-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L768hM56wElHBPxLzNYX+DtKrEUVyYwrwlLFQquGWvSSEZDsa+J5m98kDF9rElrJ +67nq4Zp9PeFDNitW8kCGw== 0001193125-04-116084.txt : 20040709 0001193125-04-116084.hdr.sgml : 20040709 20040709133545 ACCESSION NUMBER: 0001193125-04-116084 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20040708 ITEM INFORMATION: FILED AS OF DATE: 20040709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADIAN GROUP INC CENTRAL INDEX KEY: 0000890926 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 232691170 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11356 FILM NUMBER: 04907626 BUSINESS ADDRESS: STREET 1: 1601 MARKET STREET STREET 2: 12TH FLOOR CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2155646600 MAIL ADDRESS: STREET 1: 1601 MARKET ST STREET 2: 12TH FLOOR CITY: PHILADELPHIA STATE: PA ZIP: 19103 FORMER COMPANY: FORMER CONFORMED NAME: CMAC INVESTMENT CORP DATE OF NAME CHANGE: 19960126 8-K 1 d8k.htm RADIAN GROUP--FORM 8-K Radian Group--Form 8-K

UNITED STATES

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) July 8, 2004

 


 

Radian Group Inc.

(Exact Name of Registrant as Specified in Charter)

 


 

Delaware   1-11356   23-2691170

(State or Other Jurisdiction

of Incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

1601 Market Street

Philadelphia, PA

      19103
(Address of Principal Executive Offices)       (Zip Code)

 

Registrant’s telephone number, including area code (215) 564-6600

 

(Former Name or Former Address, if Changed Since Last Report)

 



ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

On July 8, 2004, we posted on our website quarterly operating supplements for the first quarter of 2004 showing financial information, prepared on a statutory accounting basis, for our financial guaranty business. The quarterly operating supplements also contain previously publicly reported financial and other information about us. The quarterly operating supplements are furnished as Exhibits 99.1 and 99.2.


SIGNATURES

 

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

 

   

RADIAN GROUP INC.

Date: July 8, 2004

 

By:

 

/s/ Howard S. Yaruss


       

Howard S. Yaruss

       

Secretary

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

 

Quarterly

Operating Supplement

First Quarter 2004


Quarterly Operating Supplement

 

Table of Contents

 

     Page

Introductory Note

   2

Company Profile

   2

Company Information

   2

Key Financial Highlights

   3

Segment Information–Financial Guaranty

   4

Statutory Income Statements

   5

Statutory Balance Sheets

   6

Gross Premiums Written by Product

   7

Total Claims-Paying Resources and Leverage Ratios

   7

Investment Portfolio Highlights

   8

Insured Portfolio Highlights

   9

Management Team

   13

Safe Harbor Statement

   14

 

1

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Table of Contents


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Quarterly Operating Supplement

 

March 31, 2004

 

Introductory Note

 

Radian Reinsurance Inc. was merged with and into Radian Asset Assurance Inc. effective as of June 1, 2004. All current year information presented herein is as of and/or for the quarter ended March 31, 2004 and does not take into account the effects of this merger.

 

Company Profile

 

Radian Asset Assurance Inc., founded in 1985 and rated AA by Fitch Ratings and Standard & Poor’s and Aa3 by Moody’s, provides credit enhancement to the holders of debt obligations and asset-backed securities. As a direct writer of financial guaranty insurance for municipal bonds, asset-backed securities and structured transactions, the Company plays an important role in extending the benefits of insurance to a broad range of institutions and securities issuers.

 

Radian Asset Assurance Inc. is a subsidiary of Radian Group Inc. (NYSE: RDN), a global credit enhancement provider headquartered in Philadelphia, with significant operations in New York City and London.

 

Company Information

    

Radian Asset Assurance Inc.

  

Contact:

335 Madison Avenue

  

John C. DeLuca

New York, New York 10017

  

Senior Vice President, Market Development

1 877 337.4925 (within the U.S.)

  

1 212 984.9222

1 212 983.3100

  

john.deluca@radian.biz

 

2

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Introductory Note / Company Profile / Company Information


Quarterly Operating Supplement

 

Radian Group Inc. and Subsidiaries

Key Financial Highlights* ($ Thousands)

 

     Quarter ended March 31, 2004

     Mortgage
Insurance


   Financial
Services


   Financial
Guaranty


    Total

Net premiums written

   $ 205,669    $ —      $ (24,241 )   $ 181,428
    

  

  


 

Net 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
    

  

  


 

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
    

  

  


 

Gain/(loss) on disposition of investments

     24,122      3,173      (619 )     26,676

Change in fair value of derivative instruments

     4,426      49      172       4,647
    

  

  


 

Net gains/(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
    

  

  


 

Total 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

     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

* Reported on a GAAP basis.

 

3

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Key Financial Highlights


Quarterly Operating Supplement

 

Radian Group Inc. and Subsidiaries

Segment Information–Financial Guaranty ($ Thousands)

 

     Quarter ended March 31, 2004

 
     As
Reported


    Impact of
Clawback


    As Adjusted
Excluding
Clawback


 

Net premiums written

   $ (24,241 )   $ (96,417 )   $ 72,176  
    


 


 


Net premiums earned

   $ 36,304     $ (24,892 )   $ 61,196  

Net investment income

     21,144       —         21,144  

Equity in net loss of affiliates

     (920 )     —         (920 )

Other income

     40       —         40  
    


 


 


Total revenues

     56,568       (24,892 )     81,460  
    


 


 


Provision for losses

     16,644       —         16,644  

Policy acquisition costs

     5,141       (9,766 )     14,907  

Other operating expenses

     11,434       —         11,434  

Interest expense

     3,427       —         3,427  
    


 


 


Total expenses

     36,646       (9,766 )     46,412  
    


 


 


Loss on disposition of investments

     (619 )     —         (619 )

Change in fair value of derivative instruments

     172       (791 )     963  
    


 


 


Net (losses)/gains

     (447 )     (791 )     344  
    


 


 


Pretax income

     19,475       (15,917 )     35,392  

Income tax provision

     2,615       (5,571 )     8,186  
    


 


 


Net income

   $ 16,860     $ (10,346 )   $ 27,206  
    


 


 


 

The above schedule shows the Financial Guaranty Segment, on a GAAP basis, as reported (Column 1) and adjustments (Column 2) to reflect the income statement impact of the recapture (referred to above as the clawback) of business previously ceded to Radian Reinsurance Inc. by one of the primary insurer customers of the Financial Guaranty Segment. The adjusted numbers are shown in Column 3. The impact of the clawback (Column 2) reflects the clawback of business ceded to Radian Reinsurance Inc. in prior periods. This clawback will only affect the first quarter (and, as a result, the year-to-date periods) of 2004. Accordingly, management believes that Column 3 provides useful information to investors by presenting a more meaningful basis of comparison for the Financial Guaranty Segment’s future results.

 

4

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Segment Information–Financial Guaranty


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Statutory Income Statements ($ Thousands)

 

     Quarter ended

 
     March 31
2004


   

March 31

2003


 

Revenues

                

Gross premiums written

   $ 29,344     $ 47,028  

Reinsurance premiums ceded

     (2,838 )     (7,780 )
    


 


Net premiums written

     26,506       39,248  

Increase in unearned premiums

     (2,991 )     (10,125 )
    


 


Premiums earned

     23,515       29,123  
    


 


Net investment income

     8,239       6,893  

Net realized gain on sale of investments

     2,688       1,188  
    


 


Net investment gains

     10,927       8,081  
    


 


Other (expense) income

     (1,084 )     1,483  
    


 


Total revenues

     33,358       38,687  
    


 


Expenses

                

Losses and loss adjustment expenses incurred

     116,450       6,279  

Commissions incurred

     (688 )     2,703  

Other underwriting expenses

     11,847       9,887  
    


 


Total expenses

     127,609       18,869  
    


 


(Loss) income before income taxes

     (94,251 )     19,818  

Federal and foreign income tax (benefit) expense

     (34,107 )     2,280  
    


 


Net (loss) income

   $ (60,144 )   $ 17,538  
    


 


Financial Ratios

                

Loss and LAE Ratio

     495.2 %     21.6 %

Underwriting Expense Ratio

     42.1 %     32.1 %
    


 


Combined Ratio

     537.3 %     53.7 %
    


 


 

On January 14, 2004, Radian Asset Assurance Inc. (the “Company”) announced it would have claims from a single manufactured housing transaction that the Company reinsured from an affiliate of the Company. The Company received its first default notice related to this transaction on January 27, 2004. The Company established $111.25 million in loss reserves for this transaction on a Statutory basis in 2004 (recorded on a GAAP basis in 2003), which represented the total exposure on this transaction. The Company expects losses to be paid out over the next several years. During the first quarter of 2004, the Company received $65.0 million in capital from its ultimate parent, Radian Group Inc., to offset (on an after-tax basis) the effect of this default on the Company.

 

5

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Statutory Income Statements


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Statutory Balance Sheets ($ Thousands)

 

     March 31
2004


  

December 31

2003


Assets

             

Long-term bonds

   $ 763,009    $ 670,790

Preferred stock

     35,006      32,252

Common stock

     70,582      74,204

Cash and short-term investments

     39,037      67,333

Receivable for securities

     —        515
    

  

Total Investments

     907,634      845,094

Investment income due and accrued

     9,236      9,722

Premiums receivable

     10,736      12,805

Funds held by reinsured companies

     73      73

Current federal income tax recoverable

     33,276      609

Net deferred tax asset

     1,509      1,130

Other assets

     8      —  
    

  

Total Assets

   $ 962,472    $ 869,433
    

  

Liabilities

             

Contingency reserve

   $ 64,308    $ 59,462

Losses and loss adjustment expenses

     126,992      19,847

Reinsurance payable on paid losses and loss adjustment expenses

     3,566      2,434

Unearned premiums

     301,169      298,178

Provision for reinsurance

     179      284

Payable to affiliates

     446      18,076

Payable for securities

     1,910      2,962

Ceded reinsurance premiums payable

     1,218      1,395

Federal and foreign income taxes payable

     —        3,642

Funds held under reinsurance treaties

     4,331      6,696

Accrued expenses and other liabilities

     6,434      3,463
    

  

Total Liabilities

     510,553      416,439
    

  

Policyholders’ Surplus

             

Common stock

     15,000      15,000

Additional paid-in capital

     391,714      326,714

Unassigned funds

     45,205      111,280
    

  

Total Policyholders’ Surplus

     451,919      452,994
    

  

Total Liabilities and Policyholders’ Surplus

   $ 962,472    $ 869,433
    

  

Qualified Statutory Capital

   $ 516,227    $ 512,456
    

  

 

On January 14, 2004, Radian Asset Assurance Inc. (the “Company”) announced it would have claims from a single manufactured housing transaction that the Company reinsured from an affiliate of the Company. The Company received its first default notice related to this transaction on January 27, 2004. The Company established $111.25 million in loss reserves for this transaction on a Statutory basis in 2004 (recorded on a GAAP basis in 2003), which represented the total exposure on this transaction. The Company expects losses to be paid out over the next several years. During the first quarter of 2004, the Company received $65.0 million in capital from its ultimate parent, Radian Group Inc., to offset (on an after-tax basis) the effect of this default on the Company.

 

Effective April 30, 2003, the Company entered into an assumption reinsurance agreement, with regard to its Trade Credit business, with an affiliated company (Radian Reinsurance Inc.) whereby the Company reversed assumed unearned premiums of $21.5 million and loss and loss adjustment reserves of $38.2 million. This transaction had no impact on premiums earned or losses and loss adjustment expenses incurred.

 

6

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Statutory Balance Sheets


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Gross Premiums Written by Product ($ Thousands)

 

     1st Qtr
2004


    1st Qtr
2003


   % Change

 

Public Finance Direct

   $ 8,186     $ 10,844    –24.5 %

Structured Finance Direct

     20,502       16,578    23.7 %

Public Finance Reinsurance

     (1,318 )     2,780    –147.4 %

Structured Finance Reinsurance

     1,974       4,556    –56.7 %

Trade Credit Reinsurance

     —         12,271    –100.0 %
    


 

      
     $ 29,344     $ 47,029    –37.6 %
    


 

      

 

Total Claims-Paying Resources and Leverage Ratios

($ Thousands except ratios)

 

    

March 31

2004


   December 31
2003


   % Change

 

Capital and Surplus

   $ 451,919    $ 452,994    0 %

Contingency Reserve

     64,308      59,462    8 %
    

  

      

Qualified Statutory Capital

     516,227      512,456    1 %

Unearned Premium Reserve

     301,169      298,178    1 %

Loss and Loss Expense Reserves

     126,992      19,847    540 %
    

  

      

Total Policyholders’ Reserves

     944,388      830,481    14 %

Present Value of Future Installment Premiums

     178,996      190,266    –6 %

Reinsurance and Soft Capital Facilities

     200,000      200,000    0 %
    

  

      

Total Claims-Paying Resources

   $ 1,323,384    $ 1,220,747    8 %
    

  

      

Total Debt Service (Principal and Interest) Outstanding

   $ 29,596,027    $ 28,961,961    2 %

Capital Leverage Ratio 1

     57:1      57:1       

Claims-Paying Ratio 2

     22:1      24:1       

1 Capital Leverage Ratio: Total debt service/Qualified statutory capital.
2 Claims-Paying Ratio: Total debt service/Total claims-paying resources.

 

7

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Gross Premiums / Total Claims-Paying Resources


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Investment Portfolio Highlights

 

Asset Quality

 

As of March 31, 2004, the book value of our investment portfolio was $896.9 million, with an average duration of 5.2 years.

 

LOGO

 

Asset Class

 

Our conservative portfolio is invested primarily in fixed-income securities. Our primary objective is to achieve total return, with a secondary objective of maximizing after-tax income.

 

LOGO

 

8

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Investment Portfolio Highlights


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

Geographic Diversification

 

State


  

Net Par

(3/31/2004)


   Percent
of total


   

Net Par

(12/31/2003)


  

Percent

of total


 

New York

   $ 1,316,927    6.1 %   $ 1,279,650    6.1 %

Pennsylvania

     1,195,022    5.6 %     1,218,444    5.9 %

Texas

     1,127,179    5.3 %     1,081,670    5.2 %

California

     743,638    3.5 %     695,664    3.4 %

Florida

     692,396    3.3 %     708,912    3.4 %

Colorado

     510,893    2.4 %     511,114    2.5 %

Connecticut

     446,262    2.1 %     447,951    2.2 %

Illinois

     390,272    1.8 %     395,050    1.9 %

Ohio

     356,846    1.7 %     357,977    1.7 %

Massachusetts

     352,237    1.7 %     352,506    1.7 %

Total of top ten states

     7,131,672    33.5 %     7,048,938    34.0 %

Total of other states

     4,331,634    20.4 %     4,343,800    21.0 %

Domestic structured finance

     9,400,294    44.2 %     8,918,367    43.0 %

International

     402,127    1.9 %     406,482    2.0 %

Total

   $ 21,265,727    100.0 %   $ 20,717,587    100.0 %

 

9

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

Sector Breakout

 

Public Finance


  

Net Par

(3/31/2004)


  

Percent

of total


   

Net Par

(12/31/2003)


  

Percent

of total


 

Healthcare

   $ 2,688,566    12.6 %   $ 2,603,369    12.5 %

General Obligations

     2,490,217    11.6 %     2,460,205    11.9 %

Education

     1,964,955    9.2 %     1,939,787    9.4 %

Long-Term Care

     1,053,303    5.0 %     1,054,633    5.1 %

Utilities

     839,111    4.0 %     890,419    4.3 %

Tax-Backed

     766,185    3.6 %     757,979    3.7 %

Other Public Finance

     671,818    3.2 %     680,833    3.3 %

Transportation

     402,746    1.9 %     405,082    1.9 %

Second-To-Pay Muni Wrap

     387,730    1.8 %     387,730    1.8 %

Housing

     169,447    0.8 %     183,462    0.9 %

Investor-Owned Utilities

     57,938    0.3 %     57,308    0.3 %

Subtotal Public Finance

   $ 11,492,016    54.0 %   $ 11,420,807    55.1 %

Structured Finance


  

Net Par

(3/31/2004)


   Percent
of total


   

Net Par

(12/31/2003)


  

Percent

of total


 

Collateralized Debt Obligations

   $ 7,393,393    34.7 %   $ 6,720,501    32.5 %

Asset-Backed – Mortgage and MBS

     972,375    4.6 %     975,114    4.7 %

Asset-Backed – Consumer

     841,861    4.0 %     981,871    4.7 %

Asset-Backed – Commercial and Other

     356,249    1.7 %     397,647    1.9 %

Other Structured Finance

     209,833    1.0 %     221,647    1.1 %

Subtotal Structured Finance

   $ 9,773,711    46.0 %   $ 9,296,780    44.9 %

Total

   $ 21,265,727    100.0 %   $ 20,717,587    100.0 %

 

10

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

Rating Distribution

 

Rating*


  

Net Par

(3/31/2004)


   Percent
of total


   

Net Par

(12/31/2003)


  

Percent

of total


 

AAA

   $ 5,597,234    26.4 %   $ 4,998,370    24.1 %

AA

     3,064,437    14.4 %     3,072,299    14.8 %

A

     3,578,309    16.8 %     3,652,262    17.6 %

BBB

     7,543,977    35.5 %     7,625,867    36.8 %

Investment Grade

     405,630    1.9 %     406,110    2.0 %

Below Investment Grade

     666,929    3.1 %     634,814    3.1 %

Not Rated

     409,211    1.9 %     327,865    1.6 %

Total

   $ 21,265,727    100.0 %   $ 20,717,587    100.0 %

* Indicated category reflects highest rating of the three rating agencies.

 

11

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

10 Largest Public Finance Exposures

 

    

Net Par

(3/31/2004)


   Percent of
total Net Par


    Rating*

New York, New York GO

   $ 184,223    0.87 %   A+

Muni Leveraged Lease

     145,377    0.68 %   A

Virgin Islands Pub Fin Auth

     124,255    0.58 %   BBB

Jefferson Cnty Ala Sewer

     106,168    0.50 %   A

Second-To-Pay Muni Wrap

     90,000    0.42 %   AAA

Second-To-Pay Muni Wrap

     90,000    0.42 %   AAA

Second-To-Pay Muni Wrap

     88,000    0.41 %   AAA

Interlocken Consolidated Metropolitan District

     83,640    0.39 %   BBB–

Long Island Univ – New York St Dorm Auth

     81,393    0.38 %   BBB–

Orlando Regional Health Systems Florida

     78,558    0.37 %   A–

Total top ten

   $ 1,071,614    5.02 %    

 

10 Largest Structured Finance Exposures

 

    

Net Par

(3/31/2004)


   Percent of
total Net Par


    Rating*

European Static Synthetic CDO

   $ 270,900    1.27 %   AAA

U.S. Static Synthetic CDO

     270,000    1.27 %   AAA

U.S. Static Synthetic CDO

     270,000    1.27 %   AA

European Static Synthetic CDO

     258,184    1.21 %   AAA

CDO of ABS

     257,529    1.21 %   AA

U.S. Static Synthetic CDO

     252,051    1.19 %   AA

U.S. Static Synthetic CDO

     250,000    1.18 %   AA+

U.S. Static Synthetic CDO

     250,000    1.18 %   AAA

U.S. Static Synthetic CDO

     243,200    1.14 %   AAA

European RMBS

     225,000    1.06 %   AA

Total top ten

   $ 2,546,864    11.98 %    

* Indicated category reflects highest rating of the three rating agencies.

 

12

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Management Team

 

Martin A. Kamarck

President

 

David J. Beidler

Senior Vice President, Senior Counsel

 

Sally B. Campbell

Senior Vice President, Public Finance

 

John C. DeLuca

Senior Vice President, Market Development

 

Bonita Z. Dorland

Senior Vice President, Chief Risk Officer

 

Paul C. Larsen

Vice President, Managing Director of Client and Portfolio Management

 

Anna M. Laudon

Vice President, Managing Director of Asset Backed Securities

 

Andrew C.J. Poole

Managing Director, Radian Asset Assurance Ltd. & Radian Representatives Ltd.

 

Jack Praschnik

Senior Vice President, Global Strategies

 

Andrew Reid

Vice President, Managing Director of Global Markets

 

Patrick Rossi

Senior Vice President, Controller

 

Jeffrey C. Salton

Senior Vice President, Operations and Analysis

 

Hao Wu

Vice President, Managing Director of Financial Products

 

13

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Radian Asset Assurance Inc. Management Team


Quarterly Operating Supplement

 

Radian Asset Assurance Inc.

Safe Harbor Statement

 

All statements in this document that address operating performance, 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 involve risks and uncertainties including the following:

 

changes in general financial and political conditions, such as extended national or regional economic recessions, changes in housing values, changes or volatility in interest rates, or other political instability; 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; increased severity or frequency of 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; vulnerability to the performance of Radian’s strategic investments; and the loss of executive officers or other key personnel.

 

Investors are also directed to other risks discussed in documents filed by Radian with the SEC, including the factors detailed in our annual report on Form 10-K for the year ended December 31, 2003 in the section immediately preceding Part I of the report.

 

Radian does not intend to and disclaims any duty or obligation to update or revise any forward-looking statements made in this document to reflect new information, future events or for any other reason.

 

14

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Safe Harbor Statement

EX-99.2 3 dex992.htm PRESS RELEASE Press Release

Exhibit 99.2

 

LOGO

 

Quarterly

Operating Supplement

First Quarter 2004


Quarterly Operating Supplement

 

Table of Contents

 

     Page

Introductory Note

   2

Company Profile

   2

Company Information

   2

Key Financial Highlights

   3

Segment Information–Financial Guaranty

   4

Statutory Income Statements

   5

Statutory Balance Sheets

   6

Gross Premiums Written by Product

   7

Total Claims-Paying Resources and Leverage Ratios

   7

Investment Portfolio Highlights

   8

Insured Portfolio Highlights

   9

Management Team

   13

Safe Harbor Statement

   14

 

1

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Table of Contents


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Quarterly Operating Supplement

 

March 31, 2004

 

Introductory Note

 

Radian Reinsurance Inc. was merged with and into Radian Asset Assurance Inc. effective as of June 1, 2004. All current year information presented herein is as of and/or for the quarter ended March 31, 2004 and does not take into account the effects of this merger.

 

Company Profile

 

Radian Reinsurance Inc., founded in 1986 and rated AA by Fitch Ratings and Standard & Poor’s and Aa3 by Moody’s, was the first company dedicated exclusively to the reinsurance of investment-grade securities. The Company is a leading provider of treaty and facultative reinsurance for primary insurers of municipal bonds, asset-backed obligations and structured finance obligations, helping insurers manage portfolio risk exposure, increase insurance capacity, and meet regulatory and rating-agency capital requirements.

Radian Reinsurance Inc. is a subsidiary of Radian Group Inc. (NYSE: RDN), a global credit enhancement provider headquartered in Philadelphia, with significant operations in New York City and London.

 

Company Information

   

Radian Reinsurance Inc.

 

Contact:

335 Madison Avenue

 

John C. DeLuca

New York, New York 10017

 

Senior Vice President, Market Development

1 877 337.4925 (within the U.S.)

 

1 212 984.9222

1 212 983.3100

 

john.deluca@radian.biz

 

2

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Introductory Note / Company Profile / Company Information


Quarterly Operating Supplement

 

Radian Group Inc. and Subsidiaries

Key Financial Highlights* ($ Thousands)

 

     Quarter ended March 31, 2004

     Mortgage
Insurance


   Financial
Services


   Financial
Guaranty


    Total

Net premiums written

   $ 205,669    $ —      $ (24,241 )   $ 181,428
    

  

  


 

Net 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
    

  

  


 

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
    

  

  


 

Gain/(loss) on disposition of investments

     24,122      3,173      (619 )     26,676

Change in fair value of derivative instruments

     4,426      49      172       4,647
    

  

  


 

Net gains/(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
    

  

  


 

Total 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

     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

* Reported on a GAAP basis.

 

3

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Key Financial Highlights


Quarterly Operating Supplement

 

Radian Group Inc. and Subsidiaries

Segment Information–Financial Guaranty ($ Thousands)

 

     Quarter ended March 31, 2004

 
     As Reported

    Impact of
Clawback


    As Adjusted
Excluding
Clawback


 

Net premiums written

   $ (24,241 )   $ (96,417 )   $ 72,176  
    


 


 


Net premiums earned

   $ 36,304     $ (24,892 )   $ 61,196  

Net investment income

     21,144       —         21,144  

Equity in net loss of affiliates

     (920 )     —         (920 )

Other income

     40       —         40  
    


 


 


Total revenues

     56,568       (24,892 )     81,460  
    


 


 


Provision for losses

     16,644       —         16,644  

Policy acquisition costs

     5,141       (9,766 )     14,907  

Other operating expenses

     11,434       —         11,434  

Interest expense

     3,427       —         3,427  
    


 


 


Total expenses

     36,646       (9,766 )     46,412  
    


 


 


Loss on disposition of investments

     (619 )     —         (619 )

Change in fair value of derivative instruments

     172       (791 )     963  
    


 


 


Net (losses)/gains

     (447 )     (791 )     344  
    


 


 


Pretax income

     19,475       (15,917 )     35,392  

Income tax provision

     2,615       (5,571 )     8,186  
    


 


 


Net income

   $ 16,860     $ (10,346 )   $ 27,206  
    


 


 


 

The above schedule shows the Financial Guaranty Segment, on a GAAP basis, as reported (Column 1) and adjustments (Column 2) to reflect the income statement impact of the recapture (referred to above as the clawback) of business previously ceded to Radian Reinsurance Inc. (the “Company”) by one of the primary insurer customers of the Financial Guaranty Segment. The adjusted numbers are shown in Column 3. The impact of the clawback (Column 2) reflects the clawback of business ceded to the Company in prior periods. This clawback will only affect the first quarter (and, as a result, the year-to-date periods) of 2004. Accordingly, management believes that Column 3 provides useful information to investors by presenting a more meaningful basis of comparison for the Financial Guaranty Segment’s future results.

 

4

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Segment Information–Financial Guaranty


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Statutory Income Statements ($ Thousands)

 

     Quarter ended

 
     March 31
2004


    March 31
2003


 

Revenues

                

Gross premiums written

   $ (72,338 )   $ 45,804  

Reinsurance premiums ceded

     1,277       (166 )
    


 


Net premiums written

     (71,061 )     45,638  

Decrease (increase) in unearned premiums

     93,438       (20,057 )
    


 


Premiums earned

     22,377       25,581  
    


 


Net investment income

     12,339       12,212  

Net realized gain on sale of investments

     2,313       2,700  
    


 


Net investment gains

     14,652       14,912  
    


 


Other (expense) income

     (1,646 )     58  
    


 


Total revenues

     35,383       40,551  
    


 


Expenses

                

Losses and loss adjustment expenses incurred

     (96 )     3,478  

Commissions incurred

     (24,907 )     16,591  

Other underwriting expenses

     4,643       1,846  
    


 


Total expenses

     (20,360 )     21,915  
    


 


Income before income taxes

     55,743       18,636  

Federal and foreign income tax expense

     11,814       2,711  
    


 


Net income

   $ 43,929     $ 15,925  
    


 


Financial Ratios

                

Loss and LAE Ratio

     –0.4 %     13.6 %

Underwriting Expense Ratio

     28.5 %     40.4 %
    


 


Combined Ratio

     28.1 %     54.0 %
    


 


 

On February 11, 2004, the Company announced that, effective January 31st, one of its primary insurers was exercising its right to recapture business, which had been assumed by the Company as part of the Company’s reinsurance agreements.

 

Similar to the terms of many of the Company’s reinsurance agreements with other primary insurers, the reinsurance agreements with the applicable primary insurer grant the primary insurer the right to recapture business assumed by the Company under certain circumstances. This recapture right was triggered by the Company’s financial strength rating downgrade from AAA to AA by Standard and Poor’s, which occurred on October 4, 2002.

 

In connection with the recapture, the Company has returned approximately $16.4 billion of par in force and approximately $96.4 million of statutory unearned premium reserves to the primary insurer. In addition, the Company has been reimbursed by the primary insurer for policy acquisition costs of approximately $31.0 million. The Company has also reimbursed the primary insurer approximately $7.5 million for case reserves which were net of $4.0 million of salvage.

 

The Company has reached agreements with its other primary insurer customers, without additional cost to the Company, where they have agreed not to exercise their recapture or ceding commission increase rights with respect to the downgrade by Standard and Poor’s.

 

5

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Statutory Income Statements


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Statutory Balance Sheets ($ Thousands)

 

     March 31
2004


   December 31
2003


Assets

             

Long-term bonds

   $ 995,845    $ 991,764

Cash and short-term investments

     14,913      76,397

Receivable for securities

     243      —  
    

  

Total Investments

     1,011,001      1,068,161

Investment income due and accrued

     13,345      13,930

Premiums receivable

     8,069      9,746

Funds held by reinsured companies

     5,211      7,575

Current federal income tax recoverable

     —        7,957

Net deferred tax asset

     1,584      1,889

Other assets

     1,922      2,316
    

  

Total Assets

   $ 1,041,132    $ 1,111,574
    

  

Liabilities

             

Contingency reserve

   $ 173,429    $ 261,850

Losses and loss adjustment expenses

     20,892      43,002

Reinsurance payable on paid losses and loss adjustment expenses

     528      3,625

Current federal income taxes

     12,862      —  

Unearned premiums

     318,870      412,308

Payable for securities

     3,052      —  

Commissions and contingent profit commissions

     929      742

Ceded reinsurance premiums payable

     1,158      1,245

Payable to affiliates

     5,279      7,274

Accrued expenses and other liabilities

     1,880      11,448
    

  

Total Liabilities

     538,879      741,494
    

  

Policyholders’ Surplus

             

Common stock

     15,000      15,000

Additional paid-in capital

     186,500      186,500

Unassigned funds

     300,753      168,580
    

  

Total Policyholders’ Surplus

     502,253      370,080
    

  

Total Liabilities and Policyholders’ Surplus

   $ 1,041,132    $ 1,111,574
    

  

Qualified Statutory Capital

   $ 675,682    $ 631,930
    

  

 

On February 11, 2004, the Company announced that, effective January 31st, one of its primary insurers was exercising its right to recapture business, which had been assumed by the Company as part of the Company’s reinsurance agreements.

 

Similar to the terms of many of the Company’s reinsurance agreements with other primary insurers, the reinsurance agreements with the applicable primary insurer grant the primary insurer the right to recapture business assumed by the Company under certain circumstances. This recapture right was triggered by the Company’s financial strength rating downgrade from AAA to AA by Standard and Poor’s, which occurred on October 4, 2002.

 

In connection with the recapture, the Company has returned approximately $16.4 billion of par in force and approximately $96.4 million of statutory unearned premium reserves to the primary insurer. In addition, the Company has been reimbursed by the primary insurer for policy acquisition costs of approximately $31.0 million. The Company has also reimbursed the primary insurer approximately $7.5 million for case reserves which were net of $4.0 million of salvage.

 

The Company has reached agreements with its other primary insurer customers, without additional cost to the Company, where they have agreed not to exercise their recapture or ceding commission increase rights with respect to the downgrade by Standard and Poor’s.

 

Effective April 30, 2003, the Company entered into an assumption reinsurance agreement, with regard to its Trade Credit business, with an affiliated company (Radian Asset Assurance Inc.) whereby the Company assumed unearned premiums of $21.5 million and loss and loss adjustment reserves of $38.2 million. This transaction had no impact on premiums earned or losses and loss adjustment expenses incurred.

 

Effective December 31, 2003, the Company entered into a novation agreement, with regard to its Trade Credit business, with an affiliated company (Radian Asset Assurance Limited) whereby the Company novated unearned premiums of $20.0 million and loss and loss adjustment reserves of $26.7 million. This transaction had no impact on premiums earned or losses and loss adjustment expenses incurred.

 

6

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Statutory Balance Sheets


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Gross Premiums Written by Product ($ Thousands)

 

     1st Qtr
2004


    1st Qtr
2003


   % Change

 

Public Finance

   $ (68,326 )   $ 26,790    –355 %

Structured Finance

     1,530       11,792    –87 %

Trade Credit Reinsurance

     (5,542 )     7,222    –177 %
    


 

      
     $ (72,338 )   $ 45,804    –258 %
    


 

      

 

On February 11, 2004, Radian Reinsurance Inc. (the “Company”) announced that, effective January 31st, one of its primary insurers was exercising its right to recapture business, which had been assumed by the Company as part of the Company’s reinsurance agreements.

 

Similar to the terms of many of the Company’s reinsurance agreements with other primary insurers, the reinsurance agreements with the applicable primary insurer grant the primary insurer the right to recapture business assumed by the Company under certain circumstances. This recapture right was triggered by the Company’s financial strength rating downgrade from AAA to AA by Standard and Poor’s, which occurred on October 4, 2002.

 

In connection with the recapture, the Company has returned approximately $16.4 billion of par in force and approximately $96.4 million of statutory unearned premium reserves to the primary insurer. In addition, the Company has been reimbursed by the primary insurer for policy acquisition costs of approximately $31.0 million. The Company has also reimbursed the primary insurer approximately $7.5 million for case reserves which were net of $4.0 million of salvage.

 

The Company has reached agreements with its other primary insurer customers, without additional cost to the Company, where they have agreed not to exercise their recapture or ceding commission increase rights with respect to the downgrade by Standard and Poor’s.

 

Total Claims-Paying Resources and Leverage Ratios

($ Thousands except ratios)

 

     March 31
2004


   December 31
2003


   % Change

 

Capital and Surplus

   $ 502,253    $ 370,080    36 %

Contingency Reserve

     173,429      261,850    –34 %
    

  

      

Qualified Statutory Capital

     675,682      631,930    7 %

Unearned Premium Reserve

     318,870      412,308    –23 %

Loss and Loss Expense Reserves

     20,892      43,002    –51 %
    

  

      

Total Policyholders’ Reserves

     1,015,444      1,087,240    –7 %

Present Value of Future Installment Premiums

     149,640      254,102    –41 %

Reinsurance and Soft-Capital Facilities

     95,000      125,000    –24 %
    

  

      

Total Claims-Paying Resources

   $ 1,260,084    $ 1,466,342    –14 %
    

  

      

Total Debt Service (Principal and Interest) Outstanding

   $ 66,236,347    $ 90,231,840    –27 %

Capital Leverage Ratio 1

     98:1      143:1       

Claims-Paying Ratio 2

     53:1      62:1       

1 Capital Leverage Ratio: Total debt service/Qualified statutory capital.
2 Claims-Paying Ratio: Total debt service/Total claims-paying resources.

 

7

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Gross Premiums / Total Claims-Paying Resources


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Investment Portfolio Highlights

 

Asset Quality

 

As of March 31, 2004, the book value of our investment portfolio was $1.0 billion, with an average duration of 5.5 years.

 

LOGO

 

Asset Class

 

Our conservative portfolio is invested primarily in fixed-income securities. Our primary objective is to achieve total return, with a secondary objective of maximizing after-tax income.

 

LOGO

 

8

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Investment Portfolio Highlights


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

Geographic Diversification

 

State


   Net Par
(3/31/2004)


   Percent
of total


    Net Par
(12/31/2003)


   Percent
of total


 

California

   $ 4,006,158    9.8 %   $ 5,559,232    9.7 %

New York

     2,975,676    7.2 %     3,650,233    6.3 %

Texas

     2,270,954    5.5 %     2,645,631    4.6 %

Illinois

     1,934,376    4.7 %     2,307,437    4.0 %

Florida

     1,794,250    4.4 %     2,422,728    4.2 %

Pennsylvania

     1,380,721    3.3 %     1,731,354    3.0 %

Massachusetts

     1,307,496    3.2 %     1,882,621    3.3 %

New Jersey

     1,079,686    2.6 %     1,933,361    3.4 %

Puerto Rico

     842,348    2.0 %     1,096,917    1.9 %

Washington

     756,546    1.8 %     1,033,840    1.8 %

Total of top ten states

     18,348,211    44.5 %     24,263,354    42.2 %

Total of other states

     11,664,852    28.3 %     14,945,109    26.0 %

Domestic structured finance

     7,228,498    17.5 %     11,927,230    20.7 %

International

     3,995,625    9.7 %     6,384,637    11.1 %

Total

   $ 41,237,186    100.0 %   $ 57,520,330    100.0 %

 

9

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

Sector Breakout

 

Public Finance


   Net Par
(3/31/2004)


   Percent
of total


    Net Par
(12/31/2003)


   Percent
of total


 

General Obligations

   $ 9,610,145    23.2 %   $ 11,926,347    20.6 %

Utilities

     5,234,498    12.7 %     7,034,723    12.2 %

Healthcare

     4,996,790    12.1 %     6,270,554    10.9 %

Transportation

     4,405,094    10.7 %     6,808,469    11.8 %

Tax-Backed

     2,849,879    6.9 %     3,615,302    6.3 %

Investor-Owned Utilities

     1,723,642    4.2 %     2,176,923    3.8 %

Education

     1,269,217    3.1 %     1,878,134    3.3 %

Housing

     717,560    1.7 %     1,192,983    2.1 %

Other Public Finance

     494,309    1.2 %     594,681    1.0 %

Second-To-Pay Muni Wrap

     404,187    1.0 %     405,073    0.7 %

Long-Term Care

     86,137    0.2 %     93,903    0.2 %

Subtotal Public Finance

   $ 31,791,458    77.0 %   $ 41,997,092    72.9 %

Structured Finance


   Net Par
(3/31/2004)


   Percent
of total


    Net Par
(12/31/2003)


   Percent
of total


 

Collateralized Debt Obligations

   $ 3,204,075    7.8 %   $ 4,078,503    7.1 %

Asset-Backed – Consumer

     2,704,973    6.6 %     6,247,278    10.9 %

Asset-Backed – Commercial and Other

     1,621,175    3.9 %     2,848,456    5.0 %

Asset-Backed – Mortgage and MBS

     1,176,133    2.9 %     1,590,747    2.8 %

Other Structured Finance

     739,372    1.8 %     758,254    1.3 %

Subtotal Structured Finance

   $ 9,445,728    23.0 %   $ 15,523,238    27.1 %

Total

   $ 41,237,186    100.0 %   $ 57,520,330    100.0 %

 

10

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

Rating Distribution

 

Rating*


   Net Par
(3/31/2004)


   Percent
of total


    Net Par
(12/31/2003)


   Percent
of total


 

AAA

   $ 4,952,765    11.9 %   $ 7,134,726    12.4 %

AA

     11,403,346    27.7 %     14,384,011    25.0 %

A

     17,011,608    41.3 %     23,100,368    40.2 %

BBB

     6,231,100    15.1 %     10,405,340    18.1 %

Investment Grade

     71,983    0.2 %     193,402    0.3 %

Below Investment Grade

     480,393    1.2 %     638,460    1.1 %

Not Rated

     1,085,991    2.6 %     1,664,023    2.9 %

Total

   $ 41,237,186    100.0 %   $ 57,520,330    100.0 %

* Indicated category reflects highest rating of the three rating agencies.

 

11

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Insured Portfolio Highlights ($ Thousands)

 

10 Largest Public Finance Exposures

 

     Net Par
(3/31/2004)


   Percent of
total Net
Par


    Rating*

Long Island Power Authority NY

   $ 295,368    0.72 %   A–

Illinois State GO

     261,846    0.63 %   AA

California State

     247,031    0.60 %   Baa1

Puerto Rico Commonwealth Highway & Transit

     235,623    0.57 %   A

City of Houston, Texas

     230,483    0.56 %   AA

New York City Muni Water Finance

     225,352    0.55 %   AA

City of Chicago

     218,845    0.53 %   A+

New York & New Jersey Port Authority

     218,525    0.53 %   AA–

Houston Airport System

     216,792    0.53 %   A1

Southern California Public Power Authority

     207,165    0.50 %   Aa2

Total top ten

   $ 2,357,030    5.72 %    

 

10 Largest Structured Finance Exposures

 

     Net Par
(3/31/2004)


  

Percent of

total Net
Par


    Rating*

European Static Synthetic CDO

   $ 288,000    0.70 %   AAA

U.S. Static Synthetic CDO

     270,000    0.65 %   AA

European RMBS

     220,955    0.54 %   AAA

U.S. Static Synthetic CDO

     204,000    0.49 %   AAA

Mid-State Homes Trust IV

     190,425    0.46 %   BBB

European RMBS

     188,394    0.46 %   AAA

U.S. Static Synthetic CDO

     180,000    0.44 %   AAA

ABCP

     167,500    0.41 %   BBB

Leveraged Lease

     163,001    0.40 %   AAA

Providian Gateway Master Trust

     150,000    0.36 %   BBB

Total top ten

   $ 2,022,275    4.91 %    

* Indicated category reflects highest rating of the three rating agencies except for leveraged lease which was provided by the ceding company.

 

12

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Insured Portfolio Highlights


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Management Team

 

Martin A. Kamarck

President

 

David J. Beidler

Senior Vice President, Senior Counsel

 

Sally B. Campbell

Senior Vice President, Public Finance

 

John C. DeLuca

Senior Vice President, Market Development

 

Bonita Z. Dorland

Senior Vice President, Chief Risk Officer

 

Paul C. Larsen

Vice President, Managing Director of Client and Portfolio Management

 

Anna M. Laudon

Vice President, Managing Director of Asset Backed Securities

 

Andrew C.J. Poole

Managing Director, Radian Asset Assurance Ltd. & Radian Representatives Ltd.

 

Jack Praschnik

Senior Vice President, Global Strategies

 

Andrew Reid

Vice President, Managing Director of Global Markets

 

Patrick Rossi

Senior Vice President, Controller

 

Jeffrey C. Salton

Senior Vice President, Operations and Analysis

 

Hao Wu

Vice President, Managing Director of Financial Products

 

13

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Radian Reinsurance Inc. Management Team


Quarterly Operating Supplement

 

Radian Reinsurance Inc.

Safe Harbor Statement

 

All statements in this document that address operating performance, 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 involve risks and uncertainties including the following: changes in general financial and political conditions, such as extended national or regional economic recessions, changes in housing values, changes or volatility in interest rates, or other political instability; 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; increased severity or frequency of 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; vulnerability to the performance of Radian’s strategic investments; and the loss of executive officers or other key personnel.

 

Investors are also directed to other risks discussed in documents filed by Radian with the SEC, including the factors detailed in our annual report on Form 10-K for the year ended December 31, 2003 in the section immediately preceding Part I of the report.

 

Radian does not intend to and disclaims any duty or obligation to update or revise any forward-looking statements made in this document to reflect new information, future events or for any other reason.

 

14

  

Quarterly Operating Supplement for the Period Ended March 31, 2004 / Safe Harbor Statement

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