Radian Group Inc. News Release

September 30,
2008

September 30,
2007

SMART HOME

% of Primary RIF included in Smart Home Transactions (3)

EX-99.1 2 dex991.htm RADIAN GROUP INC. NEWS RELEASE Radian Group Inc. News Release

Exhibit 99.1



1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600	News Release
	Contact:
	For investors:	Terri Williams-Perry – phone: 215 231.1486
		Email: terri.williams-perry@radian.biz
	For the media:	Rick Gillespie – phone: 215 231.1061
		email: rick.gillespie@radian.biz
	Radian Reports Third Quarter Financial Results
	PHILADELPHIA, November 5, 2008 - Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended September 30, 2008 of $36.7 million, or $0.46 per share. This compares to a net loss of $703.9 million, or $8.82 per share, for the prior year quarter. Book value per share at September 30, 2008 was $28.90. “Radian’s third quarter results were impacted by a continuation of elevated mortgage insurance losses, which were offset by a reduction in our first-lien premium deficiency reserve,” said S. A. Ibrahim, Chief Executive Officer of Radian. “During the third quarter, we significantly strengthened the statutory capital of our mortgage insurance business through the contribution of our financial guaranty business. This non-dilutive action is expected to provide the MI business with cash infusions over time. We are focused on growing our core MI business and taking advantage of opportunities to write profitable, new business that will better position us as we move through and beyond these uncertain economic times.” THIRD QUARTER HIGHLIGHTS — As announced on September 18, Radian contributed its ownership interest in Radian Asset Assurance Inc. (Radian Asset), its principal financial guaranty subsidiary, to Radian Guaranty Inc. (Radian Guaranty), the Company’s principal mortgage insurance subsidiary, providing capital support to its mortgage insurance (MI) business. — Radian Asset has $2.9 billion in claims-paying resources, including $935 million in statutory surplus.

LOGO

1601 Market Street

Philadelphia, Pennsylvania

19103-2337

800 523.1988

215 564.6600

— Radian has a 29 percent ownership interest in Sherman Financial and received $35.5 million in dividends from Sherman during the first three quarters of 2008, including $16 million in the third quarter. Sherman remains a solid contributor of earnings and quarterly dividends, and Radian has the flexibility to pursue a sale of its stake in Sherman.

— First and second-lien MI claims paid were in line with expectations at $277 million. Fourth quarter MI claims paid are expected to be similar to third quarter, with total claims paid for 2008 expected to be approximately $950 million, lower than previously guided.

— First-lien primary MI defaults were 9.71 percent, a 16 percent increase over the prior quarter.

— As a result of reduced mortgage origination volume, total primary new MI insurance written was $7.5 billion, a 22 percent decrease from the prior quarter. Radian Guaranty continues to maintain a strong market position.

— Representing a dramatic shift during the past year, approximately 98.4 percent of new MI business production in the third quarter of 2008 was prime, a trend that is expected to continue into 2009.

— Radian Guaranty’s strong efforts in loss mitigation remain a critical priority to its capital preservation. Radian Guaranty is involved in a number of initiatives to increase effective loss management, which include placing staff on-site with major mortgage servicers to expedite solutions, creating the Fast Advance program, launching a number of direct outreach programs including a borrower web site, partnering with the Consumer Credit Counseling Service of Delaware Valley to offer borrower counseling services and joining the Hope Now initiative.

— Radian has sustained relatively minimal credit losses through its high quality, diversified investment portfolio that has limited exposure to vulnerable asset classes.

— Compared to other financial guaranty insurers, Radian Asset has significantly less exposure to the weakening housing markets, further contributing to its strong capital position. Premiums written this quarter were much lower due to the Company’s decision to cease writing new business in light of current market conditions. Premiums earned were very strong reflecting heavy refunding activity.

— The GSE charter remains unchanged and Radian Guaranty remains a Top Tier provider to the GSEs through frequent and proactive collaboration and demonstration of its strong capital position.

LOGO

1601 Market Street

Philadelphia, Pennsylvania

19103-2337

800 523.1988

215 564.6600

UPDATE on RESERVES

Radian had total reserves of $3 billion as of September 30, 2008, including updated first-lien and second-lien premium deficiency reserves of $150.1 million and $181.3 million, respectively. As of September 30, 2008, the present value of Radian’s current projected aggregate future losses and expenses exceeded future premiums and current loss reserves for the domestic first-lien mortgage insurance book by $150.1 million. This projected net loss reflects the remaining life of the June 30, 2008 and prior book of business. The third quarter new production is expected to be profitable and therefore, its projected profitability is excluded from the premium deficiency reserve balance.

CONFERENCE CALL

Radian will discuss each of these items in its conference call today, Wednesday, November 5 at 10:00 a.m. Eastern time. The conference call will be broadcast live over the internet at http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives or at http://www.radian.biz >News. The call may also be accessed by dialing 800-398-9397 inside the U.S., or 612-332-1213 for international callers, using passcode 965834 or by referencing Radian.

A replay of the webcast will be available at the Radian Web site approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available two and a half hours after the call ends for one week, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 965834.

About Radian

Radian Group Inc. is a global credit risk management company headquartered in Philadelphia. Radian develops innovative financial solutions by applying its core mortgage credit risk expertise and structured finance capabilities to the credit enhancement needs of the capital markets worldwide, primarily through credit insurance products. The company also provides credit enhancement for public finance and other corporate and consumer assets on both a direct and reinsurance basis and holds strategic interests in credit-based consumer asset businesses. 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/investors/financial/corporate.aspx.



1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600	Exhibit A:	Condensed Consolidated Statements of Income

	Exhibit B:	Condensed Consolidated Balance Sheets

	Exhibit C:	Segment Information Quarter Ended September 30, 2008

	Exhibit D:	Segment Information Quarter Ended September 30, 2007

	Exhibit E:	Segment Information Nine Months Ended September 30, 2008

	Exhibit F:	Segment Information Nine Months Ended September 30, 2007

	Exhibit G:	Financial Guaranty Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008

	Exhibit H:	Financial Guaranty Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008

	Exhibit I:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 New Insurance Written and Risk Written

	Exhibit J:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Insurance in Force and Risk in Force

	Exhibit K:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Risk in Force by LTV and Policy Year and other Risk in Force

	Exhibit L:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Claims and Reserves

	Exhibit M:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Defaults

	Exhibit N:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Net Premiums Written and Earned, Smart Home, Captives and Persistency

	Exhibit O:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Reinsurance Progression Toward Attachment – Summary by Book Year

	Exhibit P:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Modified Pool Risk in Force

	Exhibit Q:	Mortgage Insurance Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008 Alt-A

	Exhibit R:	Financial Services Supplemental Information – For the Quarter and Nine Months Ended September 30, 2008

Radian Group Inc. and Subsidiaries

Condensed Consolidated Statements of Income

Exhibit A


	Quarter Ended September 30						Nine Months Ended September 30
(In thousands, except per-share data)	2008			2007			2008			2007
Revenues:
Net premiums written - insurance	$	202,451		$	308,011		$	669,402		$	798,860

Net premiums earned - insurance	$	249,718		$	245,396		$	740,776		$	677,913
Net investment income		65,215			64,959			196,322			188,605
Change in fair value of derivative instruments (1)		164,757			(615,936	)		928,792			(633,765	)
Net (losses) gains on other financial instruments		(63,737	)		14,840			(126,872	)		54,279
Gain on sale of affiliate		—			181,734			—			181,734
Other income		2,756			4,599			9,591			11,519

Total revenues		418,709			(104,408	)		1,748,609			480,285

Expenses:
Provision for losses		544,915			330,504			1,586,505			611,508
Provision for premium deficiency (2)		(252,170	)		155,176			135,727			155,176
Policy acquisition costs		20,770			35,743			120,628	(3)		88,195
Other operating expenses		80,781			34,891			199,771			137,471
Merger expenses		—			1,278			—			14,001
Interest expense		13,852			13,394			40,177			38,810

Total expenses		408,148			570,986			2,082,808			1,045,161

Equity in net income (loss) of affiliates		15,798			(448,924	)		44,028			(376,645	)

Pretax income (loss)		26,359			(1,124,318	)		(290,171	)		(941,521	)
Income tax (benefit) provision		(10,340	)		(420,454	)		(129,984	)		(372,207	)

Net income (loss)	$	36,699		$	(703,864	)	$	(160,187	)	$	(569,314	)

Diluted net income (loss) per share (4)	$	0.46		$	(8.82	)	$	(2.01	)	$	(7.16	)

(1) Includes premiums earned on derivative contracts. (2) Includes $(271.7) million for first-lien and $19.6 million for second-lien in the third quarter of 2008, and $150.1 million for first-lien and $(14.3) million for second-lien for the first nine months of 2008. (3) Includes the acceleration of $50.8 million of deferred policy acquisition cost amortization in the nine months ended September 30, 2008, as a result of the establishment of a first-lien premium deficiency reserve in the second quarter of 2008. *(4) Weighted average shares outstanding (in thousands)*
Average common shares outstanding		79,960			79,800			79,603			79,467
Increase in shares-potential exercise of options-diluted basis		433			—			—			—

Weighted average shares outstanding (in thousands)		80,393			79,800			79,603			79,467

For Trend Information, refer to our Quarterly Financial Statistics on Radian’s (RDN) website.

Page 1

Radian Group Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Exhibit B


(In thousands, except share and per-share data)	September 30 2008			December 31 2007		September 30 2007
Assets:
Cash and investments	$	6,330,214		$	6,611,836	$	6,575,797
Investments in affiliates		87,256			104,354		94,144
Deferred policy acquisition costs		178,581			234,955		233,582
Prepaid federal income taxes		248,828			793,486		861,809
Tax recoverables		462,694			1,816		2,043
Reinsurance recoverables		310,984			33,960		37,674
Other assets		619,597			429,782		409,811

Total assets	$	8,238,154		$	8,210,189	$	8,214,860

Liabilities and stockholders’ equity:
Unearned premiums	$	1,000,725		$	1,094,710	$	1,045,267
Reserve for losses and loss adjustment expenses		2,680,381			1,598,756		1,094,704
Reserve for premium deficiency		331,373			195,646		155,176
Long-term debt and other borrowings		908,282			953,524		948,010
Variable interest entity debt		127,624			—		—
Deferred income taxes		—			26,705		383,172
Derivative liabilities		343,296			1,305,665		675,432
Other liabilities		514,147			314,447		465,607

Total liabilities		5,905,828			5,489,453		4,767,368

Common stock		98			98		97
Additional paid-in capital		453,836			442,312		436,828
Retained earnings		2,017,542			2,181,191		2,903,798
Accumulated other comprehensive income		(139,150	)		97,135		106,769

Total common stockholders’ equity		2,332,326			2,720,736		3,447,492

Total liabilities and stockholders’ equity	$	8,238,154		$	8,210,189	$	8,214,860

Book value per share	$	28.90		$	33.83	$	42.86

Page 2

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended September 30, 2008

Exhibit C

(In thousands)

Mortgage
Insurance

Financial
Guaranty

Financial
Services

Total

Revenues:

Net premiums written - insurance

188,583

13,868

—

202,451

Net premiums earned - insurance

196,207

53,511

—

249,718

Net investment income

38,017

27,198

—

65,215

Change in fair value of derivative instruments

8,606

156,151

—

164,757

Net gains (losses) on other financial instruments

(39,925

)

(23,895

)

(63,737

)

Other income

2,561

137

2,756

Total revenues

205,466

213,023

220

418,709

Expenses:

Provision for losses

519,257

25,658

—

544,915

Provision for premium deficiency

(252,170

)

—

(252,170

)

Policy acquisition costs

5,327

15,443

—

20,770

Other operating expenses

43,771

36,885

125

80,781

Interest expense

6,718

7,134

—

13,852

Total expenses

322,903

85,120

125

408,148

Equity in net income of affiliates

—

15,798

Pretax (loss) income

(117,437

)

127,903

15,893

26,359

Income tax (benefit) provision

(70,473

)

53,550

6,583

(10,340

)

Net (loss) income

(46,964

)

74,353

9,310

36,699

Assets

5,120,152

2,934,032

183,970

8,238,154

Total investments

3,816,513

2,406,739

—

6,223,252

Deferred policy acquisition costs

17,997

160,584

—

178,581

Reserve for losses and loss adjustment expenses

2,496,412

183,969

—

2,680,381

Derivative liabilities

220,363

122,933

—

343,296

Unearned premiums

351,200

649,525

—

1,000,725

Stockholders’ equity

838,474

1,349,016

144,836

2,332,326

Page 3

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended September 30, 2007

Exhibit D


(In thousands)	Mortgage Insurance			Financial Guaranty			Financial Services			Total
Revenues:
Net premiums written - insurance	$	249,521		$	58,490		$	—		$	308,011

Net premiums earned - insurance	$	212,998		$	32,398		$	—		$	245,396
Net investment income		37,437			27,403			119			64,959
Change in fair value of derivative instruments		(374,024	)		(241,912	)		—			(615,936	)
Net gains (losses) on other financial instruments		9,312			5,560			(32	)		14,840
Gain on sale of affiliate		—			—			181,734			181,734
Other income		3,782			517			300			4,599

Total revenues		(110,495	)		(176,034	)		182,121			(104,408	)

Expenses:
Provision for losses		278,785			51,719			—			330,504
Provision for premium deficiency		155,176			—			—			155,176
Policy acquisition costs		24,865			10,878			—			35,743
Other operating expenses		25,460			9,863			(432	)		34,891
Merger expenses		1,116			162			—			1,278
Interest expense		6,764			4,808			1,822			13,394

Total expenses		492,166			77,430			1,390			570,986

Equity in net loss of affiliates		—			—			(448,924	)		(448,924	)

Pretax loss		(602,661	)		(253,464	)		(268,193	)		(1,124,318	)
Income tax benefit		(227,374	)		(99,350	)		(93,730	)		(420,454	)

Net loss	$	(375,287	)	$	(154,114	)	$	(174,463	)	$	(703,864	)

Assets	$	5,232,832		$	2,833,748		$	148,280		$	8,214,860
Total investments		3,956,943			2,556,054			—			6,512,997
Deferred policy acquisition costs		62,371			171,211			—			233,582
Reserve for losses and loss adjustment expenses		884,985			209,719			—			1,094,704
Unearned premiums		322,109			723,158			—			1,045,267
Stockholders’ equity		1,894,959			1,409,168			143,365			3,447,492

Page 4

Radian Group Inc. and Subsidiaries

Segment Information

Nine Months Ended September 30, 2008

Exhibit E

(In thousands)

Mortgage
Insurance

Financial
Guaranty

Financial
Services

Total

Revenues:

Net premiums written - insurance

598,864

70,538

—

669,402

Net premiums earned - insurance

605,568

135,208

—

740,776

Net investment income

115,803

80,505

196,322

Change in fair value of derivative instruments

105,548

823,244

—

928,792

Net (losses) gains on other financial instruments

(66,214

)

(60,778

)

120

(126,872

)

Other income

9,051

237

303

9,591

Total revenues

769,756

978,416

437

1,748,609

Expenses:

Provision for losses

1,539,561

46,944

—

1,586,505

Provision for premium deficiency

135,727

—

135,727

Policy acquisition costs

82,473

38,155

—

120,628

Other operating expenses

126,644

72,642

485

199,771

Interest expense

21,140

18,788

249

40,177

Total expenses

1,905,545

176,529

734

2,082,808

Equity in net income of affiliates

—

44,028

Pretax (loss) income

(1,135,789

)

801,887

43,731

(290,171

)

Income tax (benefit) provision

(428,186

)

279,537

18,665

(129,984

)

Net (loss) income

(707,603

)

522,350

25,066

(160,187

)

Page 5

Radian Group Inc. and Subsidiaries

Segment Information

Nine Months Ended September 30, 2007

Exhibit F


(In thousands)	Mortgage Insurance			Financial Guaranty			Financial Services			Total
Revenues:
Net premiums written - insurance	$	653,439		$	145,421		$	—		$	798,860

Net premiums earned - insurance	$	578,829		$	99,084		$	—		$	677,913
Net investment income		109,283			79,160			162			188,605
Change in fair value of derivative instruments		(419,096	)		(214,669	)		—			(633,765	)
Net gains on other financial instruments		39,791			13,993			495			54,279
Gain on sale of affiliate		—			—			181,734			181,734
Other income		9,357			783			1,379			11,519

Total revenues		318,164			(21,649	)		183,770			480,285

Expenses:
Provision for losses		571,791			39,717			—			611,508
Provision for premium deficiency		155,176			—			—			155,176
Policy acquisition costs		53,944			34,251			—			88,195
Other operating expenses		95,769			36,630			5,072			137,471
Merger expenses		13,434			567			—			14,001
Interest expense		19,959			13,866			4,985			38,810

Total expenses		910,073			125,031			10,057			1,045,161

Equity in net loss of affiliates		—			—			(376,645	)		(376,645	)

Pretax loss		(591,909	)		(146,680	)		(202,932	)		(941,521	)
Income tax benefit		(233,121	)		(72,504	)		(66,582	)		(372,207	)

Net loss	$	(358,788	)	$	(74,176	)	$	(136,350	)	$	(569,314	)

Page 6

Radian Group Inc.

Financial Guaranty Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit G


	Quarter Ended September 30						Nine Months Ended September 30
($ in thousands, except ratios)	2008			2007			2008			2007
Net Premiums Written: (1)
Public finance direct	$	2,059		$	17,746		$	15,538		$	48,656
Public finance reinsurance		6,046			31,433			30,808			67,082
Structured direct		3,358			3,991			10,546			12,027
Structured reinsurance		2,748			5,001			13,601			16,606
Trade credit reinsurance		(343	)		319			45			1,050

Total Net Premiums Written - insurance	$	13,868		$	58,490		$	70,538		$	145,421

Net Premiums Earned: (2)
Public finance direct	$	13,380		$	10,765		$	43,194		$	32,311
Public finance reinsurance		32,310			11,105			65,145			33,897
Structured direct		3,569			4,367			11,211			13,447
Structured reinsurance		4,472			5,560			15,163			17,496
Trade credit reinsurance		(220	)		601			495			1,933

Total Net Premiums Earned - insurance	$	53,511		$	32,398		$	135,208		$	99,084

Refundings included in earned premium	$	27,326		$	4,054		$	55,647		$	15,817

Claims paid:
Trade credit reinsurance	$	449		$	1,751		$	1,432		$	7,022
Other		4,232			1,478			107,449	(3)		2,212
Conseco		2,218			2,663			6,591			8,782

Total	$	6,899		$	5,892		$	115,472		$	18,016

Incurred losses:
Trade credit reinsurance	$	(1,825	)	$	(1,928	)	$	(7,299	)	$	(13,544	)
Other		27,483			53,647			54,915			53,261
Conseco		—			—			(672	)		—

Total	$	25,658		$	51,719		$	46,944		$	39,717

Loss ratio- GAAP Basis		38.1	%		111.7	%		26.6	%		26.9	%
Expense ratio- GAAP Basis (4)		77.8	%		44.8	%		62.9	%		48.0	%

		115.9	%		156.5	%		89.5	%		74.9	%

Net payments (receipts) under derivatives contracts	$	3,750		$	(3,558	)	$	9,328		$	(30,933	)

(1)

Premiums written on credit derivatives for the quarter and nine months ended September 30, 2008 were $12.1 million and $38.0 million, respectively, compared to $11.1 million and $30.0 million, respectively, for the quarter and nine months ended September 30, 2007.

(2)

Premiums earned on credit derivatives for the quarter and nine months ended September 30, 2008 were $13.8 million and $41.0 million, respectively, compared to $13.9 million and $48.6 million, respectively, for the quarter and nine months ended September 30, 2007. Premiums earned on credit derivatives are included in change of fair value of derivative instruments.

(3)

Includes a $100 million payment related to one credit that is a CDO of an ABS that was fully reserved for in 2007.

(4)

Excludes merger expenses.

Page 7

Radian Group Inc.

Financial Guaranty Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit H


($ in thousands, except ratios)	September 30, 2008			December 31, 2007			September 30, 2007
Capital and surplus	$	957,177		$	1,158,537		$	1,172,141
Contingency reserve		510,195			433,296			407,542

Qualified statutory capital		1,467,372			1,591,833			1,579,683
Unearned premium reserve		818,365			886,024			874,380
Loss and loss expense reserve		70,621			61,038			67,127

Total statutory policyholders’ reserves		2,356,358			2,538,895			2,521,190
Present value of installment premiums		402,223			461,806			433,428
Reinsurance and soft capital facilities		150,000			150,000			150,000

Total statutory claims paying resources	$	2,908,581		$	3,150,701		$	3,104,618

Net debt service outstanding	$	156,928,647		$	164,346,659		$	156,743,014

Capital leverage ratio (1)		107			103			99
Claims paying leverage ratio (2)		54			52			50
Net par outstanding by product:
Public finance direct	$	18,344,046		$	18,228,946		$	18,168,866
Public finance reinsurance		40,420,433			43,822,781			41,592,621
Structured direct		46,695,176			47,878,168			47,704,089
Structured reinsurance		5,567,853			6,091,717			5,300,388

Total	$	111,027,508		$	116,021,612		$	112,765,964

Reinsurance business net par outstanding:
Treaty		63	%		59	%		58	%
Facultative		37	%		41	%		42	%
Reserve for losses and LAE
Specific	$	47,495		$	26,791		$	27,979
Conseco		15,263			22,526			25,193
Non-specific		121,211			203,987			156,547

Total	$	183,969		$	253,304		$	209,719

(1)

Net debt service outstanding divided by qualified statutory capital

(2)

Net debt service outstanding divided by total statutory claims paying resources

Page 8

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit I


	Quarter Ended September 30										Nine Months Ended September 30
($ in millions)	2008			%		2007			%		2008			%		2007			%
Primary New Insurance Written
Flow	$	7,524		99.8	%	$	12,225		90.8	%	$	26,240		95.5	%	$	29,913		68.7	%
Structured		16		0.2	%		1,234		9.2	%		1,234		4.5	%		13,623		31.3	%

Total Primary	$	7,540		100.0	%	$	13,459		100.0	%	$	27,474		100.0	%	$	43,536		100.0	%

Flow
Prime	$	7,405		98.4	%	$	8,448		69.1	%	$	24,356		92.8	%	$	21,171		70.8	%
Alt-A		96		1.3	%		2,588		21.2	%		1,154		4.4	%		6,015		20.1	%
A minus and below		23		0.3	%		1,189		9.7	%		730		2.8	%		2,727		9.1	%

Total Flow	$	7,524		100.0	%	$	12,225		100.0	%	$	26,240		100.0	%	$	29,913		100.0	%

Structured
Prime	$	16		100.0	%	$	967		78.4	%	$	1,232		99.8	%	$	1,641		12.0	%
Alt-A		—		—			32		2.6	%		2		0.2	%		11,137		81.8	%
A minus and below		—		—			235		19.0	%		—		—			845		6.2	%

Total Structured	$	16		100.0	%	$	1,234		100.0	%	$	1,234		100.0	%	$	13,623		100.0	%

Total
Prime	$	7,421		98.4	%	$	9,415		69.9	%	$	25,588		93.1	%	$	22,812		52.4	%
Alt-A		96		1.3	%		2,620		19.5	%		1,156		4.2	%		17,152		39.4	%
A minus and below		23		0.3	%		1,424		10.6	%		730		2.7	%		3,572		8.2	%

Total Primary	$	7,540		100.0	%	$	13,459		100.0	%	$	27,474		100.0	%	$	43,536		100.0	%

Total Primary Risk in Force by FICO Score
Flow
<=619	$	7		0.1	%	$	703		5.7	%	$	376		1.4	%	$	1,830		6.1	%
620-679		773		10.3	%		3,506		28.7	%		4,223		16.1	%		9,158		30.6	%
680-739		2,662		35.4	%		4,644		38.0	%		9,729		37.1	%		10,977		36.7	%
>=740		4,082		54.2	%		3,372		27.6	%		11,912		45.4	%		7,948		26.6	%

Total Flow	$	7,524		100.0	%	$	12,225		100.0	%	$	26,240		100.0	%	$	29,913		100.0	%

Structured
<=619	$	—		—		$	129		10.5	%	$	—		—		$	538		4.0	%
620-679		—		—			296		24.0	%		17		1.4	%		3,762		27.6	%
680-739		4		25.0	%		331		26.8	%		437		35.4	%		6,160		45.2	%
>=740		12		75.0	%		478		38.7	%		780		63.2	%		3,163		23.2	%

Total Structured	$	16		100.0	%	$	1,234		100.0	%	$	1,234		100.0	%	$	13,623		100.0	%

Total
<=619	$	7		0.1	%	$	832		6.2	%	$	376		1.4	%	$	2,368		5.4	%
620-679		773		10.3	%		3,802		28.2	%		4,240		15.4	%		12,920		29.7	%
680-739		2,666		35.3	%		4,975		37.0	%		10,166		37.0	%		17,137		39.4	%
>=740		4,094		54.3	%		3,850		28.6	%		12,692		46.2	%		11,111		25.5	%

Total Primary	$	7,540		100.0	%	$	13,459		100.0	%	$	27,474		100.0	%	$	43,536		100.0	%

Percentage of primary new insurance written
Refinances		20	%				27	%				33	%				40	%
95.01% LTV and above		3	%				31	%				13	%				22	%
ARMs
Less than 5 years		1	%				4	%				1	%				17	%
5 years and longer		10	%				13	%				9	%				9	%
Primary risk written
Flow	$	1,770		99.9	%	$	3,196		91.7	%	$	6,317		95.2	%	$	7,641		88.2	%
Structured		2		0.1	%		291		8.3	%		316		4.8	%		1,022		11.8	%

Total Primary	$	1,772		100.0	%	$	3,487		100.0	%	$	6,633		100.0	%	$	8,663		100.0	%

Pool risk written	$	1				$	42				$	60				$	227

Other risk written
Seconds
1st loss	$	—				$	3				$	—				$	9
2nd loss		—					—					—					21
NIMs		—					—					—					377
International
1st loss-Hong Kong primary mortgage insurance		—					46					51					96
Reinsurance		2					15					44					49

Total other risk written	$	2				$	64				$	95				$	552

Page 9

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit J


	September 30				September 30
($ in millions)	2008		%		2007		%
Primary insurance in force
Flow	$	119,593	77.5	%	$	98,985	73.3	%
Structured		34,699	22.5	%		36,030	26.7	%

Total Primary	$	154,292	100.0	%	$	135,015	100.0	%

Prime	$	109,432	70.9	%	$	86,530	64.1	%
Alt-A		33,404	21.7	%		36,266	26.9	%
A minus and below		11,456	7.4	%		12,219	9.0	%

Total Primary	$	154,292	100.0	%	$	135,015	100.0	%

Primary risk in force
Flow	$	29,968	86.4	%	$	24,856	84.5	%
Structured		4,701	13.6	%		4,545	15.5	%


Total Primary	$	34,669	100.0	%	$	29,401	100.0	%

Flow
Prime	$	24,242	80.9	%	$	19,117	76.9	%
Alt-A		3,674	12.3	%		3,799	15.3	%
A minus and below		2,052	6.8	%		1,940	7.8	%

Total Flow	$	29,968	100.0	%	$	24,856	100.0	%

Structured
Prime	$	2,451	52.1	%	$	1,791	39.4	%
Alt-A		1,451	30.9	%		1,668	36.7	%
A minus and below		799	17.0	%		1,086	23.9	%

Total Structured	$	4,701	100.0	%	$	4,545	100.0	%

Total
Prime	$	26,693	77.0	%	$	20,908	71.1	%
Alt-A		5,125	14.8	%		5,467	18.6	%
A minus and below		2,851	8.2	%		3,026	10.3	%

Total Primary	$	34,669	100.0	%	$	29,401	100.0	%

Total Primary Risk in Force by FICO Score
Flow
<=619	$	1,550	5.2	%	$	1,573	6.3	%
620-679		8,318	27.8	%		7,632	30.7	%
680-739		11,101	37.0	%		9,122	36.7	%
>=740		8,999	30.0	%		6,529	26.3	%

Total Flow	$	29,968	100.0	%	$	24,856	100.0	%

Structured
<=619	$	740	15.7	%	$	1,025	22.6	%
620-679		1,255	26.7	%		1,515	33.3	%
680-739		1,452	30.9	%		1,282	28.2	%
>=740		1,254	26.7	%		723	15.9	%

Total Structured	$	4,701	100.0	%	$	4,545	100.0	%

Total
<=619	$	2,290	6.6	%	$	2,598	8.8	%
620-679		9,573	27.6	%		9,147	31.1	%
680-739		12,553	36.2	%		10,404	35.4	%
>=740		10,253	29.6	%		7,252	24.7	%

Total Primary	$	34,669	100.0	%	$	29,401	100.0	%

Percentage of primary risk in force
Refinances			31	%			32	%
95.01% LTV and above			23	%			22	%
ARMs
Less than 5 years			9	%			14	%
5 years and longer			9	%			9	%
Pool risk in force
Prime	$	2,096	70.7	%	$	2,088	69.9	%
Alt-A		290	9.8	%		294	9.8	%
A minus and below		577	19.5	%		605	20.3	%

Total	$	2,963	100.0	%	$	2,987	100.0	%

Page 10

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit K


	September 30				September 30
($ in millions)	2008		%		2007		%
Total Primary Risk in Force by LTV
95.01% and above	$	7,962	23.0	%	$	6,543	22.3	%
90.01% to 95.00%		11,003	31.7	%		8,929	30.4	%
85.01% to 90.00%		12,045	34.7	%		10,040	34.1	%
85.00% and below		3,659	10.6	%		3,889	13.2	%

Total	$	34,669	100.0	%	$	29,401	100.0	%

Total Primary Risk in Force by Policy Year
2004 and prior	$	7,598	22.0	%	$	9,399	31.9	%
2005		4,385	12.6	%		5,364	18.3	%
2006		5,342	15.4	%		6,246	21.3	%
2007		10,896	31.4	%		8,392	28.5	%
2008		6,448	18.6	%		—	—

Total	$	34,669	100.0	%	$	29,401	100.0	%

Total Pool Risk in Force by Policy Year
2004 and prior	$	1,821	61.5	%	$	1,893	63.4	%
2005		586	19.8	%		598	20.0	%
2006		255	8.6	%		269	9.0	%
2007		241	8.1	%		227	7.6	%
2008		60	2.0	%		—	—

Total Pool risk in Force	$	2,963	100.0	%	$	2,987	100.0	%

Other risk in force
Seconds
1st loss	$	289			$	436
2nd loss		407				571
NIMs		456				712
International
1st loss-Hong Kong primary mortgage insurance		442				432
Reinsurance		139				85
Credit default swaps		7,567				8,108
Other
Domestic credit default swaps		162				212

Total other risk in force	$	9,462			$	10,556

Risk to capital ratio-STAT Basis		19.7:1				11.9:1
Risk to capital ratio-STAT Basis excluding AAA-rated CDS		16.2:1				9.7:1
Risk to capital ratio-Radian Guaranty only		14.5:1				11.9:1

Page 11

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit L


	Quarter Ended September 30						Nine Months Ended September 30
($ in thousands)	2008			2007			2008			2007
Direct claims paid
Prime	$	98,269		$	43,601		$	222,975		$	110,952
Alt-A		68,960			28,902			152,438			70,655
A minus and below		65,280			39,025			162,911			103,132
Seconds and other		44,882			25,282			138,094			59,974

Total	$	277,391		$	136,810		$	676,418		$	344,713

Average claim paid
Prime	$	45.0		$	32.3		$	40.0		$	29.7
Alt-A		58.7			46.8			53.9			42.7
A minus and below		42.6			34.7			38.6			31.9
Seconds		36.9			31.2			35.1			29.4
Total	$	45.4		$	35.1		$	40.8		$	32.3
Loss ratio -GAAP Basis		258.1	%		122.8	%		244.6	%		90.8	%
Expense ratio - GAAP Basis (2)		24.4	%		22.1	%		33.2	%		23.8	%

		282.5	%		144.9	%		277.8	%		114.6	%

Reserve for losses by category
Prime	$	667,349		$	246,531
Alt-A		844,551			246,792
A minus and below		432,001			279,320
Pool insurance		87,429			42,582
Seconds		153,839			41,985
Other		1,436			1,341

Reserve for losses, net		2,186,605			858,551
Reinsurance recoverable		309,807	(1)		26,434

Total	$	2,496,412		$	884,985

(1)

Reinsurance recoverable on ceded losses related to captives ($240.4 million) and Smart Home ($69.4 million).

(2)

Includes the acceleration of $50.8 million of deferred policy acquisition cost amortization in the nine months ended September 30, 2008, as a result of the establishment of a first-lien premium deficiency reserve in the second quarter of 2008 and excludes merger expenses.

Page 12

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit M


	September 30 2008		December 31 2007		September 30 2007
Default Statistics
Primary insurance:
Flow
Prime
Number of insured loans	619,035		565,563		542,819
Number of loans in default	33,330		20,632		16,908
Percentage of loans in default	5.38	%	3.65	%	3.11	%
Alt-A
Number of insured loans	70,814		74,559		74,927
Number of loans in default	13,853		7,980		6,029
Percentage of loans in default	19.56	%	10.70	%	8.05	%
A minus and below
Number of insured loans	60,946		63,853		60,826
Number of loans in default	13,436		10,087		8,638
Percentage of loans in default	22.05	%	15.80	%	14.20	%
Total Flow
Number of insured loans	750,795		703,975		678,572
Number of loans in default	60,619		38,699		31,575
Percentage of loans in default	8.07	%	5.50	%	4.65	%
Structured
Prime
Number of insured loans	68,744		64,789		59,163
Number of loans in default	5,900		4,707		4,072
Percentage of loans in default	8.58	%	7.27	%	6.88	%
Alt-A
Number of insured loans	82,187		97,526		93,494
Number of loans in default	15,499		8,783		6,512
Percentage of loans in default	18.86	%	9.01	%	6.97	%
A minus and below
Number of insured loans	23,337		28,747		31,034
Number of loans in default	7,784		8,659		8,496
Percentage of loans in default	33.35	%	30.12	%	27.38	%
Total Structured
Number of insured loans	174,268		191,062		183,691
Number of loans in default	29,183		22,149		19,080
Percentage of loans in default	16.75	%	11.59	%	10.39	%
Total Primary Insurance
Prime
Number of insured loans	687,779		630,352		601,982
Number of loans in default	39,230		25,339		20,980
Percentage of loans in default	5.70	%	4.02	%	3.49	%
Alt-A
Number of insured loans	153,001		172,085		168,421
Number of loans in default	29,352		16,763		12,541
Percentage of loans in default	19.18	%	9.74	%	7.45	%
A minus and below
Number of insured loans	84,283		92,600		91,860
Number of loans in default	21,220		18,746		17,134
Percentage of loans in default	25.18	%	20.24	%	18.65	%
Total Primary Insurance
Number of insured loans	925,063		895,037		862,263
Number of loans in default	89,802	(1)	60,848	(1)	50,655	(1)
Percentage of loans in default	9.71	%	6.80	%	5.87	%
Pool insurance:
Number of loans in default	29,487	(2)	26,526	(2)	23,810	(2)

(1)

Includes approximately 483, 2,595 and 2,796 defaults at September 30, 2008, December 31, 2007 and September 30, 2007, respectively, where reserves have not been established because no claim payment is currently anticipated.

(2)

Includes approximately 20,965, 20,193 and 18,124 defaults at September 30, 2008, December 31, 2007 and September 30, 2007, respectively, where reserves have not been established because no claim payment is currently anticipated.

Page 13

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit N


	Quarter Ended September 30						Nine Months Ended September 30
	2008			2007			2008			2007
Net Premiums Written (In thousands) (1)
Primary and Pool Insurance	$	186,524		$	235,989		$	578,770		$	612,589
Seconds		2,044			4,711			8,430			22,340
International		15			8,821			11,664			18,510

Total Net Premiums Written - insurance	$	188,583		$	249,521		$	598,864		$	653,439

Net Premiums Earned (In thousands) (2)
Primary and Pool Insurance	$	187,596		$	200,467		$	575,017		$	541,796
Seconds		3,250			7,270			14,378			25,165
International		5,361			5,261			16,173			11,868

Total Net Premiums Earned - insurance	$	196,207		$	212,998		$	605,568		$	578,829

SMART HOME (In millions)
Ceded Premiums Written	$	3.1		$	3.3		$	10.0		$	9.7
Ceded Premiums Earned	$	3.1		$	3.3		$	10.0		$	9.3
Captives
Premiums ceded to captives (In millions)	$	34.6		$	30.3		$	104.4		$	88.4
% of total premiums		15.4	%		13.0	%		15.2	%		13.8	%
NIW subject to captives (In millions)	$	2,104		$	5,406		$	10,268		$	16,546
% of primary NIW		27.9	%		40.2	%		37.4	%		38.0	%
IIF included in captives (3)		36.6	%		35.3	%
RIF included in captives (3)		41.0	%		40.6	%
Persistency (twelve months ended September 30)		83.9	%		72.8	%

(1)

Premiums written on credit derivatives for the quarter and nine months ended September 30, 2008 were $2.4 million and $16.9 million, respectively, compared to $11.0 million and $46.4 million, respectively, for the quarter and nine months ended September 30, 2007.

(2)

Premiums earned on credit derivatives for the quarter and nine months ended September 30, 2008 were $5.0 million and $23.9 million, respectively, compared to $14.1 million and $50.9 million, respectively, for the quarter and nine months ended September 30, 2007. Premiums earned on credit derivatives are included in change of 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.

Page 14

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of September 30, 2008

Exhibit O

Reinsurance Progression Toward Attachment - Summary by Book Year (1)


					September 30, 2008						June 30, 2008						December 31, 2007
($ in millions)	Original Book RIF as of September 30, 2008		Progression to Attachment Point		Current RIF		Ever-to-Date Incurred Losses		Captive Benefit (3)		Current RIF		Ever-to-Date Incurred Losses		Captive Benefit (3)		Current RIF		Ever-to-Date Incurred Losses		Captive Benefit (3)
Book Year (2):
Pre-2005			0-50	%	$	1,215	$	236			$	1,337	$	240			$	2,209	$	279
Pre-2005			50-75	%		959		148				1,155		158				1,145		144
Pre-2005			75-99	%		618		106				514		81				32		19
Pre-2005			Attached			58		8	$	1		17		5	$	1		12		3	$	1

Pre-2005 Total	$	25,546			$	2,850	$	498	$	1	$	3,023	$	484	$	1	$	3,398	$	445	$	1

2005			0-50	%	$	121	$	4			$	187	$	4			$	697	$	13
2005			50-75	%		375		17				430		17				429		15
2005			75-99	%		158		10				392		21				945		53
2005			Attached			1,176		135	$	50		896		95	$	29		11		2	$	—

2005 Total	$	3,316			$	1,830	$	166	$	50	$	1,905	$	137	$	29	$	2,082	$	83	$	—

2006			0-50	%	$	36	$	1			$	146	$	3			$	851	$	12
2006			50-75	%		430		17				524		18				332		10
2006			75-99	%		142		8				153		7				1,470		71
2006			Attached			1,937		224	$	118		1,800		169	$	74		210		10	$	1

2006 Total	$	3,537			$	2,545	$	250	$	118	$	2,623	$	197	$	74	$	2,863	$	103	$	1

2007			0-50	%	$	262	$	5			$	913	$	15			$	4,058	$	36
2007			50-75	%		62		2				2,876		91				580		12
2007			75-99	%		841		31				—		—				4		—
2007			Attached			3,586		214	$	60		1,055		63	$	21		1		—	$	—

2007 Total	$	5,270			$	4,751	$	252	$	60	$	4,844	$	169	$	21	$	4,643	$	48	$	—

2008			0-50	%	$	1,882	$	12			$	1,483	$	3			$	—	$	—
2008			50-75	%		—		—				90		2				—		—
2008			75-99	%		2		—				—		—				—		—
2008			Attached			169		8	$	2		—		—	$	—		—		—	$	—

2008 Total	$	2,111			$	2,053	$	20	$	2	$	1,573	$	5	$	—	$	—	$	—	$	—

Quota Share			0-50	%	$	—	$	—			$	27	$	—			$	20	$	—
Quota Share			50-75	%		—		—				—		—				7		1
Quota Share			75-99	%		—		—				6		1				—		—
Quota Share			Attached			117		22	$	10		85		17	$	8		90		9	$	4

Quota Share Total	$	311			$	117	$	22	$	10	$	118	$	18	$	8	$	117	$	10	$	4

	$	40,091			$	14,146	$	1,208	$	241	$	14,086	$	1,010	$	133	$	13,103	$	689	$	6

SmartHome			0-50	%	$	122	$	25			$	127	$	24			$	142	$	23
SmartHome			50-75	%		—		—				—		—				693		92
SmartHome			75-99	%		—		—				622		115				—		—
SmartHome			Attached			1,234		304	$	67		703		154	$	45		833		112	$	10

Total SmartHome	$	3,900			$	1,356	$	329	$	67	$	1,452	$	293	$	45	$	1,668	$	227	$	10

(1)

Data presented in aggregate for all trusts for captives active at each period end only. Actual trust attachment and exit points vary by individual contract. Attachment is calculated at the contract/deal level and is based on Total Incurred Losses which are defined as claims paid ever-to-date plus loss reserves.

(2)

Book year figures may include loans from additional periods pursuant to reinsurance agreement terms and conditions.

(3)

Captive Benefit is defined as ceded reserves at period end plus ever-to-date claims paid by the trust.

Page 15

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit P


	September 30				September 30
($ in millions)	2008		%		2007		%
Modified Pool Risk in Force
Prime
2004 and prior	$	46	29.5	%	$	47	30.1	%
2005		40	25.6	%		48	30.8	%
2006		44	28.2	%		44	28.2	%
2007		22	14.1	%		17	10.9	%
2008		4	2.6	%		—	—

Total	$	156	100.0	%	$	156	100.0	%

Alt-A
2004 and prior	$	98	14.6	%	$	105	15.4	%
2005		102	15.2	%		118	17.4	%
2006		165	24.5	%		165	24.3	%
2007		304	45.2	%		292	42.9	%
2008		4	0.5	%		—	—

Total	$	673	100.0	%	$	680	100.0	%

A minus and below
2004 and prior	$	9	36.0	%	$	10	35.7	%
2005		6	24.0	%		8	28.6	%
2006		3	12.0	%		3	10.7	%
2007		7	28.0	%		7	25.0	%
2008		—	—			—	—

Total	$	25	100.0	%	$	28	100.0	%

Total
2004 and prior	$	153	17.9	%	$	162	18.8	%
2005		148	17.3	%		174	20.1	%
2006		212	24.8	%		212	24.5	%
2007		333	39.0	%		316	36.6	%
2008		8	1.0	%		—	—

Total Modified Pool Risk in Force	$	854	100.0	%	$	864	100.0	%

Page 16

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of September 30, 2008

ALT-A

Exhibit Q


	Quarter Ended September 30								Nine Months Ended September 30
($ in millions)	2008		%		2007		%		2008		%		2007		%
Primary New Insurance Written by FICO Score
<=619	$	—	—		$	15	0.6	%	$	3	0.3	%	$	107	0.6	%
620-659		9	9.4	%		167	6.4	%		26	2.2	%		1,846	10.8	%
660-679		10	10.4	%		303	11.5	%		63	5.4	%		2,689	15.7	%
680-739		30	31.2	%		1,350	51.5	%		561	48.6	%		8,373	48.8	%
>=740		47	49.0	%		785	30.0	%		503	43.5	%		4,137	24.1	%

Total	$	96	100.0	%	$	2,620	100.0	%	$	1,156	100.0	%	$	17,152	100.0	%

Primary Risk in Force by FICO Score
<=619	$	34	0.7	%	$	39	0.7	%
620-659		628	12.3	%		756	13.8	%
660-679		755	14.7	%		839	15.4	%
680-739		2,452	47.8	%		2,558	46.8	%
>=740		1,256	24.5	%		1,275	23.3	%

Total	$	5,125	100.0	%	$	5,467	100.0	%

Primary Risk in Force by LTV
95.01% and above	$	356	6.9	%	$	382	7.0	%
90.01% to 95.00%		1,330	26.0	%		1,424	26.0	%
85.01% to 90.00%		2,131	41.6	%		2,216	40.6	%
85.00% and below		1,308	25.5	%		1,445	26.4	%

Total	$	5,125	100.0	%	$	5,467	100.0	%

Primary Risk in Force by Policy Year
2004 and prior	$	940	18.3	%	$	1,182	21.6	%
2005		707	13.8	%		897	16.4	%
2006		1,141	22.3	%		1,325	24.2	%
2007		2,083	40.6	%		2,063	37.8	%
2008		254	5.0	%		—	—

Total	$	5,125	100.0	%	$	5,467	100.0	%

Page 17

Radian Group Inc.

Financial Services Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2008

Exhibit R


	Quarter Ended September 30						Nine Months Ended September 30
(In thousands )	2008			2007			2008			2007
Investment in Affiliates-Selected Information
C-BASS
Balance, beginning of period	$	—		$	467,800		$	—		$	451,395
Net income for period		—			(467,800	)		—			(451,395	)

Balance, end of period	$	—		$	—		$	—		$	—

Sherman
Balance, beginning of period	$	112,644		$	171,737		$	104,315		$	167,412
Net income for period		15,798			18,876			44,028			74,750
Dividends received		15,961			—			35,460			51,512
Other comprehensive (loss) income		522			(637	)		120			(674	)
Sale of ownership interest		—			(95,866	)		—			(95,866	)
Adjustment to investment related to buyback of MGIC interest		(25,786	)		—			(25,786	)		—

Balance, end of period	$	87,217		$	94,110		$	87,217		$	94,110

Portfolio Information:
C-BASS
Servicing portfolio		N/A		$	57,700,000
Total assets		N/A			N/A
Servicing income		N/A			N/A			N/A			N/A
Net interest income		N/A			N/A			N/A			N/A
Total revenues		N/A			N/A			N/A			N/A
Sherman
Total assets	$	2,433,666		$	2,093,168
Total revenues	$	381,047		$	311,386		$	1,179,014		$	880,613

Radian owns a 46% interest in C-BASS and a 28.7% interest in Sherman. Prior to August 2008, we owned a 21.8% interest in Sherman. Prior to September 2007, we owned an interest in Sherman consisting of 40.96% of the Class A Common Units of Sherman (Class A Common Units represent 94% of the total equity in Sherman) and 50% of the Preferred Units of Sherman.

Page 18



1601 Market Street Philadelphia, Pennsylvania 19103-2337 800 523.1988 215 564.6600		Forward Looking Statements
		All statements in this news 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 U.S. Private Securities Litigation Reform Act of 1995. These statements, which 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 extended national or regional economic recessions, changes in housing demand or mortgage originations, changes in housing values (in particular, further deterioration in the housing, mortgage and related credit markets, which would harm our future consolidated results of operations and could cause losses for our businesses to be worse than expected), changes in the liquidity in the capital markets and the further contraction of credit markets, population trends and changes in household formation patterns, changes in unemployment rates, changes or volatility in interest rates or consumer confidence, changes in credit spreads, changes in the way investors perceive the strength of private mortgage insurers or financial guaranty providers, investor concern over the credit quality and specific risks faced by the particular businesses, municipalities or pools of assets covered by our insurance; • economic changes or catastrophic events in geographic regions where our mortgage insurance or financial guaranty insurance in force is more concentrated; • our ability to successfully execute upon our capital plan, and if necessary, to obtain additional capital to support our long-term liquidity needs and to protect our credit ratings and the financial strength ratings of Radian Guaranty Inc., our primary mortgage insurance subsidiary; • a further decrease in the volume of home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards and the on-going deterioration in housing markets throughout the U.S.; • our ability to maintain adequate risk-to-capital ratios, leverage ratios and surplus requirements in our mortgage insurance business in light of on-going losses in this business; • the loss of a customer for whom we write a significant amount of mortgage insurance or the influence of large customers; • 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;

LOGO

1601 Market Street

Philadelphia, Pennsylvania

19103-2337

800 523.1988

215 564.6600

• the performance of our insured portfolio of higher risk loans, such as Alternative-A (“Alt-A”) and subprime loans, and adjustable rate products, such as adjustable rate mortgages and interest-only mortgages, which have resulted in increased losses in 2007 and 2008 and are expected to result in further losses;

• reduced opportunities for loss mitigation in markets where housing values fail to appreciate or begin to decline;

• changes in persistency rates of our mortgage insurance policies caused by changes in refinancing activity, in the rate of appreciation or depreciation of home values and changes in the mortgage insurance cancellation requirements of mortgage lenders and investors;

• 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 insurance subsidiaries at any time (in particular, the credit rating of Radian Group Inc. and the financial strength ratings assigned to Radian Guaranty Inc., which are currently on Negative outlook);

• heightened competition for our mortgage insurance business from others such as the Federal Housing Administration and the Veterans’ Administration or other private mortgage insurers (in particular those that have been assigned higher ratings from the major ratings agencies);

• changes in the charters or business practices of Federal National Mortgage Association (“Fannie Mae”) and Freddie Mac, the largest purchasers of mortgage loans that we insure, and our ability to retain our “Top Tier” eligibility requirement from both Freddie Mac and Fannie Mae;

• the application of existing federal or state consumer, lending, insurance, 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 investigations or the possibility of private lawsuits or other formal investigations by state insurance departments and state attorneys general alleging that services offered by the mortgage insurance industry, such as captive reinsurance, pool insurance and contract underwriting, are violative of the Real Estate Settlement Procedures Act and/or similar state regulations, (ii) legislative and regulatory changes affecting demand for private mortgage insurance or financial guaranty insurance, or (iii) legislation and regulatory changes limiting or restricting our use of (or requirements for) additional capital, the products we may offer, the form in which we may execute the credit protection we provide or the aggregate notional amount of any product we may offer for any one transaction or in the aggregate;

• 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 the premium deficiencies for our first- and second-lien mortgage insurance business, or to estimate accurately the fair value amounts of derivative contracts in our mortgage insurance and financial guaranty businesses in determining gains and losses on these contracts;

LOGO

1601 Market Street

Philadelphia, Pennsylvania

19103-2337

800 523.1988

215 564.6600

• volatility in our earnings caused by changes in the fair value of our derivative instruments and our need to reevaluate the premium deficiencies in our mortgage insurance business on a quarterly basis;

• changes in accounting guidance from the Securities and Exchange Commission (“SEC”) or the Financial Accounting Standards Board;

• legal and other limitations on amounts we may receive from our subsidiaries as dividends or through tax and expense sharing arrangements with our subsidiaries; and

• vulnerability to the performance of our strategic investments, including in particular, our investment in Sherman Financial Group LLC.

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, 2007 as well as the material changes to these risks discussed in Item 1A of Part II of our quarterly reports on Form 10-Q. 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 news release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this news release to reflect new information or future events or for any other reason.

SOURCE: Radian Group Inc.

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