RADIAN’S RATINGS REAFFIRMED

The two major credit ratings agencies reaffirmed the strength of Radian Asset Assurance, the financial guaranty subsidiary of Radian Group, Inc. Standard & Poor’s rates Radian Asset “AA,” while Moody’s rating is “Aa3.” Both agencies have a “stable” outlook on the bond insurer.

The review follows the decision by parent Radian Group and MGIC to cancel their proposed merger. The merger was terminated as a result of difficulties in the mortgage securities market, in which both Radian Group and MGIC are active participants.

Radian Asset, though a subsidiary of Radian Group, has been largely unaffected to date by the mortgage and subprime problems that have affected many financial institutions.  Radian Asset is separately capitalized and operationally independent of other subsidiaries of the Radian Group. Importantly, New York state insurance regulations strongly limit the amount of dividends Radian Asset is capable of paying its parent. Radian Group also announced it will contribute $100 million of additional capital to Radian Asset to assure market confidence in the financial soundness of the bond insurer.

While Radian Asset is already sufficiently capitalized, the additional funding will increase the insurer’s ability to write new business. Radian Group has also indicated it will take any steps necessary in the future to protect Radian Asset from any troubles experienced by the parent company as a result of its mortgage industry exposure.

In Moody’s statement reaffirming Radian Asset’s rating, the agency pointed to stable earnings, limited exposure to residential mortgage risk and the diversity of the credits in Radian Asset’s insured portfolio.

Radian Asset insures smaller, infrequent issuers of municipal bonds whose credit quality is generally investment-grade quality. Since 1990, more than 2,000 issues have been insured with an average transaction size of $13 million. As part of the rating agency monitoring process, all of Radian Asset’s insured transactions are reviewed by S&P and Moody’s to insure that Radian Asset’s portfolio meets certain targets for credit quality and diversification.

09/06/07