890926--3/14/2008--RADIAN_GROUP

related topics

{loss, insurance, financial}

{loan, real, estate}

{capital, credit, financial}

{competitive, industry, competition}

{regulation, change, law}

{product, market, service}

{condition, economic, financial}

{financial, litigation, operation}

{acquisition, growth, future}

{system, service, information}

{interest, director, officer}

{debt, indebtedness, cash}

{stock, price, share}

{control, financial, internal}

{provision, law, control}

{operation, international, foreign}

{regulation, government, change}

We may require additional capital in light of our recent loss experience, which could worsen if general economic factors continue to deteriorate. Additional capital could dilute our existing stockholders and reduce our per-share earnings. Deterioration in regional economic factors in areas where our business is concentrated increases our losses in these areas. A downgrade or potential downgrade of our credit ratings or the insurance financial strength ratings assigned to any of our operating subsidiaries is possible and could weaken our competitive position and affect our financial condition. A prolonged period of losses could increase our subsidiaries risk-to-capital or leverage ratios, preventing them from writing new insurance. If the estimates we use in establishing loss reserves for our mortgage insurance or financial guaranty business are incorrect, we may be required to take unexpected charges to income and our ratings may be downgraded. Our success depends on our ability to assess and manage our underwriting risks. Our success depends, in part, on our ability to manage risks in our investment portfolio. As a holding company, we depend on our subsidiaries ability to transfer funds to us to pay dividends and to meet our obligations. Our reported earnings are subject to fluctuations based on changes in our credit derivatives that require us to adjust their fair market value as reflected on our income statement. The performance of our strategic investments could harm our financial results. Our international operations subject us to numerous risks. We may lose business if we are unable to meet our customers technological demands. Our information technology systems may not be configured to process information regarding new and emerging products. A material weakness relating to our internal control over financial reporting could result in errors in our reported results and could have a material adverse effect on our operations and investor confidence in our business. A third-party acquisition of 20% or more of our outstanding shares will trigger a change in control under our Equity Compensation Plan, Performance Plan and other benefit plans. We are subject to litigation risk. Our inability to obtain financial statements for C-BASS, in which we hold a 46% equity interest, in final form on a timely basis, could delay our ability to file timely reports with the SEC Risks Particular to Our Mortgage Insurance Business A decrease in the volume of home mortgage originations could result in fewer opportunities for us to write new insurance business. An increase in the volume of cancellations or non-renewals of our existing policies would have a significant effect on our revenues. Because our mortgage insurance business is concentrated among a few significant customers, our revenues could decline if we lose any significant customer. Our business depends, in part, on effective and reliable loan servicing, which may be negatively impacted by the current disruption in the mortgage credit markets. A large portion of our mortgage insurance risk in force consists of higher risk loans, such as Alt-A and subprime loans, which have resulted in increased losses in 2007 and may result in further losses in the future. A portion of our mortgage insurance risk in force consists of insurance on adjustable-rate products such as ARMs that have resulted in significant losses in 2007 and may result in further losses. Our results of operations may continue to be negatively affected by NIMS and second-lien mortgages. We face the possibility of higher claims as our mortgage insurance policies age. Our delegated underwriting program may subject our mortgage insurance business to unanticipated claims. We face risks associated with our contract underwriting business. Our loss mitigation opportunities are reduced in markets where housing values fail to appreciate or begin to decline. Our mortgage insurance business faces intense competition. Because many of the mortgage loans that we insure are sold to Freddie Mac and Fannie Mae, changes in their charters or business practices could significantly impact our mortgage insurance business. Legislation and regulatory changes and interpretations could harm our mortgage insurance business. Risks Particular to Our Financial Guaranty Business Recent adverse developments in the mortgage and other asset-backed credit markets may continue to negatively affect our results of operations. Our financial guaranty business may subject us to significant risks from the failure of a single company, municipality or other entity whose obligations we have insured. Our financial guaranty business is concentrated among relatively few significant customers, meaning that our revenues could decline if we lose any significant customer. Some of our financial guaranty products are riskier than traditional guaranties of public finance obligations. We may be forced to reinsure greater risks than we desire due to adverse selection by ceding companies. Variations in credit spreads may decrease demand for our credit enhancement and reduce opportunities for us to write profitable business. Our financial guaranty business faces intense competition. Legislation and regulatory changes and interpretations could harm our financial guaranty business. Changes in tax laws could reduce the demand for or profitability of financial guaranty insurance, which could harm our business. We may be unable to develop or sustain our financial guaranty business if we were required, but were unable, to obtain reinsurance or other forms of capital.

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890926--3/14/2008--RADIAN_GROUP_INC