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## Ratings 

Radian Group and our principal operating subsidiaries have been assigned the ratings provided in the chart below . We believe that ratings often are considered by others in assessing our credit strength and the financial strength of our insurance subsidiaries and, historically, they also have been a significant factor in determining Radian Guaranty’ s eligibility with the GSEs. See “ Part I. Item 1A. Risk Factors— We could lose our eligibility status with the GSEs, causing Freddie Mac and Fannie Mae to decide not to purchase mortgages insured by us, which would significantly impair our mortgage insurance franchise ” and “ Our current credit ratings and the insurance financial strength ratings assigned to our mortgage insurance or financial guaranty subsidiaries could weaken our competitive position. ” 

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(1) Moody’s outlook for Radian Group and all our rated insurance subsidiaries is currently Negative. 

(2) S&P’s outlook for Radian Group and all our rated insurance subsidiaries is currently Negative. 

(3) Not currently rated. 

## Critical Accounting Policies 

Securities and Exchange Commission guidance defines Critical Accounting Policies as those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the ef fect of matters that are inherently uncertain and that may change in subsequent periods. In preparing our consolidated financial statements in accordance with GAAP , management has made estimates, assumptions and judgments that af fect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing these financial statements, management has utilized available information, including our past history, industry standards and the current and projected economic and housing environment, among other factors, in forming its estimates, assumptions and judgments, giving due consideration to materiality . Because the use of estimates is inherent in GAAP, actual results could differ from those estimates. In addition, other companies may utilize dif ferent estimates, which may impact comparability of our results of operations to those of companies in similar businesses. A summary of the accounting policies that management believes are critical to the preparation of our consolidated financial statements is set forth below. 

## Reserve for Losses 

We establish reserves to provide for losses and LAE and the estimated costs of settling claims in both our mortgage insurance and financial guaranty segments in accordance with the accounting standard regarding accounting and reporting by insurance enterprises. Although this standard specifically excludes mortgage insurance from its guidance relating to the reserve for losses, we establish reserves for mortgage insurance using the guidance contained in this standard, supplemented with other accounting guidance as described below, due to the lack of specific guidance for mortgage insurance. 

Estimating the loss reserves in both our mortgage insurance and financial guaranty business segments involves significant reliance upon assumptions and estimates with regard to the likelihood, magnitude and timing of each potential loss. The models, assumptions and estimates we use to establish loss reserves may not prove to be accurate, especially during an extended economic downturn or a period of extreme market volatility and uncertainty , as has existed for the last several years. As such, we cannot be certain that our reserve estimate will be adequate to cover ultimate losses on incurred defaults. 

