Form 8-K RADIAN GROUP INC For: Jul 22

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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FORM 8-K

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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of report (Date of earliest event reported) July 22, 2015

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Radian Group Inc.
(Exact Name of Registrant as Specified in Its Charter)

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(215) 231 - 1000
(Registrant’s Telephone Number, Including Area Code)

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

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions  (see General Instruction A.2. below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.          Results of Operations and Financial Condition.

On July 22, 2015, Radian Group Inc. issued a news release announcing its financial results for the quarter ended June 30, 2015. A copy of this news release is furnished as Exhibit 99.1 to this report.

The information included in, or furnished with, this report shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.          Financial Statements and Exhibits.

(d) Exhibits.

            99.1*               Radian Group Inc. News Release dated July 22, 2015.

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*         Furnished herewith.

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SIGNATURES

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

EXHIBIT INDEX

Exhibit 99.1

Radian Announces Second Quarter 2015 Financial Results

-- Reports net income of $50 million or $0.22 per diluted share --

-- Net income from continuing operations of $45 million or $0.20 per diluted share --

-- Adjusted diluted net operating income of $0.40 per share, up 74% from prior-year period --

PHILADELPHIA--(BUSINESS WIRE)--July 22, 2015--Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended June 30, 2015, of $50.0 million, or $0.22 per diluted share, which included the following pre-tax items: a loss of $91.9 million on induced conversion and debt extinguishment from recent actions to strengthen the company’s capital structure, and net gains of $28.4 million on investments and other financial instruments. This compares to net income for the quarter ended June 30, 2014, of $174.8 million, or $0.78 per diluted share, which included pre-tax net gains of $25.3 million on investments and other financial instruments, and $71.3 million of net income from discontinued operations. The company also reported an income tax provision of $34.8 million for the quarter ended June 30, 2015, compared to an income tax benefit of $10.7 million for the quarter ended June 30, 2014.

Adjusted pretax operating income for the quarter ended June 30, 2015, was $147.3 million, compared to adjusted pretax operating income for the quarter ended June 30, 2014, of $74.1 million. Adjusted diluted net operating income per share for the quarter ended June 30, 2015, was $0.40. See “Non-GAAP Financial Measures” below.

“Radian delivered strong financial results in the second quarter, driven by positive trends and solid performance for our two business segments,” said Radian’s Chief Executive Officer S.A. Ibrahim. “We also took actions in the quarter to simplify and strengthen Radian’s capital structure in a way that will reduce our overall cost of capital, improve the maturity profile of our debt and focus on long-term growth.”

SECOND QUARTER HIGHLIGHTS AND RECENT EVENTS

Mortgage Insurance

• New mortgage insurance written (NIW) was $11.8 billion for the quarter, compared to $9.4 billion in the first quarter of 2015 and $9.3 billion in the prior-year quarter.
  
  
  • Of the $11.8 billion in new business written in the second quarter of 2015, 68 percent was written with monthly premiums and 32 percent with single premiums. This compares to a mix of 63 percent monthly premiums and 37 percent single premiums in the first quarter of 2015.
  • Refinances accounted for 23 percent of total NIW in the second quarter of 2015, compared to 33 percent in the first quarter of 2015, and 13 percent a year ago.
  • NIW continued to consist of loans with excellent risk characteristics.

• Total primary mortgage insurance in force was $172.7 billion, compared to $172.1 billion as of March 31, 2015, and $165.0 billion as of June 30, 2014. Persistency, which is the percentage of mortgage insurance in force that remains on the company’s books after a twelve-month period, was 80.1 percent as of June 30, 2015, compared to 82.6 percent as of March 31, 2015, and 83.9 percent as of June 30, 2014.
• Total net premiums earned was $237.4 million, compared to $224.6 million for the quarter ended March 31, 2015, and $203.6 million for the quarter ended June 30, 2014. Net premiums earned in the second quarter included
  
  
  • $9.8 million of incremental premiums earned from single premiums compared to the first quarter of 2015, the majority of which related to prepayments that servicers had not previously reported to Radian, and
  • an accrual for a $5.8 million profit commission based on experience to date for the company’s Second Quota Share Reinsurance Transaction, where Radian expects to exercise its option to recapture 50 percent of the ceded risk on December 31, 2015. See press release Exhibit M for additional details.

• The mortgage insurance provision for losses was $31.6 million in the second quarter of 2015, compared to $45.9 million in the first quarter of 2015, and $64.6 million in the prior-year period.
  
  
  • The loss ratio in the second quarter was 13.3 percent, compared to 20.4 percent in the first quarter of 2015 and 31.7 percent in the second quarter of 2014.
  • Mortgage insurance loss reserves were $1.2 billion as of June 30, 2015, compared to $1.4 billion as of March 31, 2015, and $1.7 billion as of June 30, 2014.
  • Primary reserve per primary default (excluding IBNR and other reserves) was $27,279 as of June 30, 2015. This compares to primary reserve per primary default of $28,423 as of March 31, 2015, and $26,024 as of June 30, 2014.
• The total number of primary delinquent loans decreased by 7 percent in the second quarter from the first quarter of 2015, and by 23 percent from the second quarter of 2014. The primary mortgage insurance delinquency rate decreased to 4.3 percent in the second quarter of 2015, compared to 4.6 percent in the first quarter of 2015, and 5.8 percent in the second quarter of 2014.
• Total mortgage insurance claims paid were $212.0 million in the second quarter, compared to $207.1 million in the first quarter, and $240.3 million in the second quarter of 2014. Claims paid in the second quarter of 2015 include $75.6 million of claims paid relating to the September 2014 BofA Settlement Agreement. The company continues to expect mortgage insurance net claims paid for the full-year 2015 of approximately $600 – $700 million. This includes a total of approximately $250 million of claims related to the BofA Settlement Agreement, of which $174.6 million have already been paid.
• As of June 30, 2015, Radian Guaranty would be able to immediately comply with the financial requirements of the Private Mortgage Insurer Eligibility Requirements (PMIERs) developed by Fannie Mae and Freddie Mac as adopted on April 17, 2015, and that come into effect on December 31, 2015, by utilizing approximately $330 million of existing holding company liquidity. This assumes that the company converts approximately $80 million of existing liquid assets, which represent the cash surrender value of Radian’s company-owned life insurance policies, into PMIERs-compliant Available Assets (as defined in the PMIERs) and receives, as expected, full PMIERs benefit of approximately $145 million for its outstanding quota-share reinsurance arrangements.

Mortgage and Real Estate Services

• On June 30, 2014, Radian completed the acquisition of Clayton Holdings LLC, a leading provider of risk-based analytics, residential loan due diligence, consulting, surveillance and staffing solutions. The company also provides customized Real Estate Owned (REO) asset management and single-family rental services through its Green River Capital subsidiary; advanced Automated Valuation Models, Broker Price Opinions and technology solutions to monitor loan portfolio performance, acquire and track non-performing loans, and value and sell residential real estate through its Red Bell Real Estate subsidiary; and a global reach through its Clayton EuroRisk subsidiary.

• Total revenues for the Services segment were $44.6 million and gross profit was $19.1 million in the second quarter of 2015. This compares to total revenues of $31.5 million and gross profit of $12.3 million in the first quarter of 2015.
• In July, Clayton introduced an Asset Representations Reviewer service to help issuers of asset-backed securities, including auto finance, credit card, student loan and equipment-leasing issuers, comply with the requirements of the Securities and Exchange Commission’s amendments to Regulation AB. Clayton plans to leverage its knowledge of underwriting, loan document review and surveillance, and the company’s proprietary technology to provide consulting services on testing procedure design, help clients specify the role of the asset reviewer, and perform asset review pilot testing.

Expenses and Discontinued Operations

• Other operating expenses were $67.7 million in the second quarter, compared to $53.8 million in the first quarter of 2015, and $60.8 million in the second quarter of last year. Operating expenses in the second quarter of 2015 were primarily driven by variable compensation expenses related to long-term incentive awards that matured in June 2015; compensation expenses related to the acquisition by Clayton of Red Bell Real Estate; and an increase in mortgage insurance-related expenses due to higher volume.
• Income from discontinued operations, net of tax, for the quarter ended June 30, 2015, was $4.9 million, compared to $0.5 million for the quarter ended March 31, 2015. Results from discontinued operations for the quarter were driven by the recognition of investment gains that were deferred in other comprehensive income and recognized as a result of the sale of Radian Asset to Assured Guaranty Corp., a subsidiary of Assured Guaranty Ltd., on April 1, 2015. Details regarding the assets and liabilities associated with discontinued operations may be found on press release Exhibit D.

CAPITAL AND LIQUIDITY UPDATE

Radian Group maintains approximately $735 million of currently available liquidity.

• Radian completed a series of actions in the second quarter to strengthen the company’s capital structure, including to reduce its overall cost of capital, improve its maturity profile and facilitate improved credit ratings. The capital actions had four components:
  
  
  • Radian paid $127 million in cash and delivered 28.4 million shares for a total consideration value of $657 million to purchase an aggregate face value of $389 million of Radian’s 2017 Convertible Notes.
  • In connection with the purchase of the convertible notes, Radian terminated a corresponding portion of the Capped Call it had entered into in 2010 in connection with the initial issuance of its 2017 Convertible Notes, for proceeds to Radian of $12 million in cash and 2.3 million shares of Radian common stock.
  • The purchase of the convertible notes was funded by the issuance of Senior Notes with a coupon of 5.25% and a maturity date of 2020, resulting in net proceeds of $343 million.
  • A portion of the proceeds generated from the issuance of the Senior Notes was used to enter into an Accelerated Share Repurchase Program (ASR), in order to reduce the dilutive impact of the shares issued in connection with the purchase of the convertible notes. The ASR was executed for a cash payment of $202 million in exchange for 9.2 million intial shares and an estimated additional 1.6 million shares upon completion of the ASR, assuming an average stock price of $18.68.

As noted above, these actions resulted in a loss on induced conversion and debt extinguishment of $91.9 million, an expected reduction in the company’s annual interest expense of approximately $16 million, and an expected increase in fully diluted share count of approximately 2.8 million shares. Additional details related to these capital actions may be found on Slide 11 of the second quarter presentation slides.

• Book value per share at June 30, 2015, was $11.28, compared to $11.53 at March 31, 2015. The decrease in book value from the first quarter of 2015 was related to the issuance of shares resulting from the capital actions noted above.
• As of June 30, 2015, Radian Guaranty’s risk-to-capital ratio was 16.5:1 and statutory capital was $2.0 billion.
• As of June 30, 2015, a total of $2.7 billion of risk in force outstanding had been ceded under quota share reinsurance agreements in order to proactively manage Radian Guaranty’s risk-to-capital position. Radian has ceded the maximum amount of NIW under these agreements and has not ceded any premium on new business in 2015. As discussed above, net premiums earned in the second quarter included an accrual for a $5.8 million profit commission based on experience to date for the company’s Second Quota Share Reinsurance Transaction, where Radian expects to exercise its option to recapture 50 percent of the ceded risk on December 31, 2015.

CONFERENCE CALL

Radian will discuss second quarter financial results in a conference call today, Wednesday, July 22, 2015, 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 800.230.1951 inside the U.S., or 612.332.0107 for international callers, using passcode 364879 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 364879.

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.

NON-GAAP FINANCIAL MEASURES

Radian believes that adjusted pretax operating income and adjusted diluted net operating income per share (non-GAAP measures) facilitate evaluation of the company’s fundamental financial performance and provide relevant and meaningful information to investors about the ongoing operating results of the company. On a consolidated basis, these measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as alternatives to GAAP measures of performance. The measures described below have been established in order to increase transparency for the purpose of evaluating the company’s core operating trends and enabling more meaningful comparisons with Radian’s competitors.

Adjusted pretax operating income is defined as earnings excluding the impact of certain items that are not viewed as part of the operating performance of the company’s primary activities, or not expected to result in an economic impact equal to the amount reflected in pretax income (loss) from continuing operations. Adjusted diluted net operating income per share represents a diluted net income per share calculation using as its basis adjusted pretax operating income, net of taxes at the company’s statutory tax rate for the period. See press release Exhibit F or Radian’s website for a description of these items, as well as Exhibit G for reconciliations to consolidated GAAP measures.

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance, risk management products and real estate services to financial institutions. Radian offers products and services through two business segments:

• Mortgage Insurance, through its principal mortgage insurance subsidiary Radian Guaranty Inc. This private mortgage insurance protects lenders from default-related losses, facilitates the sale of low-downpayment mortgages in the secondary market and enables homebuyers to purchase homes more quickly with downpayments less than 20%.

• Mortgage and Real Estate Services, through its principal services subsidiary Clayton, as well as Green River Capital and Red Bell Real Estate. These solutions include information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service and monitor loans and asset-backed securities.

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.

On April 1, 2015, Radian Guaranty completed the previously disclosed sale of 100% of the issued and outstanding shares of Radian Asset Assurance to Assured, pursuant to the Radian Asset Assurance Stock Purchase Agreement dated as of December 22, 2014. As a result, the operating results of Radian Asset Assurance are classified as discontinued operations for all periods presented in our condensed consolidated statements of operations. See Exhibit D for additional information on discontinued operations.

The income from discontinued operations, net of tax consisted of the following components for the periods indicated:

Summarized financial information concerning our operating segments as of and for the periods indicated, is as follows. For a definition of adjusted pretax operating income and reconciliations to consolidated GAAP measures, see Exhibits F and G.

Use of Non-GAAP Financial Measure

In addition to the traditional GAAP financial measures, we have presented non-GAAP financial measures for the consolidated company, “adjusted pretax operating income (loss)” and “adjusted diluted net operating income (loss) per share,” among our key performance indicators to evaluate our fundamental financial performance. These non-GAAP financial measures align with the way the Company’s business performance is evaluated by both management and the board of directors. These measures have been established in order to increase transparency for the purposes of evaluating our core operating trends and enabling more meaningful comparisons with our peers. Although on a consolidated basis “adjusted pretax operating income (loss)” and “adjusted diluted net operating income (loss) per share” are non-GAAP financial measures, we believe these measures aid in understanding the underlying performance of our operations. Our senior management, including our Chief Executive Officer (the Company’s chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of the Company’s business segments and to allocate resources to the segments.

Adjusted pretax operating income (loss) is defined as GAAP pretax income (loss) from continuing operations excluding the effects of net gains (losses) on investments and other financial instruments, loss on induced conversion and debt extinguishment, acquisition-related expenses, amortization and impairment of intangible assets and net impairment losses recognized in earnings. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common shareholders, net of taxes computed using the company’s statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Interest expense on convertible debt, share dilution from convertible debt and the impact of stock-based compensation arrangements have been reflected in the per share calculations consistent with the accounting standard regarding earnings per share, whenever the impact is dilutive.

Although adjusted pretax operating income (loss) excludes certain items that have occurred in the past and are expected to occur in the future, the excluded items represent those that are: (1) not viewed as part of the operating performance of our primary activities; or (2) not expected to result in an economic impact equal to the amount reflected in pretax income (loss) from continuing operations. These adjustments, along with the reasons for their treatment, are described below.

(1) Net gains (losses) on investments and other financial instruments. The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized investment gains and losses arise primarily from changes in the market value of our investments that are classified as trading. These valuation adjustments may not necessarily result in economic gains or losses.

Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized and unrealized gains or losses. We do not view them to be indicative of our fundamental operating activities. Therefore, these items are excluded from our calculation of adjusted pretax operating income (loss). However, we include the change in expected economic loss or recovery associated with our consolidated VIEs, if any, in the calculation of adjusted pretax operating income (loss).

(2) Loss on induced conversion and debt extinguishment. Gains or losses on early extinguishment of debt or losses incurred to induce conversion of convertible debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial position; therefore, these activities are not viewed as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends. Therefore, these items are excluded from our calculation of adjusted pretax operating income (loss).

(3) Acquisition-related expenses. Acquisition-related expenses represent the costs incurred to effect an acquisition of a business (i.e., a business combination). Because we pursue acquisitions on a strategic and selective basis and not in the ordinary course of our business, we do not view acquisition-related expenses as a consequence of a primary business activity. Therefore, we do not consider these expenses to be part of our operating performance and they are excluded from our calculation of adjusted pretax operating income (loss).

(4) Amortization and impairment of intangible assets. Amortization of intangible assets represents the periodic expense required to amortize the cost of intangible assets over their estimated useful lives. Intangible assets with an indefinite useful life are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. These charges are not viewed as part of the operating performance of our primary activities and therefore are excluded from our calculation of adjusted pretax operating income (loss).

(5) Net impairment losses recognized in earnings. The recognition of net impairment losses on investments can vary significantly in both size and timing, depending on market credit cycles. We do not view these impairment losses to be indicative of our fundamental operating activities. Therefore, whenever these losses occur, we exclude them from our calculation of adjusted pretax operating income (loss).

See Exhibit G for the reconciliation of our non-GAAP financial measures for the consolidated company, adjusted pretax operating income and adjusted diluted net operating income per share, to the most comparable GAAP measures, pretax income from continuing operations and net income per share from continuing operations, respectively.

Total adjusted pretax operating income (loss) and adjusted diluted net operating income (loss) per share are not measures of total profitability, and therefore should not be viewed as substitutes for GAAP pretax income (loss) from continuing operations or net income (loss) per share from continuing operations. Our definitions of adjusted pretax operating income (loss) and adjusted diluted net operating income (loss) per share may not be comparable to similarly-named measures reported by other companies.

On a consolidated basis, “adjusted pretax operating income” and “adjusted diluted net operating income per share” are measures not determined in accordance with GAAP. These measures are not representative of total profitability, and therefore should not be viewed as substitutes for GAAP pretax income from continuing operations or net income per share from continuing operations. Our definitions of adjusted pretax operating income and adjusted diluted net operating income per share may not be comparable to similarly-named measures reported by other companies. See Exhibit F for additional information on our consolidated non-GAAP financial measures.

The following table shows additional trend information for the Services segment:

The selected unaudited financial information presented below represents unaudited quarterly historical information for the businesses of Clayton Holdings LLC (“Clayton”) for periods prior to our acquisition on June 30, 2014. Financial information for periods after the acquisition is included in the table above and in Exhibit E as part of our Services segment.

FORWARD-LOOKING STATEMENTS

All statements in this report 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 Exchange Act and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as "anticipate," "may," "will," "could," "should," "would," "expect," "intend," "plan," "goal," "contemplate," "believe," "estimate," "predict," "project," "potential," "continue," "seek," "strategy," "future," "likely" or the negative or other variations on these words and other similar expressions. These statements, which may 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 statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements including:

• changes in general economic and political conditions, including unemployment rates, changes in the U.S. housing and mortgage credit markets, declines in home prices and property values, the performance of the U.S. or global economies, the amount of liquidity in the capital or credit markets, changes or volatility in interest rates or consumer confidence and changes in credit spreads, all of which may be impacted by, among other things, legislative activity or inactivity, actual or threatened downgrades of U.S. government credit ratings, or actual or threatened defaults on U.S. government obligations;

• changes in the way customers, investors, regulators or legislators perceive the strength of private mortgage insurers;

• catastrophic events, increased unemployment, home price depreciation or other negative economic changes generally or in geographic regions where our mortgage insurance exposure is more concentrated;

• Radian Guaranty Inc.’s ability to remain eligible under applicable requirements imposed by the Federal Housing Finance Agency (“FHFA”) and by Fannie Mae and Freddie Mac (collectively, the “GSEs”) to insure loans purchased by the GSEs;

• our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs. We expect to contribute a significant amount of our holding company liquidity to support Radian Guaranty Inc.’s compliance with the final financial requirements (“PMIERs Financial Requirements”) of the Private Mortgage Insurer Eligibility Requirements that were issued by the FHFA in final form on April 17, 2015 (“PMIERs”) and which become effective for existing mortgage insurers on December 31, 2015. Our projections regarding the amount of holding company liquidity that we may contribute to Radian Guaranty Inc. to comply with the PMIERs Financial Requirements are based on our estimates of Radian Guaranty’s “Minimum Required Assets”(a risk-based minimum required asset amount, as defined in the PMIERs, calculated based on net risk in force, which approximates the maximum loss exposure at any point in time and a variety of measures designed to evaluate credit quality) and “Available Assets” (as defined in the PMIERs, these assets primarily include the liquid assets of a mortgage insurer and its affiliated reinsurers, and exclude premiums received but not yet earned), which may not prove to be accurate, and which could be impacted by: (1) our ability to receive, as expected, GSE approval for the amendments to our existing reinsurance arrangements and receive the full PMIERs benefit for these arrangements; (2) whether we elect to convert certain liquid assets into PMIERs-compliant Available Assets; (3) factors affecting the performance of our mortgage insurance business, including our level of defaults, prepayments, the losses we incur on new or existing defaults and the credit characteristics of our mortgage insurance; and (4) how much capital we expect to maintain at our mortgage insurance subsidiaries in excess of the amount required to satisfy the PMIERs Financial Requirements. Contributions of holding company cash and investments from Radian Group will leave less liquidity to satisfy Radian Group’s future obligations. Depending on the amount of holding company contributions that we make, we may be required or may decide to seek additional capital by incurring additional debt, by issuing additional equity, or by selling assets, which we may not be able to do on favorable terms, if at all;

• our ability to maintain an adequate level of capital in our insurance subsidiaries to satisfy existing and future state regulatory requirements, including new capital adequacy standards that currently are being developed by the National Association of Insurance Commissioners (“NAIC”) and that could be adopted by states in which we write business;

• changes in the charters or business practices of, or rules or regulations imposed by or applicable to the GSEs, including: (1) the implementation of the final PMIERs (including as updated on June 30, 2015 to increase the amount of Available Assets that must be held against risk in force associated with lender paid mortgage insurance originated on or after January 1, 2016), which (a) will increase the amount of capital that Radian Guaranty is required to hold, and therefore, reduce our current returns on subsidiary capital, (b) potentially impact the type of business that Radian Guaranty is willing to write, which could reduce our new insurance written (“NIW”) and market share, (c) impose extensive and more stringent operational requirements in areas such as claim processing, loss mitigation, document retention, underwriting, quality control, reporting and monitoring, among others, that may result in additional costs to achieve and maintain compliance, and (d) require the consent of the GSEs for Radian Guaranty to take certain actions such as paying dividends, entering into various inter-company agreements, and commuting or reinsuring risk, among others; (2) changes that could limit the type of business that Radian Guaranty and other private mortgage insurers are willing to write, which could reduce our new insurance written NIW and market share; (3) changes that could increase the cost of private mortgage insurance, including as compared to the Federal Housing Administration’s (“FHA”) pricing, or result in the emergence of other forms of credit enhancement; and (4) changes that could require us to alter our business practices and which may result in substantial additional costs;

• our ability to continue to effectively mitigate our mortgage insurance losses, including a decrease in net “Rescissions” (our legal right, under certain conditions, to unilaterally rescind coverage on our mortgage insurance policies if we determine that a loan did not qualify for insurance), “Claim Denials” (our legal right, under certain conditions, to deny a claim) or “Claim Curtailments” (our legal right, under certain conditions, to reduce the amount of a claim, including due to servicer negligence) resulting from an increase in the number of successful challenges to previous Rescissions, Claim Denials or Claim Curtailments (including as part of one or more settlements of disputed Rescissions or Claim Denials), or as a result of the GSEs intervening in or otherwise limiting our loss mitigation practices, including settlements of disputes regarding “Loss Mitigation Activities” (activities such as Rescissions, Claim Denials, Claim Curtailments and cancellations);

• the negative impact that our Loss Mitigation Activities may have on our relationships with our customers and potential customers, including the potential loss of current or future business and the heightened risk of disputes and litigation;

• any disruption in the servicing of mortgages covered by our insurance policies, as well as poor servicer performance;

• a substantial decrease in the persistency rates of our mortgage insurance policies, which has the effect of reducing our premium income on our premiums on mortgage insurance products paid on a monthly installment basis and could decrease the profitability of our mortgage insurance business;

• heightened competition for our mortgage insurance business from others such as the FHA, the U.S. Department of Veterans Affairs and other private mortgage insurers (including with respect to other private mortgage insurers, those that have been assigned higher ratings than we have, that may have access to greater amounts of capital than we do, or that are new entrants to the industry, and therefore, are not burdened by legacy obligations) and the impact such heightened competition may have on our returns and our NIW;

• the increased demand from lenders for customized (reduced) rates on lender-paid, single premium mortgage insurance products, which could further reduce our overall average premium rates and returns and, to the extent we decide to limit this type of business, could adversely impact our market share and our customer relationships;

• changes to the current system of housing finance, including the possibility of a new system in which private mortgage insurers are not required or their products are significantly limited in effect or scope;

• the effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the financial services industry in general, and on our businesses in particular;

• the adoption of new or application of existing federal or state laws and regulations, or changes in these laws and regulations or the way they are interpreted, including, without limitation: (1) the resolution of existing, or the possibility of additional, lawsuits, inquiries or investigations (including a recent inquiry from the Wisconsin Office of the Commissioner of Insurance to all private mortgage insurers pertaining to customized insurance rates and terms offered to mortgage insurance customers); (2) changes to the Mortgage Guaranty Insurers Model Act (“Model Act”) being considered by the NAIC that could include more stringent capital and other requirements for Radian Guaranty in states that adopt the new Model Act in the future; and (3) legislative and regulatory changes (a) impacting the demand for our products, (b) limiting or restricting the products we may offer or increasing the amount of capital we are required to hold, (c) affecting the form in which we execute credit protection, or (d) otherwise impacting our existing businesses or future prospects;

• the amount and timing of potential payments or adjustments associated with federal or other tax examinations, including deficiencies assessed by the Internal Revenue Service (“IRS”) resulting from the examination of our 2000 through 2007 tax years, which we are currently contesting;

• 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 business;

• volatility in our results of operations caused by changes in the fair value of our assets and liabilities, including a significant portion of our investment portfolio;

• changes in “GAAP” (accounting principles generally accepted in the U.S.) or “SAP” (statutory accounting practices including those required or permitted, if applicable, by the insurance departments of the respective states of domicile of our insurance subsidiaries) rules and guidance, or their interpretation;

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

• the possibility that we may need to impair the estimated fair value of goodwill established in connection with our acquisition of Clayton Holdings LLC, the valuation of which requires the use of significant estimates and assumptions with respect to the estimated future economic benefits arising from certain assets acquired in the transaction such as the value of expected future cash flows of Clayton, Clayton’s workforce, expected synergies with our other affiliates and other unidentifiable intangible assets.

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, 2014 and in our subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.

CONTACT:
Radian Group Inc.
Emily Riley, 215-231-1035
[email protected]