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Radian Reports Second Quarter 2012 Financial Results

Radian will discuss these items in its conference call today, Wednesday, August 1, 2012, at 11:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at http://www.radian.biz/page?name=Webcasts or at www.radian.biz. The call may also be accessed by dialing 800-288-8961 inside the U.S., or 612-288-0337 for international callers, using passcode 254001 or by referencing Radian.

A replay of the webcast will be available on the Radian website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available approximately two and a half hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 254001.

In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's website under Investors >Quarterly Results, or by clicking on http://www.radian.biz/page?name=QuarterlyResults.

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. Additional information may be found at www.radian.biz.

Financial Results and Supplemental Information Contents (Unaudited)

For trend information on all schedules, refer to Radian’s quarterly financial statistics at http://www.radian.biz/page?name=FinancialReportsCorporate.

Exhibit A:   Condensed Consolidated Statements of Income
Exhibit B: Condensed Consolidated Balance Sheets
Exhibit C: Segment Information Quarter Ended June 30, 2012
Exhibit D: Segment Information Quarter Ended June 30, 2011
Exhibit E: Segment Information Six Months Ended June 30, 2012
Exhibit F: Segment Information Six Months Ended June 30, 2011
 
Exhibit G: Financial Guaranty Supplemental Information
Exhibit H: Financial Guaranty Supplemental Information
Exhibit G: Mortgage Insurance Supplemental Information
New Insurance Written
Exhibit I: Mortgage Insurance Supplemental Information
NIW by Product, FICO and LTV
Exhibit J: Mortgage Insurance Supplemental Information
Insurance in Force and Risk in Force by Product
Exhibit K: Mortgage Insurance Supplemental Information
Risk in Force by FICO, LTV and Policy Year
Exhibit L: Mortgage Insurance Supplemental Information
Primary, Pool and Other Risk in Force
Exhibit M: Mortgage Insurance Supplemental Information
Claims, Reserves and Reserves per Default
Exhibit N: Mortgage Insurance Supplemental Information
Default Statistics
Exhibit O: Mortgage Insurance Supplemental Information
Net Premiums Written and Earned, Captives and Persistency
   
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
 

Quarter Ended June 30

Six Months Ended June 30

(In thousands, except per-share data)

2012   2011 2012   2011
 
Revenues:
Net premiums written - insurance $ 181,932   $ 152,778   $ 259,610   $ 335,527  
 
Net premiums earned - insurance $ 186,779 $ 188,934 $ 354,144 $ 391,957
Net investment income 30,877 43,823 65,590 86,063
Net gains on investments 26,419 44,236 93,878 81,671
Net impairment losses recognized in earnings (11 ) (11 )
Change in fair value of derivative instruments (33,124 ) 188,726 (105,881 ) 432,618
Net (losses) gains on other financial instruments (61,862 ) 5,047 (79,714 ) 80,298
Gain on sale of affiliate 7,708 7,708
Other income 1,395   1,196   2,835   2,644  
Total revenues 158,192   471,951   338,560   1,075,240  
 
Expenses:
Provision for losses 210,868 263,566 477,022 690,939
Change in reserve for premium deficiency 559 (3,102 ) 539 (4,485 )
Policy acquisition costs 10,805 14,387 38,851 28,518
Other operating expenses 40,193 45,954 90,347 92,173
Interest expense 12,581   16,079   26,729   33,103  
Total expenses 275,006   336,884   633,488   840,248  
 
Equity in net (loss) income of affiliates (2 )   (13 ) 65  
 
Pretax (loss) income (116,816 ) 135,067 (294,941 ) 235,057
Income tax provision (benefit) 2,443   (2,048 ) (6,450 ) (5,064 )
 
Net (loss) income $ (119,259 ) $ 137,115   $ (288,491 ) $ 240,121  
 
Diluted net (loss) income per share (1) $ (0.90 ) $ 1.03   $ (2.18 ) $ 1.80  
 
                 
(1) Weighted average shares outstanding (in thousands)
     
Weighted average common shares outstanding 132,346 132,185 132,350 132,185
Increase in weighted average shares-common stock equivalents-diluted basis   1,429     1,539  
Weighted average shares outstanding 132,346   133,614   132,350   133,724  
                         

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

     
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit B
 
June 30 December 31 June 30

(In thousands, except per-share data)

2012 2011 2011
 
Assets:
Cash and investments $ 5,313,983 $ 5,846,168 $ 6,038,529
Deferred policy acquisition costs 99,386 139,906 138,926
Deferred income taxes, net 15,975 15,975 27,531
Reinsurance recoverables 103,143 157,985 179,573
Derivative assets 14,229 17,212 27,266
Other assets 484,814   479,519   516,971
Total assets $ 6,031,530   $ 6,656,765   $ 6,928,796
 
Liabilities and stockholders' equity:
Unearned premiums $ 588,431 $ 637,372 $ 629,813
Reserve for losses and loss adjustment expenses 3,250,280 3,310,902 3,343,624
Reserve for premium deficiency 4,183 3,644 6,251
Long-term debt 666,806 818,584 811,319
VIE debt 107,833 228,240 393,740
Derivative liabilities 219,960 126,006 313,708
Payable for securities purchased 3,767 46,368 48,707
Other liabilities 289,382   303,358   252,324
Total liabilities 5,130,642   5,474,474   5,799,486
 
Common stock 151 151 151
Additional paid-in capital 1,074,683 1,074,513 1,073,703
Retained (deficit) earnings (192,264 ) 96,227 34,861
Accumulated other comprehensive income 18,318   11,400   20,595
Total common stockholders’ equity 900,888   1,182,291   1,129,310
Total liabilities and stockholders’ equity $ 6,031,530   $ 6,656,765   $ 6,928,796
 
Book value per share $ 6.75 $ 8.88 $ 8.48
     
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2012
Exhibit C
 
Mortgage Financial

(In thousands)

Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 182,518   $ (586 ) $ 181,932  
 
Net premiums earned - insurance $ 170,763 $ 16,016 $ 186,779
Net investment income 17,608 13,269 30,877
Net gains (losses) on investments 26,662 (243 ) 26,419
Net impairment losses recognized in earnings
Change in fair value of derivative instruments (52 ) (33,072 ) (33,124 )
Net gains (losses) on other financial instruments 42 (61,904 ) (61,862 )
Gain on sale of affiliate 7,708 7,708
Other income 1,304   91   1,395  
Total revenues 216,327   (58,135 ) 158,192  
 
Expenses:
Provision for losses 208,078 2,790 210,868
Change in reserve for premium deficiency 559 559
Policy acquisition costs 7,890 2,915 10,805
Other operating expenses 31,272 8,921 40,193
Interest expense 1,723   10,858   12,581  
Total expenses 249,522   25,484   275,006  
 
Equity in net loss of affiliates   (2 ) (2 )
 
Pretax loss (33,195 ) (83,621 ) (116,816 )
Income tax (benefit) provision (10,209 ) 12,652   2,443  
 
Net loss $ (22,986 ) $ (96,273 ) $ (119,259 )
 
Cash and investments $ 3,176,027 $ 2,137,956 $ 5,313,983
Deferred policy acquisition costs 44,240 55,146 99,386
Total assets 3,388,524 2,643,006 6,031,530
Unearned premiums 290,880 297,551 588,431
Reserve for losses and loss adjustment expenses 3,155,343 94,937 3,250,280
VIE debt 7,500 100,333 107,833
Derivative liabilities 219,960 219,960
     
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2011
Exhibit D
 
Mortgage Financial

(In thousands)

Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 164,194   $ (11,416 ) $ 152,778  
 
Net premiums earned - insurance $ 164,325 $ 24,609 $ 188,934
Net investment income 24,853 18,970 43,823
Net gains on investments 27,425 16,811 44,236
Net impairment losses recognized in earnings (11 ) (11 )
Change in fair value of derivative instruments 258 188,468 188,726
Net (losses) gains on other financial instruments (631 ) 5,678 5,047
Other income 1,124   72   1,196  
Total revenues 217,343   254,608   471,951  
 
Expenses:
Provision for losses 269,992 (6,426 ) 263,566
Change in reserve for premium deficiency (3,102 ) (3,102 )
Policy acquisition costs 8,601 5,786 14,387
Other operating expenses 33,913 12,041 45,954
Interest expense 146   15,933   16,079  
Total expenses 309,550   27,334   336,884  
 
Equity in net income of affiliates      
 
Pretax (loss) income (92,207 ) 227,274 135,067
Income tax provision (benefit) 5,374   (7,422 ) (2,048 )
 
Net (loss) income $ (97,581 ) $ 234,696   $ 137,115  
 
Cash and investments $ 3,334,789 $ 2,703,740 $ 6,038,529
Deferred policy acquisition costs 44,509 94,417 138,926
Total assets 3,688,720 3,240,076 6,928,796
Unearned premiums 191,737 438,076 629,813
Reserve for losses and loss adjustment expenses 3,268,582 75,042 3,343,624
VIE debt 56,239 337,501 393,740
Derivative liabilities 313,708 313,708
     
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2012
Exhibit E
 
Mortgage Financial

(In thousands)

Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 379,371   $ (119,761 ) $ 259,610  
 
Net premiums earned - insurance $ 344,214 $ 9,930 $ 354,144
Net investment income 35,619 29,971 65,590
Net gains on investments 58,840 35,038 93,878
Net impairment losses recognized in earnings
Change in fair value of derivative instruments (31 ) (105,850 ) (105,881 )
Net losses on other financial instruments (667 ) (79,047 ) (79,714 )
Gain on sale of affiliate 7,708 7,708
Other income 2,648   187   2,835  
Total revenues 440,623   (102,063 ) 338,560  
 
Expenses:
Provision for losses 442,807 34,215 477,022
Change in reserve for premium deficiency 539 539
Policy acquisition costs 16,536 22,315 38,851
Other operating expenses 67,537 22,810 90,347
Interest expense 3,445   23,284   26,729  
Total expenses 530,864   102,624   633,488  
 
Equity in net loss of affiliates   (13 ) (13 )
 
Pretax loss (90,241 ) (204,700 ) (294,941 )
Income tax (benefit) provision (22,008 ) 15,558   (6,450 )
 
Net loss $ (68,233 ) $ (220,258 ) $ (288,491 )
     
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2011
Exhibit F
 
Mortgage Financial

(In thousands)

Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 345,040   $ (9,513 ) $ 335,527  
 
Net premiums earned - insurance $ 350,459 $ 41,498 $ 391,957
Net investment income 51,686 34,377 86,063
Net gains on investments 45,187 36,484 81,671
Net impairment losses recognized in earnings (11 ) (11 )
Change in fair value of derivative instruments (136 ) 432,754 432,618
Net gains on other financial instruments 1,835 78,463 80,298
Other income 2,524   120   2,644  
Total revenues 451,544   623,696   1,075,240  
 
Expenses:
Provision for losses 683,965 6,974 690,939
Change in reserve for premium deficiency (4,485 ) (4,485 )
Policy acquisition costs 18,817 9,701 28,518
Other operating expenses 68,050 24,123 92,173
Interest expense 9,935   23,168   33,103  
Total expenses 776,282   63,966   840,248  
 
Equity in net income of affiliates   65   65  
 
Pretax (loss) income (324,738 ) 559,795 235,057
Income tax provision (benefit) 8,875   (13,939 ) (5,064 )
 
Net (loss) income $ (333,613 ) $ 573,734   $ 240,121  
   
Radian Group Inc. and Subsidiaries
Financial Guaranty Supplemental Information
Exhibit G
 
Quarter Ended Six Months Ended
June 30 June 30

(In thousands)

2012   2011 2012   2011
 
Net Premiums Earned:

Public finance direct

$ 14,147 $ 11,580 $ 24,360 $ 19,416
Public finance reinsurance 822 8,262 5,592 16,066
Structured direct 246 941 628 1,382
Structured reinsurance 803 955 1,616 1,764
Trade credit reinsurance (2 ) 42   (2 ) 41
Net Premiums Earned - insurance 16,016 21,780 32,194 38,669
Impact of commutations and reinsurance   2,829   (22,264 ) 2,829
Total Net Premiums Earned - insurance $ 16,016   $ 24,609   $ 9,930   $ 41,498
 
Refundings included in earned premium $ 10,483   $ 9,300   $ 18,707   $ 14,131
 
Net premiums earned - derivatives (1) $ 7,224   $ 10,473   $ 15,872   $ 21,356
 
Claims paid $ (6,720 ) (2) $ 3,430   $ 2,280   $ 3,696
 
(1) Included in change in fair value of derivative instruments.
(2) Reduction due to salvage recovery on a prior claim.
 

The impact of the Assured Transaction for the Six Months Ended June 30, 2012, was as follows:

 
(In millions)

Statement of Operations

Decrease in premiums written $ (119.8 )
Decrease in premiums earned $ (22.2 )
Increase in change in fair value of derivative instruments—gain 1.4
Gain on sale of affiliate 7.7
Increase in amortization of policy acquisition costs (15.7 )
Decrease in pre-tax income $ (28.8 )
 

Balance Sheet

Decrease in:
Cash $ 93.6
Deferred policy acquisition costs 26.2
Accounts and notes receivable 1.1
Derivative assets 0.6
Unearned premiums 71.6
Derivative liabilities 2.1
Increase in other assets 19.1
Radian Group Inc. and Subsidiaries      
Financial Guaranty Supplemental Information
Exhibit H
 
June 30 December 31 June 30

($ in thousands, except ratios)

2012 2011 2011
 

Statutory Information:

 
Capital and surplus $ 1,153,339 $ 974,874 $ 1,002,337
Contingency reserve 288,145   421,406   414,462
Qualified statutory capital 1,441,484 1,396,280 1,416,799
 
Unearned premium reserve 288,142 448,669 486,589
Loss and loss expense reserve (47,532 ) 161,287   80,378
Total statutory policyholders' reserves 1,682,094 2,006,236 1,983,766
 
Present value of installment premiums 112,824   148,641   171,397
Total statutory claims paying resources $ 1,794,918   $ 2,154,877   $ 2,155,163
 
Net debt service outstanding $ 51,128,082   $ 88,202,630   $ 95,107,674
 
Capital leverage ratio (1) 35 63 67
Claims paying leverage ratio (2) 28 41 44
 
Net par outstanding by product:
Public finance direct $ 10,709,855 $ 13,838,427 $ 15,084,460
Public finance reinsurance 5,658,564 19,097,057 20,548,760
Structured direct 24,267,242 34,760,869 37,351,096
Structured reinsurance 830,121   1,492,859   1,703,261
Total (3) $ 41,465,782   (4) $ 69,189,212   $ 74,687,577
 

(1)

 

The capital leverage ratio is derived by dividing net debt service outstanding by qualified statutory capital.

(2)

The claims paying leverage ratio is derived by dividing net debt service outstanding by total statutory claims paying resources.

(3)

Included in public finance net par outstanding is $1.0 billion, $1.4 billion and $1.8 billion at June 30, 2012, December 31, 2011, and June 30, 2011, respectively, for legally defeased bond issues where our financial guaranty policy has not been extinguished but cash or securities have been deposited in an escrow account for the benefit of bondholders.

(4)

Reductions in par caused by the following: $15.6 billion in connection with the Assured Transaction, $9.4 billion in connection with the CDO terminations, and $1.2 billion in connection with the Commutation Transactions.

 
Radian Group Inc. and Subsidiaries  
Mortgage Insurance Supplemental Information
Exhibit I
 
Quarter Ended Six Months Ended
June 30 June 30
2012   2011 2012   2011

($ in millions)

$ % $ % $ % $ %

Primary new insurance written

Prime $ 8,330 99.9 % $ 2,280 100.0 % $ 14,790 99.9 % $ 4,863 99.9 %
Alt-A 1 1
A minus and below 4   0.1 %     9   0.1 % 3   0.1 %
Total Flow $ 8,335   100.0 % $ 2,280   100.0 % $ 14,800   100.0 % $ 4,866   100.0 %
 

Total primary new insurance written by FICO score

>=740 $ 6,326 75.9 % $ 1,846 81.0 % $ 11,246 76.0 % $ 3,927 80.7 %
680-739 1,816 21.8 % 434 19.0 % 3,216 21.7 % 936 19.2 %
620-679 193   2.3 %     338   2.3 % 3   0.1 %
Total Flow $ 8,335   100.0 % $ 2,280   100.0 % $ 14,800   100.0 % $ 4,866   100.0 %
 

Percentage of primary new insurance written

Monthly premiums 67 % 63 % 66 % 65 %
Single premiums 33 % 37 % 34 % 35 %
Refinances 34 % 23 % 39 % 38 %
LTV
95.01% and above 1.3 % 1.4 % 1.5 % 1.3 %
90.01% to 95.00% 42.6 % 35.5 % 40.9 % 33.1 %
ARMS
Less than 5 years 0.1 % 0.1 % 0.1 % 0.1 %
5 years and longer 2.5 % 6.9 % 2.5 % 5.8 %
 
Radian Group Inc. and Subsidiaries  
Mortgage Insurance Supplemental Information
Exhibit J
 
June 30 June 30
2012 2011

($ in millions)

$   % $   %

Primary insurance in force

   
Flow $ 118,420 90.8 % $ 111,510 89.1 %
Structured 11,991     9.2 % 13,600     10.9 %
Total Primary $ 130,411     100.0 % $ 125,110     100.0 %
 
Prime $ 112,112 86.0 % $ 103,860 83.0 %
Alt-A 11,383 8.7 % 13,318 10.7 %
A minus and below 6,916     5.3 % 7,932     6.3 %
Total Primary $ 130,411     100.0 % $ 125,110     100.0 %
 

Primary risk in force

Flow $ 29,200 91.8 % $ 27,448 90.4 %
Structured 2,609     8.2 % 2,913     9.6 %
Total Primary $ 31,809     100.0 % $ 30,361     100.0 %
 
Flow
Prime $ 25,951 88.9 % $ 23,637 86.1 %
Alt-A 2,022 6.9 % 2,374 8.7 %
A minus and below 1,227     4.2 % 1,437     5.2 %
Total Flow $ 29,200     100.0 % $ 27,448     100.0 %
 
Structured
Prime $ 1,520 58.2 % $ 1,702 58.4 %
Alt-A 589 22.6 % 665 22.8 %
A minus and below 500     19.2 % 546     18.8 %
Total Structured $ 2,609     100.0 % $ 2,913     100.0 %
 
Total
Prime $ 27,471 86.4 % $ 25,339 83.5 %
Alt-A 2,611 8.2 % 3,039 10.0 %
A minus and below 1,727     5.4 % 1,983     6.5 %
Total Primary $ 31,809     100.0 % $ 30,361     100.0 %
 
Radian Group Inc. and Subsidiaries  
Mortgage Insurance Supplemental Information
Exhibit K
 
June 30 June 30
2012 2011

($ in millions)

$   % $   %

Total primary risk in force by FICO score

   
Flow
>=740 $ 13,868 47.5 % $ 11,196 40.8 %
680-739 9,265 31.7 % 9,327 34.0 %
620-679 5,162 17.7 % 5,865 21.4 %
<=619 905     3.1 % 1,060     3.8 %
Total Flow $ 29,200     100.0 % $ 27,448     100.0 %
 
Structured
>=740 $ 690 26.4 % $ 776 26.6 %
680-739 757 29.0 % 848 29.1 %
620-679 698 26.8 % 781 26.8 %
<=619 464     17.8 % 508     17.5 %
Total Structured $ 2,609     100.0 % $ 2,913     100.0 %
 
Total
>=740 $ 14,558 45.8 % $ 11,972 39.4 %
680-739 10,022 31.5 % 10,175 33.5 %
620-679 5,860 18.4 % 6,646 21.9 %
<=619 1,369     4.3 % 1,568     5.2 %
Total Primary $ 31,809     100.0 % $ 30,361     100.0 %
 

Total primary risk in force by LTV

85.00% and below $ 2,936 9.2 % $ 2,753 9.1 %
85.01% to 90.00% 12,265 38.6 % 11,722 38.6 %
90.01% to 95.00% 11,648 36.6 % 10,268 33.8 %
95.01% and above 4,960     15.6 % 5,618     18.5 %
Total $ 31,809     100.0 % $ 30,361     100.0 %
 

Total primary risk in force by policy year

2005 and prior $ 6,250 19.7 % $ 7,519 24.7 %
2006 2,944 9.3 % 3,396 11.2 %
2007 6,471 20.3 % 7,435 24.5 %
2008 4,870 15.3 % 5,549 18.3 %
2009 2,362 7.4 % 2,915 9.6 %
2010 2,035 6.4 % 2,419 8.0 %
2011 3,352 10.5 % 1,128 3.7 %
2012 3,525     11.1 %      
Total $ 31,809     100.0 % $ 30,361     100.0 %
 
Primary risk in force on defaulted loans $ 4,628   $ 5,326  
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit L
     
 
    June 30     June 30
2012 2011

($ in millions)

$     % $     %
       

Percentage of primary risk in force

Refinances 32 % 31 %
ARMS
Less than 5 years 4 % 5 %
5 years and longer 6 % 7 %
 

Pool risk in force

Prime $ 1,471 76.8 % $ 1,676 75.6 %
Alt-A 113 5.9 % 132 6.0 %
A minus and below   331       17.3 %   408       18.4 %
Total $ 1,915       100.0 % $ 2,216       100.0 %
 

Total pool risk in force by policy year

2005 and prior $ 1,722 89.9 % $ 1,894 85.5 %
2006 85 4.4 % 131 5.9 %
2007 93 4.9 % 154 6.9 %
2008   15       0.8 %   37       1.7 %
Total pool risk in force $ 1,915       100.0 % $ 2,216       100.0 %
 

Other risk in force

Second-lien
1st loss $ 91 $ 109
2nd loss 25 33
NIMS 14 59
1st loss-Hong Kong primary mortgage insurance   49     89  
Total other risk in force $ 179   $ 290  
 
Risk to capital ratio-Radian Guaranty only 21.0:1

(1)

 

 

19.8:1
 
(1) Preliminary
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit M
 
 
    Quarter Ended     Six Months Ended
June 30 June 30

($ in thousands)

2012     2011 2012     2011
 
Net claims paid
Prime $ 170,351 $ 256,020 $ 297,452 $ 464,215
Alt-A 40,261 88,140 76,912 163,270
A minus and below   31,112     52,794     57,192     97,379  
Total primary claims paid 241,724 396,954 431,556 724,864
Pool 20,374 58,341 45,300 92,699
Second-lien and other   1,349     3,736     4,932     6,619  
Subtotal 263,447 459,031 481,788 824,182
Impact of first-lien terminations 38,198 38,198
Impact of captive terminations (1,166 ) (148 ) (1,166 )
Impact of second-lien terminations       16,550         16,550  
Total $ 263,447   $ 512,613   $ 481,640   $ 877,764  
 
Average claim paid (1)
Prime $ 47.1 $ 49.9 $ 48.6 $ 49.0
Alt-A 56.4 62.0 57.8 60.9
A minus and below 36.0 40.8 38.0 39.0
Total primary average claims paid 46.6 50.6 47.6 49.5
Pool 65.9 80.2 66.9 75.7
Second-lien and other 24.5 27.7 26.2 28.9
Total $ 47.4 $ 52.7 $ 48.5 $ 51.2
 
Average primary claim paid (2) (3) $ 49.2 $ 55.3 $ 50.4 $ 54.8
Average total claim paid (2) (3) $ 49.9 $ 56.9 $ 51.0 $ 56.0
 
Loss ratio - GAAP basis 121.9 % 164.3 % 128.6 % 195.2 %
Expense ratio - GAAP basis   22.9 %   25.9 %   24.4 %   24.8 %
  144.8 %   190.2 %   153.0 %   220.0 %
 
Reserve for losses by category
Prime $ 1,740,492 $ 1,635,206
Alt-A 597,570 652,577
A minus and below 361,104 374,647
Reinsurance recoverable (4)   97,845     160,664  
Total primary reserves 2,797,011 2,823,094
Pool insurance   348,288     436,948  
Total 1st lien reserves 3,145,299 3,260,042
Second lien 9,970 8,522
Other   74     18  
Total reserves $ 3,155,343   $ 3,268,582  
 
1st lien reserve per default (5)
Primary reserve per primary default $ 28,410 $ 25,334
Pool reserve per pool default (6) 18,012 16,795
Total 1st lien reserve per default 26,704 23,718
 
 

(1)

Calculated net of reinsurance recoveries and without giving effect to the impact of first-lien, second-lien and captive terminations.

(2)

Calculated without giving effect to the impact of terminations of captive reinsurance and first- and second-lien transactions.

(3)

Before reinsurance recoveries.

(4)

Represents ceded losses on captive transactions and Smart Home.

(5)

Calculated as total reserves divided by total defaults.

(6)

If calculated before giving effect to deductibles and stop losses in pool transactions, the pool reserve per default at June 30, 2012 and 2011, would be $27,949 and $28,277, respectively.

 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit N
 
 
    June 30     December 31     June 30
2012 2011 2011

Default Statistics

Primary Insurance:
 
Flow

Prime

Number of insured loans 588,335 569,190 564,839
Number of loans in default 57,961 65,238 64,143
Percentage of loans in default 9.85 % 11.46 % 11.36 %
 

Alt-A

Number of insured loans 40,976 44,355 47,491
Number of loans in default 13,001 14,481 15,329
Percentage of loans in default 31.73 % 32.65 % 32.28 %
 

A minus and below

Number of insured loans 37,755 40,884 43,597
Number of loans in default 11,688 13,560 14,098
Percentage of loans in default 30.96 % 33.17 % 32.34 %
 

Total Flow

Number of insured loans 667,066 654,429 655,927
Number of loans in default 82,650 93,279 93,570
Percentage of loans in default 12.39 % 14.25 % 14.27 %
 
Structured

Prime

Number of insured loans 39,278 41,248 43,429
Number of loans in default 5,608 6,308 6,248
Percentage of loans in default 14.28 % 15.29 % 14.39 %
 

Alt-A

Number of insured loans 17,435 18,484 19,600
Number of loans in default 5,053 5,563 5,930
Percentage of loans in default 28.98 % 30.10 % 30.26 %
 

A minus and below

Number of insured loans 14,816 15,477 16,159
Number of loans in default 5,139 5,711 5,686
Percentage of loans in default 34.69 % 36.90 % 35.19 %
 
Total Structured
Number of insured loans 71,529 75,209 79,188
Number of loans in default 15,800 17,582 17,864
Percentage of loans in default 22.09 % 23.38 % 22.56 %
 
Total Primary Insurance

Prime

Number of insured loans 627,613 610,438 608,268
Number of loans in default 63,569 71,546 70,391
Percentage of loans in default 10.13 % 11.72 % 11.57 %
 

Alt-A

Number of insured loans 58,411 62,839 67,091
Number of loans in default 18,054 20,044 21,259
Percentage of loans in default 30.91 % 31.90 % 31.69 %
 

A minus and below

Number of insured loans 52,571 56,361 59,756
Number of loans in default 16,827 19,271 19,784
Percentage of loans in default 32.01 % 34.19 % 33.11 %
 
Total Primary
Number of insured loans 738,595 729,638 735,115
Number of loans in default 98,450 110,861 111,434
Percentage of loans in default 13.33 % 15.19 % 15.16 %
 
Pool insurance
Number of loans in default 19,336 21,685 26,016
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit O
 
 
    Quarter Ended     Six Months Ended
June 30 June 30

($ in thousands)

2012     2011 2012     2011
 

Net Premiums Written

Primary and Pool Insurance $ 181,996 $ 163,556 $ 378,317 $ 343,813
Second-lien 482 592 993 1,212
International   40     46     61     15  
Total Net Premiums Written - Insurance $ 182,518   $ 164,194   $ 379,371   $ 345,040  
 

Net Premiums Earned

Primary and Pool Insurance $ 169,898 $ 162,388 $ 342,379 $ 345,857
Second-lien 482 592 993 1,212
International   383     1,345     842     3,390  
Total Net Premiums Earned - Insurance $ 170,763   $ 164,325   $ 344,214   $ 350,459  
 

1st Lien Captives

Premiums ceded to captives $ 6,289 $ 7,266 $ 12,718 $ 14,853
% of total premiums 3.5 % 4.2 % 3.6 % 4.1 %
IIF included in captives (1) 8.9 % 9.9 %
RIF included in captives (1) 7.7 % 9.7 %
 

Quota Share Reinsurance ("QSR")

QSR ceded premiums written $ 25,477
% of premiums written 12.0 %
QSR ceded premiums earned $ 3,098
% of premiums earned 1.7 %
RIF included in QSR (2) $ 922,497
Ceding commissions $ 6,369
 
Persistency (twelve months ended June 30) 83.9 % 82.5 %
 
 

(1)

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.

(2)

Included in primary risk in force.

 

FORWARD-LOOKING STATEMENTS

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