(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to _____________________

Commission file number  1-11356

Radian Group Inc.

(Exact name of registrant as specified in its charter)

Delaware

23-2691170

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1601 Market Street, Philadelphia, PA

19103

(Address of principal executive offices)

(zip code)

(215) 564-6600

(Registrant’s telephone number, including area code)

Yes   x

No   o

Yes   x

No   o

Yes   o

No   o

Page Number

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Income

4

Condensed Consolidated Statement of Changes in Common Stockholders’ Equity

5

Condensed Consolidated Statements of Cash Flows

6

Notes to Unaudited Condensed Consolidated Financial Statements

7 – 13

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14 – 26

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

26

Item 4.

Controls and Procedures

26

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

27

Item 6.

Exhibits and Reports on Form 8-K

27

SIGNATURES

28

CERTIFICATIONS

29 – 30

EXHIBIT INDEX

31

(In thousands, except share amounts)

March 31
2003

December 31
2002

Assets

Investments

Fixed maturities held to maturity – at amortized cost (fair value $354,752 and $379,643)

$

331,738

$

356,000

Fixed maturities available for sale – at fair value (amortized cost $3,569,202 and $3,332,102)

3,690,560

3,448,926

Trading securities – at fair value (cost $44,056 and $39,261)

37,602

37,619

Equity securities – at fair value (cost $204,423 and $196,766)

172,543

168,517

Short-term investments

299,308

180,919

Other invested assets

6,463

8,346

Total Investments

4,538,214

4,200,327

Cash

31,393

21,969

Investment in affiliates

253,027

259,120

Deferred policy acquisition costs

195,481

183,587

Prepaid federal income taxes

280,236

294,136

Provisional losses recoverable

45,548

48,561

Accrued investment income

48,937

47,762

Accounts and notes receivable

108,018

86,850

Property and equipment, at cost (less accumulated depreciation of $24,569 and $21,703)

59,059

55,580

Other assets

228,994

195,513

$

5,788,907

$

5,393,405

Liabilities and Stockholders’ Equity

Unearned premiums

$

643,904

$

618,050

Reserve for losses

632,896

624,577

Short-term and long-term debt

717,237

544,145

Deferred federal income taxes

592,811

570,279

Accounts payable and accrued expenses

358,007

282,919

2,944,855

2,639,970

Common stockholders’ equity

Common stock, par value $.001 per share; 200,000,000 shares authorized;

95,223,318 and 95,134,279 shares issued in 2003 and 2002, respectively

95

95

Treasury stock; 1,940,640 and 1,581,989 shares in 2003 and 2002, respectively

(63,758

)

(51,868

)

Additional paid-in capital

1,240,078

1,238,698

Retained earnings

1,611,036

1,508,138

Accumulated other comprehensive income

56,601

58,372

2,844,052

2,753,435

$

5,788,907

$

5,393,405

Quarter Ended
March 31

(In thousands, except per-share amounts)

2003

2002

Revenues:

Premiums written:

Direct

$

211,677

$

202,864

Assumed

59,689

35,402

Ceded

(19,006

)

(13,628

)

Net premiums written

252,360

224,638

Increase in unearned premiums

(26,231

)

(15,449

)

Premiums earned

226,129

209,189

Net investment income

46,672

42,753

Equity in net income of affiliates

14,888

18,620

Other income

14,557

11,282

Total revenues

302,246

281,844

Expenses:

Provision for losses

67,758

57,427

Policy acquisition costs

31,017

23,447

Other operating expenses

44,441

44,745

Interest expense

8,584

7,154

Total expenses

151,800

132,773

Gains and losses:

Net gains on dispositions of investments

4,025

621

Change in fair value of derivative instruments

(7,898

)

(3,242

)

Net losses

(3,873

)

(2,621

)

Pretax income

146,573

146,450

Provision for income taxes

41,801

42,517

Net income

104,772

103,933

Dividends to preferred stockholder

—  

825

Net income available to common stockholders

$

104,772

$

103,108

Basic net income per share

$

1.12

$

1.09

Diluted net income per share

$

1.11

$

1.08

Average number of common shares outstanding – basic

93,394

94,224

Average number of common and common equivalent shares outstanding - diluted

94,297

95,881

Accumulated Other
Comprehensive
Income (Loss)

(In thousands)

Common
Stock

Treasury
Stock

Additional
Paid-in
Capital

Retained
Earnings

Foreign
Currency
Translation
Adjustment

Unrealized
Holding
Gains
(Losses)

Total

Balance, January 1, 2003

$

95

$

(51,868

)

$

1,238,698

$

1,508,138

$

233

$

58,139

$

2,753,435

Comprehensive income:

Net income

—  

—  

—  

104,772

—  

—  

104,772

Unrealized foreign currency translation adjustment, net of tax of  $119

—  

—  

—  

—  

222

—  

222

Unrealized holding gains arising during period, net of tax of $336

—  

—  

—  

—  

—  

623

Less: Reclassification adjustment for net gains included in net income, net of tax of $1,409

—  

—  

—  

—  

—  

(2,616

)

Net unrealized loss on investments, net of tax benefit of  $1,073

—  

—