Radian Group Inc--Form 11-K
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 11-K

 


(Mark One):

x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 1-11356

 


 

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

RADIAN GROUP INC.

1601 Market Street

Philadelphia, PA 19103

 



Table of Contents

RADIAN GROUP INC.

SAVINGS INCENTIVE PLAN

INDEX

 

      Page

Report of Independent Registered Public Accounting Firm

   1

Financial Statements:

  

Statements of Net Assets Available for Benefits as of December 31, 2005 and 2004

   2

Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2005 and 2004

   3

Notes to Financial Statements

   4-12

Supplemental Schedules *

  

Form 5500, Schedule H, Part IV Item 4i: Schedule of Assets (Held at End of Year ) as of December 31, 2005

   13

Form 5500, Schedule H, Part IV Item 4j: Schedule of Reportable Transactions for the Year Ended December 31, 2005

   14

Signatures

   15

Exhibit Index

   16

Exhibit:

  

Consent of Independent Registered Public Accounting Firm

  

* All other schedules required by Section 2520-103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.


Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Trustees and Participants

in the Radian Group Inc.

Savings Incentive Plan

Philadelphia, Pennsylvania:

We have audited the accompanying statements of net assets available for benefits of Radian Group Inc. Savings Incentive Plan (the “Plan”) as of December 31, 2005 and 2004, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules (1) assets held at end of year as of December 31, 2005, and (2) reportable transactions for the year ended December 31, 2005, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Plan’s management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 2005 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.

/s/ Deloitte & Touche LLP

Philadelphia, PA

June 29, 2006

 

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Table of Contents

RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

DECEMBER 31, 2005 AND 2004

 

     2005    2004

ASSETS

     

Investments (at fair value):

     

Common Stock Fund - Radian Group Inc.

     

Participant-directed

   $ 2,284,700    $ 2,263,551

Nonparticipant-directed (Note Q)

     13,407,261      11,792,245
             
     15,691,961      14,055,796

Other participant-directed investments (Note J)

     40,169,945      33,199,876

Loans receivable

     701,599      668,173

Employer contributions receivable

     2,841,828      2,603,166
             

NET ASSETS AVAILABLE FOR BENEFITS

   $ 59,405,333    $ 50,527,011
             

See notes to financial statements.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

YEARS ENDED DECEMBER 31, 2005 AND 2004

 

     2005    2004

ADDITIONS TO NET ASSETS ATTRIBUTED TO:

     

Investment income:

     

Net appreciation in fair value of investments

   $ 2,775,500    $ 3,374,938

Loan interest

     39,454      35,384

Interest

     191,017      76,643

Dividends

     1,164,396      409,503
             

Total investment income

     4,170,367      3,896,468
             

Contributions:

     

Participants’

     5,515,146      5,119,298

Employer’s

     2,841,828      2,603,166

Rollover

     726,811      443,100
             

Total contributions

     9,083,785      8,165,564
             

Total additions

     13,254,152      12,062,032
             

DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:

     

Other deductions

     646      15,698

Benefits paid to participants

     4,375,184      4,158,991
             

Total deductions

     4,375,830      4,174,689
             

NET ADDITIONS

     8,878,322      7,887,343

NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF THE YEAR

     50,527,011      42,639,668
             

NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR

   $ 59,405,333    $ 50,527,011
             

See notes to financial statements.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS

A. Significant Accounting Policies

Basis of Accounting and Use of Estimates

The financial statements of the Plan are prepared under the accrual method of accounting. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the changes therein during the reporting period. Actual results may differ from those estimates and assumptions.

Investment Valuation and Income Recognition

Shares of mutual funds are valued at the quoted market prices. For the Radian Common Stock Fund investment, the valuation of the investment is based on the value of the underlying assets, which represents fair value. The underlying assets include Radian common stock and money market accounts, and are valued at quoted market price. For the common collective trusts, the underlying assets include traditional investment contracts issued by insurance companies and banks, alternative contracts and short-term investments, and are valued by discounting the related cash flows on yields of similar instruments with comparable duration. Participant loans are valued at their outstanding balances, which approximate fair value. Dividends are recorded as of the declaration date and interest is recorded when earned. Purchases and sales of securities are recorded as of the trade date.

Plan Expenses

All expenses for administration of the Plan are paid directly by Radian Group Inc. (“Radian” or the “Company”). Loan origination fees are paid by the participant and are deducted from the loan proceeds. An annual administrative fee for loans is deducted from a participant’s account. Brokerage commissions and other expenses incurred in connection with purchases and sales of securities, which are participant-directed, are included as a reduction of the amount earned on each fund.

B. Plan Description

The following description of the Plan provides only general information. Participants should refer to the Plan documents for a complete description of the Plan.

The Plan is a defined contribution plan designed to allow eligible employees of Radian and its subsidiaries to save for their retirement. Full-time employees, upon completion of 90 consecutive days of service, are eligible to join the Plan. Savings are achieved through a program of salary deferrals in which a participant’s salary is reduced by the amount elected to be saved on a pre-tax basis.

All participants are entitled to contribute between 1% and 25% of their annual salary to the Plan, subject to the dollar limitations discussed below. Prior to January 1, 1994, participants were permitted to contribute after-tax savings (“savings contributions”) under the Plan. After January 1, 1994, all contributions must be made on a salary reduction, pre-tax basis. Additional limitations are imposed under the Plan on the amount of salary reduction contributions that may be elected by highly compensated participants in order to comply with certain non-discrimination requirements of the Internal Revenue Code of 1986 (“the Code”). The annual limit on salary reduction contributions by a participant is determined from time to time by the Plan’s Benefits Administration Committee (the “Committee”) (not to exceed the indexed limitations contained in the Code), and those limits were set at $14,000 for 2005 and $13,000 for 2004.

On August 6, 2002, the Board of Directors of Radian approved an amendment to the Plan to allow for catch-up contributions in accordance with, and subject to the limitations of, Section 414 (vi) of the Code effective October 1, 2002 as well as other changes permitted under the Economic Growth and Tax Relief Reconciliation Act of 2001.

C. Administration of the Plan

The Plan is administered by the Committee, which has fiduciary responsibility for the general operation of the Plan. Members of the Committee are appointed by the Board of Directors of Radian for indefinite terms and may resign or be removed at any time. Members of the Committee serve without compensation for their service. As such, Radian indemnifies such members to the extent determined by its Board of Directors.

Although Radian expects to continue the Plan, Radian reserves the right to amend or terminate the Plan at any time. In the event the Plan is terminated, all benefits would become fully vested and non-forfeitable and the net assets of the Plan would be allocated as required by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and by the Plan.

Administrative expenses of the Plan, as noted above, are paid by Radian, the Plan sponsor as provided in the Plan Document.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS - Continued

D. Participant Accounts

Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution, the Company’s matching contributions, which is made to a separate incentive account, and allocations of Company discretionary contributions and Plan earnings, and charged with withdrawals and an allocation of Plan losses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

All investment funds are considered participant - directed funds and contain only participant - directed amounts. The only nonparticipant - directed amounts in the Plan are the Company matching contributions, which are made in Radian common stock.

E. Matching Contributions

Radian makes an annual “matching contribution” with respect to the salary reduction contributions of each participant, subject to a limit of six percent of the participant’s base salary in any pay period. For every dollar a participant contributes to the Plan (not exceeding a total of six percent of base salary in any pay period) and does not withdraw before the close of the Plan year (calendar year), Radian will make a contribution of at least $0.25.

After the close of any year, Radian may, in its sole discretion, make a supplemental matching contribution. For the years ended December 31, 2005 and 2004, for every eligible dollar a participant contributed to the Plan during the year, Radian made a supplemental matching contribution of $0.75 in Radian common stock.

Matching contributions generally must be made no later than the last date on which such amounts may be deducted for federal income tax purposes. In order to be entitled to the matching contribution for a Plan year, a participant must (i) be employed by Radian on the last working day of the Plan year, (ii) be on an authorized leave of absence (provided the participant has not withdrawn his or her current year contribution) or (iii) be entitled to receive a distribution of the participant’s account following the participant’s retirement, death or disability in the relevant Plan year.

Matching contributions, which may be made in cash or Radian common stock, are invested in the Common Stock Fund. The matching portion of the Common Stock Fund is considered a nonparticipant - directed fund (See Note Q).

F. Forfeited Accounts

A participant forfeits his or her right to matching contributions, and any earnings thereon, that remain unvested at the time of the participant’s termination of service. These amounts will be used to reduce future employer contributions. At December 31, 2005 and 2004, forfeited nonvested accounts totaled $407,333 and $459,604, respectively. During the year ended December 31, 2005 and 2004, employer contributions were reduced by $407,333 and $409,604, respectively, from forfeited nonvested accounts.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS - Continued

G. Trust Agreement

Effective August 2004, the Company and Vanguard Fiduciary Trust Company (“Vanguard”) or (the “trustee”) established a trust (the “Trust”) for investment purposes as part of the Plan. The Trust replaced a predecessor trust established with Massachusetts Financial Services (“MFS”). At the same time, The Vanguard Group (“TVG”) also became the Plan’s record keeper. All assets held in trust by MFS at that time were transferred to Vanguard.

H. Vesting

The rights of a participant to savings contributions made by the participant and salary reduction contributions made by Radian on the participant’s behalf, and any earnings thereon, are at all times fully vested and non-forfeitable. Matching contributions, and any earnings thereon, become vested based on such participant’s years of vesting service. A participant earns one year of vesting service for each Plan year in which such participant completes at least 1,000 hours of service.

Participants become vested under the following schedule:

 

Years of Service

  

Vested Percentage

of the Participant’s

Incentive Account

 

Less than 2

   0 %

2 but less than 3

   20 %

3 but less than 4

   40 %

4 but less than 5

   60 %

5 but less than 6

   80 %

6 or more

   100 %

Effective January 1, 2003, in connection with Radian’s acquisition of Enhance Financial Services Group Inc. (“EFSG”), the EFSG 401(k) Savings Plan was merged into the Plan. Employees of EFSG who were eligible to participate in the EFSG Plan prior to January 1, 2003 retain the vesting schedule under the EFSG Plan as follows:

 

Years of Service

  

Vested Percentage

of the Participant’s

Incentive Account

 

Less than 1

   0 %

1 but less than 2

   33 %

2 but less than 3

   68 %

3 or more

   100 %

Newly eligible employees of EFSG follow the Plan vesting schedule.

I. Investment Options

The selection of investment options, which may be done in increments of 1% pursuant to the Plan, with the exception of employer matching contributions, is the sole responsibility of each participant. Neither the Trustee nor Radian has any responsibility to select investment options or to advise participants in selecting their investment options. Subject to applicable provisions of law, each participant assumes all risks connected with any decrease in the market value of any securities in the funds, and such funds shall be the sole source of payments to be made under the Plan. See Note P below.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS - Continued

J. Other Participant-Directed Investments

Other participant-directed investments consisted of the following:

 

           December 31, 2005
           Cost    Fair Value
TVG    Morgan Growth Fund    $ 6,112,757    $ 7,328,094
TVG    Wellington Fund      6,398,547      6,604,863
TVG    Retirement Savings Trust      5,033,218      5,033,218
TVG    Total Bond Market Index Fund      3,034,579      3,001,661
TVG    Growth and Income Fund      2,643,486      2,962,770
TVG    Columbia Acorn Fund      1,905,210      2,174,107
TVG    Growth Equity Fund      1,792,313      2,118,203
TVG    International Explorer Fund      1,776,488      1,975,123
TVG    Oppenheimer Global Fund      1,277,482      1,604,498
TVG    Target Retirement 2035 Fund      1,035,247      1,114,412
TVG    Target Retirement 2025 Fund      881,540      914,849
TVG    Windsor II Fund      762,025      771,280
TVG    Mid – Cap Index Fund      672,834      755,356
TVG    Inflation Protected Securities Fund      687,795      672,026
TVG    Target Retirement 2015 Fund      604,154      633,287
TVG    500 Index Fund      524,005      550,854
TVG    Small – Cap Index Fund      380,856      404,370
TVG    Selected Value Fund      379,622      389,454
TVG    Target Retirement 2045 Fund      266,083      272,807
TVG    Royce Fund      231,598      241,909
TVG    Artisan International Fund      154,684      181,565
TVG    High –Yield Corporate Fund      143,615      141,638
TVG    Strategic Equity Fund      116,086      114,601
TVG    Target Retirement 2005 Fund      92,990      94,484
TVG    Mid – Cap Growth Fund      81,623      86,833
TVG    Target Retirement Income      27,755      27,683
                
   Total    $ 37,016,592    $ 40,169,945
                

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS - Continued

 

          December 31, 2004
          Cost    Fair Value
TVG    Morgan Growth Fund    $ 6,131,150    $ 6,883,654
TVG    Wellington Fund      5,736,578      5,965,378
TVG    Retirement Savings Trust      5,060,538      5,060,538
TVG    Total Bond Market Index Fund      2,884,403      2,911,945
TVG    Growth and Income Fund      2,589,733      2,834,879
TVG    Columbia Acorn Fund      1,706,757      1,900,892
TVG    Growth Equity Fund      1,674,034      1,865,154
TVG    Oppenheimer Global Fund      1,470,014      1,749,093
TVG    International Explorer Fund      790,497      917,872
TVG    Target Retirement 2035 Fund      529,442      571,025
TVG    Target Retirement 2015 Fund      466,808      482,250
TVG    Target Retirement 2025 Fund      344,349      352,482
TVG    Windsor II Fund      229,280      240,601
TVG    Small – Cap Index Fund      194,677      216,813
TVG    Target Retirement 2005 Fund      195,208      199,305
TVG    500 Index Fund      185,955      197,594
TVG    Mid – Cap Index Fund      159,085      180,158
TVG    Inflation Protected Securities Fund      171,017      170,924
TVG    Royce Fund      136,044      142,090
TVG    Selected Value Fund      122,976      133,060
TVG    Artisan International Fund      77,547      86,076
TVG    High –Yield Corporate Fund      49,962      50,709
TVG    Target Retirement 2045 Fund      28,469      30,183
TVG    Mid – Cap Growth Fund      27,546      29,538
TVG    Strategic Equity Fund      16,725      17,013
TVG    Target Retirement Income      10,484      10,650
                
   Total    $ 30,989,278    $ 33,199,876
                

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS - Continued

K. Payment of Benefits and Withdrawals

On termination of service due to death, disability or retirement, a participant or a participant’s beneficiary, as applicable, may elect to receive either a lump-sum amount equal to the value of the participant’s vested interest in his or her account, or annual installments over a ten-year period. For termination of service for other reasons, a participant may receive the value of the vested interest in his or her account only as a lump-sum distribution. Benefit payments to participants are recorded upon distribution. If the amount in a participant’s account is less than $5,000, a lump-sum distribution is made following termination of the participant’s service.

Participants are permitted to make withdrawals in accordance with Plan provisions. The minimum withdrawal permitted is the lesser of $500 or the full value of the participant’s applicable account.

All amounts attributable to savings contributions must be withdrawn prior to any “hardship withdrawal” of amounts attributable to matching contributions or salary reduction contributions.

The Plan’s hardship withdrawal rules comply with the Code. In order to make a hardship withdrawal, a participant must exhaust the possibility of all other withdrawals (other than hardship withdrawals) under the Plan and all such withdrawals and nontaxable loans available under all other retirement plans maintained by Radian and its affiliates. Earnings credited after 1988 on salary reduction contributions are not available for hardship withdrawals, even if the contributions were made before 1989. Upon receiving a hardship distribution, a participant is generally suspended from making contributions to the Plan (and all other deferred compensation plans maintained by Radian and its affiliates) for six months following the year of the hardship withdrawal.

 

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L. Net Appreciation in Fair Value

Net appreciation (depreciation) in fair value of investments (including gains and losses on investments bought and sold, as well as held during the year) for the years ended December 31, 2005 and 2004 consisted of:

 

          2005     2004  
TVG    Artisan International Fund    $ 20,689     $ 8,529  
TVG    Columbia Acorn Fund      129,604       203,302  
TVG    Oppenheimer Global Fund      147,466       290,084  
TVG    Royce Fund      4,720       6,046  
TVG    500 Index Fund      18,269       11,833  
TVG    Growth Equity Fund      154,560       194,996  
TVG    Growth and Income Fund      117,314       257,674  
TVG    High –Yield Corporate Fund      (3,232 )     748  
TVG    Inflation Protected Securities Fund      (15,631 )     (93 )
TVG    International Explorer Fund      97,142       133,253  
TVG    Mid – Cap Growth Fund      2,645       2,096  
TVG    Mid – Cap Index Fund      51,628       21,074  
TVG    Morgan Growth Fund      565,823       795,613  
TVG    Selected Value Fund      2,548       10,084  
TVG    Small – Cap Index Fund      11,344       22,137  
TVG    Strategic Equity Fund      331       287  
TVG    Target Retirement 2005 Fund      4,225       4,097  
TVG    Target Retirement 2015 Fund      14,136       15,584  
TVG    Target Retirement 2025 Fund      25,833       8,141  
TVG    Target Retirement 2035 Fund      51,565       41,638  
TVG    Target Retirement 2045 Fund      6,916       1,715  
TVG    Target Retirement Income      (225 )     166  
TVG    Total Bond Market Index Fund      (61,750 )     33,497  
TVG    Wellington Fund      23,158       240,609  
TVG    Windsor II Fund      31       11,327  
MFS    Fixed Fund Institutional Series      —         (113 )
MFS    Money Market Fund      —         —    
MFS    Emerging Growth Fund      —         (116,367 )
MFS    Bond Fund      —         (56,283 )
MFS    International New Discovery Fund      —         2,496  
MFS    Total Return Fund – A      —         (10,944 )
MFS    Massachusetts Investors Trust      —         (38,085 )
MFS    Massachusetts Investors Growth Stock Fund      —         (59,420 )
MFS    Research Fund      —         (351 )
MFS    Capital Opportunities Fund      —         (30,644 )
MFS    Global Equity Fund      —         29,605  
MFS    New Discovery Fund      —         (170,341 )

Common Stock Fund - Radian Group Inc.

     1,406,391       1,510,948  
                   

Net Appreciation in Fair Value

   $ 2,775,500     $ 3,374,938  
                   

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS - Continued

M. Loans

Participants may borrow from the Plan in an amount up to 50% of their vested balance. The maximum loan amount is $50,000 as set forth by the IRS and Department of Labor regulations. The minimum loan allowed by the Plan is $1,000. Loans are to be repaid via payroll deductions including interest at the prime rate plus 1% over a maximum five-year period, except loans that are used toward the purchase of a primary residence, which can be repaid over a longer time period. A participant may have only one loan outstanding at any one time. Outstanding loans are due and payable upon termination of service.

N. Federal Tax Considerations

The Internal Revenue Service (“IRS”) has determined and informed the Company by a letter dated September 11, 2002 that the Plan and related trust is designed in accordance with applicable sections of the Internal Revenue Code (“IRC”). Radian’s board of directors has since amended the Plan; however, the Plan administrator believes that the Plan is currently designed and operated in compliance with the applicable requirements of the IRC. Accordingly, no provision for income taxes has been included in the financial statements herein.

O. Schedule of Investments Greater than Five Percent of Net Assets (at fair value)

The following presents investments that represented five percent or more of the Plan’s net assets for each respective year.

 

     Number of
Shares/Units
    2005

Vanguard Growth and Income Fund

   92,906     $ 2,962,770

Vanguard Morgan Growth Fund

   413,783       7,328,094

Vanguard Total Bond Market Index Fund

   298,376       3,001,661

Vanguard Wellington Fund

   217,623       6,604,863

Vanguard Retirement Savings Trust

   5,033,218       5,033,218

Common Stock Fund - Radian Group Inc.

   643,641 *     15,691,961

 

    

Number of

Shares/Units

    2004

Vanguard Growth and Income Fund

   92,613     $ 2,834,879

Vanguard Morgan Growth Fund

   421,793       6,883,654

Vanguard Total Bond Market Index Fund

   283,539       2,911,945

Vanguard Wellington Fund

   197,595       5,965,378

Vanguard Retirement Savings Trust

   5,060,538       5,060,538

Common Stock Fund - Radian Group Inc.

   634,001 *     14,055,796

 

* The Common Stock Fund is reported as units.

P. Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market volatility and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

NOTES TO FINANCIAL STATEMENTS - Continued

Q. Nonparticipant - Directed Investments

Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant - directed investments is as follows:

 

     December 31,  
     2005     2004  

Net Assets:

    

Common Stock Fund - Radian Group Inc.*

   $ 13,407,261     $ 11,792,245  
                

Total

   $ 13,407,261     $ 11,792,245  
                
     Year Ended December 31  
     2005     2004  

Changes in Net Assets:

    

Net appreciation

   $ 1,159,065     $ 1,267,625  

Interest and dividends

     20,183       9,758  

Contributions

     2,603,166       2,759,493  

Benefits paid to participants

     (805,778 )     (1,206,531 )

Other deductions

     (495 )     (353,680 )

Loan activity

     3,809       (46,123 )

Transfers to participant - directed investments

     (1,364,934 )     (1,581,848 )
                
   $ 1,615,016     $ 848,694  
                

* Indicates party-in-interest to the Plan.

R. Exempt Party-in-Interest Transactions

Certain Plan investments are shares of mutual funds managed by TVG. Vanguard is the trustee as defined by the Plan and, therefore, these transactions qualify as exempt party-in-interest transactions. At December 31, 2005 and 2004, the Plan held 643,641 and 634,001 units, respectively, of common stock of Radian Group Inc., the sponsoring employer, with a cost basis of $11,407,598 and $10,561,962, respectively. During the year ended December 31, 2005, the Plan recorded dividend income on Radian Group Inc. common stock of $23,899. Radian Group Inc., as the Plan sponsor qualifies as an exempt party-in-interest.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

Form 5500, Schedule H, Part IV Item 4i: Schedule of Assets (Held at End of Year)

December 31, 2005

 

Identity of

Issuer

  

Description Of Investment

  

Number of

Shares/Units

    Cost    Current Value
TVG*    Morgan Growth Fund***    413,783     $ 6,112,757    $ 7,328,094
TVG*    Wellington Fund***    217,623       6,398,547      6,604,863
TVG*    Retirement Savings Trust    5,033,218       5,033,218      5,033,218
TVG*    Total Bond Market Index Fund***    298,376       3,034,579      3,001,661
TVG*    Growth and Income Fund***    92,906       2,643,486      2,962,770
TVG    Columbia Acorn Fund***    77,178       1,905,210      2,174,107
TVG*    Growth Equity Fund***    203,282       1,792,313      2,118,203
TVG*    International Explorer Fund***    110,219       1,776,488      1,975,123
TVG    Oppenheimer Global Fund***    24,055       1,277,482      1,604,498
TVG*    Target Retirement 2035 Fund***    90,898       1,035,247      1,114,412
TVG*    Target Retirement 2025 Fund***    77,727       881,540      914,849
TVG*    Windsor II Fund***    24,618       762,025      771,280
TVG*    Mid – Cap Index Fund***    42,845       672,834      755,356
TVG*    Inflation Protected Securities Fund***    55,265       687,795      672,026
TVG*    Target Retirement 2015 Fund***    55,261       604,154      633,287
TVG*    500 Index Fund***    4,793       524,005      550,854
TVG*    Small – Cap Index Inv***    14,178       380,856      404,370
TVG*    Selected Value Fund***    20,650       379,622      389,454
TVG*    Target Retirement 2045 Fund***    21,703       266,083      272,807
TVG    Royce Fund***    15,577       231,598      241,909
TVG    Artisan International Fund***    7,174       154,684      181,565
TVG*    High – Yield Corporate Fund***    22,956       143,615      141,638
TVG*    Strategic Equity Fund***    5,226       116,086      114,601
TVG*    Target Retirement 2005 Fund***    8,644       92,990      94,484
TVG*    Mid – Cap Growth Fund***    4,959       81,623      86,833
TVG*    Target Retirement Income***    2,652       27,755      27,683
Radian*    Common Stock Fund    643,641 **     11,407,598      15,691,961
   Loans receivable @4.25% to 10.5% Maturing between 2006 and 2024        701,599      701,599
                  

TOTAL

        $ 49,125,789    $ 56,563,505
                  

* Indicates party-in-interest to the Plan.
** Amount represents units based on third party independent report.
*** All registered investment company investments.

 

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RADIAN GROUP INC. SAVINGS INCENTIVE PLAN

Form 5500, Schedule H, Part IV Item 4j: Schedule of Reportable Transactions

December 31, 2005

Investments Purchased

 

Identity

Of Party

  

Description of Security

   Number of
Shares/Units
   Purchase
Price
  

Fair Value of

Asset on Transaction

Date

Single Transaction            
Radian*    Common Stock Fund    137,211    3,012,770    3,012,770

* Indicates party-in-interest to the Plan.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Benefits Administration Committee has duly caused this annual report to be signed on its behalf by the undersigned here unto duly authorized.

 

RADIAN GROUP INC.
SAVINGS INCENTIVE PLAN
By:   Benefits Administration Committee

Date: June 29, 2006

 

By:  

/s/ C. Robert Quint

  C. Robert Quint
 

Executive Vice President and

Chief Financial Officer

 

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Exhibit Index

 

Exhibit No.  

Description

23   Consent of Independent Registered Public Accounting Firm

 

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