Primary Location of Books and Records 1601 Market Street Philadelphia, PA, US

Transcription

1 PROPERTY AND CASUALTY COMPANIES ASSOCIATION EDITION ANNUAL STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2012 OF THE CONDITION AND AFFAIRS OF THE RADIAN GUARANTY INC. NAIC Group Code 0766, 0766 NAIC Company Code Employer s ID Number (Current Period) (Prior Period) Organized under the Laws of Pennsylvania, State of Domicile or Port of Entry Pennsylvania Country of Domicile United States Incorporated/Organized 09/23/1976 Commenced Business 04/12/1977 Statutory Home Office 1601 Market Street, Philadelphia, PA, US (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 1601 Market Street Philadelphia, PA, US (Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Mail Address 1601 Market Street, Philadelphia, PA, US (Street and Number or P.O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records 1601 Market Street Philadelphia, PA, US (Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Website Address Statutory Statement Contact Colleen Marie Monti (Name) (Area Code) (Telephone Number) (Extension) RadianCompliance@radian.biz ( Address) (Fax Number) OFFICERS Name Title Name Title Teresa Bryce Bazemore, President Timothy White Hunter, Secretary Carl Robert Quint, EVP/ Chief Financial Officer, OTHER OFFICERS DIRECTORS OR TRUSTEES Richard Ian Altman Teresa Bryce Bazemore Zoe Devaney Timothy White Hunter Sanford Alexander Ibrahim Brien Joseph McMahon Carl Robert Quint State of Pennsylvania County of Philadelphia ss The officers of this reporting entity, being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures Manual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. Teresa Bryce Bazemore Timothy White Hunter Carl Robert Quint President Secretary EVP/ Chief Financial Officer a. Is this an original filing? Yes [ X ] No [ ] Subscribed and sworn to before me this b. If no, day of February, State the amendment number 2. Date filed 3. Number of pages attached

2 2 ASSETS 1 Current Year 2 3 Prior Year 4 Assets Nonadmitted Assets Net Admitted Assets (Cols. 1-2) Net Admitted Assets 1. Bonds (Schedule D)!! 2. Stocks (Schedule D): 2.1 Preferred stocks 2.2 Common stocks!!! 3. Mortgage loans on real estate (Schedule B): 3.1 First liens 3.2 Other than first liens 4. Real estate (Schedule A): 4.1 Properties occupied by the company (less $ encumbrances) 4.2 Properties held for the production of income (less $ encumbrances) 4.3 Properties held for sale (less $ encumbrances) 5. Cash ($, Schedule E - Part 1), cash equivalents ($, Schedule E - Part 2) and short-term investments ($, Schedule DA)!!!! 6. Contract loans (including $ premium notes) 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA)! 9. Receivables for securities!!!! 10. Securities lending reinvested collateral assets (Schedule DL) 11. Aggregate write-ins for invested assets 12. Subtotals, cash and invested assets (Lines 1 to 11)!!!! 13. Title plants less $ charged off (for Title insurers only) 14. Investment income due and accrued!! 15. Premiums and considerations: 15.1 Uncollected premiums and agents balances in the course of collection!!!! 15.2 Deferred premiums, agents balances and installments booked but deferred and not yet due (including $ but unbilled premiums) 15.3 Accrued retrospective premiums 16. Reinsurance: earned 16.1 Amounts recoverable from reinsurers 16.2 Funds held by or deposited with reinsured companies 16.3 Other amounts receivable under reinsurance contracts 17. Amounts receivable relating to uninsured plans 18.1 Current federal and foreign income tax recoverable and interest thereon 18.2 Net deferred tax asset 19. Guaranty funds receivable or on deposit 20. Electronic data processing equipment and software!!! 21. Furniture and equipment, including health care delivery assets ($ )!!!! 22. Net adjustment in assets and liabilities due to foreign exchange rates 23. Receivables from parent, subsidiaries and affiliates!!! 24. Health care ($ ) and other amounts receivable 25. Aggregate write-ins for other than invested assets!!!!!! 26. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25)!!!! 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 28. Total (Lines 26 and 27)!!!! DETAILS OF WRITE-INS Summary of remaining write-ins for Line 11 from overflow page Totals (Lines 1101 through 1103 plus 1198)(Line 11 above) "#$!! %"&$$' ($' Summary of remaining write-ins for Line 25 from overflow page!! Totals (Lines 2501 through 2503 plus 2598)(Line 25 above)!!!!!!

3 3 LIABILITIES, SURPLUS AND OTHER FUNDS 1 Current Year 2 Prior Year 1. Losses (Part 2A, Line 35, Column 8)!!! 2. Reinsurance payable on paid losses and loss adjustment expenses (Schedule F, Part 1, Column 6) 3. Loss adjustment expenses (Part 2A, Line 35, Column 9)! 4. Commissions payable, contingent commissions and other similar charges 5. Other expenses (excluding taxes, licenses and fees)!! 6. Taxes, licenses and fees (excluding federal and foreign income taxes)!! 7.1Current federal and foreign income taxes (including $ on realized capital gains (losses)) 7.2 Net deferred tax liability 8. Borrowed money $ and interest thereon $ 9. Unearned premiums (Part 1A, Line 38, Column 5) (after deducting unearned premiums for ceded reinsurance of $ and including warranty reserves of $ and accrued accident and health experience rating refunds including $ for medical loss ratio rebate per the Public Health Service Act)!!! 10. Advance premium 11. Dividends declared and unpaid: 11.1 Stockholders 11.2 Policyholders 12. Ceded reinsurance premiums payable (net of ceding commissions)!! 13. Funds held by company under reinsurance treaties (Schedule F, Part 3, Column 19) 14. Amounts withheld or retained by company for account of others! 15. Remittances and items not allocated 16. Provision for reinsurance (including $ certified) (Schedule F, Part 8)!!!! 17. Net adjustments in assets and liabilities due to foreign exchange rates 18. Drafts outstanding 19. Payable to parent, subsidiaries and affiliates! 20. Derivatives 21. Payable for securities! 22. Payable for securities lending 23. Liability for amounts held under uninsured plans 24. Capital notes $ and interest thereon $ 25. Aggregate write-ins for liabilities 26. Total liabilities excluding protected cell liabilities (Lines 1 through 25) 27. Protected cell liabilities 28. Total liabilities (Lines 26 and 27) 29. Aggregate write-ins for special surplus funds 30. Common capital stock 31. Preferred capital stock 32. Aggregate write-ins for other than special surplus funds 33. Surplus notes 34. Gross paid in and contributed surplus!!!! 35. Unassigned funds (surplus) )!* ) * 36. Less treasury stock, at cost: 36.1 shares common (value included in Line 30 $ ) 36.2 shares preferred (value included in Line 31 $ ) 37. Surplus as regards policyholders (Lines 29 to 35, less 36) (Page 4, Line 39)!!! 38. Totals (Page 2, Line 28, Col. 3)!! DETAILS OF WRITE-INS Summary of remaining write-ins for Line 25 from overflow page Totals (Lines 2501 through 2503 plus 2598) (Line 25 above) Summary of remaining write-ins for Line 29 from overflow page Totals (Lines 2901 through 2903 plus 2998) (Line 29 above) Summary of remaining write-ins for Line 32 from overflow page Totals (Lines 3201 through 3203 plus 3298) (Line 32 above)

4 4 STATEMENT OF INCOME 1 Current Year 2 Prior Year UNDERWRITING INCOME 1. Premiums earned (Part 1, Line 35, Column 4)!! DEDUCTIONS: 2. Losses incurred (Part 2, Line 35, Column 7)!! 3. Loss adjustment expenses incurred (Part 3, Line 25, Column 1)!!! 4. Other underwriting expenses incurred (Part 3, Line 25, Column 2)!!! 5. Aggregate write-ins for underwriting deductions 6. Total underwriting deductions (Lines 2 through 5)!! 7. Net income of protected cells 8. Net underwriting gain (loss) (Line 1 minus Line 6 plus Line 7) )! * )* INVESTMENT INCOME 9. Net investment income earned (Exhibit of Net Investment Income, Line 17)!! 10. Net realized capital gains (losses) less capital gains tax of $ (Exhibit of Capital Gains (Losses))!!! 11. Net investment gain (loss) (Lines ) OTHER INCOME 12. Net gain (loss) from agents'or premium balances charged off (amount recovered $ amount charged off $ ) 13. Finance and service charges not included in premiums 14. Aggregate write-ins for miscellaneous income )!* ) * 15. Total other income (Lines 12 through 14) )!* ) * 16. Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ) ) * )!* 17. Dividends to policyholders 18. Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 16 minus Line 17) ) * )!* 19. Federal and foreign income taxes incurred )* )! * 20. Net income (Line 18 minus Line 19) (to Line 22) )* )* CAPITAL AND SURPLUS ACCOUNT 21. Surplus as regards policyholders, December 31 prior year (Page 4, Line 39, Column 2)!! 22. Net income (from Line 20) )* )* 23. Net transfers (to) from Protected Cell accounts 24. Change in net unrealized capital gains or (losses) less capital gains tax of $! )!!* 25. Change in net unrealized foreign exchange capital gain (loss) )!!* 26. Change in net deferred income tax!!! )!!!* 27. Change in nonadmitted assets (Exhibit of Nonadmitted Assets, Line 28, Col. 3)!! 28. Change in provision for reinsurance (Page 3, Line 16, Column 2 minus Column 1)!! 29. Change in surplus notes 30. Surplus (contributed to) withdrawn from protected cells 31. Cumulative effect of changes in accounting principles 32. Capital changes: 32.1 Paid in 32.2 Transferred from surplus (Stock Dividend) 32.3 Transferred to surplus 33. Surplus adjustments: 33.1 Paid in 33.2 Transferred to capital (Stock Dividend)!! 33.3 Transferred from capital 34. Net remittances from or (to) Home Office 35. Dividends to stockholders 36. Change in treasury stock (Page 3, Lines 36.1 and 36.2, Column 2 minus Column 1) 37. Aggregate write-ins for gains and losses in surplus!! 38. Change in surplus as regards policyholders for the year (Lines 22 through 37) ) * 39. Surplus as regards policyholders, December 31 current year (Line 21 plus Line 38) (Page 3, Line 37)!!! DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 0501 through 0503 plus 0598) (Line 5 above) ($#$ )!* ) * Summary of remaining write-ins for Line 14 from overflow page Totals (Lines 1401 through 1403 plus 1498) (Line 14 above) )!* ) * $$,$'-""$ )! * )* $$,$'-'!! $,$$&$,$" Summary of remaining write-ins for Line 37 from overflow page Totals (Lines 3701 through 3703 plus 3798) (Line 37 above)!!

5 5 CASH FLOW 1 Current Year 2 Prior Year Cash from Operations 1. Premiums collected net of reinsurance! 2. Net investment income!!!! 3. Miscellaneous income )!* ) * 4. Total (Lines 1 through 3)!! 5. Benefit and loss related payments! 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts 7. Commissions, expenses paid and aggregate write-ins for deductions! 8. Dividends paid to policyholders 9. Federal and foreign income taxes paid (recovered) net of $ tax on capital gains (losses) )! * 10. Total (Lines 5 through 9)!! 11. Net cash from operations (Line 4 minus Line 10) )* ) * Cash from Investments 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds!!! 12.2 Stocks!! 12.3 Mortgage loans 12.4 Real estate!!!! 12.5 Other invested assets!! 12.6 Net gains or (losses) on cash, cash equivalents and short-term investments 12.7 Miscellaneous proceeds! 12.8 Total investment proceeds (Lines 12.1 to 12.7)!!! 13. Cost of investments acquired (long-term only): 13.1 Bonds!! 13.2 Stocks! 13.3 Mortgage loans 13.4 Real estate!!!! 13.5 Other invested assets!! 13.6 Miscellaneous applications! 13.7 Total investments acquired (Lines 13.1 to 13.6)!!!!! 14. Net increase (decrease) in contract loans and premium notes 15. Net cash from investments (Line 12.8 minus Line 13.7 minus Line 14)! Cash from Financing and Miscellaneous Sources 16. Cash provided (applied): 16.1 Surplus notes, capital notes 16.2 Capital and paid in surplus, less treasury stock!! 16.3 Borrowed funds 16.4 Net deposits on deposit-type contracts and other insurance liabilities 16.5 Dividends to stockholders 16.6 Other cash provided (applied)! )! * 17. Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6)! RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11, plus Lines 15 and 17) )!! * ) * 19. Cash, cash equivalents and short-term investments: 19.1 Beginning of year!! 19.2 End of year (Line 18 plus Line 19.1)!!!

6 6 UNDERWRITING AND INVESTMENT EXHIBIT Line of Business PART 1 - PREMIUMS EARNED 1 Net Premiums Written per Column 6, Part 1B 2 Unearned Premiums Dec. 31 Prior Year - per Col. 3, Last Year s Part 1 3 Unearned Premiums Dec. 31 Current Year - per Col. 5 Part 1A 4 Premiums Earned During Year (Cols ) 1. Fire 2. Allied lines 3. Farmowners multiple peril 4. Homeowners multiple peril 5. Commercial multiple peril 6. Mortgage guaranty!!!! 8. Ocean marine 9. Inland marine 10. Financial guaranty 11.1 Medical professional liability - occurrence 11.2 Medical professional liability - claims-made 12. Earthquake 13. Group accident and health 14. Credit accident and health (group and individual) 15. Other accident and health 16. Workers'compensation 17.1 Other liability - occurrence 17.2 Other liability - claims-made 17.3 Excess workers compensation 18.1 Products liability - occurrence 18.2 Products liability - claims-made 19.1,19.2 Private passenger auto liability 19.3,19.4 Commercial auto liability 21. Auto physical damage 22. Aircraft (all perils) 23. Fidelity 24. Surety 26. Burglary and theft 27. Boiler and machinery 28. Credit 29. International 30. Warranty 31. Reinsurance - nonproportional assumed property 32. Reinsurance - nonproportional assumed liability 33. Reinsurance - nonproportional assumed financial lines 34. Aggregate write-ins for other lines of business 35. TOTALS!!!! DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through 3403 plus 3498) (Line 34 above)

7 7 UNDERWRITING AND INVESTMENT EXHIBIT PART 1A - RECAPITULATION OF ALL PREMIUMS Line of Business 1 Amount Unearned (Running One Year or Less from Date of Policy) (a) 2 Amount Unearned (Running More Than One Year from Date of Policy) (a) 3 Earned but Unbilled Premium 4 Reserve for Rate Credits and Retrospective Adjustments Based on Experience 5 Total Reserve for Unearned Premiums Cols Fire 2. Allied lines 3. Farmowners multiple peril 4. Homeowners multiple peril 5. Commercial multiple peril 6. Mortgage guaranty!!! 8. Ocean marine 9. Inland marine 10. Financial guaranty 11.1 Medical professional liability - occurrence 11.2 Medical professional liability - claims-made 12. Earthquake 13. Group accident and health 14. Credit accident and health (group and individual) 15. Other accident and health 16. Workers'compensation 17.1 Other liability - occurrence 17.2 Other liability - claims-made 17.3 Excess workers compensation 18.1 Products liability - occurrence 18.2 Products liability - claims-made 19.1,19.2 Private passenger auto liability 19.3,19.4 Commercial auto liability 21. Auto physical damage 22. Aircraft (all perils) 23. Fidelity 24. Surety 26. Burglary and theft 27. Boiler and machinery 28. Credit 29. International 30. Warranty 31. Reinsurance - nonproportional assumed property 32. Reinsurance - nonproportional assumed liability 33. Reinsurance - nonproportional assumed financial lines 34. Aggregate write-ins for other lines of business 35. TOTALS!!! 36. Accrued retrospective premiums based on experience 37. Earned but unbilled premiums 38. Balance (Sum of Lines 35 through 37)!! DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through 3403 plus 3498) (Line 34 above) (a) State here basis of computation used in each case. ($-

8 8 1. Fire Line of Business 2. Allied lines 3. Farmowners multiple peril 4. Homeowners multiple peril 5. Commercial multiple peril UNDERWRITING AND INVESTMENT EXHIBIT Direct Business (a) PART 1B - PREMIUMS WRITTEN 1 Reinsurance Assumed Reinsurance Ceded From From To To Affiliates Non-Affiliates Affiliates Non-Affiliates Net Premiums Written Cols Mortgage guaranty!!! 8. Ocean marine 9. Inland marine 10. Financial guaranty 11.1 Medical professional liability - occurrence 11.2 Medical professional liability - claims-made 12. Earthquake 13. Group accident and health 14. Credit accident and health (group and individual) 15. Other accident and health 16. Workers'compensation 17.1 Other liability - occurrence 17.2 Other liability - claims-made 17.3 Excess workers compensation 18.1 Products liability - occurrence 18.2 Products liability - claims-made 19.1,19.2 Private passenger auto liability 19.3,19.4 Commercial auto liability 21. Auto physical damage 22. Aircraft (all perils) 23. Fidelity 24. Surety 26. Burglary and theft 27. Boiler and machinery 28. Credit 29. International 30. Warranty 31. Reinsurance - nonproportional assumed property 32. Reinsurance - nonproportional assumed liability 33. Reinsurance - nonproportional assumed financial lines 34. Aggregate write-ins for other lines of business XXX XXX XXX 35. TOTALS!!! DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through 3403 plus 3498) (Line 34 above) (a) Does the company s direct premiums written include premiums recorded on an installment basis? If yes: 1. The amount of such installment premiums $ / Amount at which such installment premiums would have been reported had they been recorded on an annualized basis $

9 9 UNDERWRITING AND INVESTMENT EXHIBIT PART 2 - LOSSES PAID AND INCURRED 1 Losses Paid Less Salvage Net Losses Unpaid Net Losses Losses Incurred Reinsurance Net Payments Current Year Unpaid Current Year Recovered (Cols ) (Part 2A, Col. 8) Prior Year (Cols ) Reinsurance Assumed Percentage of Losses Incurred (Col. 7, Part 2) to Premiums Earned (Col. 4, Part 1) Line of Business Direct Business 1. Fire 2. Allied lines 3. Farmowners multiple peril 4. Homeowners multiple peril 5. Commercial multiple peril 6. Mortgage guaranty!!!!!!!! 8. Ocean marine 9. Inland marine 10. Financial guaranty 11.1 Medical professional liability - occurrence 11.2 Medical professional liability - claims-made 12. Earthquake 13. Group accident and health 14. Credit accident and health (group and individual) 15. Other accident and health 16. Workers'compensation 17.1 Other liability - occurrence 17.2 Other liability - claims-made 17.3 Excess workers compensation 18.1 Products liability - occurrence 18.2 Products liability - claims-made 19.1,19.2 Private passenger auto liability 19.3,19.4 Commercial auto liability 21. Auto physical damage 22. Aircraft (all perils) 23. Fidelity 24. Surety 26. Burglary and theft 27. Boiler and machinery 28. Credit 29. International 30. Warranty 31. Reinsurance - nonproportional assumed property XXX 32. Reinsurance - nonproportional assumed liability XXX 33. Reinsurance - nonproportional assumed financial lines XXX 34. Aggregate write-ins for other lines of business 35. TOTALS!!!!!!!! DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through ) (Line 34 above)

10 10 UNDERWRITING AND INVESTMENT EXHIBIT PART 2A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES 1 2 Reinsurance Assumed Reported Losses Incurred But Not Reported Deduct Reinsurance Recoverable from Net Losses Excl. Authorized and Incurred But Net Losses Unauthorized Not Reported Reinsurance Reinsurance Unpaid Companies (Cols ) Direct Assumed Ceded (Cols ) Net Unpaid Loss Adjustment Expenses Line of Business Direct 1. Fire 2. Allied lines 3. Farmowners multiple peril 4. Homeowners multiple peril 5. Commercial multiple peril 6. Mortgage guaranty!!!!!!! 8. Ocean marine 9. Inland marine 10. Financial guaranty 11.1 Medical professional liability - occurrence 11.2 Medical professional liability - claims-made 12. Earthquake 13. Group accident and health )* 14. Credit accident and health (group and individual) 15. Other accident and health )* 16. Workers'compensation 17.1 Other liability - occurrence 17.2 Other liability - claims-made 17.3 Excess workers compensation 18.1 Products liability - occurrence 18.2 Products liability - claims-made 19.1,19.2 Private passenger auto liability 19.3,19.4 Commercial auto liability 21. Auto physical damage 22. Aircraft (all perils) 23. Fidelity 24. Surety 26. Burglary and theft 27. Boiler and machinery 28. Credit 29. International 30. Warranty 31. Reinsurance - nonproportional assumed property XXX XXX 32. Reinsurance - nonproportional assumed liability XXX XXX 33. Reinsurance - nonproportional assumed financial lines XXX XXX 34. Aggregate write-ins for other lines of business 35. TOTALS!!!!!!! DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through ) (Line 34 above) (a) Including $ for present value of life indemnity claims.

11 11 1. Claim adjustment services: UNDERWRITING AND INVESTMENT EXHIBIT PART 3 - EXPENSES 1 Loss Adjustment Expenses 2 Other Underwriting Expenses 3 Investment Expenses 1.1 Direct )! * )! * 1.2 Reinsurance assumed 1.3 Reinsurance ceded 1.4 Net claim adjustment services ( ) )* )* 2. Commission and brokerage: 2.1 Direct, excluding contingent!! 2.2 Reinsurance assumed, excluding contingent 2.3 Reinsurance ceded, excluding contingent!! 2.4 Contingent-direct 2.5 Contingent-reinsurance assumed 2.6 Contingent-reinsurance ceded 2.7 Policy and membership fees 2.8 Net commission and brokerage ( ) )! * )! * 3. Allowances to manager and agents!!! 4. Advertising! 5. Boards, bureaus and associations 6. Surveys and underwriting reports 7. Audit of assureds'records 8. Salary and related items: 8.1 Salaries!! 8.2 Payroll taxes!!!!!! 9. Employee relations and welfare 10. Insurance!! 11. Directors'fees 12. Travel and travel items!!!!! 13. Rent and rent items!!!!! 14. Equipment!!!!! 15. Cost or depreciation of EDP equipment and software!! 16. Printing and stationery!!! 17. Postage, telephone and telegraph, exchange and express!!! 18. Legal and auditing!! 19. Totals (Lines 3 to 18)!!!!! 20. Taxes, licenses and fees: 20.1 State and local insurance taxes deducting guaranty association credits of $!! 20.2 Insurance department licenses and fees! 20.3 Gross guaranty association assessments 20.4 All other (excluding federal and foreign income and real estate) 20.5 Total taxes, licenses and fees ( )!! 21. Real estate expenses 22. Real estate taxes 23. Reimbursements by uninsured plans 24. Aggregate write-ins for miscellaneous expenses!!!! 25. Total expenses incurred!!!!! (a) 26. Less unpaid expenses - current year!! 27. Add unpaid expenses - prior year!!! 28. Amounts receivable relating to uninsured plans, prior year 29. Amounts receivable relating to uninsured plans, current year 30. TOTAL EXPENSES PAID (Lines )!!!!! DETAILS OF WRITE-INS ($#$!!!! Summary of remaining write-ins for Line 24 from overflow page Totals (Lines 2401 through 2403 plus 2498) (Line 24 above)!!!! (a) Includes management fees of $! to affiliates and $ to non-affiliates. 4 Total

12 12 EXHIBIT OF NET INVESTMENT INCOME 1 Collected During Year 2 Earned During Year 1. U.S. Government bonds (a)!! 1.1 Bonds exempt from U.S. tax (a) 1.2 Other bonds (unaffiliated) (a)!!! 1.3 Bonds of affiliates (a) 2.1 Preferred stocks (unaffiliated) (b)!! 2.11 Preferred stocks of affiliates (b) 2.2 Common stocks (unaffiliated)!!!! 2.21 Common stocks of affiliates 3. Mortgage loans (c) 4. Real estate (d) 5. Contract loans 6. Cash, cash equivalents and short-term investments (e) 7. Derivative instruments (f) 8. Other invested assets!! 9. Aggregate write-ins for investment income 10. Total gross investment income 11. Investment expenses (g)! 12. Investment taxes, licenses and fees, excluding federal income taxes (g) 13. Interest expense (h) 14. Depreciation on real estate and other invested assets (i) 15. Aggregate write-ins for deductions from investment income 16. Total deductions (Lines 11 through 15)!!!! 17. Net investment income (Line 10 minus Line 16)! DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 0901 through 0903) plus 0998 (Line 9 above) Miscellaneous expense Summary of remaining write-ins for Line 15 from overflow page Totals (Lines 1501 through 1503) plus 1598 (Line 15 above) (a) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (b) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued dividends on purchases. (c) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (d) Includes $ for company s occupancy of its own buildings; and excludes $ interest on encumbrances. (e) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (f) Includes $ accrual of discount less $ amortization of premium. (g) Includes $ investment expenses and $ investment taxes, licenses and fees, excluding federal income taxes, attributable to segregated and Separate Accounts. (h) Includes $ interest on surplus notes and $ interest on capital notes. (i) Includes $ depreciation on real estate and $ depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) 1 Realized Gain (Loss) On Sales or Maturity 2 Other Realized Adjustments 3 Total Realized Capital Gain (Loss) (Columns 1 + 2) 4 Change in Unrealized Capital Gain (Loss) 5. Change in Unrealized Foreign Exchange Capital Gain (Loss) 1. U.S. Government bonds!! 1.1 Bonds exempt from U.S. tax 1.2 Other bonds (unaffiliated) )*!! 1.3 Bonds of affiliates 2.1 Preferred stocks (unaffiliated)! 2.11 Preferred stocks of affiliates 2.2 Common stocks (unaffiliated)! )!*!! 2.21 Common stocks of affiliates! 3. Mortgage loans 4. Real estate 5. Contract loans 6. Cash, cash equivalents and short-term investments 7. Derivative instruments 8. Other invested assets!! 9. Aggregate write-ins for capital gains (losses)!!!! 10. Total capital gains (losses)!! )*!! DETAILS OF WRITE-INS Foreign Valuation Adjustment Miscellaneous!!!! Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 0901 through 0903) plus 0998 (Line 9 above)!!!!

13 1. Bonds (Schedule D) 2. Stocks (Schedule D): 2.1 Preferred stocks EXHIBIT OF NONADMITTED ASSETS 1 Current Year Total Nonadmitted Assets 2 Prior Year Nonadmitted Assets 3 Change in Total Nonadmitted Assets (Col. 2 - Col. 1) 2.2 Common stocks! 3. Mortgage loans on real estate (Schedule B): 3.1 First liens 3.2 Other than first liens 4. Real estate (Schedule A): 4.1 Properties occupied by the company 4.2 Properties held for the production of income 4.3 Properties held for sale 5. Cash (Schedule E - Part 1), cash equivalents (Schedule E - Part 2) and short-term investments (Schedule DA) 6. Contract loans 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA) 9. Receivables for securities 10. Securities lending reinvested collateral assets (Schedule DL) 11. Aggregate write-ins for invested assets 12. Subtotals, cash and invested assets (Lines 1 to 11)! 13. Title plants (for Title insurers only) 14. Investment income due and accrued 15. Premiums and considerations: 15.1 Uncollected premiums and agents balances in the course of collection )* 15.2 Deferred premiums, agents balances and installments booked but deferred and not yet due 15.3 Accrued retrospective premiums 16. Reinsurance: 16.1 Amounts recoverable from reinsurers 16.2 Funds held by or deposited with reinsured companies 16.3 Other amounts receivable under reinsurance contracts 17. Amounts receivable relating to uninsured plans 18.1 Current federal and foreign income tax recoverable and interest thereon 18.2 Net deferred tax asset! 19. Guaranty funds receivable or on deposit 20. Electronic data processing equipment and software 21. Furniture and equipment, including health care delivery assets!!! 22. Net adjustment in assets and liabilities due to foreign exchange rates 23. Receivables from parent, subsidiaries and affiliates!! 24. Health care and other amounts receivable 25. Aggregate write-ins for other than invested assets!!!!!! 26. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25)!! 27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 28. Total (Lines 26 and 27)!! DETAILS OF WRITE-INS Summary of remaining write-ins for Line 11 from overflow page Totals (Lines 1101 through 1103 plus 1198)(Line 11 above) "#$!!! %"&$$' ($' ) * Summary of remaining write-ins for Line 25 from overflow page Totals (Lines 2501 through 2503 plus 2598)(Line 25 above)!!!!!! 13

14 14 NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies A. The financial statements of Radian Guaranty Inc. ("the Company") are presented on the basis of accounting practices prescribed or permitted by the Pennsylvania Insurance Department and the NAIC Accounting Practices and Procedures manuals. B. The preparation of financial statements in conformity with Statutory Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. C. The Company uses the following accounting policies: (1) Short-term investments are stated in accordance with the guidance provided in SSAP 2. (2) Highest-quality and high-quality (NAIC designations 1 and 2, respectively) bonds not backed by other loans are stated at amortized cost and are amortized using the scientific interest method. All other bonds not backed by other loans (NAIC designations 3 to 6) are stated at the lower of amortized cost or fair value. (3) Common Stocks are valued on the basis adopted by the NAIC. (4) Highest-quality and high-quality (NAIC designations 1 and 2, respectively) preferred stocks are stated at amortized cost. All other preferred stocks (NAIC designations 3 to 6) are stated at the lower of cost, amortized cost, or fair value. (5) The Company does not have any mortgage loans on real estate. (6) Loan-backed and structured securities are amortized using the effective interest method and stated in accordance with the guidance provided in SSAP No. 43R. All valuation adjustments are made using the prospective method. (7) The Company owns 100% of the common stock of Radian Mortgage Insurance Inc. ( RMII ), Radian Insurance Inc. ("RIINC ), Radian Asset Assurance Inc. ( RAA ), and Radian Mortgage Assurance Inc ( RMAI ), formerly known as Amerin Guaranty Corporation. At December 31, 2012, RMII, RIINC, RAA, and RMAI had policyholders' surplus (market value) of $81,774,786, $218,560,704, $1,144,112,008 and $18,477,583, respectively. The Company also owns 100% of the stock of Radian Services LLC, and Radian Mortgage Services (Hong Kong) Ltd., which are valued on the basis of their net worth. (8) The Company has less than 5% ownership in several private equity limited partnerships. The fair value of these limited partnerships is recorded based on the underlying audited GAAP equity of the investee. The change in the stated value is recorded as a change in net unrealized capital gains (losses), as a component of unassigned surplus. (9) Derivatives - None. (10) Premium Deficiency Reserve None. (11) Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates and loss reports and an amount determined from losses incurred but not reported. These liabilities are based on estimates and assumptions made by management. Although management believes the liabilities are adequate, the ultimate liability may exceed or be less than the amount provided. (12) Capitalization policy - None. (13) Pharmaceutical rebate receivables - None. 2. Accounting Changes and Correction of Errors None. 3. Business Combinations and Goodwill None. 4. Discontinued Operations None. 5. Investments A. Mortgage Loans None. B. Debt Restructuring None. C. Reverse Mortgages None. D. Loan-Backed Securities (1) Prepayment assumptions are obtained from FT Interactive Data (IDC). (2) Securities with a recognized other-than-temporary impairment - None (3) Information pertaining to each security with a recognized other-than-temporary impairment - None. (4) All impaired securities (fair value is less than amortized cost) for which an other-than-temporary impairment has not been recognized in earnings as a realized loss (including securities with a recognized other-than-temporary impairment for noninterest related declines when a non-recognized interest related impairment remains): a.) The aggregate amount of unrealized losses: 1. Less than 12 months $1,766, month or longer $ 173,427 b.) The aggregate related fair value of securities with unrealized losses: 1. Less than 12 months $318,783, months or longer $ 13,633,973 (5) In evaluating whether a decline in value is other-than-temporary, the Company considers several factors, including, but not limited to, the following: a) the extent and the duration of the decline in value; b) the reasons for the decline in value (credit event, interest related or market fluctuations); c) the financial position and access to capital of the issuer, including the current and future impact of any specific events; d) the Company s intent to sell the security, or whether it is more likely than not the Company will be required to sell it before recovery; and e) the financial condition of and near term prospects of the issuer. Debt security impairment is deemed other-than-temporary if: a) The Company either intends to sell the security, or the Company does not have the ability to retain the security for a period of time sufficient to recover the amortized cost basis; or b) The Company will be unable to collect cash flows sufficient to recover the amortized cost basis of the security. (6) Additional Information - Impairments due to deterioration in credit that result in a conclusion that the present value of cash flows expected to be collected will not be sufficient to recover the amortized cost basis of the security are considered otherthan-temporary. Other declines in fair value (for example, due to interest rate changes, sector credit rating changes or

15 14.1 NOTES TO FINANCIAL STATEMENTS company-specific rating changes) that result in a conclusion that the present value of cash flows expected to be collected will not be sufficient to recover the amortized cost basis of the security may also result in a conclusion that an other-thantemporary impairment has occurred. To the extent the Company determines that a security is deemed to be other-thantemporarily impaired, an impairment loss is recognized. E. Repurchase Agreements and/or Securities Lending Transactions None. F. Real Estate During 2012, the Company sold all real estate via Radian Services, an affiliate (see also Note 10F paragraph 2.) G. Investments in low income housing tax credits - None. 6. Joint Ventures, Partnerships and Limited Liability Companies None. 7. Investment Income A. The Company excludes investment income due and accrued with amounts that are over 90 days past due. B. There were no amounts excluded in 2012 or Derivative Instruments None. 9. Income Taxes A. The components of the net deferred tax asset/(liability) recognized in the Company s financial statements are as follows: 1. 12/31/2012 (1) (2) (3) (Col 1+2) Ordinary Cap ital Total (a) Gross Deferred T ax Assets $ 519,529,212 $ 6,722,510 $ 526,251,722 (b) Statutory Valuation Allowance Adjustments 508,377, ,377,232 (c) Adjusted Gross Deferred T ax Assets (1a-1b) 11,151,980 6,722,510 17,874,490 (d) Deferred Tax Assets Nonadmitted 2,780,505-2,780,505 (e) Sub-total Net Admitted Deferred Tax Asset (1c-1d) 8,371,475 6,722,510 15,093,985 (f) Total Deferred Tax Liabilities 706,792 14,387,193 15,093,985 (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax $ 7,664,683 $ (7,664,683) $ - Liability) (1e-1f) 12/31/2011 (4) (5) (6) (Col 4+5) Ordinary Cap ital Total (a) Gross Deferred T ax Assets $ 437,094,874 $ 11,146,648 $ 448,241,522 (b) Statutory Valuation Allowance Adjustments 433,185,033 1,583, ,768,950 (c) Adjusted Gross Deferred T ax Assets (1a-1b) 3,909,841 9,562,731 13,472,572 (d) Deferred Tax Assets Nonadmitted 3,489,621-3,489,621 (e) Sub-total Net Admitted Deferred Tax Asset (1c-1d) 420,220 9,562,731 9,982,951 (f) Total Deferred Tax Liabilities 420,220 9,562,731 9,982,951 (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax $ - $ - $ - Liability) (1e-1f) Change (7) (8) (9) (Col 1-4) (Col 2-5) (Col 7+8) Ordinary Cap ital Total (a) Gross Deferred T ax Assets $ 82,434,338 $ (4,424,138) $ 78,010,200 (b) Statutory Valuation Allowance Adjustments 75,192,199 (1,583,917) 73,608,282 (c) Adjusted Gross Deferred T ax Assets (1a-1b) 7,242,139 (2,840,221) 4,401,918 (d) Deferred Tax Assets Nonadmitted (709,116) - (709,116) (e) Sub-total Net Admitted Deferred Tax Asset (1c-1d) 7,951,255 (2,840,221) 5,111,034 (f) Total Deferred Tax Liabilities 286,572 4,824,462 5,111,034 (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax $ 7,664,683 $ (7,664,683) $ - Liability) (1e-1f) Components of the Change in Net Deferred Income Taxes: Net Deferred T ax Asset / (Liability)(before Non-admitted) $ (709,116) Tax Effect of Unrealiz ed Gains / (Losses) 7,102,753 Change in Net Deferred Income Tax $ 6,393,637 For the period ended December 31, 2011 the Company was not eligible to elect to admit deferred tax assets pursuant to paragraph 10e because it is not subject to risk based capital requirements.

16 14.2 NOTES TO FINANCIAL STATEMENTS 2. A dm is s ion Calculat ion Com p onent s SSA P N o /31/2012 (1) (2) (3) (Col 1 +2) O rdin ary C ap it al T ot al (a) F ederal Incom e T axes P aid In P rior Years Recoverable T h rough Los s C arry backs. $ - $ - $ - (b) A djus t ed G ross D eferred T ax A sset s Exp ect ed T o B e Realiz ed (E xcluding T he A m ount O f D eferred T ax A s set s F rom 2(a) above) A ft er A p p lication of th e T h res hold Limit at ion. (T he Less er of 2(b)1 and 2(b)2 Below ) A djus t ed G ross D eferred T ax A sset s Exp ect ed t o be Realiz ed Follow ing the Balance Sheet D ate A djus t ed G ross D eferred T ax A sset s A llow ed p er Limit at ion T hreshold. NA N /A 138,823,124 (c) A djus t ed G ross D eferred T ax A sset s (Excluding T he A mount O f D eferred T ax A s s ets F rom 2(a) and 2(b) above) O ffset by G ross D eferred T ax Liabilities. 706,792 14,387,193 15,093,985 (d) D eferred T ax A s sets A dm it t ed as t he result of ap p licat ion of SSA P N o T otal (2(a) + 2(b) + 2(c)). $ 706,792 $ 14,387,193 $ 15,093,985 12/31/2011 (4) (5) (6) (Col 4 +5) O rdin ary C ap it al T ot al (a) F ederal Incom e T axes P aid In P rior Years Recoverable T h rough Los s C arry backs. $ - $ - $ - (b) A djus t ed G ross D eferred T ax A sset s Exp ect ed T o B e Realiz ed (E xcluding T he A m ount O f D eferred T ax A s set s F rom 2(a) above) A ft er A p p lication of th e T h res hold Limit at ion. (T he Less er of 2(b)1 and 2(b)2 Below ) A djus t ed G ross D eferred T ax A sset s Exp ect ed t o be Realiz ed Follow ing the Balance Sheet D ate A djus t ed G ross D eferred T ax A sset s A llow ed p er Limit at ion T hreshold. N /A N /A 93,616,129 (c) A djus t ed G ross D eferred T ax A sset s (Excluding T he A mount O f D eferred T ax A s s ets F rom 2(a) and 2(b) above) O ffset by G ross D eferred T ax Liabilities. 420,220 9,562,731 9,982,951 (d) D eferred T ax A s sets A dm it t ed as t he result of ap p licat ion of SSA P N o T otal (2(a) + 2(b) + 2(c)). $ 420,220 $ 9,562,731 $ 9,982,951 Change (7) (8) (9) (C ol 1-4) (C ol 2-5) (Col 7 +8) O rdin ary C ap it al T ot al (a) F ederal Incom e T axes P aid In P rior Years Recoverable T h rough Los s C arry backs. $ - $ - $ - (b) A djus t ed G ross D eferred T ax A sset s Exp ect ed T o B e Realiz ed (E xcluding T he A m ount O f D eferred T ax A s set s F rom 2(a) above) A ft er A p p lication of th e T h res hold Limit at ion. (T he Less er of 2(b)1 and 2(b)2 Below ) A djus t ed G ross D eferred T ax A sset s Exp ect ed t o be Realiz ed Follow ing the Balance Sheet D ate A djus t ed G ross D eferred T ax A sset s A llow ed p er Limit at ion T hreshold. NA NA 45,206,995 (c) A djus t ed G ross D eferred T ax A sset s (Excluding T he A mount O f D eferred T ax A s s ets F rom 2(a) and 2(b) above) O ffset by G ross D eferred T ax Liabilities. 286,572 4,824,462 5,111,034 (d) D eferred T ax A s sets A dm it t ed as t he result of ap p licat ion of SSA P N o T otal (2(a) + 2(b) + 2(c)). $ 286,572 $ 4,824,462 $ 5,111, (a) Rat io Percentage U sed T o D etermine R ecovery Period A nd T hreshold Limit ation A mount. 10% (b) A mount of Adjusted Cap ital A nd Surp lus U sed t o D etermine R ecovery Period A nd Threshold Limit ation In 2(b)2 A bove. $ 925,487,494 $ 936,161,290

17 14.3 NOTES TO FINANCIAL STATEMENTS 4. 12/31/2012 (1) (2) (3) Impact of Tax Planning Strategies (Col 1+2) Ordinary Capital Total Percent Percent Percent (a) (b) (a) (b) (a) (b) (c) Adjusted Gross DTAs (% of Total Adjusted Gross DTAs) Net Admitted Adjusted Gross DTAs (% of Total Net Admitted Adjusted Gross DTAs) /31/2011 (4) (5) (6) (Col 4+5) Ordinary Capital Total Percent Percent Percent Adjusted Gross DTAs (% of Total Adjusted Gross DTAs) Net Admitted Adjusted Gross DTAs (% of Total Net Admitted Adjusted Gross DTAs) Change (7) (8) (9) (Col 1-4) (Col 2-5) (Col 7+8) Ordinary Capital Total Percent Percent Percent Adjusted Gross DTAs (% of Total Adjusted Gross DTAs) Net Admitted Adjusted Gross DTAs (% of Total Net Admitted Adjusted Gross DTAs) Does the Company's tax-planning strategies include the use of reinsurance? Yes No X B. Regarding deferred tax liabilities that are not recognized - Not Applicable C. Current income taxes incurred consist of the following major components: 1. Current Income Tax: (1) (2) (3) (Col 1-2) 12/31/ /31/2011 Change (a) Federal $ (24,951,947) $ (37,261,584) $ 12,309,637 (b) Foreign (c) Subtotal (24,951,947) (37,261,584) 12,309,637 (d) Federal Income Tax on Net Capital Gains 26,117,862 36,622,203 (10,504,341) (e) Utilization of Capital Loss Carry -Forwards (f) Other (g) Federal and Foreign Income Taxes Incurred $ 1,165,915 $ (639,381) $ 1,805,296

18 14.4 NOTES TO FINANCIAL STATEMENTS 2. Deferred Tax Assets: (1) (2) (3) (Col 1-2) 12/31/ /31/2011 Change (a) Ordinary: (1) Discounting of Unpaid Losses $ 24,963,047 $ 26,614,774 $ (1,651,727) (2) Unearned Premium Reserve 19,644,250 14,913,084 4,731,166 (3) Policyholder Reserves (4) Investments - 20,962 (20,962) (5) Deferred Acquisition Costs (6) Policyholder Dividends Accrual (7) Fixed Assets 2,186,951 3,521,367 (1,334,416) (8) Compensation and Benefits Accrual 5,054,323 4,495, ,039 (9) Pension Accrual (10) Receivables - Nonadmitted - 648,656 (648,656) (11) Net Operating Loss Carry-Forward 424,479, ,998,151 85,481,507 (12) Tax Credit Carry-Forward 439, ,145 - (13) Other (Including Items <5% of Total Ordinary Tax Assets) 5,384,048 3,640,144 1,743,904 (14) Rescission Premium Refund Accrual 16,797,242 20,014,600 (3,217,358) (15) Bad Debt on Notes Receivable 20,580,548 23,788,707 (3,208,159) (99) Subtotal 519,529, ,094,874 82,434,338 (b) Statutory Valuation Allowance Adjustment 508,377, ,185,033 75,192,199 (c) Nonadmitted 2,780,505 3,489,621 (709,116) (d) Admitted Ordinary Deferred Tax Assets (2a99-2b - 2c) 8,371, ,220 7,951,255 (e) Capital: (1) Investments 6,722,510 11,146,648 (4,424,138) (2) Net Capital Loss Carry-Forwards (3) Real Estate (4) Other (Including Items <5% of Total Capital Tax Assets) (99) Subtotal 6,722,510 11,146,648 (4,424,138) (f) Statutory Valuation Allowance Adjustment - 1,583,917 (1,583,917) (g) Nonadmitted (h) Admitted Capital Deferred Tax Assets (2e99-2f - 2g) 6,722,510 9,562,731 (2,840,221) (i) Admitted Deferred Tax Assets (2d + 2h) 15,093,985 9,982,951 5,111, Deferred Tax Liabilities: (a) Ordinary: (1) Investments 25,501 43,102 (17,601) (2) Fixed Assets (3) Deferred and Uncollected Premium (4) Policyholder Reserves (5) Other (Including Items <5% of Total Ordinary Tax Liabilities) 2,534-2,534 (6) Prepaid Expenses 678, , ,639 (99) Subtotal 706, , ,572 (b) Capital: (1) Investments 14,387,193 9,562,731 4,824,462 (2) Real Estate (3) Other (Including Items <5% of Total Capital Tax Liabilities) (99) Subtotal 14,387,193 9,562,731 4,824,462 (c) Deferred Tax Liabilities (3a99 + 3b99) 15,093,985 9,982,951 5,111, Net Deferred Tax Assets/Liabilities (2i - 3c) $ - $ - $ -

19 14.5 NOTES TO FINANCIAL STATEMENTS D. The provision for federal and foreign income taxes incurred is different from that which would be obtained by applying the statutory Federal income tax rate to net income before taxes. The significant items causing this difference are as follows: 12/31/2012 Effective Tax Rate Provision comp uted at statutory rate $ (61,148,256) 35.00% Tax-exemp t income & DRD, net of 832(b)(5)(B) (20,071,062) Change in statutory valuation allowance 73,608,282 (42.13) Change in non-admitted assets 709,116 (0.41) Increase in value of COLI asset (964,409) 0.55 Lobbying Exp. Disallowance 631,926 (0.36) Other 1,909,890 (1.09) PY True-up 96,791 (0.06) Total $ (5,227,722) 2.99% Federal and foreign income taxes incurred $ (24,951,947) 14.28% Federal income taxes incurred - capital gain (loss) 26,117,862 (14.95) Change in net deferred income taxes (6,393,637) 3.66 Total statutory income taxes $ (5,227,722) 2.99% E. 1. As of December 31, 2012 the company had the following net operating loss carryforward: NOL Exp iration Tax y ear 2012 $253,089, Tax y ear 2011 $497,667, Tax y ear 2010 $462,041, The amount of federal income taxes incurred in the current and prior years that will be available for recoupment in the event of future net losses are: T ax year 2012 $0 T ax year 2011 $0 3. The company has no dep osits admitted under Section 6603 of the Internal Revenue Service Code. 4. Federal and foreign tax contingencies - Not Applicable. F. The Company s Federal Income Tax return is consolidated with the following entities: Asset Recovery Solutions Group Inc. Commonwealth Mortgage Assurance Company of Texas Enhance C-BASS Residual Finance Corp. Enhance Financial Services Group Inc. Guaranty Risk Services, Inc. Lottery Receivables Series 1998A Corp. Municipal and Infrastructure Assurance Corporation Radian Asset Assurance Inc. Radian Asset Securities Inc. Radian CPS I Inc. Radian CPS II Inc. Radian CPS III Inc. Radian Group Inc. Radian Insurance Inc. Radian MI Services Inc. Radian Mortgage Assurance Inc Radian Mortgage Insurance Inc. Radian Mortgage Reinsurance Company Radian Reinsurance (Bermuda) Limited SAFCO SPC Finance Corp. Van-American Insurance Agency, Inc. Windsor Management Inc. The method of allocation between the companies is subject to a written agreement, approved by the Board of Directors. Allocation is based upon separate return calculations. Pursuant to this agreement, the Company has the ability to recoup federal income taxes paid in prior years in the event of future net losses, which it may incur, or to recoup its net losses carried forward as an offset to future net income subject to federal income taxes. Intercompany tax balances are settled according to the terms of the approved agreement.

20 14.6 NOTES TO FINANCIAL STATEMENTS 10. Information Concerning Parent, Subsidiaries and Affiliates A., B. & C. Material Party Transactions The Company received cash capital contributions from Radian Group Inc. ("Parent") during 2012 as follows: Date Amount 6/27/2012 $ 130,214 7/20/ ,790 8/10/ ,794 9/13/ ,179 10/12/ ,182 11/13/ ,518 12/17/ ,524 Total $ 324,201 The Company made a capital contribution, recorded during the fourth quarter 2012, to RMII in the amount of $56,000,000. This amount was settled in cash on December 28, The Company made a capital contribution, recorded during the third quarter 2012, to RMII in the amount of $4,000,000. This amount was settled in cash on November 1, During the third quarter 2012, the Company received a cash dividend from RAA in the amount of $54,000,000. The amount was received on July 2, On December 20, 2011, the Company's Parent transferred RMAI to the Company in the form of a capital contribution using a September 30, 2011 valuation of $16,572,743. In December 2011, the Company sold its ownership interest in Enhance Financial Services Group ( EFSG ) to the Parent in exchange for cash of $5,692,610, which represented the fair value of the Company s ownership interest in EFSG at September 30, The Company received a capital contribution, recorded during the fourth quarter 2011, from its Parent in the amount of $100,000,000. This amount was settled in cash on February 16, The Company made a capital contribution, recorded during the fourth quarter 2011, to RMII in the amount of $10,500,000. This amount was settled in cash on February 16, The Company received a capital contribution, recorded during the third quarter 2011, from its Parent in the amount of $30,000,000. This amount was settled in cash on November 2, The Company made a capital contribution,recorded during the third quarter 2011, to EFSG in the amount of $2,412,700. This amount was settled in cash on November 3, During the second quarter 2011, the Company received a dividend from RAA in the amount of $53,400,000. The amount was received on June 30, The Company made a capital contribution, recorded during the fourth quarter 2010, to RMII in the amount of $20,566,046. This amount was settled in cash on February 18, D. Intercompany receivable and payables - At December 31, 2012, the Company reported $238,604 as amounts due from its affiliates and $9,225,391 as amounts due to its Parent. At December 31, 2011, the Company reported $102,160,248 as amounts due from its Parent and affiliates and $10,497,045 as amounts due to its affiliates. The terms of the agreements require that these amounts be settled within 30 days. E. Guarantees and Undertakings The Company has a Guaranty Agreement with RMAI, a monoline mortgage guaranty insurer restricted to writing only first lien residential mortgage insurance. (see Note 14). F. Service Contracts and Cost Sharing Agreements - The Company also has entered into management agreements with each of its subsidiaries, RMII, RIINC, RMAI, and its sister company, Commonwealth Mortgage Assurance Company of Texas, whereby a certain percentage of costs incurred by the Company for accounting, finance, data processing and legal services are passed through to the subsidiaries. The Company has also entered into a cost allocation agreement with its Parent, under which all of the Parent's interest expense costs are allocated on the basis of the Company's percenttage of total relative consolidated GAAP capital and the remaining costs are allocated based on the Comapany's pro rata share of the expense as calculated based on timing. The Company has an agreement with its subsidiary, Radian Services, whereby Radian Services purchases, maintains, and disposes of real estate and certain other assets acquired in the settlement of claims and purchases, services, and settles loans acquired in the loss mitigation process. Financing of each acquisition is provided by the Company and is repaid at the time of disposal or settlement. At December 31, 2012 and 2011, the net amount due from Radian Services under this agreement was $1,075,014 and $580,878 respectively, which was non-admitted for statutory financial statement purposes. G. Nature of Control Relationship - All outstanding shares of the Company are currently owned by its Parent, an insurance holding company domiciled in the state of Delaware. H. Upstream Intermediate Entity None. I. Investments in SCA in excess of 10% of admitted assets The Company owns a 100% interest in RAA (See also Note 1 (7)). The Company s investment in RAA is recorded based on its underlying statutory equity. At December 31, 2012, RAA had assets, liabilities, policyholders' surplus (market value) and net income of $1,676,047,514, $531,935,507, $1,144,112,008 and $103,253,319, respectively. J. Investments in impaired SCAs There were no recognized SCA impairments during In 2011 the Company recognized an other-than-temporary impairment on its affiliate investment in RMII in the amount of $11,117,624, which was recorded on line 10 of the Statement of Income as a realized loss. K. Investments in Foreign insurance subsidiary - None. L. Investments in downstream non insurance holding company - None.