 2,232 32.3%
Total Primary $6,058 100.0% $6,914 100.0%
Pool risk written (In millions) $333 $467
Other risk written (In millions)
Seconds
1st loss $43 $56
2nd loss 206 325
NIMs 238 66
International
1st loss-Hong Kong primary
mortgage insurance 31 240
Reinsurance 7 11
Other
Domestic credit default swaps 32 150
Financial guaranty wrap - 511
Total other risk written $557 $1,359
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit J
September 30 September 30
2006 % 2005 %
Primary insurance in force ($ in
millions)
Flow $82,561 71.6% $82,827 75.8%
Structured 32,700 28.4% 26,457 24.2%
Total Primary $115,261 100.0% $109,284 100.0%
Prime $77,030 66.8% $74,207 67.9%
Alt-A 25,906 22.5% 21,137 19.3%
A minus and below 12,325 10.7% 13,940 12.8%
Total Primary $115,261 100.0% $109,284 100.0%
Primary risk in force ($ in millions)
Flow $20,464 79.9% $20,283 79.1%
Structured 5,141 20.1% 5,374 20.9%
Total Primary $25,605 100.0% $25,657 100.0%
Flow
Prime $16,072 78.5% $15,512 76.4%
Alt-A 2,857 14.0% 3,197 15.8%
A minus and below 1,535 7.5% 1,574 7.8%
Total Flow $20,464 100.0% $20,283 100.0%
Structured
Prime $2,065 40.2% $2,130 39.6%
Alt-A 1,492 29.0% 1,321 24.6%
A minus and below 1,584 30.8% 1,923 35.8%
Total Structured $5,141 100.0% $5,374 100.0%
Total
Prime $18,137 70.8% $17,642 68.8%
Alt-A 4,349 17.0% 4,518 17.6%
A minus and below 3,119 12.2% 3,497 13.6%
Total Primary $25,605 100.0% $25,657 100.0%
Total Primary Risk in Force by FICO
Score
($ in millions)
Flow
<=619 $1,296 6.3% $1,355 6.7%
620-679 6,297 30.8% 6,372 31.4%
680-739 7,506 36.7% 7,489 36.9%
>=740 5,365 26.2% 5,067 25.0%
Total Flow $20,464 100.0% $20,283 100.0%
Structured
<=619 $1,585 30.8% $1,923 35.8%
620-679 1,839 35.8% 1,953 36.3%
680-739 1,175 22.9% 1,035 19.3%
>=740 542 10.5% 463 8.6%
Total Structured $5,141 100.0% $5,374 100.0%
Total
<=619 $2,881 11.2% $3,278 12.8%
620-679 8,136 31.8% 8,325 32.4%
680-739 8,681 33.9% 8,524 33.2%
>=740 5,907 23.1% 5,530 21.6%
Total Primary $25,605 100.0% $25,657 100.0%
Percentage of primary risk in force
Refinances 34% 37%
95.01% LTV and above 16% 14%
ARMs
Less than 5 years 21% 24%
5 years and longer 9% 8%
Pool risk in force ($ in millions)
Prime $2,190 73.2% $2,073 78.6%
Alt-A 301 10.1% 262 9.9%
A minus and below 501 16.7% 304 11.5%
Total $2,992 100.0% $2,639 100.0%
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit K
September 30 September 30
2006 % 2005 %
Total Primary Risk in Force by LTV
($ in millions)
95.01% and above $4,182 16.3% $3,550 13.8%
90.01% to 95.00% 8,174 31.9% 8,736 34.1%
85.01% to 90.00% 9,187 35.9% 9,606 37.4%
85.00% and below 4,062 15.9% 3,765 14.7%
Total $25,605 100.0% $25,657 100.0%
Total Primary Risk in Force by
Policy Year ($ in millions)
2002 and prior $3,584 14.0% $5,189 20.2%
2003 4,159 16.2% 6,224 24.3%
2004 5,137 20.1% 7,808 30.4%
2005 7,072 27.6% 6,436 25.1%
2006 5,653 22.1% - -
Total $25,605 100.0% $25,657 100.0%
Total Pool Risk in Force by Policy
Year ($ in millions)
2002 and prior $1,647 55.0% $1,676 63.5%
2003 138 4.6% 190 7.2%
2004 291 9.7% 296 11.2%
2005 651 21.8% 477 18.1%
2006 265 8.9% - -
Total Pool risk in Force $2,992 100.0% $2,639 100.0%
Other risk in force (In millions)
Seconds
1st loss $557 $641
2nd loss 714 330
NIMs 382 283
International
1st loss-Hong Kong primary
mortgage insurance 301 238
Reinsurance 33 30
Credit default swaps 7,678 168
Other
Domestic credit default swaps 212 150
Financial guaranty wrap 125 358
Total other risk in force $10,002 $2,198
Risk to capital ratio-STAT Basis 10.4:1 9.8:1
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit L
Quarter Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
Direct claims paid (In
thousands)
Prime $28,737 $24,369 $88,568 $88,141
Alt-A 13,343 17,498 47,364 59,403
A minus and below 21,885 21,310 67,666 62,218
Seconds and other 10,447 7,883 28,614 26,655
Total $74,412 $71,060 $232,212 $236,417
Average claim paid (In
thousands)
Prime $25.5 $23.6 $25.9 $23.6
Alt-A 30.3 36.5 34.9 35.9
A minus and below 27.1 27.6 27.6 26.5
Seconds 26.9 22.0 26.2 22.5
Total $26.9 $26.9 $27.9 $26.5
Loss ratio - GAAP Basis 59.4% 39.0% 43.8% 43.5%
Expense ratio - GAAP Basis 29.4% 25.4% 28.2% 26.1%
88.8% 64.4% 72.0% 69.6%
Reserve for losses by category
(In thousands):
Prime $187,223 $164,626
Alt-A 143,006 156,937
A minus and below 222,399 169,135
Pool Insurance 33,500 47,195
Seconds 57,471 (1) 35,093
Other 7,650 7,978
Total $651,249 $580,964
(1) Includes $19.0 million of reinsurance recoverable on a first-loss
second lien captive.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit M
September 30 December 31 September 30
2006 2005 2005
Default Statistics
Primary insurance:
Flow
Prime
Number of insured loans 499,623 508,117 514,805
Number of loans in default 14,761 18,045 15,355
Percentage of loans in default 2.95% 3.55% 2.98%
Alt-A
Number of insured loans 63,156 67,339 69,210
Number of loans in default 4,236 4,946 4,730
Percentage of loans in default 6.71% 7.34% 6.83%
A minus and below
Number of insured loans 51,875 54,066 55,077
Number of loans in default 6,970 7,543 6,910
Percentage of loans in default 13.44% 13.95% 12.55%
Total Flow
Number of insured loans 614,654 629,522 639,092
Number of loans in default 25,967 30,534 26,995
Percentage of loans in default 4.22% 4.85% 4.22%
Structured
Prime
Number of insured loans 66,982 59,457 56,691
Number of loans in default 2,845 2,640 2,274
Percentage of loans in default 4.25% 4.44% 4.01%
Alt-A
Number of insured loans 73,511 50,997 51,905
Number of loans in default 2,940 2,564 2,841
Percentage of loans in default 4.00% 5.03% 5.47%
A minus and below
Number of insured loans 41,889 47,348 49,843
Number of loans in default 8,693 8,472 7,921
Percentage of loans in default 20.75% 17.89% 15.89%
Total Structured
Number of insured loans 182,382 157,802 158,439
Number of loans in default 14,478 13,676 13,036
Percentage of loans in default 7.94% 8.67% 8.23%
Total Primary Insurance
Prime
Number of insured loans 566,605 567,574 571,496
Number of loans in default 17,606 20,685 17,629
Percentage of loans in default 3.11% 3.64% 3.08%
Alt-A
Number of insured loans 136,667 118,336 121,115
Number of loans in default 7,176 7,510 7,571
Percentage of loans in default 5.25% 6.35% 6.25%
A minus and below
Number of insured loans 93,764 101,414 104,920
Number of loans in default 15,663 16,015 14,831
Percentage of loans in default 16.70% 15.79% 14.14%
Total Primary Insurance
Number of insured loans 797,036 787,324 797,531
Number of loans in default 40,445 (1) 44,210 (1) 40,031
Percentage of loans in default 5.07% 5.62% 5.02%
Pool insurance:
Number of loans in default 18,096 (2) 10,194 (2) 7,683
(1) Includes approximately 800 and 452 defaults at September 30, 2006 and
December 31, 2005, respectively, where reserves have not been
established because no claim payment is currently anticipated.
(2) Includes approximately 12,634 and 3,699 defaults at September 30, 2006
and December 31, 2005, respectively, where reserves have not been
established because no claim payment is currently anticipated.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit N
Quarter Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
Net Premiums Written (In
thousands)
Primary and Pool Insurance $179,206 $198,277 $560,338 $566,825
Seconds 16,682 18,370 42,466 47,701
NIMs 2,943 12,268 22,651 32,148
International 6,295 4,067 12,247 22,711
Domestic credit default swaps 777 2,724 8,957 2,724
Financial guaranty wrap 30 84 90 189
Net Premiums Written $205,933 $235,790 $646,749 $672,298
Net Premiums Earned (In thousands)
Primary and Pool Insurance $180,895 $182,380 $541,723 $525,376
Seconds 12,266 12,810 41,024 36,773
NIMs 4,359 12,826 18,023 32,364
International 2,279 583 8,196 2,110
Domestic credit default swaps 1,603 219 3,752 219
Financial guaranty wrap 30 84 90 189
Net Premiums Earned $201,432 $208,902 $612,808 $597,031
SMART HOME (In millions)
Ceded Premiums Written $3.5 $0.9 $8.5 $2.5
Ceded Premiums Earned $3.3 $0.6 $8.6 $2.1
Captives
Premiums ceded to captives (In
millions) $24.1 $22.0 $71.3 $67.6
% of total premiums 11.6% 10.8% 11.5% 11.4%
NIW subject to captives (In
millions) $3,160 $2,701 $9,700 $7,998
% of primary NIW 38.6% 21.3% 29.8% 25.3%
IIF included in captives (1) 34.2% 32.1%
RIF included in captives (1) 38.9% 34.0%
Persistency (twelve months ended
September 30) 65.7% 57.1%
September 30 December 31 September 30
2006 2005 2005
SMART HOME
% of Primary RIF included in Smart
Home Transactions (1) 10.9% 7.8% 1.7%
(1) Radian reinsures the middle layer risk positions, while retaining a
significant portion of the total risk comprising the first loss and
most remote risk positions.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of September 30, 2006
ALT-A
Exhibit O
($ in millions)
Quarter Ended Nine Months Ended
September 30 September 30
2006 % 2005 % 2006 % 2005 %
Primary New
Insurance
Written by
FICO Score
<=619 $2 0.1% $24 0.7% $25 0.2% $31 0.4%
620-659 133 5.9% 596 16.0% 1,392 11.5% 1,463 17.5%
660-679 280 12.4% 488 13.1% 1,668 13.8% 1,106 13.2%
680-739 1,160 51.5% 1,632 43.9% 5,853 48.4% 3,688 44.0%
>=740 679 30.1% 979 26.3% 3,159 26.1% 2,086 24.9%
Total $2,254 100.0% $3,719 100.0% $12,097 100.0% $8,374 100.0%
Primary Risk
in Force by
FICO Score
<=619 $27 0.6% $50 1.1%
620-659 790 18.2% 974 21.6%
660-679 701 16.1% 783 17.3%
680-739 1,931 44.4% 1,898 42.0%
>=740 900 20.7% 813 18.0%
Total $4,349 100.0% $4,518 100.0%
Primary Risk
in Force by
LTV
95.01%
and
above $126 2.9% $228 5.0%
90.01% to
95.00% 1,272 29.3% 1,462 32.4%
85.01% to
90.00% 1,840 42.3% 1,958 43.3%
85.00%
and
below 1,111 25.5% 870 19.3%
Total $4,349 100.0% $4,518 100.0%
Primary Risk
in Force by
Policy Year
2002 and
prior $354 8.1% $608 13.5%
2003 591 13.6% 1,034 22.9%
2004 841 19.3% 1,619 35.8%
2005 1,287 29.6% 1,257 27.8%
2006 1,276 29.4% - -
Total $4,349 100.0% $4,518 100.0%
Radian Group Inc.
Financial Services Supplemental Information
For the Quarter and Nine Months Ended and as of September 30, 2006
Exhibit P
Quarter Ended Nine Months Ended
September 30 September 30
(In thousands) 2006 2005 2006 2005
Investment in Affiliates-
Selected Information
C-BASS
Balance, beginning of period $415,351 $332,367 $364,364 $290,073
Net income for period 27,421 20,727 102,302 80,271
Dividends received 11,300 9,750 35,194 27,000
Balance, end of period $431,472 $343,344 $431,472 $343,344
Sherman
Balance, beginning of period $76,790 $103,831 $81,753 $101,492
Net income for period 29,192 26,418 84,689 82,036
Dividends received 43,225 58,786 103,740 110,661
Other comprehensive income - 797 55 1,468
Purchase (sale) of ownership
interest 66,307 (18,947) 66,307 (18,947)
Warrant repurchase - - - (2,075)
Balance, end of period $129,064 $53,313 $129,064 $53,313
Portfolio Information:
C-BASS
Servicing portfolio $60,400,000 $40,900,000
Total assets 8,431,896 3,765,804
Servicing income 77,734 62,210 $231,603 $185,423
Net interest income 77,096 51,280 212,008 136,838
Total revenues 173,851 134,539 556,468 456,076
Sherman
Total assets $1,078,387 $868,957
Net revenues $229,835 $213,799 $703,620 $572,351
Radian owns a 46% interest in C-BASS and a 40.3% interest in Sherman,
consisting of 40.96% of the Class A Common Units of Sherman (Class A
Common Units represent 94% of the total equity in Sherman) and 50% of the
Preferred Units of Sherman (Preferred Units represent 3.6% of the total
equity in Sherman).
All statements made in this news release that address events or
developments that we expect or anticipate may occur in the future are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934
and the U.S. Private Securities Litigation Reform Act of 1995. These
statements are made on the basis of management's current views and
assumptions with respect to future events. The forward-looking statements,
as well as Radian's prospects as a whole, are subject to risks and
uncertainties, including the following: changes in general financial and
political conditions such as extended national or regional economic
recessions (or expansions), changes in housing values, population trends
and changes in household formation patterns, changes in unemployment rates,
or changes or volatility in interest rates; changes in investor perception
of the strength of private mortgage insurers or financial guaranty
providers; risks faced by the businesses, municipalities or pools of assets
covered by Radian's insurance; the loss of a customer with whom Radian has
a concentration of its insurance in force; increased severity or frequency
of losses associated with certain Radian products that are riskier than
traditional mortgage insurance and financial guaranty insurance policies;
material changes in persistency rates of Radian's mortgage insurance
policies; changes in Radian's credit ratings or the insurance financial-
strength ratings assigned by the major ratings agencies to Radian's
operating subsidiaries; heightened competition from other insurance
providers and from alternative products to private mortgage insurance and
financial guaranty insurance; changes in the charters or business practices
of Fannie Mae and Freddie Mac; the application of federal or state
consumer, lending, insurance and other applicable laws and regulations, or
unfavorable changes in these laws and regulations or the way they are
interpreted, including: (i) the possibility of private lawsuits or
investigations by state insurance departments and state attorneys general
alleging that services offered by the mortgage insurance industry, such as
captive reinsurance, pool insurance and contract underwriting, are
violative of the Real Estate Settlement Procedures Act and/or similar state
regulations (particularly in light of inquiries that we and other mortgage
insurers have received from the New York Insurance Department and public
reports that other state insurance departments are investigating or
planning to investigate captive reinsurance arrangements used in the
mortgage insurance industry) or (ii) legislative and regulatory changes
affecting demand for private mortgage insurance or financial guaranty
insurance; the possibility that we may fail to estimate accurately the
likelihood, magnitude and timing of losses in connection with establishing
loss reserves for our mortgage insurance or financial guaranty businesses
or to estimate accurately the fair value amounts of derivative financial
guaranty contracts in determining gains and losses on these contracts;
changes in accounting guidance from the SEC or the Financial Accounting
Standards Board regarding income recognition and the treatment of loss
reserves in the mortgage insurance or financial guaranty industries;
changes in claims against mortgage insurance products resulting from the
aging of Radian's mortgage insurance policies; vulnerability to the
performance of Radian's strategic investments; changes in the availability
of affordable or adequate reinsurance for our non-prime risk; and
international expansion of our mortgage insurance and financial guaranty
businesses into new markets and risks associated with our international
business activities. Radian does not intend to, and disclaims any duty or
obligation to, update or revise any forward-looking statements made in this
news release to reflect new information, future events or for any other
reason. For more information regarding these risks and uncertainties, as
well as certain additional risks that we face, investors should refer to
the risk factors detailed in Part I, Item 1A of our annual report on Form
10-K for the year ended December 31, 2005 and the material changes to these
risk factors detailed in Part II, Item 1A of our quarterly report on Form
10-Q for the quarter ended June 30, 2006.
SOURCE Radian Group Inc.
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Related links:
http://www.radian.biz
CONTACT:
Investors: Mona Zeehandelaar,
+1-215-231-1674, mona.zeehandelaar@radian.biz, or Media:
Corporate Communications, +1-888-NEWS-520, media@radian.biz, both
of Radian Group
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