8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) April 21, 2004

Radian Group Inc.

(Exact name of registrant as specified in its Charter)

Delaware	1-11356	23-2691170
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(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)

(Former name or former address, if changed since last report)

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On April 21, 2004, Radian Group Inc. (the “Company”) issued a press release announcing its results for the quarter ended March 31, 2004. The press release is furnished herewith as Exhibit 99.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RADIAN GROUP INC.
Date: April 21, 2004	By:	/s/ C. Robert Quint
		C. Robert Quint
		Chief Financial Officer

EX-99

Exhibit 99

Contact:
For investors	–	Mona Zeehandelaar – phone: 215 231.1674
		email:mona.zeehandelaar@radian.biz
For the media	–	Elizabeth Emmons – phone: 215 231.1334
		email: elizabeth.emmons@radian.biz

Radian Reports First Quarter 2004 Net Income of $120 Million

PHILADELPHIA, Pa., April 21, 2004 — Radian Group Inc. (NYSE: RDN) today reported its results for the quarter ended March 31, 2004. The key financial highlights of the quarter are shown in the following table:

Key Financial Highlights (dollars in millions, except per share data)

	Quarter Ended March 31, 2004		Quarter Ended March 31, 2003		Percent Change
Net income	$	120.0	$	104.8	15	%
Net income per share	$	1.26	$	1.11	14	%
Premiums written	$	181.4	$	252.4	(28	%)
Premiums written*	$	277.8	$	252.4	10	%
Premiums earned	$	243.4	$	226.1	8	%
Premiums earned*	$	268.3	$	226.1	19	%
Revenues	$	334.0	$	302.2	11	%
Book value per share (as of 3/31)	$	35.63	$	30.49	17	%

*These amounts exclude the impact of one of the primary insurer’s recapture of business from Radian Reinsurance, which is described in Radian’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 11, 2004. A reconciliation and additional information about the impact of this recapture can be found in Schedules 1 and 2 to this release.

Securities gains for the first quarter of 2004 were $31.3 million or $0.21 per share, compared to a loss of $4.0 million or $0.03 per share a year ago. Mortgage insurance accounted for 67%, or $80.5 million, of net income in the first quarter of 2004, while financial guaranty business represented 19%, or $22.6 million, and financial services 14%, or $16.9 million.

“This quarter’s solid results demonstrate the strength of Radian’s diversified platform, which enabled us to deliver another strong quarter despite the clawback of a portion of our financial guaranty reinsurance portfolio,” stated Radian’s Chairman and CEO Frank P. Filipps. “Our mortgage insurance business continues to produce strong returns and we are encouraged by signs of improvement in credit and persistency.”

Financial Guaranty

The decline in financial guaranty net premiums written and net premiums earned from a year ago is primarily the result of one of the primary insurers exercising its right to recapture financial guaranty reinsurance ceded to Radian Reinsurance Inc. A reconciliation and additional details of the impact of this recapture can be found in Schedules 1 and 2 to this release.

Mortgage Insurance

New primary mortgage insurance written in the quarter was $9.7 billion and consisted of $8.9 billion of flow business and $0.8 billion of structured business. Premiums earned increased 23% from a year ago to $207.1 million. Primary mortgage insurance-in-force was $118.0 billion at March 31, 2004, compared to $119.9 billion at December 31, 2003, and $119.0 billion a year ago. The default rate on primary loans was 4.47%, compared to 4.72% at December 31, 2003, and 3.85% a year ago. Persistency for the quarter was 51.5%.

Financial Services

Net income per share from Radian’s financial services businesses for the first quarter was $0.24 per share compared to $0.09 per share for the same period last year.

Radian will hold a conference call to discuss the company’s first quarter results on Thursday, April 22, 2004, at 9:00 a.m. Eastern time. This call will be broadcast live over the Internet at www.ir.radiangroupinc.com/phoenix.zhtml?c=112301&p=irol-audioarchives. A replay of the webcast will be available at this site approximately two hours after the live broadcast ends and a transcript of the call will be available at this site approximately 24 hours after the call ends, both 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 “Investor Information – News and Events – Webcasts and Presentations” or can be accessed by clicking on www.ir.radiangroupinc.com/phoenix.zhtml?c=112301&p=irol-audioarchives.

Radian Group Inc. is a leading credit enhancement provider to the global financial and capital markets, headquartered in Philadelphia. Radian’s subsidiaries provide products and services through three business lines: financial guaranty, mortgage insurance and other financial services. Additional information may be found at www.radiangroupinc.com.

The following is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

The statements contained in this release that are not historical facts are forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties, including but not limited to, the following risks: general economic developments such as extended national or regional economic recessions (or expansions), changes in housing

values, interest rate changes or volatility; changes in investor perception of the strength of private mortgage insurers or financial guaranty providers, and risks faced by the businesses, municipalities or pools of assets covered by Radian’s insurance; the loss of significant customers with whom Radian has a concentration of its insurance in force; rising delinquencies in mortgage loans insured by Radian resulting from increased consolidation of mortgage lenders and servicers; the potential for more severe or more frequent losses associated with certain Radian products that are riskier than traditional mortgage insurance and municipal guaranty insurance policies; material changes in persistency rates of Radian’s mortgage insurance policies; downgrades of the insurance financial-strength ratings assigned by the major ratings agencies to Radian’s operating subsidiaries; intense competition from others and from alternative products to private mortgage insurance and financial guaranty insurance; changes in the business practices of Fannie Mae and Freddie Mac; legislative and regulatory changes affecting demand for private mortgage insurance and financial guaranty insurance; changes in claims against mortgage insurance products resulting from the aging of Radian’s mortgage insurance policies; changes in Radian’s ability to maintain sufficient reinsurance capacity in an increasingly concentrated reinsurance market; and vulnerability to the performance of Radian’s strategic investments. Investors are also directed to other risks discussed in documents filed by Radian with the Securities and Exchange Commission.

Financial Results and Supplemental Information Contents

Condensed Consolidated Statements of Income

Condensed Consolidated Balance Sheets

Segment Information Quarter Ended March 31, 2004

Segment Information Quarter Ended March 31, 2003

Financial Guaranty Insurance Supplemental Information

Mortgage Insurance Supplemental Information: New Insurance Written, Risk Written and Captives

Mortgage Insurance Supplemental Information: Insurance in Force and Risk in Force

Mortgage Insurance Supplemental Information: Risk in Force by LTV and Policy Year

Mortgage Insurance Supplemental Information: Claims and Defaults

Mortgage Insurance Supplemental Information: ALT A

Supplemental Schedule 1: Reinsurance Clawback Impact on Radian Group

Supplemental Schedule 2: Reinsurance Clawback Impact on Financial Guaranty

Radian Group Inc. and Subsidiaries

Condensed Consolidated Statements of Income

	Quarter Ended March 31
	2004		2003
(Thousands of dollars, except per-share data)
Revenues:
Net premiums written	$	181,428	$	252,360
Premiums earned		243,420		226,129
Net investment income		49,705		46,672
Equity in net income of affiliates		32,482		14,888
Other income		8,400		14,557
Total revenues		334,007		302,246
Expenses:
Provision for losses		114,767		67,758
Policy acquisition costs		22,283		31,017
Other operating expenses		53,159		44,441
Interest expense		9,654		8,584
Total expenses		199,863		151,800
Gains and losses:
Gain/loss on sales of investments		26,676		4,025
Change in fair value of derivative instruments		4,647		(7,898	)
Total gains and losses		31,323		(3,873	)
Pretax income		165,467		146,573
Provision for income taxes		45,457		41,801
Net income	$	120,010	$	104,772
Net income available to common stockholders	$	120,010	$	104,772
Net income per share	$	1.26	$	1.11
Weighted average shares outstanding (in thousands)		95,078		94,297

Radian Group Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Thousands of dollars, except per-share data)	March 31 2004		December 31 2003		March 31 2003
Assets:
Cash and investments	$	5,198,066	$	5,074,531	$	4,569,607
Investments in affiliates		318,398		328,478		253,027
Deferred policy acquisition costs		201,091		218,779		195,481
Prepaid federal income taxes		358,340		358,840		280,236
Other assets		465,198		465,139		490,556
Total assets	$	6,541,093	$	6,445,767	$	5,788,907
Liabilities and stockholders’ equity:
Unearned premiums	$	656,309	$	718,649	$	643,904
Reserve for losses and loss adjustment expenses		786,115		790,380		632,896
Long-term debt		717,461		717,404		717,237
Current income taxes		41,432		24,092		—
Deferred federal income taxes		723,885		688,262		592,811
Other liabilities		272,406		281,136		358,007
Total liabilities		3,197,608		3,219,923		2,944,855
Common stock		96		96		95
Additional paid-in capital		1,187,150		1,199,056		1,176,320
Retained earnings		2,004,673		1,886,548		1,611,036
Accumulated other comprehensive income		151,566		140,144		56,601
Total common stockholders’ equity		3,343,485		3,225,844		2,844,052
Total liabilities and stockholders’ equity	$	6,541,093	$	6,445,767	$	5,788,907
Book value per share	$	35.63	$	34.31	$	30.49

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended March 31, 2004

(Thousands of dollars)	Mortgage Insurance		Financial Services		Financial Guaranty			Total
Revenues:
Net premiums written	$	205,669	$	—	$	(24,241	)	$	181,428
Premiums earned	$	207,116	$	—	$	36,304		$	243,420
Net investment income		28,513		48		21,144			49,705
Equity in net income (loss) of affiliates		—		33,402		(920	)		32,482
Other income		5,486		2,874		40			8,400
Total revenues		241,115		36,324		56,568			334,007
Expenses:
Provision for losses		98,123		—		16,644			114,767
Policy acquisition costs		17,142		—		5,141			22,283
Other operating expenses		37,746		3,979		11,434			53,159
Interest expense		5,503		724		3,427			9,654
Total expenses		158,514		4,703		36,646			199,863
Gains and losses:
Gain/loss on sales of investments		24,122		3,173		(619	)		26,676
Change in fair value of derivative instruments		4,426		49		172			4,647
Total gains and losses		28,548		3,222		(447	)		31,323
Pretax income		111,149		34,843		19,475			165,467
Income tax provision		30,647		12,195		2,615			45,457
Net income	$	80,502	$	22,648	$	16,860		$	120,010
Assets	$	3,929,574	$	304,921	$	2,306,598		$	6,541,093
Deferred policy acquisition costs		79,092		—		121,999			201,091
Reserve for losses and loss adjustment expenses		521,102		—		265,013			786,115
Unearned premiums		92,228		—		564,081			656,309
Equity		1,905,233		250,212		1,188,040			3,343,485

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended March 31, 2003

(Thousands of dollars)	Mortgage Insurance			Financial Services		Financial Guaranty			Total
Revenues:
Net premiums written	$	164,772		$	—	$	87,588		$	252,360
Premiums earned	$	168,032		$	—	$	58,097		$	226,129
Net investment income		27,829			34		18,809			46,672
Equity in net income (loss) of affiliates		—			14,944		(56	)		14,888
Other income		6,599			6,361		1,597			14,557
Total revenues		202,460			21,339		78,447			302,246
Expenses:
Provision for losses		54,167			—		13,591			67,758
Policy acquisition costs		17,479			—		13,538			31,017
Other operating expenses		29,408			7,161		7,872			44,441
Interest expense		5,100			612		2,872			8,584
Total expenses		106,154			7,773		37,873			151,800
Gains and losses:
Gain/loss on sales of investments		390			119		3,516			4,025
Change in fair value of derivative instruments		(3,584	)		—		(4,314	)		(7,898	)
Total gains and losses		(3,194	)		119		(798	)		(3,873	)
Pretax income		93,112			13,685		39,776			146,573
Income tax provision		25,454			5,474		10,873			41,801
Net income	$	67,658		$	8,211	$	28,903		$	104,772
Assets	$	3,590,043		$	253,591	$	1,945,273		$	5,788,907
Deferred policy acquisition costs		74,931			—		120,550			195,481
Reserve for losses and loss adjustment expenses		484,069			—		148,827			632,896
Unearned premiums		108,592			—		535,312			643,904
Equity		1,694,518			201,884		947,650			2,844,052

Radian Group Inc.

Financial Guaranty Insurance Supplemental Information

For the Quarter Ended and as of March 31,2004

	Quarter Ended March 31
(Thousands of dollars, except ratios)	2004		2003
Net Premiums Written:
Public direct	8,187		10,268
Public reinsurance	20,468		23,531
Structured direct	17,747		17,810
Structured reinsurance	8,812		14,368
Trade credit	16,962		21,611
	72,176		87,588
Impact of recapture (1)	(96,417	)	—
Net Premiums Written	(24,241	)	87,588
Net Premiums Earned:
Public direct	5,799		3,887
Public reinsurance	11,202		11,078
Structured direct	18,446		18,412
Structured reinsurance	9,732		12,283
Trade credit	16,017		12,437
	61,196		58,097
Impact of recapture (1)	(24,892	)	—
Net Premiums Earned	36,304		58,097
Claims paid:
Trade credit	6,628		4,224
Financial guaranty	2,637		404
Conseco	7,405		—
Total	16,670		4,628
Impact of recapture (1)	11,488		—
Claims paid	28,158		4,628
Incurred losses:
Trade credit	8,202		7,388
Financial guaranty	8,442		6,203
Conseco	—		—		1
Total	16,644		13,591
Loss ratio—GAAP Basis	45.8	%	23.4	%
Expense ratio—GAAP Basis	45.7	%	36.9	%
	91.5	%	60.3	%
Refundings included in earned premium	1,906		1,609
	March 31 2004		December 31 2003		March 31 2003
Capital and surplus	956,805		826,550		638,619
Contingency reserve	237,737		321,312		299,373
Qualified statutory capital	1,194,542		1,147,862		937,992
Unearned premium reserve	653,274		735,156		637,106
Loss and loss expense reserve	195,579		95,130		89,057
Total policyholders’ reserves	2,043,395		1,978,148		1,664,155
Present value of installment premiums	328,600		444,368		433,751
Reinsurance and soft capital facilities	245,000		275,000		125,000
Total claims paying resources	2,616,995		2,697,516		2,222,906
Net debt service outstanding	94,434,209		117,900,058		108,985,797
Capital leverage ratio (2)	79		103		116
Claims paying leverage ratio (3)	36		44		49

(1) Amounts recorded related to the recapture of previously ceded business by one of the primary insurers

(2) Net debt service outstanding divided by qualified statutory capital

(3) Net debt service outstanding divided by total claims paying resources

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of March 31, 2004

	Quarter Ended March 31
(Thousands of dollars, except ratios)	2004		%		2003		%
Primary New Insurance Written ($ millions)
Flow	8,842		91.5	%	10,589		49.8	%
Structured	824		8.5	%	10,687		50.2	%
Total	9,666		100.0	%	21,276		100.0	%
Prime	6,271		64.9	%	13,500		63.4	%
Alt-A	2,487		25.7	%	5,104		24.0	%
A minus and below	908		9.4	%	2,672		12.6	%
Total	9,666		100.0	%	21,276		100.0	%
Total Primary New Insurance Written by FICO Score ($ millions)
<=619	705		7.3	%	2,413		11.3	%
620-679	3,209		33.2	%	5,523		26.0	%
680-739	3,445		35.6	%	7,081		33.3	%
>=740	2,066		21.4	%	6,175		29.0	%
Unreported	241		2.5	%	84		0.4	%
Total	9,666		100.0	%	21,276		100.0	%
Percentage of primary new insurance written
Monthlies	94	%			94	%
Refinances	43	%			55	%
95.01% LTV and above	12	%			14	%
ARMs	34	%			49	%
Primary risk written ($ millions)
Flow	2,313		89.5	%	2,542		47.2	%
Structured	272		10.5	%	2,842		52.8	%
Total	2,585		100.0	%	5,384		100.0	%
Pool risk written ($ millions)	86				63
Other risk written ($ millions)
Seconds	52
NIMS and other	168
Total other risk written	220
Loss ratio—GAAP Basis	47.4	%			32.2	%
Expense ratio—GAAP Basis	26.5	%			27.9	%
	73.9	%			60.1	%
Captives
Premiums ceded to captives ($ millions)	19.2				18.5
% of total premiums	9.8	%			10.8	%
NIW subject to captives ($ millions)	4,349				5,297
% of primary NIW	45.0	%			24.9	%
IIF subject to captives	30.3	%			28.2	%
RIF subject to captives	32.2	%			30.7	%
Persistency (twelve months ended March 31)	51.5	%			56.5	%

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of March 31, 2004

	March 31				December 31			March 31
(Thousands of dollars, except ratios)	2004		%		2003	%		2003	%
Primary insurance in force ($ millions)
Flow	91,403		77.4	%	91,709	76.5	%	91,430	76.8	%
Structured	26,618		22.6	%	28,178	23.5	%	27,606	23.2	%
Total	118,021		100.0	%	119,887	100.0	%	119,036	100.0	%
Prime	81,168		68.8	%	82,096	68.5	%	86,793	72.9	%
Alt-A	23,589		20.0	%	23,710	19.8	%	18,901	15.9	%
A minus and below	13,264		11.2	%	14,081	11.7	%	13,342	11.2	%
Total	118,021		100.0	%	119,887	100.0	%	119,036	100.0	%
Primary risk in force ($ millions)
Flow	22,305		82.9	%	22,261	82.1	%
Structured	4,601		17.1	%	4,845	17.9	%
Total	26,906		100.0	%	27,106	100.0	%
Prime	18,332		68.1	%	18,449	68.0	%	19,922	73.0	%
Alt-A	5,340		19.9	%	5,253	19.4	%	4,121	15.1	%
A minus and below	3,234		12.0	%	3,404	12.6	%	3,259	11.9	%
Total	26,906		100.0	%	27,106	100.0	%	27,302	100.0	%
Total Primary Risk in Force by FICO Score ($ millions)
<=619	3,267		12.1	%	3,508	12.9	%	3,632	13.3	%
620-679	8,735		32.5	%	8,773	32.4	%	8,545	31.3	%
680-739	8,913		33.1	%	8,847	32.7	%	8,918	32.6	%
>=740	5,740		21.4	%	5,728	21.1	%	5,916	21.7	%
Unreported	251		0.9	%	250	0.9	%	291	1.1	%
Total	26,906		100.0	%	27,106	100.0	%	27,302	100.0	%
Percentage of primary risk in force
Monthlies	91	%
Refinances	39	%
95.01% LTV and above	12	%
ARMs	27	%

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of March 31, 2004

	March 31			December 31			March 31
(Thousands of dollars, except ratios)	2004	%		2003	%		2003	%
Total Primary Risk in Force by LTV ($ millions)
95.01% and above	3,239	12.0	%	3,067	11.3	%	2,364	8.7	%
90.01% to 95.00%	10,119	37.6	%	10,184	37.6	%	10,676	39.1	%
85.01% to 90.00%	9,942	37.0	%	10,024	37.0	%	10,275	37.6	%
85.00% and below	3,606	13.4	%	3,831	14.1	%	3,987	14.6	%
Total	26,906	100.0	%	27,106	100.0	%	27,302	100.0	%
Total Primary Risk in Force by Policy Year ($ millions)
2001 and prior	6,614	24.6	%	7,837	28.9	%	14,014	51.3	%
2002	5,467	20.3	%	6,198	22.9	%	9,762	35.8	%
2003	12,291	45.7	%	13,071	48.2	%	3,526	12.9	%
2004	2,534	9.4	%	—	0.0	%	—	0.0	%
Total	26,906	100.0	%	27,106	100.0	%	27,302	100.0	%
Pool risk in force ($ millions)	2,430			2,415			1,860
GSE Pool risk in force ($ millions)	1,423			1,393			1,215
Other risk in force ($ millions)
Seconds	731			725			413
NIMS and other	475			328			81
Total other risk in force	1,206			1,053			494
Risk to capital ratio—STAT Basis	10.9:1			11.4:1			11.6:1

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of March 31, 2004

	Quarter Ended March 31
	2004		2003
Direct claims paid ($ thousands)
Prime	32,059		24,064
Alt-A	20,525		8,608
A Minus and below	22,634		13,935
Seconds	13,399		6,706
Total	88,617		53,313
Average claim paid ($ thousands)
Prime	24.5		22.7
Alt-A	42.6		37.3
A Minus and below	27.7		24.7
Seconds	30.1		24.2
Total	29.0		25.0
	March 31		December 31		March 31
	2004		2003		2003
Default Statistics
Primary insurance:
Prime
Number of insured loans	629,719		640,778		690,647
Number of loans in default	19,240		22,156		20,452
Percentage of loans in default	3.06	%	3.46	%	2.96	%
Alt A
Number of insured loans	137,247		138,571		109,907
Number of loans in default	7,880		7,343		4,844
Percentage of loans in default	5.74	%	5.30	%	4.41	%
A Minus and below
Number of insured loans	103,545		110,054		107,181
Number of loans in default	11,757		12,497		9,694
Percentage of loans in default	11.35	%	11.36	%	9.04	%
Total
Number of insured loans	870,511		889,403		907,735
Number of loans in default	38,877		41,996		34,990
Percentage of loans in default	4.47	%	4.72	%	3.85	%
Pool insurance:
Number of insured loans	565,264		599,140		599,255
Number of loans in default	5,739		5,738		6,040
Percentage of loans in default	1.02	%	0.96	%	1.01	%

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of March 31, 2004

ALT-A

	Quarter Ended March 31
(Thousands of dollars, except ratios)	2004	%		2003	%
Primary New Insurance Written by FICO Score ($ millions)
<=619	20	0.8	%	5	0.1	%
620-659	464	18.7	%	764	15.0	%
660-679	444	17.8	%	524	10.3	%
680-739	1,122	45.1	%	1,807	35.4	%
>=740	435	17.5	%	2,002	39.2	%
Unreported	2	0.1	%	2	0.0	%
Total	2,487	100.0	%	5,104	100.0	%
Primary Risk in Force by FICO Score ($ millions)
<=619	94	1.7	%	105	2.5	%
620-659	1,280	24.0	%	1,099	26.7	%
660-679	904	16.9	%	645	15.7	%
680-739	2,152	40.3	%	1,546	37.5	%
>=740	900	16.9	%	716	17.4	%
Unreported	10	0.2	%	10	0.2	%
Total	5,340	100.0	%	4,121	100.0	%
Primary Risk in Force by LTV ($ millions)
95.01% and above	512	9.6	%	177	4.3	%
90.01% to 95.00%	1,876	35.1	%	1,409	34.2	%
85.01% to 90.00%	2,132	39.9	%	1,713	41.5	%
85.00% and below	820	15.4	%	822	20.0	%
Total	5,340	100.0	%	4,121	100.0	%
Primary Risk in Force by Policy Year ($ millions)
2001 and prior	640	12.0	%	1,240	30.1	%
2002	1,209	22.6	%	2,159	52.4	%
2003	2,785	52.2	%	722	17.5	%
2004	706	13.2	%	—	0.0	%
Total	5,340	100.0	%	4,121	100.0	%

Schedule 1

Supplemental Schedule

Radian Group Inc. and Subsidiaries

The following schedule shows the Consolidated Income Statement as reported (Column 1) and adjustments (Column 2) to reflect the income statement impact of the recapture (referred to below as the clawback) of business previously ceded to the Company by one of the primary insurer customers of the financial guaranty segment. The adjusted numbers are shown in Column 3. Management believes it is important to present the information in this manner, as this event affected the financial results for the period presented and will affect year to date information as well. Management believes that future period results will be more comparable to Column 3.

	As Reported Quarter Ended March 31 2004		Impact of Clawback			As Adjusted Quarter Ended March 31 Excluding Clawback		Quarter Ended March 31 2003
(Thousands of dollars, except per-share data)
Revenues:
Net premiums written	$	181,428	$	(96,417	)	$	277,845	$	252,360
Premiums earned		243,420		(24,892	)		268,312		226,129
Net investment income		49,705		—			49,705		46,672
Equity in net income of affiliates		32,482		—			32,482		14,888
Other income		8,400		—			8,400		14,557
Total revenues		334,007		(24,892	)		358,899		302,246
Expenses:
Provision for losses		114,767		—			114,767		67,758
Policy acquisition costs		22,283		(9,766	)		32,049		31,017
Other operating expenses		53,159		—			53,159		44,441
Interest expense		9,654		—			9,654		8,584
Total expenses		199,863		(9,766	)		209,629		151,800
Gains and losses:
Gain/loss on sales of investments		26,676		—			26,676		4,025
Change in fair value of derivative instruments		4,647		(791	)		5,438		(7,898	)
Total gains and losses		31,323		(791	)		32,114		(3,873	)
Pretax income		165,467		(15,917	)		181,384		146,573
Provision for income taxes		45,457		(5,571	)		51,028		41,801
Net income	$	120,010	$	(10,346	)	$	130,356	$	104,772
Net income available to common stockholders	$	120,010	$	(10,346	)	$	130,356	$	104,772
Net income per share	$	1.26	$	(0.11	)	$	1.37	$	1.11
Weighted average shares outstanding (in thousands)		95,078					95,078		94,297

Schedule 2

Supplemental Schedule

Segment Information–Financial Guaranty

Radian Group Inc. and Subsidiaries

The following schedule shows the Consolidated Income Statement as reported (Column 1) and adjustments (Column 2) to reflect the income statement impact of the recapture (referred to below as the clawback) of business previously ceded to the Company by one of the primary insurer customers of the financial guaranty segment. The adjusted numbers are shown in Column 3. Management believes it is important to present the information in this manner, as this event affected the financial results for the period presented and will affect year to date information as well. Management believes that future period results will be more comparable to Column 3.

(Thousands of dollars)	As Reported Quarter Ended March 31 2004			Impact of Clawback			As Adjusted Quarter Ended March 31 Excluding Clawback			Quarter Ended March 31 2003
Revenues:
Net premiums written	$	(24,241	)	$	(96,417	)	$	72,176		$	87,588
Premiums earned	$	36,304		$	(24,892	)	$	61,196		$	58,097
Net investment income		21,144			—			21,144			18,809
Equity in net income (loss) of affiliates		(920	)		—			(920	)		(56	)
Other income		40			—			40			1,597
Total revenues		56,568			(24,892	)	$	81,460			78,447
Expenses:
Provision for losses		16,644			—			16,644			13,591
Policy acquisition costs		5,141			(9,766	)		14,907			13,538
Other operating expenses		11,434			—			11,434			7,872
Interest expense		3,427			—			3,427			2,872
Total expenses		36,646			(9,766	)		46,412			37,873
Gains and losses:
Gain/loss on sales of investments		(619	)		—			(619	)		3,516
Change in fair value of derivative instruments		172			(791	)		963			(4,314	)
Total gain and losses		(447	)		(791	)		344			(798	)
Pretax income		19,475			(15,917	)		35,392			39,776
Income tax provision		2,615			(5,571	)		8,186			10,873
Net income	$	16,860		$	(10,346	)	$	27,206		$	28,903
Loss ratio—excluding Clawback								27.2	%		23.4	%
Expense ratio—excluding Clawback								43.0	%		36.9	%
								70.2	%		60.3	%