Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - RADIAN GROUP INC | d8k.htm |
Exhibit 99.1
| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
Contact:
| Emily Riley – | phone: 215.231.1035 | |
| email: emily.riley@radian.biz |
Radian Reports First Quarter 2011 Financial Results
– Diluted net income per share of $0.77 includes impact of significant fair value gains–
– Mortgage insurance delinquencies declined for fifth consecutive quarter –
PHILADELPHIA, May 5, 2011 — Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended March 31, 2011, of $103.0 million, or $0.77 per diluted share, which included combined gains from the change in fair value of derivatives and other financial instruments of $319.1 million. This compares to a net loss of $310.4 million, or $3.77 per diluted share, for the prior-year quarter. Book value per share at March 31, 2011, was $7.31, compared to $6.46 at December 31, 2010.
“We are pleased with the continued decline in mortgage insurance delinquencies through April and our ability to maintain a strong share of today’s high-quality mortgage insurance business,” said Chief Executive Officer S.A. Ibrahim. “However, our first quarter results clearly reflect the continued impact of a stagnant housing market and the uncertain outcome of our late-stage delinquent loans.”
Ibrahim continued, “We are encouraged by the moderate improvement in our economy early this year, and believe we have the financial flexibility to navigate the uncertainty during 2011 and continue Radian’s position as a strong, viable franchise.”
FIRST QUARTER HIGHLIGHTS
| • | The mortgage insurance provision for losses was $414.0 million in the first quarter of 2011, compared to $529.1 million in the prior-year period. Mortgage insurance loss reserves were approximately $3.5 billion as of March 31, 2011, which was flat to the fourth quarter of 2010, and down slightly from a year ago. First-lien reserves increased to $25,714 per primary default and $25,230 per pool default as of March 31, 2011, compared to $22,378 and $20,305 respectively as of March 31, 2010. |
| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
| • | The total number of primary delinquent loans decreased by 7 percent in the first quarter from the fourth quarter of 2010, which represented the fifth consecutive quarterly decline. |
| • | Radian Guaranty Inc.’s risk-to-capital ratio was 20.3:1 at March 31, 2011, compared to a ratio of 16.8:1 at December 31, 2010, and 16.9:1 at March 31, 2010. Radian Group maintains sufficient liquidity to contribute capital to its mortgage insurance subsidiaries in 2011 if needed. |
| • | New mortgage insurance written (NIW) increased to $2.6 billion compared to $1.9 billion a year ago. NIW continued to consist of loans with excellent risk characteristics, and the company maintained an estimated market share of 21 percent. |
| • | Total mortgage insurance claims paid were $365.2 million, compared to $357.3 million in the first quarter of 2010. The company continues to expect mortgage insurance claims paid of approximately $1.7 billion for the full-year 2011. |
| • | Radian Asset Assurance Inc. continues to serve as an important source of capital support for Radian Guaranty and is expected to continue to provide Radian Guaranty with cash infusions over time. |
| • | As of March 31, 2011, Radian Asset had approximately $1.0 billion in statutory surplus with an additional $1.2 billion in claims-paying resources. |
| • | Radian Asset is expected to pay an ordinary dividend of $53.4 million to Radian Guaranty in June 2011. |
| • | The company’s net par outstanding was reduced by more than $1 billion, which included the termination of a TruPs CDO transaction with $85 million of exposure with no associated payment. |
| • | Excluding gains and losses on derivatives and other financial instruments, the financial guaranty segment was break-even in the first quarter. |
2
| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
RECENT EVENTS
| • | The total number of primary delinquent loans continued to decrease in April. |
| • | On April 1, 2011, the company terminated nearly $45 million of structured pool mortgage insurance exposure that eliminated more than 2,200 loans from its delinquent inventory and reduced pool risk in force by approximately 2 percent. The payment of $39 million to terminate the contracts was slightly less than the company’s loss reserve for the terminated loans. |
| • | Radian continued to reduce its financial guaranty net par outstanding in April by more than $2 billion, which included the early termination of $1.7 billion of corporate CDOs and $231 million of below investment grade reinsurance exposure, which had a slight positive impact on statutory surplus. |
CONFERENCE CALL
Radian will discuss these items in its conference call today, Thursday, May 5, 2011, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at http://www.radian.biz/page?name=Webcasts or at www.radian.biz. The call may also be accessed by dialing 800-230-1951 inside the U.S., or 612-288-0340 for international callers, using passcode 200990 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 200990.
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 at http://www.radian.biz/page?name=QuarterlyResults.
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| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. Additional information may be found at www.radian.biz.
Financial Results and Supplemental Information Contents (Unaudited)
For trend information on all schedules, refer to Radian’s quarterly financial statistics at http://www.radian.biz/page?name=FinancialReportsCorporate.
| Exhibit A: | Condensed Consolidated Statements of Income | |
| Exhibit B: | Condensed Consolidated Balance Sheets | |
| Exhibit C: | Segment Information Quarter Ended March 31, 2011 | |
| Exhibit D: | Segment Information Quarter Ended March 31, 2010 | |
| Exhibit E: | Financial Guaranty Supplemental Information | |
| Exhibit F: | Financial Guaranty Supplemental Information | |
| Exhibit G: | Mortgage Insurance Supplemental Information | |
| New Insurance Written | ||
| Exhibit H: | Mortgage Insurance Supplemental Information | |
| Insurance in Force and Risk in Force | ||
| Exhibit I: | Mortgage Insurance Supplemental Information | |
| Risk in Force by LTV and Policy Year and Other Risk in Force | ||
| Exhibit J: | Mortgage Insurance Supplemental Information | |
| Claims, Reserves and Reserve Per Default | ||
| Exhibit K: | Mortgage Insurance Supplemental Information | |
| Default Statistics | ||
| Exhibit L: | Mortgage Insurance Supplemental Information | |
| Net Premiums Written and Earned, Smart Home, Captives and Persistency | ||
| Exhibit M: | Mortgage Insurance Supplemental Information | |
| Modified Pool |
4
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
| Quarter
Ended March 31 |
||||||||
| (In thousands, except per-share data) | 2011 | 2010 | ||||||
| Revenues: |
||||||||
| Net premiums written - insurance |
$ | 182,749 | $ | 155,501 | ||||
| Net premiums earned - insurance |
$ | 203,023 | $ | 198,268 | ||||
| Net investment income |
42,240 | 45,358 | ||||||
| Net gains on investments |
37,435 | 57,948 | ||||||
| Net impairment losses recognized in earnings |
— | (18 | ) | |||||
| Change in fair value of derivative instruments |
243,892 | (77,954 | ) | |||||
| Net gains (losses) on other financial instruments |
75,251 | (101,564 | ) | |||||
| Other income |
1,448 | 5,775 | ||||||
| Total revenues |
603,289 | 127,813 | ||||||
| Expenses: |
||||||||
| Provision for losses |
427,373 | 543,880 | ||||||
| Change in reserve for premium deficiency |
(1,383 | ) | (1,231 | ) | ||||
| Policy acquisition costs |
14,131 | 14,868 | ||||||
| Other operating expenses |
46,219 | 65,056 | ||||||
| Interest expense |
17,024 | 10,804 | ||||||
| Total expenses |
503,364 | 633,377 | ||||||
| Equity in net income of affiliates |
65 | 8,098 | ||||||
| Pretax income (loss) |
99,990 | (497,466 | ) | |||||
| Income tax benefit |
(3,016 | ) | (187,111 | ) | ||||
| Net income (loss) |
$ | 103,006 | $ | (310,355 | ) | |||
| Diluted net income (loss) per share (1) |
$ | 0.77 | $ | (3.77 | ) | |||
| (1) Weighted average shares outstanding (In thousands) |
| |||||||
| Weighted average common shares outstanding |
132,427 | 82,341 | ||||||
| Increase in weighted average shares-common stock equivalents-diluted basis |
1,276 | — | ||||||
| Weighted average shares outstanding |
133,703 | 82,341 | ||||||
For Trend Information, refer to our Quarterly Financial Statistics on Radian’s (RDN) website.
5
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit B
| (In thousands, except per-share data) | March 31 2011 |
December 31 2010 |
||||||
| Assets: |
||||||||
| Cash and investments |
$ | 6,442,264 | $ | 6,680,630 | ||||
| Deferred policy acquisition costs |
145,721 | 148,326 | ||||||
| Deferred income taxes, net |
27,531 | 27,531 | ||||||
| Reinsurance recoverables |
218,963 | 244,894 | ||||||
| Derivative assets |
24,554 | 26,212 | ||||||
| Other assets |
492,530 | 493,294 | ||||||
| Total assets |
$ | 7,351,563 | $ | 7,620,887 | ||||
| Liabilities and stockholders’ equity: |
||||||||
| Unearned premiums |
$ | 666,019 | $ | 686,364 | ||||
| Reserve for losses and loss adjustment expenses |
3,627,695 | 3,596,735 | ||||||
| Reserve for premium deficiency |
9,353 | 10,736 | ||||||
| Long-term debt |
968,199 | 964,788 | ||||||
| VIE debt |
373,007 | 520,114 | ||||||
| Derivative liabilities |
487,345 | 723,579 | ||||||
| Other liabilities |
247,048 | 258,791 | ||||||
| Total liabilities |
6,378,666 | 6,761,107 | ||||||
| Common stock |
150 | 150 | ||||||
| Additional paid-in capital |
1,071,346 | 1,071,080 | ||||||
| Retained deficit |
(101,920 | ) | (204,926 | ) | ||||
| Accumulated other comprehensive income (loss) |
3,321 | (6,524 | ) | |||||
| Total common stockholders’ equity |
972,897 | 859,780 | ||||||
| Total liabilities and stockholders’ equity |
$ | 7,351,563 | $ | 7,620,887 | ||||
| Book value per share |
$ | 7.31 | $ | 6.46 | ||||
6
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended March 31, 2011
Exhibit C
| (In thousands) |
Mortgage Insurance |
Financial Guaranty |
Total | |||||||||
| Revenues: |
||||||||||||
| Net premiums written - insurance |
$ | 180,846 | $ | 1,903 | $ | 182,749 | ||||||
| Net premiums earned - insurance |
$ | 186,134 | $ | 16,889 | $ | 203,023 | ||||||
| Net investment income |
26,833 | 15,407 | 42,240 | |||||||||
| Net gains on investments |
17,762 | 19,673 | 37,435 | |||||||||
| Change in fair value of derivative instruments |
(394 | ) | 244,286 | 243,892 | ||||||||
| Net gains on other financial instruments |
2,466 | 72,785 | 75,251 | |||||||||
| Other income |
1,400 | 48 | 1,448 | |||||||||
| Total revenues |
234,201 | 369,088 | 603,289 | |||||||||
| Expenses: |
||||||||||||
| Provision for losses |
413,973 | 13,400 | 427,373 | |||||||||
| Change in reserve for premium deficiency |
(1,383 | ) | - | (1,383 | ) | |||||||
| Policy acquisition costs |
10,216 | 3,915 | 14,131 | |||||||||
| Other operating expenses |
34,137 | 12,082 | 46,219 | |||||||||
| Interest expense |
9,789 | 7,235 | 17,024 | |||||||||
| Total expenses |
466,732 | 36,632 | 503,364 | |||||||||
| Equity in net income of affiliates |
— | 65 | 65 | |||||||||
| Pretax (loss) income |
(232,531 | ) | 332,521 | 99,990 | ||||||||
| Income tax provision (benefit) |
3,501 | (6,517 | ) | (3,016 | ) | |||||||
| Net (loss) income |
$ | (236,032 | ) | $ | 339,038 | $ | 103,006 | |||||
| Cash and investments |
$ | 3,977,445 | $ | 2,464,819 | $ | 6,442,264 | ||||||
| Deferred policy acquisition costs |
42,322 | 103,399 | 145,721 | |||||||||
| Total assets |
4,471,425 | 2,880,138 | 7,351,563 | |||||||||
| Unearned premiums |
191,910 | 474,109 | 666,019 | |||||||||
| Reserve for losses and loss adjustment expenses |
3,542,797 | 84,898 | 3,627,695 | |||||||||
| VIE debt |
72,369 | 300,638 | 373,007 | |||||||||
| Derivative liabilities |
— | 487,345 | 487,345 | |||||||||
7
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended March 31, 2010
Exhibit D
| (In thousands) |
Mortgage Insurance |
Financial Guaranty |
Financial Services |
Total | ||||||||||||
| Revenues: |
||||||||||||||||
| Net premiums written - insurance |
$ | 157,032 | $ | (1,531 | ) | $ | — | $ | 155,501 | |||||||
| Net premiums earned - insurance |
$ | 177,339 | $ | 20,929 | $ | — | $ | 198,268 | ||||||||
| Net investment income |
26,359 | 18,999 | — | 45,358 | ||||||||||||
| Net gains on investments |
28,781 | 29,167 | — | 57,948 | ||||||||||||
| Net impairment losses recognized in earnings |
(18 | ) | — | — | (18 | ) | ||||||||||
| Change in fair value of derivative instruments |
277 | (78,231 | ) | — | (77,954 | ) | ||||||||||
| Net losses on other financial instruments |
(30,200 | ) | (71,364 | ) | — | (101,564 | ) | |||||||||
| Other income |
1,799 | 3,913 | 63 | 5,775 | ||||||||||||
| Total revenues |
204,337 | (76,587 | ) | 63 | 127,813 | |||||||||||
| Expenses: |
||||||||||||||||
| Provision for losses |
529,091 | 14,789 | — | 543,880 | ||||||||||||
| Change in reserve for premium deficiency |
(1,231 | ) | — | — | (1,231 | ) | ||||||||||
| Policy acquisition costs |
10,504 | 4,364 | — | 14,868 | ||||||||||||
| Other operating expenses |
46,233 | 18,673 | 150 | 65,056 | ||||||||||||
| Interest expense |
2,120 | 8,684 | — | 10,804 | ||||||||||||
| Total expenses |
586,717 | 46,510 | 150 | 633,377 | ||||||||||||
| Equity in net income of affiliates |
— | 78 | 8,020 | 8,098 | ||||||||||||
| Pretax (loss) income |
(382,380 | ) | (123,019 | ) | 7,933 | (497,466 | ) | |||||||||
| Income tax (benefit) provision |
(145,847 | ) | (44,041 | ) | 2,777 | (187,111 | ) | |||||||||
| Net (loss) income |
$ | (236,533 | ) | $ | (78,978 | ) | $ | 5,156 | $ | (310,355 | ) | |||||
| Cash and investments |
$ | 3,546,637 | $ | 2,523,751 | $ | — | $ | 6,070,388 | ||||||||
| Deferred policy acquisition costs |
36,762 | 120,169 | — | 156,931 | ||||||||||||
| Total assets |
4,919,093 | (1) | 3,161,663 | 127,402 | 8,208,158 | (1) | ||||||||||
| Unearned premiums |
219,753 | 560,808 | — | 780,561 | ||||||||||||
| Reserve for losses and loss adjustment expenses |
3,597,035 | 138,789 | — | 3,735,824 | ||||||||||||
| VIE debt |
268,443 | 327,618 | — | 596,061 | ||||||||||||
| Derivative liabilities |
— | 234,504 | — | 234,504 | ||||||||||||
| (1) | Revised to conform to December 31, 2010 presentation of certain items. |
8
Radian Group Inc.
Financial Guaranty Supplemental Information
Exhibit E
| Quarter Ended | ||||||||
| (In thousands) | March 31 | |||||||
| 2011 | 2010 | |||||||
| Net Premiums Earned: |
||||||||
| Public finance direct |
$ | 7,836 | $ | 12,336 | ||||
| Public finance reinsurance |
7,804 | 6,913 | ||||||
| Structured direct |
441 | 717 | ||||||
| Structured reinsurance |
809 | 915 | ||||||
| Trade credit reinsurance |
(1 | ) | 48 | |||||
| Total Net Premiums Earned - insurance |
$ | 16,889 | $ | 20,929 | ||||
| Refundings included in earned premium |
$ | 4,831 | $ | 9,533 | ||||
| Net premiums earned - derivatives (1) |
$ | 10,883 | $ | 12,023 | ||||
| Claims paid: |
||||||||
| Trade credit reinsurance |
$ | (24 | ) | $ | 1,086 | |||
| Financial Guaranty |
290 | 3,357 | ||||||
| Total |
$ | 266 | (2) | $ | 4,443 | |||
| (1) | Included in change in fair value of derivative instruments. |
| (2) | Includes the recovery of $3.2 million related to previous public finance claim payments. |
9
Radian Group Inc.
Financial Guaranty Supplemental Information
Exhibit F
| March 31 | December 31 | March 31 | ||||||||||
| ($ in thousands, except ratios) | 2011 | 2010 | 2010 | |||||||||
| Statutory Information: |
||||||||||||
| Capital and surplus |
$ | 1,050,208 | $ | 1,049,664 | $ | 1,048,763 | ||||||
| Contingency reserve |
397,930 | 392,589 | 383,435 | |||||||||
| Qualified statutory capital |
1,448,138 | 1,442,253 | 1,432,198 | |||||||||
| Unearned premium reserve |
506,566 | 517,516 | 576,412 | |||||||||
| Loss and loss expense reserve |
81,743 | 70,129 | 109,370 | |||||||||
| Total statutory policyholders’ reserves |
2,036,447 | 2,029,898 | 2,117,980 | |||||||||
| Present value of installment premiums |
193,424 | 202,386 | 243,721 | |||||||||
| Soft capital facilities |
— | — | 150,000 | |||||||||
| Total statutory claims paying resources |
$ | 2,229,871 | $ | 2,232,284 | $ | 2,511,701 | ||||||
| Net debt service outstanding |
$ | 98,976,819 | $ | 101,168,759 | $ | 107,465,994 | ||||||
| Capital leverage ratio (1) |
68 | 70 | 75 | |||||||||
| Claims paying leverage ratio (2) |
44 | 45 | 43 | |||||||||
| Net par outstanding by product: |
||||||||||||
| Public finance direct |
$ | 15,324,283 | $ | 15,727,252 | $ | 17,213,124 | ||||||
| Public finance reinsurance |
21,349,837 | 21,907,290 | 23,542,687 | |||||||||
| Structured direct |
39,078,572 | 39,315,801 | 42,347,436 | |||||||||
| Structured reinsurance |
1,760,573 | 1,805,295 | 2,063,475 | |||||||||
| Total (3) |
$ | 77,513,265 | $ | 78,755,638 | $ | 85,166,722 | ||||||
| (1) | The capital leverage ratio is derived by dividing net debt service outstanding by qualified statutory capital. |
| (2) | The claims paying leverage ratio is derived by dividing net debt service outstanding by total statutory claims paying resources. |
| (3) | Included in public finance net par outstanding is $2.0 billion, $1.9 billion and $2.0 billion at March 31, 2011, December 31, 2010 and March 31, 2010, respectively, for legally defeased bond issues where our financial guaranty policy has not been extinguished but cash or securities have been deposited in an escrow account for the benefit of bondholders. The accounting standard for financial guarantee insurance contracts requires that these contracts continue to be accounted for as outstanding contracts despite the elimination of substantially all risk. |
10
Radian Group Inc.
Mortgage Insurance Supplemental Information
Exhibit G
| Quarter
Ended March 31 |
||||||||||||||||
| ($ in millions) | 2011 | 2010 | ||||||||||||||
| $ | % | $ | % | |||||||||||||
| Primary new insurance written |
||||||||||||||||
| Prime |
$ | 2,583 | 99.9 | % | $ | 1,896 | 99.9 | % | ||||||||
| Alt-A |
1 | 0.0 | % | — | — | |||||||||||
| A minus and below |
2 | 0.1 | % | 1 | 0.1 | % | ||||||||||
| Total |
$ | 2,586 | 100.0 | % | $ | 1,897 | 100.0 | % | ||||||||
| Total primary new insurance written by FICO score |
||||||||||||||||
| >=740 |
$ | 2,081 | 80.5 | % | $ | 1,461 | 77.0 | % | ||||||||
| 680-739 |
502 | 19.4 | % | 435 | 22.9 | % | ||||||||||
| 620-679 |
3 | 0.1 | % | 1 | 0.1 | % | ||||||||||
| Total |
$ | 2,586 | 100.0 | % | $ | 1,897 | 100.0 | % | ||||||||
| Percentage of primary new insurance written |
||||||||||||||||
| Refinances |
51 | % | 35 | % | ||||||||||||
| 95.01% LTV and above |
1.2 | % | 0.5 | % | ||||||||||||
| ARMs |
||||||||||||||||
| Less than 5 years |
0.1 | % | 0.1 | % | ||||||||||||
| 5 years and longer |
4.9 | % | 5.1 | % | ||||||||||||
11
Radian Group Inc.
Mortgage Insurance Supplemental Information
Exhibit H
| ($ in millions) | March 31 2011 |
March 31 2010 |
||||||||||||||
| $ | % | $ | % | |||||||||||||
| Primary insurance in force |
||||||||||||||||
| Flow |
$ | 113,853 | 89.0 | % | $ | 119,943 | 86.1 | % | ||||||||
| Structured |
14,100 | 11.0 | % | 19,419 | 13.9 | % | ||||||||||
| Total Primary |
$ | 127,953 | 100.0 | % | $ | 139,362 | 100.0 | % | ||||||||
| Prime |
$ | 105,645 | 82.6 | % | $ | 109,404 | 78.5 | % | ||||||||
| Alt-A |
14,023 | 10.9 | % | 20,396 | 14.6 | % | ||||||||||
| A minus and below |
8,285 | 6.5 | % | 9,562 | 6.9 | % | ||||||||||
| Total Primary |
$ | 127,953 | 100.0 | % | $ | 139,362 | 100.0 | % | ||||||||
| Primary risk in force |
||||||||||||||||
| Flow |
||||||||||||||||
| Prime |
$ | 23,963 | 85.6 | % | $ | 24,783 | 83.9 | % | ||||||||
| Alt-A |
2,510 | 9.0 | % | 2,996 | 10.1 | % | ||||||||||
| A minus and below |
1,508 | 5.4 | % | 1,763 | 6.0 | % | ||||||||||
| Total Flow |
$ | 27,981 | 100.0 | % | $ | 29,542 | 100.0 | % | ||||||||
| Structured |
||||||||||||||||
| Prime |
$ | 1,753 | 58.3 | % | $ | 1,977 | 55.1 | % | ||||||||
| Alt-A |
692 | 23.0 | % | 981 | 27.4 | % | ||||||||||
| A minus and below |
563 | 18.7 | % | 628 | 17.5 | % | ||||||||||
| Total Structured |
$ | 3,008 | 100.0 | % | $ | 3,586 | 100.0 | % | ||||||||
| Total |
||||||||||||||||
| Prime |
$ | 25,716 | 83.0 | % | $ | 26,760 | 80.8 | % | ||||||||
| Alt-A |
3,202 | 10.3 | % | 3,977 | 12.0 | % | ||||||||||
| A minus and below |
2,071 | 6.7 | % | 2,391 | 7.2 | % | ||||||||||
| Total Primary |
$ | 30,989 | 100.0 | % | $ | 33,128 | 100.0 | % | ||||||||
| Total primary risk in force by FICO score |
||||||||||||||||
| Flow |
||||||||||||||||
| >=740 |
$ | 11,128 | 39.8 | % | $ | 10,561 | 35.7 | % | ||||||||
| 680-739 |
9,611 | 34.3 | % | 10,572 | 35.8 | % | ||||||||||
| 620-679 |
6,131 | 21.9 | % | 7,119 | 24.1 | % | ||||||||||
| <=619 |
1,111 | 4.0 | % | 1,290 | 4.4 | % | ||||||||||
| Total Flow |
$ | 27,981 | 100.0 | % | $ | 29,542 | 100.0 | % | ||||||||
| Structured |
||||||||||||||||
| >=740 |
$ | 803 | 26.7 | % | $ | 982 | 27.4 | % | ||||||||
| 680-739 |
874 | 29.1 | % | 1,091 | 30.4 | % | ||||||||||
| 620-679 |
807 | 26.8 | % | 934 | 26.1 | % | ||||||||||
| <=619 |
524 | 17.4 | % | 579 | 16.1 | % | ||||||||||
| Total Structured |
$ | 3,008 | 100.0 | % | $ | 3,586 | 100.0 | % | ||||||||
| Total |
||||||||||||||||
| >=740 |
$ | 11,931 | 38.5 | % | $ | 11,543 | 34.9 | % | ||||||||
| 680-739 |
10,485 | 33.8 | % | 11,663 | 35.2 | % | ||||||||||
| 620-679 |
6,938 | 22.4 | % | 8,053 | 24.3 | % | ||||||||||
| <=619 |
1,635 | 5.3 | % | 1,869 | 5.6 | % | ||||||||||
| Total Primary |
$ | 30,989 | 100.0 | % | $ | 33,128 | 100.0 | % | ||||||||
| Percentage of primary risk in force |
||||||||||||||||
| Refinances |
32 | % | 31 | % | ||||||||||||
| 95.01% LTV and above |
19 | % | 20 | % | ||||||||||||
| ARMs |
||||||||||||||||
| Less than 5 years |
6 | % | 7 | % | ||||||||||||
| 5 years and longer |
7 | % | 8 | % | ||||||||||||
| Pool risk in force |
||||||||||||||||
| Prime |
$ | 1,753 | 75.3 | % | $ | 1,882 | 72.7 | % | ||||||||
| Alt-A |
139 | 6.0 | % | 192 | 7.4 | % | ||||||||||
| A minus and below |
437 | 18.7 | % | 515 | 19.9 | % | ||||||||||
| Total |
$ | 2,329 | 100.0 | % | $ | 2,589 | 100.0 | % | ||||||||
12
Radian Group Inc.
Mortgage Insurance Supplemental Information
Exhibit I
| ($ in millions) | March 31 2011 |
March 31 2010 |
||||||||||||||
| $ | % | $ | % | |||||||||||||
| Total primary risk in force by LTV |
||||||||||||||||
| 85.00% and below |
$ | 2,819 | 9.1 | % | $ | 3,117 | 9.4 | % | ||||||||
| 85.01% to 90.00% |
11,942 | 38.6 | % | 12,440 | 37.6 | % | ||||||||||
| 90.01% to 95.00% |
10,391 | 33.5 | % | 10,829 | 32.7 | % | ||||||||||
| 95.01% and above |
5,837 | 18.8 | % | 6,742 | 20.3 | % | ||||||||||
| Total |
$ | 30,989 | 100.0 | % | $ | 33,128 | 100.0 | % | ||||||||
| Total primary risk in force by policy year |
||||||||||||||||
| 2005 and prior |
$ | 7,874 | 25.4 | % | $ | 9,325 | 28.1 | % | ||||||||
| 2006 |
3,549 | 11.5 | % | 4,209 | 12.7 | % | ||||||||||
| 2007 |
7,772 | 25.1 | % | 9,160 | 27.7 | % | ||||||||||
| 2008 |
5,740 | 18.4 | % | 6,576 | 19.8 | % | ||||||||||
| 2009 |
3,004 | 9.7 | % | 3,436 | 10.4 | % | ||||||||||
| 2010 |
2,469 | 8.0 | % | 422 | 1.3 | % | ||||||||||
| 2011 |
581 | 1.9 | % | — | — | |||||||||||
| Total |
$ | 30,989 | 100.0 | % | $ | 33,128 | 100.0 | % | ||||||||
| Total pool risk in force by policy year |
||||||||||||||||
| 2005 and prior |
$ | 1,943 | 83.4 | % | $ | 2,096 | 81.0 | % | ||||||||
| 2006 |
165 | 7.1 | % | 227 | 8.7 | % | ||||||||||
| 2007 |
179 | 7.7 | % | 214 | 8.3 | % | ||||||||||
| 2008 |
42 | 1.8 | % | 52 | 2.0 | % | ||||||||||
| Total pool risk in force |
$ | 2,329 | 100.0 | % | $ | 2,589 | 100.0 | % | ||||||||
| Other risk in force |
||||||||||||||||
| Second-lien |
||||||||||||||||
| 1st loss |
$ | 108 | $ | 138 | ||||||||||||
| 2nd loss |
76 | 89 | ||||||||||||||
| NIMs |
69 | 292 | ||||||||||||||
| International |
||||||||||||||||
| 1st loss-Hong Kong primary mortgage insurance |
104 | 222 | ||||||||||||||
| Credit default swaps |
— | 120 | ||||||||||||||
| Total other risk in force |
$ | 357 | $ | 861 | ||||||||||||
| Risk to capital ratio-Radian Guaranty only |
20.3:1 | (1) | 16.9:1 | |||||||||||||
| (1) | Preliminary |
13
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of March 31, 2011
Exhibit J
| ($ in thousands) | Quarter
Ended March 31 |
|||||||
| 2011 | 2010 | |||||||
| Net claims paid (1) |
||||||||
| Prime |
$ | 208,195 | $ | 125,964 | ||||
| Alt-A |
75,130 | 65,031 | ||||||
| A minus and below |
44,585 | 36,384 | ||||||
| Total primary claims paid |
327,910 | 227,379 | ||||||
| Pool |
34,358 | 31,409 | ||||||
| Second-lien and other |
2,883 | 7,979 | ||||||
| Subtotal |
365,151 | 266,767 | ||||||
| Impact of first-lien terminations |
— | 80,110 | ||||||
| Impact of captive terminations |
— | (436 | ) | |||||
| Impact of second-lien terminations |
— | 10,834 | ||||||
| Total net claims paid |
$ | 365,151 | $ | 357,275 | ||||
| Average net claim paid (1) (2) |
||||||||
| Prime |
$ | 47.8 | $ | 45.8 | ||||
| Alt-A |
59.6 | 59.6 | ||||||
| A minus and below |
37.1 | 39.9 | ||||||
| Total average net primary claim paid |
48.1 | 47.8 | ||||||
| Pool |
69.0 | 64.9 | ||||||
| Second-lien and other |
30.7 | 34.8 | ||||||
| Total average net claim paid |
$ | 49.3 | $ | 48.8 | ||||
| Average direct primary claim paid (2) (3) |
$ | 54.3 | $ | 53.9 | ||||
| Average total direct claim paid (2) (3) |
$ | 55.0 | $ | 54.1 | ||||
| Loss ratio - GAAP Basis |
222.4 | % | 298.4 | % | ||||
| Expense ratio - GAAP Basis |
23.8 | % | 32.0 | % | ||||
| 246.2 | % | 330.4 | % | |||||
| Reserve for losses by category |
||||||||
| Prime |
$ | 1,684,039 | $ | 1,347,003 | ||||
| Alt-A |
704,751 | 821,551 | ||||||
| A minus and below |
403,248 | 421,748 | ||||||
| Reinsurance recoverable (4) |
192,258 | 596,325 | ||||||
| Total primary reserves |
2,984,296 | 3,186,627 | ||||||
| Pool |
531,903 | 379,794 | ||||||
| Total 1st lien reserves |
3,516,199 | 3,566,421 | ||||||
| Second-lien |
26,470 | 30,490 | ||||||
| Other |
128 | 124 | ||||||
| Total reserves |
$ | 3,542,797 | $ | 3,597,035 | ||||
| 1st lien reserve per default (5) |
||||||||
| Primary reserve per primary default |
$ | 25,714 | $ | 22,378 | ||||
| Pool reserve per pool default |
25,230 | 20,305 | ||||||
| Total 1st lien reserve per default |
25,640 | 22,138 | ||||||
| (1) | Calculated net of reinsurance recoveries. |
| (2) | Calculated without giving effect to the impact of terminations of captive reinsurance transactions and first- and second-lien transactions. |
| (3) | Before reinsurance recoveries. |
| (4) | Represents ceded losses on captive transactions and Smart Home. |
| (5) | Excludes defaults for which no reserve was established because we do not expect to make a claim payment, primarily due to deductibles. |
14
Radian Group Inc.
Mortgage Insurance Supplemental Information
Exhibit K
| March 31 2011 |
December 31 2010 |
March 31 2010 |
||||||||||
| Default Statistics |
||||||||||||
| Primary insurance: |
||||||||||||
| Flow |
||||||||||||
| Prime |
||||||||||||
| Number of insured loans |
576,388 | 584,213 | 607,552 | |||||||||
| Number of loans in default |
66,615 | 71,196 | 77,423 | |||||||||
| Percentage of loans in default |
11.56 | % | 12.19 | % | 12.74 | % | ||||||
| Alt-A |
||||||||||||
| Number of insured loans |
49,866 | 51,765 | 58,588 | |||||||||
| Number of loans in default |
16,720 | 17,934 | 21,533 | |||||||||
| Percentage of loans in default |
33.53 | % | 34.65 | % | 36.75 | % | ||||||
| A minus and below |
||||||||||||
| Number of insured loans |
45,522 | 47,044 | 52,547 | |||||||||
| Number of loans in default |
14,713 | 16,401 | 19,264 | |||||||||
| Percentage of loans in default |
32.32 | % | 34.86 | % | 36.66 | % | ||||||
| Total Flow |
||||||||||||
| Number of insured loans |
671,776 | 683,022 | 718,687 | |||||||||
| Number of loans in default |
98,048 | 105,531 | 118,220 | |||||||||
| Percentage of loans in default |
14.60 | % | 15.45 | % | 16.45 | % | ||||||
| Structured |
||||||||||||
| Prime |
||||||||||||
| Number of insured loans |
44,700 | 42,131 | 46,234 | |||||||||
| Number of loans in default |
6,519 | 6,735 | 6,565 | |||||||||
| Percentage of loans in default |
14.58 | % | 15.99 | % | 14.20 | % | ||||||
| Alt-A |
||||||||||||
| Number of insured loans |
20,315 | 20,234 | 32,960 | |||||||||
| Number of loans in default |
6,380 | 6,635 | 11,949 | |||||||||
| Percentage of loans in default |
31.41 | % | 32.79 | % | 36.25 | % | ||||||
| A minus and below |
||||||||||||
| Number of insured loans |
16,589 | 16,716 | 18,161 | |||||||||
| Number of loans in default |
5,949 | 6,569 | 7,180 | |||||||||
| Percentage of loans in default |
35.86 | % | 39.30 | % | 39.54 | % | ||||||
| Total Structured |
||||||||||||
| Number of insured loans |
81,604 | 79,081 | 97,355 | |||||||||
| Number of loans in default |
18,848 | 19,939 | 25,694 | |||||||||
| Percentage of loans in default |
23.10 | % | 25.21 | % | 26.39 | % | ||||||
| Total Primary Insurance |
||||||||||||
| Prime |
||||||||||||
| Number of insured loans |
621,088 | 626,344 | 653,786 | |||||||||
| Number of loans in default |
73,134 | 77,931 | 83,988 | |||||||||
| Percentage of loans in default |
11.78 | % | 12.44 | % | 12.85 | % | ||||||
| Alt-A |
||||||||||||
| Number of insured loans |
70,181 | 71,999 | 91,548 | |||||||||
| Number of loans in default |
23,100 | 24,569 | 33,482 | |||||||||
| Percentage of loans in default |
32.91 | % | 34.12 | % | 36.57 | % | ||||||
| A minus and below |
||||||||||||
| Number of insured loans |
62,111 | 63,760 | 70,708 | |||||||||
| Number of loans in default |
20,662 | 22,970 | 26,444 | |||||||||
| Percentage of loans in default |
33.27 | % | 36.03 | % | 37.40 | % | ||||||
| Total Primary Insurance |
||||||||||||
| Number of insured loans |
753,380 | 762,103 | 816,042 | |||||||||
| Number of loans in default (1) |
116,896 | 125,470 | 143,914 | |||||||||
| Percentage of loans in default |
15.52 | % | 16.46 | % | 17.64 | % | ||||||
| Pool insurance: |
||||||||||||
| Number of loans in default (2) |
29,044 | 32,456 | 33,934 | |||||||||
| (1) | Includes an estimated 841, 525 and 1,517 defaults at March 31, 2011, December 31, 2010 and March 31, 2010, respectively, for which no reserve was established because we do not expect to make a claim payment, primarily due to deductibles. |
| (2) | Includes an estimated 7,962, 9,712 and 15,230 defaults at March 31, 2011, December 31, 2010 and March 31, 2010, respectively, for which no reserve was established because we do not expect to make a claim payment, primarily due to deductibles. |
15
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of March 31, 2011
Exhibit L
| Quarter Ended March 31 |
||||||||
| 2011 | 2010 | |||||||
| Net Premiums Written (In thousands) |
||||||||
| Primary and Pool Insurance |
$ | 180,257 | $ | 157,413 | ||||
| Second-lien |
620 | (455 | ) (1) | |||||
| International |
(31 | ) | 74 | |||||
| Total Net Premiums Written - Insurance |
$ | 180,846 | $ | 157,032 | ||||
| Net Premiums Earned (In thousands) |
||||||||
| Primary and Pool Insurance |
$ | 183,469 | $ | 174,112 | ||||
| Second-lien |
620 | 511 | ||||||
| International |
2,045 | 2,716 | ||||||
| Total Net Premiums Earned - Insurance |
$ | 186,134 | $ | 177,339 | ||||
| SMART HOME (In millions) |
||||||||
| Ceded Premiums Written and Earned |
$ | 2.2 | $ | 2.3 | ||||
| Net premiums earned - derivatives (In thousands) (2) |
$ | — | $ | 139 | ||||
| 1st Lien Captives |
||||||||
| Premiums ceded to captives (In thousands) |
$ | 7,587 | $ | 25,474 | ||||
| % of total premiums |
3.9 | % | 12.6 | % | ||||
| NIW subject to captives (In thousands) |
$ | — | $ | 333 | ||||
| % of primary NIW |
— | < 1 | % | |||||
| IIF included in captives (3) |
10.2 | % | 29.5 | % | ||||
| RIF included in captives (3) |
10.1 | % | 31.1 | % | ||||
| Persistency (twelve months ended March 31) |
83.0 | % | 81.0 | % | ||||
| March 31 | March 31 | |||||||
| 2011 | 2010 | |||||||
| SMART HOME |
||||||||
| % of Primary RIF included in Smart Home Transactions (3) |
2.9 | % | 3.3 | % | ||||
| (1) | Reflects the impact of second-lien terminations. |
| (2) | Included in change in fair value of derivative instruments. |
| (3) | 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. |
16
Radian Group Inc.
Mortgage Insurance Supplemental Information
Modified Pool (1)
Exhibit M
| March 31 | March 31 | |||||||||||||||
| ($ in millions) | 2011 | 2010 | ||||||||||||||
| $ | % | $ | % | |||||||||||||
| Modified pool risk in force by policy year |
||||||||||||||||
| 2005 and prior |
$ | 203 | 68.1 | % | $ | 201 | 42.6 | % | ||||||||
| 2006 |
37 | 12.4 | % | 49 | 10.4 | % | ||||||||||
| 2007 |
51 | 17.1 | % | 214 | 45.3 | % | ||||||||||
| 2008 |
7 | 2.4 | % | 8 | 1.7 | % | ||||||||||
| Total |
$ | 298 | 100.0 | % | $ | 472 | 100.0 | % | ||||||||
| Modified pool risk in force by product |
||||||||||||||||
| Prime |
$ | 87 | 29.2 | % | $ | 76 | 16.1 | % | ||||||||
| Alt-A |
192 | 64.4 | % | 377 | 79.9 | % | ||||||||||
| A minus and below |
19 | 6.4 | % | 19 | 4.0 | % | ||||||||||
| Total |
$ | 298 | 100.0 | % | $ | 472 | 100.0 | % | ||||||||
| Modified pool insurance in force by product |
||||||||||||||||
| Prime |
$ | 1,065 | 31.5 | % | $ | 705 | 10.8 | % | ||||||||
| Alt-A |
2,163 | 63.9 | % | 5,681 | 86.7 | % | ||||||||||
| A minus and below |
157 | 4.6 | % | 164 | 2.5 | % | ||||||||||
| Total |
$ | 3,385 | 100.0 | % | $ | 6,550 | 100.0 | % | ||||||||
| Reserve for losses - modified pool (in thousands) |
$ | 79,571 | $ | 245,522 | ||||||||||||
| Default Statistics: |
||||||||||||||||
| Modified pool |
||||||||||||||||
| Number of insured loans |
19,424 | 26,122 | ||||||||||||||
| Number of loans in default |
3,963 | 8,111 | ||||||||||||||
| Percentage of loans in default |
20.40 | % | 31.05 | % | ||||||||||||
| (1) | Included in primary insurance amounts. |
17
| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
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 information. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties, including the following:
| • | changes in general financial and political conditions, such as the failure of the U.S. economy to fully recover from the most recent recession or the U.S. economy reentering a recessionary period, the lack of meaningful liquidity in the capital markets or in the credit markets, a prolonged period of high unemployment rates and limited home price appreciation or further depreciation (which has resulted in some borrowers voluntarily defaulting on their mortgages when their mortgage balances exceed the value of their homes), changes or volatility in interest rates or consumer confidence, changes in credit spreads, changes in the way customers, investors or regulators perceive the strength of private mortgage insurers or financial guaranty providers, or investor concern over the credit quality and specific risks faced by the particular businesses, municipalities or pools of assets covered by our insurance; |
| • | catastrophic events or further economic changes in geographic regions where our mortgage insurance or financial guaranty insurance exposure is more concentrated; |
| • | our ability to successfully execute upon our capital plan for our mortgage insurance business (which depends, in part, on the performance of our financial guaranty portfolio), and if necessary, to obtain additional capital to support our mortgage insurance business and the long-term liquidity needs of our holding company; |
| • | a further reduction in, or prolonged period of depressed levels of, home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards, the risk retention requirements established under the Dodd-Frank Wall Street |
18
| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
| Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the decrease in housing demand throughout the U.S.; |
| • | our ability to maintain adequate risk-to-capital ratios and surplus requirements in our mortgage insurance business in light of ongoing losses in this business and further deterioration in our financial guaranty portfolio which, in the absence of new capital, could depend on our ability to execute strategies for which regulatory and other approvals are required and may not be obtained; |
| • | our ability to continue to effectively mitigate our mortgage insurance and financial guaranty losses; |
| • | reduced opportunities for loss mitigation in markets where housing values do not appreciate or continue to decline; |
| • | a more rapid than expected decrease in the level of insurance rescissions and claim denials from the current elevated levels (including as a result of successful challenges to previously rescinded policies or claim denials), which rescissions and denials have materially mitigated our paid losses and resulted in a significant reduction in our loss reserves; |
| • | the negative impact our insurance rescissions and claim denials may have on our relationships with customers and potential customers, including the potential loss of business and the heightened risk of disputes and litigation; the need, in the event that we are unsuccessful in defending our rescissions or denials, to reestablish loss reserves for, and reassume risk on, rescinded loans and pay additional claims; |
| • | the concentration of our mortgage insurance business among a relatively small number of large customers; |
| • | the disruption in the servicing of mortgages covered by our insurance policies; |
| • | the aging of our mortgage insurance portfolio and changes in severity or frequency of losses associated with certain of our products that are riskier than traditional mortgage insurance or financial guaranty insurance policies; |
| • | the performance of our insured portfolio of higher risk loans, such as Alternative-A and subprime loans, and of adjustable rate products, such as adjustable rate mortgages and interest-only mortgages; |
| • | a decrease in persistency rates of our mortgage insurance policies; |
| • | an increase in the risk profile of our existing mortgage insurance portfolio due to the availability of mortgage refinancing to only the most qualified borrowers in the current mortgage and housing market; |
| • | further downgrades or threatened downgrades of, or other ratings actions with respect to, our credit ratings or the ratings assigned by the major rating agencies to any of our rated |
19
| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
| insurance subsidiaries at any time (in particular, the credit rating of Radian Group Inc. and the financial strength rating assigned to Radian Guaranty Inc.); |
| • | heightened competition for our mortgage insurance business from others such as the Federal Housing Administration (the “FHA”), the Veterans’ Administration and private mortgage insurers (in particular, the FHA and those private mortgage insurers that have been assigned higher ratings from the major rating agencies or new entrants to the industry that are not burdened by legacy obligations); |
| • | changes in the charters or business practices of, or rules or regulations applicable to, Federal National Mortgage Association (“Fannie Mae”) and Freddie Mac, the largest purchasers of mortgage loans that we insure, and our ability to remain an eligible provider to both Freddie Mac and Fannie Mae; |
| • | 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 scope; |
| • | the effect of the Dodd-Frank Act on the financial services industry in general, and on our mortgage insurance and financial guaranty businesses in particular, including whether and to what extent loans with mortgage insurance are considered “qualified residential mortgages” for purposes of the Dodd-Frank Act securitization provisions or “qualified mortgages” for purposes of the ability to repay provisions and potential obligations to post collateral on our existing insured derivatives portfolio; |
| • | the application of existing federal or state consumer, lending, insurance, tax, securities and other applicable laws and regulations, or changes in these laws and regulations or the way they are interpreted; including, without limitation: (i) the outcome of existing, or the possibility of additional, lawsuits or investigations, and (ii) legislative and regulatory changes (a) affecting demand for private mortgage insurance, (b) limiting or restricting our use of (or increasing requirements for) additional capital and the products we may offer, or (c) affecting the form in which we execute credit protection or affecting our existing financial guaranty portfolio; |
| • | 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 premium deficiencies for our mortgage insurance business, or to estimate accurately the fair value amounts of derivative instruments in our mortgage insurance and financial guaranty businesses in determining gains and losses on these contracts; |
20
| Radian Group Inc. |
|
|
1601 Market Street Philadelphia, Pennsylvania 19103-2337
800.523.1988 215.231.1000 |
|
| • | the ability of our primary insurance customers in our financial guaranty reinsurance business to provide appropriate surveillance and to mitigate losses adequately with respect to our assumed insurance portfolio; |
| • | volatility in our earnings caused by changes in the fair value of our derivative instruments and our need to reevaluate the possibility of a premium deficiency in our mortgage insurance business on a quarterly basis; |
| • | our ability to realize the tax benefits associated with our deferred tax assets, which will depend on our ability to generate sufficient sustainable taxable income in future periods; |
| • | our ability to obtain the necessary regulatory approval to consummate our purchase of Municipal and Infrastructure Assurance Corporation (the “FG Insurance Shell”) and to successfully develop and implement a strategy to utilize the FG Insurance Shell in the public finance financial guaranty market, which strategy may depend on, among other items, our ability to obtain further necessary regulatory or other approvals, to attract third-party capital and to obtain ratings sufficient to support such a strategy; |
| • | changes in accounting guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board; 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, 2010. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we filed this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this press release to reflect new information or future events or for any other reason.
###
21