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Fitch Affs Radian Guaranty Inc. Insurer Fin Strength Rtg At `AA'.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 10, 2001

Fitch has affirmed the 'AA' insurer financial strength rating of Radian Guaranty Inc. and assigned an 'AA' insurer financial strength rating to Radian Insurance Inc., a wholly-owned subsidiary of Radian Guaranty Inc. Additionally, an 'A+' long-term issuer rating was assigned to Radian Guaranty's parent--Radian Group Inc. The Rating Outlook for all ratings is Stable.

Fitch's very strong rating on Radian Guaranty reflects its strong risk-based capitalization, high-quality balance sheet, sizable market presence and sound insured portfolio characteristics. Partially offsetting these factors are the increasingly competitive market conditions evidenced by the proliferation of captive lender reinsurance and the more aggressive posture of Fannie Mae and Freddie Mac.

Fitch's rating indicates that Radian Guaranty exceeds stringent capital adequacy requirements set by Fitch's mortgage insurance risk-based capital model. The model assesses an insurer's ability to meet its potential claim payment obligations during a protracted national economic downturn. Based on this analysis, Radian Guaranty's internal capital combined with moderate external reinsurance support are more than adequate to cover policyholder losses under an 'AA' stress scenario.

As of Dec. 31, 2000, Radian's consolidated mortgage insurance operations reported assets of $2.1 billion and capital (policyholders surplus and contingency reserves) of $1.6 billion. Net insurance-in-force and net policy limits totaled $192 billion and $25 billion, respectively. Operating leverage of 15.5:1 at year-end 2000 was consistent with its peer average and well below the statutory maximum of 25:1.

Radian Guaranty has reported strong and improving profitability in recent years as the result of the exceptional credit performance of residential mortgages due to the persistently strong U.S. economy, record employment rates and robust housing markets. Over the past five years the insurer's return on capital has averaged in excess of 20%.

Radian Insurance Inc. was formed in late 2000 to write credit insurance on non-traditional mortgage assets such as second mortgage, manufactured housing loans, home equity loans and mortgages with loan-to-values above 100%. The company currently maintains a strong capital position, as well as, explicit support from Radian Guaranty in the form of an uncapped net worth and liquidity maintenance agreement.

Radian Group Inc., which was formed by the merger of CMAC Investment Corporation and Amerin Corporation, maintained assets and shareholders equity of $3.8 billion and $2.0 billion, respectively, at March 31, 2001. In addition to the mortgage insurance operations, Fitch also assigns insurer financial strength ratings to two financial guaranty insurers--Enhance Reinsurance Co. 'AAA' and Asset Guaranty Insurance Co. 'AA', as well as an 'A+' long-term issuer rating to their direct parent--Enhance Financial Services Group Inc.
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Publication:Business Wire
Date:Jul 10, 2001
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