PHILADELPHIA, July 30 /PRNewswire-FirstCall/ -- Radian Group Inc.
(NYSE: RDN) today announced that it has concluded that the value of its
investment in Credit-Based Asset Servicing and Securitization LLC ("C-BASS")
has been materially impaired. C-BASS is a limited liability company whose
interests are owned by MGIC Investment Corporation, Radian Group Inc. and the
management of C-BASS. C-BASS is principally engaged in the business of
investing in the credit risk of subprime single-family residential mortgages.
Since February 2007, the market for subprime mortgages has experienced
significant turmoil, with market dislocations accelerating to unprecedented
levels beginning in mid-July 2007 and further deteriorating in the last few
days.
Radian's investment in C-BASS consists of approximately $468 million of
equity as of June 30, 2007 and an additional $50 million drawn on July 20 and
23, 2007 under a $50 million unsecured credit facility that Radian provided to
C-BASS. On a pro forma basis reflecting the amounts drawn under this credit
facility, Radian's investment in C-BASS was approximately $518 million.
Radian has not determined the impairment charge, although it could be Radian's
entire investment, less any associated tax benefit.
S.A. Ibrahim, Chief Executive Officer noted, "While this action clearly
reflects the continuing credit challenges in today's mortgage market, we are
moving forward, as planned, with our proposed merger with MGIC, which we
expect to close late in the current quarter, or early in the next."
About Radian
Radian Group Inc. is a global credit risk management company headquartered
in Philadelphia with significant operations in New York and London. Radian
develops innovative financial solutions by applying its core mortgage credit
risk expertise and structured finance capabilities to the credit enhancement
needs of the capital markets worldwide, primarily through credit insurance
products. The company also provides credit enhancement for public finance and
other corporate and consumer assets on both a direct and reinsurance basis and
holds strategic interests in active credit-based consumer asset businesses.
Additional information may be found at http://www.radian.biz .
All statements made in this news release that address events or
developments that we expect or anticipate may occur in the future are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and
the U.S. Private Securities Litigation Reform Act of 1995. These statements
are made on the basis of management's current views and assumptions with
respect to future events. The forward-looking statements, as well as Radian's
prospects as a whole, are subject to risks and uncertainties, including the
following: changes in general financial and political conditions such as
extended national or regional economic recessions (or expansions), changes in
housing demand or mortgage originations, changes in housing values, population
trends and changes in household formation patterns, changes in unemployment
rates, changes or volatility in interest rates, consumer confidence, or
changes in credit spreads; changes in investor perception of the strength of
private mortgage insurers or financial guaranty providers; risks faced by the
businesses, municipalities or pools of assets covered by Radian's insurance;
the loss of a customer with whom Radian has a concentration of its insurance
in force or the influence of large customers; increased severity or frequency
of losses associated with certain Radian products that are riskier than
traditional mortgage insurance and financial guaranty insurance policies;
material changes in persistency rates of Radian's mortgage insurance policies;
changes in Radian's credit ratings or the insurance financial-strength ratings
assigned by the major ratings agencies to Radian's operating subsidiaries;
heightened competition from other insurance providers and from alternative
products to private mortgage insurance and financial guaranty insurance;
changes in the charters or business practices of Fannie Mae and Freddie Mac;
the application of federal or state consumer, lending, insurance and other
applicable laws and regulations, or unfavorable changes in these laws and
regulations or the way they are interpreted, including: (i) the possibility of
private lawsuits or investigations by state insurance departments and state
attorneys general alleging that services offered by the mortgage insurance
industry, such as captive reinsurance, pool insurance and contract
underwriting, are violative of the Real Estate Settlement Procedures Act
and/or similar state regulations (particularly in light of inquiries that we
and other mortgage insurers have received from the New York Insurance
Department and public reports that other state insurance departments are
investigating or planning to investigate captive reinsurance arrangements used
in the mortgage insurance industry) or (ii) legislative and regulatory changes
affecting demand for private mortgage insurance or financial guaranty
insurance; the possibility that we may fail to estimate accurately the
likelihood, magnitude and timing of losses in connection with establishing
loss reserves for our mortgage insurance or financial guaranty businesses or
to estimate accurately the fair value amounts of derivative financial guaranty
contracts in determining gains and losses on these contracts; changes in
accounting guidance from the SEC or the Financial Accounting Standards Board
regarding income recognition and the treatment of loss reserves in the
mortgage insurance or financial guaranty industries; changes in claims against
mortgage insurance products resulting from the aging of Radian's mortgage
insurance policies; vulnerability to the performance of Radian's strategic
investments; changes in the availability of affordable or adequate reinsurance
for our non-prime risk; legal and other limitations on the amount of dividends
we may receive from our insurance subsidiaries; international expansion of our
mortgage insurance and financial guaranty businesses into new markets and
risks associated with our international business activities; and risks and
uncertainties associated with our proposed merger with MGIC Investment
Corporation, including, without limitation: the ability to complete the
transaction on the proposed terms and schedule; the risk that the two
companies and their businesses will not be integrated successfully; customer
attrition and disruption from the transaction making it more difficult to
maintain relationships with customers, employees or other business
relationships; the risk that the cost savings and any other synergies from the
transaction may not be fully realized or may take longer to realize than
expected; the risk that potential sales of assets in connection with the
merger may negatively impact the financial performance of the combined
company; and the possibility that the merger may not be completed, whether due
to the failure to receive the requisite regulatory approvals or otherwise,
which may have an adverse effect on our customers, employees and other
business relationships, and may have a materially adverse impact on our
financial results and prospects. For more information regarding these risks
and uncertainties, as well as certain additional risks that we face, investors
should refer to the risk factors detailed in Part I, Item 1A of our annual
report on Form 10-K for the year ended December 31, 2006 and in the joint
proxy statement/prospectus for our 2007 annual meeting. We caution you not to
place undue reliance on these forward-looking statements, which are current
only as of the date of this news release. Radian does not intend to, and
disclaims any duty or obligation to, update or revise any forward-looking
statements made in this news release to reflect new information, future events
or for any other reason.
SOURCE Radian Group Inc.
-0- 07/30/2007
/CONTACT: Investors, Mona Zeehandelaar, +1-215-231-1674,
mona.zeehandelaar@radian.biz; Media, Michelle Davidson, +1-215-231-1325, Cell
+1-215-260-6760, michelle.davidson@radian.biz, or Courtney Robinson,
+1-215-231-1762, Cell +1-215-629-6880, courtney.robinson@radian.biz, all of
Radian Group Inc./
/Web site: http://www.radian.biz /
(RDN)
CO: Radian Group Inc.; Credit-Based Asset Servicing and Securitization LLC
ST: Pennsylvania
IN: FIN
SU: ECO
AB-AD
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3109 07/30/2007 19:27 EDT http://www.prnewswire.com
