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Radian Reports Fourth Quarter And Full Year 2012 Financial Results

Stocks in this article: RDN

Radian will discuss these items in its conference call today, Monday, February 11, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at http://www.radian.biz/page?name=Webcasts or at www.radian.biz. The call may also be accessed by dialing 800-230-1092 inside the U.S., or 612-234-9960 for international callers, using passcode 280218 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 280218.

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 December 31, 2012
Exhibit D: Segment Information Quarter Ended December 31, 2011
Exhibit E: Segment Information Year Ended December 31, 2012
Exhibit F: Segment Information Year Ended December 31, 2011
Exhibit G: Financial Guaranty Supplemental Information
Exhibit H: Financial Guaranty Supplemental Information
Exhibit I: Mortgage Insurance Supplemental Information
New Insurance Written
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 Reserve per Default
Exhibit N: Mortgage Insurance Supplemental Information
Default Statistics
Exhibit O: Mortgage Insurance Supplemental Information
Net Premiums Written and Earned, Captives, QSR and Persistency
 
   
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
 
Quarter Ended Year Ended
December 31 December 31
(In thousands except per-share data) 2012   2011 2012   2011
 
Revenues:
Net premiums written - insurance $ 217,743   $ 193,433   $ 686,630   $ 707,247  
 
Net premiums earned - insurance $ 193,875 $ 184,413 $ 738,982 $ 756,025
Net investment income 23,112 38,694 114,337 163,520
Net gains on investments 6,351 38,866 184,888 202,177
Net impairment losses recognized in earnings (3 ) (1,171 ) (3 ) (1,202 )
Change in fair value of derivative instruments 2,912 69,769 (144,025 ) 628,395
Net (losses) gains on other financial instruments (1,815 ) 32,429 (82,269 ) 193,329
Gain on sale of affiliate 7,708
Other income 1,627   1,551   5,790   5,599  
Total revenues 226,059   364,551   825,408   1,947,843  
 
Expenses:
Provision for losses 305,797 355,984 959,171 1,296,521
Change in reserve for premium deficiency (1,464 ) (665 ) 41 (7,092 )
Policy acquisition costs 10,098 12,796 61,876 52,763
Other operating expenses 55,896 38,397 196,672 175,810
Interest expense 12,583   14,197   51,832   61,394  
Total expenses 382,910   420,709   1,269,592   1,579,396  
 
Equity in net (loss) income of affiliates     (13 ) 65  
 
Pretax (loss) income (156,851 ) (56,158 ) (444,197 ) 368,512
Income tax provision 20,451   65,381   7,271   66,362  
 
Net (loss) income $ (177,302 ) $ (121,539 ) $ (451,468 ) $ 302,150  
 
Diluted net (loss) income per share (1) $ (1.34 ) $ (0.92 ) $ (3.41 ) $ 2.26  
 

(1) Weighted average shares outstanding (in thousands)

 

Weighted average common shares outstanding

132,525

132,369

132,533

132,372

Increase in weighted average shares-common stock equivalents-diluted basis

 

   

   

   

1,491

 

Weighted average shares outstanding

 

132,525

   

132,369

   

132,533

   

133,863

 
 

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
 
December 31 December 31
(In thousands, except per-share data) 2012 2011
 
Assets:
Cash and investments $ 5,208,199 $ 5,846,168
Deferred policy acquisition costs 88,202 139,906
Deferred income taxes, net 15,975
Reinsurance recoverables 89,204 157,985
Derivative assets 13,609 17,212
Other assets 503,986   479,519
Total assets $ 5,903,200   $ 6,656,765
 
Liabilities and stockholders' equity:
Unearned premiums $ 648,682 $ 637,372
Reserve for losses and loss adjustment expenses 3,149,936 3,310,902
Reserve for premium deficiency 3,685 3,644
Long-term debt 663,571 818,584
VIE debt 108,858 228,240
Derivative liabilities 266,873 126,006
Other liabilities 325,270   349,726
Total liabilities 5,166,875   5,474,474
 
Common stock 151 151
Additional paid-in capital 1,075,320 1,074,513
Retained (deficit) earnings (355,241 ) 96,227
Accumulated other comprehensive income 16,095   11,400
Total common stockholders’ equity 736,325   1,182,291
Total liabilities and stockholders’ equity $ 5,903,200   $ 6,656,765
 
Book value per share $ 5.51 $ 8.88
 
     
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended December 31, 2012
Exhibit C
 
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 217,044   $ 699   $ 217,743  
 
Net premiums earned - insurance 179,486 14,389 193,875
Net investment income 12,814 10,298 23,112
Net gains on investments 1,447 4,904 6,351
Net impairment losses recognized in earnings (3 ) (3 )
Change in fair value of derivative instruments (298 ) 3,210 2,912
Net losses on other financial instruments (864 ) (951 ) (1,815 )
Other income 1,588   39   1,627  
Total revenues 194,173   31,886   226,059  
 
Expenses:
Provision for losses 306,895 (1,098 ) 305,797
Change in reserve for premium deficiency (1,464 ) (1,464 )
Policy acquisition costs 7,469 2,629 10,098
Other operating expenses 44,661 11,235 55,896
Interest expense 2,099   10,484   12,583  
Total expenses 359,660   23,250   382,910  
 
Pretax (loss) income (165,487 ) 8,636 (156,851 )
Income tax provision 12,279   8,172   20,451  
 
Net (loss) income $ (177,766 ) $ 464   $ (177,302 )
 
Cash and investments $ 3,118,153 $ 2,090,046 $ 5,208,199
Deferred policy acquisition costs 38,478 49,724 88,202
Total assets 3,575,427 2,327,773 5,903,200
Unearned premiums 382,413 266,269 648,682
Reserve for losses and loss adjustment expenses 3,083,608 66,328 3,149,936
VIE Debt 9,875 98,983 108,858
Derivative liabilities 266,873 266,873
 
     
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended December 31, 2011
Exhibit D
 
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 194,009   $ (576 ) $ 193,433  
 
Net premiums earned - insurance 167,000 17,413 184,413
Net investment income 20,350 18,344 38,694
Net gains on investments 27,755 11,111 38,866
Net impairment losses recognized in earnings (1,171 ) (1,171 )
Change in fair value of derivative instruments (696 ) 70,465 69,769
Net (losses) gains on other financial instruments (457 ) 32,886 32,429
Other income 1,488   63   1,551  
Total revenues 214,269   150,282   364,551  
 
Expenses:
Provision for losses 333,293 22,691 355,984
Change in reserve for premium deficiency (665 ) (665 )
Policy acquisition costs 9,400 3,396 12,796
Other operating expenses 28,093 10,304 38,397
Interest expense 1,944   12,253   14,197  
Total expenses 372,065   48,644   420,709  
 
Pretax (loss) income (157,796 ) 101,638 (56,158 )
Income tax provision (benefit) 110,315   (44,934 ) 65,381  
 
Net (loss) income $ (268,111 ) $ 146,572   $ (121,539 )
 
Cash and investments $ 3,210,279 $ 2,635,889 $ 5,846,168
Deferred policy acquisition costs 52,094 87,812 139,906
Total assets 3,470,103 3,186,662 6,656,765
Unearned premiums 233,446 403,926 637,372
Reserve for losses and loss adjustment expenses 3,247,900 63,002 3,310,902
VIE Debt 9,450 218,790 228,240
Derivative liabilities 126,006 126,006
 
     
Radian Group Inc. and Subsidiaries
Segment Information
Year Ended December 31, 2012
Exhibit E
 
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 806,305   $ (119,675 ) $ 686,630  
 
Net premiums earned - insurance 702,385 36,597 738,982
Net investment income 63,191 51,146 114,337
Net gains on investments 103,666 81,222 184,888
Net impairment losses recognized in earnings (3 ) (3 )
Change in fair value of derivative instruments (330 ) (143,695 ) (144,025 )
Net losses on other financial instruments (3,491 ) (78,778 ) (82,269 )
Gain on sale of affiliate 7,708 7,708
Other income 5,516   274   5,790  
Total revenues 870,937   (45,529 ) 825,408  
 
Expenses:
Provision for losses 921,507 37,664 959,171
Change in reserve for premium deficiency 41 41
Policy acquisition costs 34,131 27,745 61,876
Other operating expenses 152,448 44,224 196,672
Interest expense 7,454   44,378   51,832  
Total expenses 1,115,581   154,011   1,269,592  
 
Equity in net loss of affiliates (13 ) (13 )
 
Pretax loss (244,644 ) (199,553 ) (444,197 )
Income tax (benefit) provision (30,045 ) 37,316   7,271  
 
Net loss $ (214,599 ) $ (236,869 ) $ (451,468 )
 
     
Radian Group Inc. and Subsidiaries
Segment Information
Year Ended December 31, 2011
Exhibit F
 
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 717,264   $ (10,017 ) $ 707,247  
 
Net premiums earned - insurance $ 680,895 $ 75,130 $ 756,025
Net investment income 93,678 69,842 163,520
Net gains on investments 126,205 75,972 202,177
Net impairment losses recognized in earnings (1,202 ) (1,202 )
Change in fair value of derivative instruments (632 ) 629,027 628,395
Net gains on other financial instruments 3,864 189,465 193,329
Other income 5,369   230   5,599  
Total revenues 908,177   1,039,666   1,947,843  
 
Expenses:
Provision for losses 1,293,857 2,664 1,296,521
Change in reserve for premium deficiency (7,092 ) (7,092 )
Policy acquisition costs 36,051 16,712 52,763
Other operating expenses 132,225 43,585 175,810
Interest expense 13,894   47,500   61,394  
Total expenses 1,468,935   110,461   1,579,396  
 
Equity in net income of affiliates 65 65
 
Pretax (loss) income (560,758 ) 929,270 368,512
Income tax provision (benefit) 83,157   (16,795 ) 66,362  
 
Net (loss) income $ (643,915 ) $ 946,065   $ 302,150  
 
   
Radian Group Inc. and Subsidiaries
Financial Guaranty Supplemental Information
Exhibit G
 
Quarter Ended Year Ended
December 31 December 31
(In thousands) 2012   2011 2012   2011
 
Net Premiums Earned:
Public finance direct $ 10,723 $ 11,673 $ 43,727 $ 40,797
Public finance reinsurance 2,492 4,638 13,434 25,942
Structured direct 657 312 1,527 2,093
Structured reinsurance 515 795 173 3,434
Trade credit reinsurance 2   (5 )   35
Net Premiums Earned - insurance 14,389 17,413 58,861 72,301
Impact of commutations     (22,264 ) 2,829
Total Net Premiums Earned - insurance $ 14,389   $ 17,413   $ 36,597   $ 75,130
 
Refundings included in earned premium $ 7,956   $ 8,459   $ 33,985   $ 27,187
 
Net premiums earned - derivatives (1) $ 5,652   $ 10,054   $ 28,693   $ 41,743
 
Claims paid $ 5,465   $ 5,392   $ 34,338   $ 11,427
 

(1) Included in change in fair value of derivative instruments.

The impact of the Assured Transaction for the Year Ended December 31, 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
 
December 31 December 31

($ in thousands, except ratios)

2012 2011
 

Statutory Information:

 
Capital and surplus $ 1,144,112 $ 974,874
Contingency reserve 300,138   421,406
Qualified statutory capital 1,444,250 1,396,280
 
Unearned premium reserve 256,920 448,669
Loss and loss expense reserve (53,441 ) 161,287
Total statutory policyholders' reserves 1,647,729 2,006,236
 
Present value of installment premiums 114,292   148,641
Total statutory claims paying resources $ 1,762,021   $ 2,154,877
 
Net debt service outstanding $ 42,526,289   $ 88,202,630
 
Capital leverage ratio (1) 29 63
Claims paying leverage ratio (2) 24 41
 
Net par outstanding by product:
Public finance direct $ 9,796,131 $ 13,838,427
Public finance reinsurance 5,542,217 19,097,057
Structured direct 17,615,383 34,760,869
Structured reinsurance 787,758   1,492,859
Total (3) $ 33,741,489   (4) $ 69,189,212
 
 

(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 and $1.4 billion at December 31, 2012 and December 31, 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, $10.2 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 Year Ended
December 31 December 31
2012   2011 2012   2011
($ in millions) $   % $   % $   % $   %

Primary new insurance written

       
Prime $ 11,657 99.9 % $ 6,532 99.9 % $ 37,041 99.9 % $ 15,499 99.9 %
Alt-A 2 2 2
A minus and below 6     0.1   3     0.1   18     0.1   9     0.1  
Total Flow $ 11,663     100.0 % $ 6,537     100.0 % $ 37,061     100.0 % $ 15,510     100.0 %
 

Total primary new insurance written by FICO score

>=740 $ 8,838 75.8 % $ 5,051 77.3 % $ 28,151 75.9 % $ 12,142 78.3 %
680-739 2,519 21.6 1,364 20.9 7,994 21.6 3,192 20.6
620-679 306 2.6 121 1.8 916 2.5 175 1.1
<=619       1             1      
Total Flow $ 11,663     100.0 % $ 6,537     100.0 % $ 37,061     100.0 % $ 15,510     100.0 %
 

Percentage of primary new insurance written

Monthly premiums 65 % 57 % 65 % 59 %
Single premiums 35 % 43 % 35 % 41 %
 
Refinances 44 % 46 % 40 % 39 %
LTV
95.01% and above 1.5 % 2.3 % 1.4 % 1.9 %
90.01% to 95.00% 40.5 % 37.7 % 41.2 % 36.3 %
ARMS
Less than 5 years <1% <1% <1% <1%
5 years and longer 1.1 % 3.2 % 1.9 % 4.8 %
 
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit J
   
December 31 December 31
2012 2011
($ in millions) $   % $   %
   

Primary insurance in force

Flow $ 129,079 92.0 % $ 113,438 89.9 %
Structured 11,284     8.0   12,747     10.1  
Total Primary $ 140,363     100.0 % $ 126,185     100.0 %
 
Prime $ 123,437 87.9 % $ 106,407 84.3 %
Alt-A 10,447 7.5 12,344 9.8
A minus and below 6,479     4.6   7,434     5.9  
Total Primary $ 140,363     100.0 % $ 126,185     100.0 %
 

Primary risk in force

Flow $ 31,891 92.8 % $ 27,937 91.0 %
Structured 2,481     7.2   2,755     9.0  
Total Primary $ 34,372     100.0 % $ 30,692     100.0 %
 
Flow
Prime $ 28,898 90.6 % $ 24,401 87.3 %
Alt-A 1,852 5.8 2,200 7.9
A minus and below 1,141     3.6   1,336     4.8  
Total Flow $ 31,891     100.0 % $ 27,937     100.0 %
 
Structured
Prime $ 1,450 58.5 % $ 1,610 58.4 %
Alt-A 552 22.2 625 22.7
A minus and below 479     19.3   520     18.9  
Total Structured $ 2,481     100.0 % $ 2,755     100.0 %
 
Total
Prime $ 30,348 88.3 % $ 26,011 84.8 %
Alt-A 2,404 7.0 2,825 9.2
A minus and below 1,620     4.7   1,856     6.0  
Total Primary $ 34,372     100.0 % $ 30,692     100.0 %
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit K
 
 
    December 31     December 31
2012 2011
($ in millions) $     % $     %

Total primary risk in force by FICO score

       
Flow
>=740 $ 16,448 51.6 % $ 12,242 43.8 %
680-739 9,686 30.4 9,205 32.9
620-679 4,918 15.4 5,503 19.8
<=619   839     2.6     987     3.5  
Total Flow $ 31,891     100.0 % $ 27,937     100.0 %
 
Structured
>=740 $ 661 26.6 % $ 732 26.6 %
680-739 716 28.9 802 29.1
620-679 661 26.6 738 26.8
<=619   443     17.9     483     17.5  
Total Structured $ 2,481     100.0 % $ 2,755     100.0 %
 
Total
>=740 $ 17,109 49.8 % $ 12,974 42.3 %
680-739 10,402 30.3 10,007 32.6
620-679 5,579 16.2 6,241 20.3
<=619   1,282     3.7     1,470     4.8  
Total Primary $ 34,372     100.0 % $ 30,692     100.0 %
 

Total primary risk in force by LTV

85.00% and below $ 3,292 9.6 % $ 2,772 9.0 %
85.01% to 90.00% 13,134 38.2 11,861 38.6
90.01% to 95.00% 13,303 38.7 10,735 35.0
95.01% and above   4,643     13.5     5,324     17.4  
Total $ 34,372     100.0 % $ 30,692     100.0 %
 

Total primary risk in force by policy year

2005 and prior $ 5,657 16.5 % $ 6,887 22.4 %
2006 2,735 8.0 3,172 10.3
2007 6,059 17.6 6,960 22.7
2008 4,582 13.3 5,206 17.0
2009 2,021 5.9 2,656 8.7
2010 1,726 5.0 2,244 7.3
2011 2,956 8.6 3,567 11.6
2012   8,636     25.1          
Total $ 34,372     100.0 % $ 30,692     100.0 %
 
Primary risk in force on defaulted loans $ 4,320 $ 5,198
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit L
 
 
    December 31     December 31
($ in millions) 2012 2011
$     % $     %

Percentage of primary risk in force

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

Pool risk in force

Prime $ 1,411 76.9 % $ 1,601 77.4 %
Alt-A 104 5.7 122 5.9
A minus and below   319       17.4     345       16.7  
Total $ 1,834       100.0 % $ 2,068       100.0 %
 

Total pool risk in force by policy year

2005 and prior $ 1,663 90.7 % $ 1,852 89.6 %
2006 76 4.1 92 4.4
2007 85 4.6 103 5.0
2008   10       0.6     21       1.0  
Total pool risk in force $ 1,834       100.0 % $ 2,068       100.0 %
 

Other risk in force

Second-lien
1st loss $ 81 $ 102
2nd loss 13 29
NIMS 14 19
1st loss-Hong Kong primary mortgage insurance   40     64  
Total other risk in force $ 148   $ 214  
 
Risk to capital ratio-Radian Guaranty only

20.8:1

(1)

21.5:1
Risk to capital ratio-Mortgage Insurance combined

29.9:1

(1)

30.9:1
 
(1) Preliminary
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit M
 
 
    Quarter Ended     Year Ended
December 31 December 31
($ in thousands) 2012     2011 2012     2011
Net claims paid
Prime $ 171,727 $ 152,202 $ 638,820 $ 796,940
Alt-A 43,806 36,934 165,776 257,448
A minus and below   26,982     30,035     112,216     164,429  
Total primary claims paid 242,515 219,171 916,812 1,218,817
Pool 20,360 33,140 92,206 178,610
Second-lien and other   555     2,370     8,598     11,331  
Subtotal 263,430 254,681 1,017,616 1,408,758
Impact of first-lien terminations 36,903 75,101
Impact of captive terminations (148 ) (1,166 )
Impact of second-lien terminations               16,550  
Total $ 263,430   $ 291,584   $ 1,017,468   $ 1,499,243  
 
Average claim paid (1)
Prime $ 48.0 $ 49.9 $ 48.6 $ 49.6
Alt-A 56.3 58.6 57.9 60.7
A minus and below 36.7 40.4 37.7 40.2
Total primary average claims paid 47.6 49.6 47.8 50.0
Pool 73.0 72.2 67.9 76.2
Second-lien and other 11.1 19.9 25.1 25.8
Total $ 48.6 $ 50.9 $ 48.7 $ 51.9
 
Average primary claim paid (2) (3) $ 50.0 $ 52.4 $ 50.4 $ 54.6
Average total claim paid (2) (3) $ 50.8 $ 53.4 $ 51.1 $ 56.0
 
Loss ratio - GAAP basis 171.0 % 198.6 % 131.2 % 189.8 %
Expense ratio - GAAP basis   29.0 %   22.3 %   26.6 %   24.7 %
  200.0 %   220.9 %   157.8 %   214.5 %
 
Reserve for losses by category
Prime $ 1,739,968 $ 1,748,412
Alt-A 564,719 612,423
A minus and below 361,533 370,806
Reinsurance recoverable (4)   83,238     151,569  
Total primary reserves 2,749,458 2,883,210
Pool insurance   323,403     353,583  
Total 1st lien reserves 3,072,861 3,236,793
Second lien 7,237 11,070
Other   3,510     37  
Total reserves $ 3,083,608   $ 3,247,900  
 
1st lien reserve per default (5)
Primary reserve per primary default $ 29,510 $ 26,007
Primary reserve per primary default excluding IBNR 26,408 24,637
Pool reserve per pool default (6) 17,821 16,305
Total 1st lien reserve per default 27,605 24,420
 
 

(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 December 31, 2012 and December 31, 2011, would be $28,125 and $25,402, respectively.

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

Default Statistics

Primary Insurance:
 
Flow

Prime

Number of insured loans 630,094 569,190
Number of loans in default 55,483 65,238
Percentage of loans in default 8.81 % 11.46 %
 

Alt-A

Number of insured loans 37,754 44,355
Number of loans in default 11,798 14,481
Percentage of loans in default 31.25 % 32.65 %
 

A minus and below

Number of insured loans 35,150 40,884
Number of loans in default 11,211 13,560
Percentage of loans in default 31.89 % 33.17 %
 
Total Flow
Number of insured loans 702,998 654,429
Number of loans in default 78,492 93,279
Percentage of loans in default 11.17 % 14.25 %
 
Structured

Prime

Number of insured loans 37,528 41,248
Number of loans in default 5,371 6,308
Percentage of loans in default 14.31 % 15.29 %
 

Alt-A

Number of insured loans 16,315 18,484
Number of loans in default 4,207 5,563
Percentage of loans in default 25.79 % 30.10 %
 

A minus and below

Number of insured loans 14,157 15,477
Number of loans in default 5,099 5,711
Percentage of loans in default 36.02 % 36.90 %
 
Total Structured
Number of insured loans 68,000 75,209
Number of loans in default 14,677 17,582
Percentage of loans in default 21.58 % 23.38 %
 
Total Primary Insurance

Prime

Number of insured loans 667,622 610,438
Number of loans in default 60,854 71,546
Percentage of loans in default 9.12 % 11.72 %
 

Alt-A

Number of insured loans 54,069 62,839
Number of loans in default 16,005 20,044
Percentage of loans in default 29.60 % 31.90 %
 

A minus and below

Number of insured loans 49,307 56,361
Number of loans in default 16,310 19,271
Percentage of loans in default 33.08 % 34.19 %
 
Total Primary
Number of insured loans 770,998 729,638
Number of loans in default 93,169 110,861
Percentage of loans in default 12.08 % 15.19 %
 
Pool insurance
Number of loans in default 18,147 21,685
 
 
Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit O
 
 
   

Quarter Ended December 31

   

Year Ended December 31

($ in thousands) 2012     2011 2012     2011
       

Net Premiums Written

Primary and Pool Insurance $ 216,609 $ 193,670 $ 804,371 $ 715,125
Second-lien (1) 429 537 1,874 2,314
International   6     (198 )   60     (175 )
Total Net Premiums Written - Insurance $ 217,044   $ 194,009   $ 806,305   $ 717,264  
 

Net Premiums Earned

Primary and Pool Insurance $ 178,771 $ 166,233 $ 699,079 $ 673,869
Second-lien 429 537 1,874 2,314
International   286     230     1,432     4,712  
Total Net Premiums Earned - Insurance $ 179,486   $ 167,000   $ 702,385   $ 680,895  
 

1st Lien Captives

Premiums ceded to captives $ 5,371 $ 6,895 $ 23,416 $ 28,816
% of total premiums 2.8 % 3.9 % 3.2 % 4.1 %
IIF included in captives (1) 6.5 % 8.9 %
RIF included in captives (1) 6.3 % 8.8 %
 

Initial Quota Share Reinsurance ("QSR") Transaction

QSR ceded premiums written $ 10,296 $ 52,151
% of premiums written 4.3 % 5.9 %
QSR ceded premiums earned $ 7,700 $ 16,088
% of premiums earned 4.0 % 2.2 %
Ceding commissions $ 2,574 $ 13,038
RIF included in QSR (2) $ 1,525,840
 

Second QSR Transaction

QSR ceded premiums written $ 9,648 $ 9,648
% of premiums written 4.0 % 1.1 %
QSR ceded premiums earned $ 504 $ 504
% of premiums earned 0.3 % 0.1 %
Ceding commissions $ 3,377 $ 3,377
RIF included in QSR (2) $ 368,429
 
Persistency (twelve months ended December 31) 81.8 % 85.4 %
 
 

(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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