Radian Group Inc. · NYSE:RDN
Radian — R. W. Baird 2007 Growth Conference
24 slides from Radian's conference presentation, May 8, 2007
Slide 1: Curt Culver, R. W. Baird 2007 Growth Conference
Curt Culver Chairman and CEO, MGIC Investment Corporation R. W. Baird 2007 Growth Conference Chicago, IL
Slide 2: Additional Information
Additional Information MGIC Investment Corporation and Radian Group Inc. have filed a joint proxy statement/prospectus and other relevant documents concerning the MGIC/Radian merger transaction with the United States Securities and Exchange Commission (the “SEC”). STOCKHOLDERS ARE URGED TO READ THE
Slide 3: Financial Highlights
0.9% 0.8% 76.0 Expenses (millions) 9.5% -54.9% $2.3 Bulk NIW (billions) 31.6% Flat $10.4 Flow NIW (billions) 6.8% 1.0% $178.3 Insurance in Force (billions) -38.9% -23.4% $1.14 Earnings per Share (excl. gains) -64.0% -70.1% $14.0 Income From JVs net of tax (millions) 23.0% 5.7% $166 Paid Losses (mill
Slide 4: Financial Highlights
March 2007 March 2006 Asset - Size (billions) $6.6 $6.3 Investment Portfolio (billions) $5.3 $5.2 Shareholder Equity (billions) $4.5 $4.2 Net Loss Reserves (millions) $1,127 $1,090 Debt-to-Equity Ratio 13.6% 14.2% Risk-to-Capital (consolidated) 7.5:1 7.3:1 ( 1) Financial Highlights are presented on
Slide 5: Recent Trends Impacting Housing
Recent Trends Impacting Housing Source: OFHEO, Goldman Sachs, April 19, 2007 “Californian Mortgage trends present a risk for Countrywide” Home Price Appreciation Alternative Product Sales
Slide 6: Real Estate Markets are Regional not National
Real Estate Markets are Regional not National 4 th Quarter 2006 Annualized Year over Year Source: March 1, 2007 OFHEO Home Price Data < 1% 1 - 10% > 10% U.S.: 4.4%
Slide 7: Why the Worry?
Why the Worry? Source: FHLMC “Economic and Housing Market Outlook” 2007 MBA National Mortgage Servicing Conference & Expo Amy Crews Cutts, PhD Deputy Chief Economist
Slide 8: Why the Worry? (1)
Why the Worry? (1) (1) Delinquency rates and cumulative loss of sub-prime loans
Slide 9: Credit Quality and Layering of Risk
Credit Quality and Layering of Risk Low ratios Excellent, established credit Low ratios Excellent, established credit High ratios Excellent, established credit High ratios Adverse credit 90% LTV 95% LTV 95% LTV 95% LTV SOURCE: MGIC 1.0 2.5 4.8 15.0
Slide 10: Documentation and Market Risk
“Stable” Markets The Nation, excluding Cal. & N.E. “Volatile” Markets Cal. and New England only Documentation and Market Risk SOURCE: MGIC ---------------------- FICO Score ---------------------- (relative claim incidence by credit score, 1989-91)
Slide 11: Stable Employment Picture
Stable Employment Picture Source: Bureau of Labor Statistics April 6, 2007 press release
Slide 12: Employment and Delinquencies
Employment and Delinquencies
Slide 13: Attractive Rates and Lower Home Prices help Affordability
Attractive Rates and Lower Home Prices help Affordability
Slide 14: Tremendous Growth in Equity
SOURCE: Inside Mortgage Finance, MBAA December Outlook, FHLMC Tremendous Growth in Equity
Slide 15: Housing Continues to be a Growth Market
SOURCE: FNMA, MBAA December Outlook Range of MDO Growth Estimates from FNMA as of 10/16/2006 Housing Continues to be a Growth Market
Slide 16: Powered by demographics and increasing homeownership
Sources: U.S. Department of Commerce, U.S. Census Bureau for 1980 through June 2002 data; Fannie Mae 2005 Statistical Summary data . 1980’s 2000 - 2010 1990’s …powered by demographics and increasing homeownership Population Growth
Slide 17: Additional Drivers of Demand
Additional Drivers of Demand Baby Boomers 2 nd home purchases Reverse Mortgages Affordable Housing Initiatives 1 st time home buyers low and moderate income borrowers
Slide 18: Summary
Summary Housing is a growth industry Positive Demographic Trends Stable employment trends Returning to long term appreciation trends Real Estate is local
Slide 19: Forward-Looking Statements and Risk Factors
Forward-Looking Statements and Risk Factors Our revenues and losses could be affected by the risk factors discussed below that are applicable to us, and our income from joint ventures could be affected by the risk factors discussed below that are applicable to C- BASS and Sherman. These risk factors
Slide 20: Risk factors: piggyback loans and competition
While no data is publicly available, we believe that piggyback loans are a significant percentage of mortgage originations in which borrowers make down payments of less than 20% and that their use is primarily by borrowers with higher credit scores. During the fourth quarter of 2004, we introduced o
Slide 21: Risk factors: housing demand drivers
• housing affordability, • population trends, including the rate of household formation, • the rate of home price appreciation, which in times of heavy refinancing can affect whether refinance loans have LTV ratios that require private mortgage insurance, and • government housing policy encouraging
Slide 22: Risk factors: litigation and regulatory proceedings
The mortgage insurance industry is subject to the risk of private litigation and regulatory proceedings. Consumers are bringing a growing number of lawsuits against home mortgage lenders and settlement service providers. In recent years, seven mortgage insurers, including MGIC, have been involved in
Slide 23: Risk factors: Basel II and international operations
The Basel II provisions related to residential mortgages and mortgage insurance may provide incentives to certain of our bank customers not to insure mortgages having a lower risk of claim and to insure mortgages having a higher risk of claim. The Basel II provisions may also alter the competitive p
Slide 24: Risk factors: merger-related costs and integration
• we will have certain costs relating to the merger that will increase our expenses; • the merger may distract us from day-to-day operations and require substantial commitments of time and resources by our personnel, which they otherwise could have devoted to other opportunities that could have been