Ladies and gentlemen, thank you very much for standing by. Welcome to the Radian's fourth quarter 2007 earnings call. At this time all participation lines are in a listen-only mode. Later, there will be an opportunity for questions with instructions given at that time (Operator Instructions). As a reminder, today's conference call is being recorded. After the prepared remark Radian management will be happy to take your questions. Please limit yourself to one question and if necessary one follow-up. If you have additional questions following the call please contact Radian directly. I will now like to turn the conference over to your host Mr. S.A. Ibrahim. Please go ahead.

Thank you, operator. Thank you everyone for joining us today. This is S.A. Ibrahim, Chief Executive Officer of Radian; with me here are Bob Quint, Chief Financial Officer; David Applegate, President of Radian Guaranty, Steve Cooke, President of our Financial Guaranty business; as well as other members of our management team. First let me remind you that any forward-looking statements that we make this morning should be considered in conjunction with the cautionary statements set forth in the Safe Harbor statement included with our webcast live and the statements contained in our SEC filings. As always I will start off by making some opening remarks followed by Bob Quint with detail comments on the fourth quarter and full year. Steve Cooke and David Applegate will then give more color on Financial Guaranty and Mortgage Insurance. I will then wrap up with some closing remarks prior to taking your questions. I will begin by commenting on 2007 moving on to our view what lies ahead, how we are position to deal with the near-term challenges and how we are positioning ourselves to benefit when the current cycle moves into recovery phase. 2007 was indeed an extremely challenging year for Radian and the industry. Market conditions have continued to deteriorate since our last update and we believe that the housing downturn will continue to challenge us during 2008 and into 2009. In financial terms, 2007 was clearly disappointing. In the fourth quarter Radian reported a net loss of $618 million and diluted net loss per share of $7.74. After the impact of the last two quarters losses driven primarily by the C-BASS write-down, credit losses, higher reserves and mark-to-market adjustments, book value at year end 2007 was $35.10. We have a solid investment portfolio of $6.4 billion and we have strong claims…

Thank you and good morning. For this quarter I'll be updating you on many of the unusual items that impacted our financial statements in the third quarter as well as going over the highlights of the normal P&L activity. The first item is the C-BASS situation, in the third quarter we wrote-off our entire $468 million equity investment and less the $50 million demand note on the balance sheet, because we believe that would be collectable. The collectibility of the note has become more uncertain and likely won't be known for several years, but regardless of that based on the equity method of accounting a full write-off of the note is necessary, due to the fourth quarter operating loss from C-BASS that has further impaired its equity. The $50 million write-off is located in the equity and affiliates line in our income statement. We have no further exposure to C-BASS. Next is the NIMs mark-to-market. As of September 30th, we've booked $432 million of negative marks which included $372 million of projected client payments. The risk enforced at September 30th was $712 million. Since then our risk has been reduced by another $108 million to $604 million at yearend '07 and was down by another $13 million to $591 million in January. The updated balance sheet mark on the NIM is $434 million and importantly projected claims have not changed materially since our third quarter expectation. With total risk enforced at year end of $604 million our derivative liability is 72% of our total exposure. There is no further exposure beyond that. The next item is Second Lien. The premium deficiency necessary because future projected losses and expenses are greater than future expected premiums booked in the third quarter of $155 million had an expectation of approximately $300 million of…

Thanks Bob. In keeping with what my colleagues have been saying these are certainly unprecedented time in the Financial Guaranty Insurance industry. Throughout it all our goal is going be continue to demonstrate that we are well capitalized business on a standalone basis, with stable rating and limited exposure to vulnerable asset classes. As we said in the past, we continue to pursue strategic alternative, which potentially further enhance the value of our Financial Guaranty business. We believe we have more than adequate capital when viewed in light of our outstanding exposure. Production levels have been impacted by uncertainty and were less than optimum in the fourth quarter due to overall market concerns about subprime exposures, as well as specific concerns about the Financial Guaranty insurance industry. As Bob mentioned earlier, the net mark-to-market adjustment for Financial Guaranty the $397 million much of which is related to our synthetic investment grade corporate CDO exposure. While the impact of the adjustment on the 2007 financial statements significant. It is important to remember that virtually this entire amount is a result of the widening of credit spreads, prior to the downturn in the credit markets and not due to deterioration in the credit quality of this portfolio or erosion of underlying collateral. Provided the credit quality remains as strong as it has today. Radian asset will release mark-to-market gains in the future as the CDO transactions mature. We continue to vigorously monitor all segments of our insurance portfolio with a particular emphasis on our non-CDO RMBS portfolio and on our CDO portfolio with a particular emphasis on our CDO ABS exposure and CDO CMBS exposure. Let me spend some time focusing on our CDO of ABS portfolio. As you may remember from our third quarter earnings call, we have exposure on only…

Thank you, Steve. Good morning. Although these are clearly challenging times, I can assure you I am pleased to be here at Radian. And a long-term potential of this business is significant and I look forward to reporting better performance in the future. The Q4 performance $335 million was the total after tax loss and the full year loss for MI was $693 million after tax. Bob did a very thorough job explaining the financial charges on our NIMS, the second lien deficiency and CDS, but I do want to update you briefly on those. As a reminder, we have reserved $434 million of what is now at the end of January $591 million risk in force. On the second liens we have total risk in force of $925 million. We have a very seasoned risk in force book of $451 million that is performing well in which we have few concerns over. Unfortunately, as we have stated before we have risk in force of $ 473 million concentrated with two originators that is performing poorly. We have now put-up reserves of $ 323 million against these books for total coverage against risk in force of 68%. Although not insignificant in terms of exposure, we have a clear sizing of the box in these sectors. Now turning to our fourth quarter reserve build up, in Q4 we had a $465 million in reserves pushing our total reserve position against our primary risk in force and full polices to $1.2 billion. The reserve build up reflects an update to our roll to loss ratios, cure rates have clearly dropped, and loans are moving more quickly to late stage to fall with less probability of recovery. In addition in Q4, we experienced a large increase in overall defaults. Defaults in our primary…

Thanks Dave. I want to conclude by saying that we have come through a difficult year and the environment continues to be very challenging. These challenges will remain with us for the near future and may well intensify before they abate. Our book value is $35.10 we have said before and this does not include any upsides from the future revertful of mark-to-market adjustments, the value of unearned and contracted premiums and the opportunity to write profitable new business. At the same time, future losses and mark-to-market adjustments would negatively impact our book value. Our claims paying resources in both business segments are strong and we stand to benefit from a profitable and bulk capitalized Financial Guaranty business. With that, operator we are now ready to start questions.

(Operator Instructions) And our first question will come from the line of Ron Bobman with Capital Returns. Please go ahead.

Everybody must be sleeping in this morning and must be first on the line. I had a question about the MI business and the captive balances. You provided us sort of the distribution of Prime, Alt-A and A minus/subprime for risk in force as well as I think sort of new business risk in force rating. I am curious to know with respect to your MI book of business that's subject to captive protection and recoverables. How that's split up between the relative books of business Prime, Alt-A, and A minus.

Most of the captive reinsurance is on our Prime business, but I would say that majority of the captive business is on our Prime business. The majority of the Smart Home is on subprime and then secondary is Alt-A.

Would you mind reminding me or teaching me what do you mean by Smart Home?

Smart home is a capital markets reinsurance transaction that we did in '05 and '06, its essentially reinsurance on our portion of our subprime portfolio.

Okay, being closer to these kind of parties then presumably anyone else in the call. Are you hopeful or expecting Fannie to follow Freddie's sort of amendments with respect to limiting or eliminating the deep-cedes as well as the A minus, AA minus threshold abeyance?

This is Dave Applegate. Fannie Mae I am sure will take that under consideration. It will be difficult to speculate on exactly what they would do. We certainly are pleased with what Freddie has done to-date.

Thank you and next will go to the line of Ross Levin with Arbiter Partners. Please go ahead.

Hi guys, Arbiter actually. Two questions, first of all with respect to the mark-to-market on guaranteed CDO portfolio. There has been something I guess considerable move in terms of corporate credit spreads sort of prices that which corporate CDO exposure in the AAA tranche is trading, since December 31st. Could you just give us a little bit of guidance on understanding of where that might lead you in terms of mark-to-market that would be very helpful? And also I know that, you probably knows your competitor took a premium deficiency reserve against bulk transactions, but if they refer to as Wall Street bulk transaction -- are you guys looking taking some sort of premium deficiency reserve against other segments of the book beyond the second?

I'll take the second question first. With regard to premium deficiency last quarter we took a premium deficiency on our second-lien business because we seeing that business to be a separate line, that was separately sold and measured. With regard to 2006 and 2007 vintage Wall Street securitization, we really did very little of that business, instead we took risk on those deals to our NIM guarantees, which we taken marks on throughout 2007. So, we do not contemplate any other kind of segregation of our book with regard to premium deficiency. With regard to spread, obviously at the end of the first quarter we will take in to account then prevailing spread in determining our mark-to-market on all of our business.

Okay.

And next we will go to line of [Mike Maneeze with Bear Stearns]. Please go ahead.

Hi. Just a question on the bulk production you guys had in the fourth quarter. Can you just talk a little bit about that looks like you guys were about $3 billion of bulk, just wanted to understand kind of what's the strategy there, kind of what sort of pricing were looking at and what we can expect from that channel in the future. Thanks.

This is Dave Applegate. Overall I think we're going to see a decrease in the amount of bulk transactions. The bulk transactions we've been doing we definitely see a significant improvement in credit quality and we've been able to adjust our pricing obviously quickly on bulk versus our other published pricing. So the mix is improving, overall we think it will decline as a percentage of business, but the returns are fair, forecast to be pretty attractive.

So, I mean as far as -- do you also have a breakdown of the risk in force by vintage year for restructured? Just curious to know like what percentage of the structured book is might post '05 for capital.

We could do achieve that.

Okay.

We can do in the follow-up. We definitely have it. We just don't have access to at the moment.

Okay. Thanks.

And our next question will come from the line of Mike Grasher with Piper Jaffray. Please go ahead.

Thank you. Good morning, gentlemen. Bob I may have missed this in your opening remarks that, did you mention any expected impairment on your marks to-date?

In which one, Mike.

Across the board? The marks on the derivatives in particular?

Oh, they were all updated. All of our marks have to be updated every quarter, so the current marks are updated for year end. The NIMS mark really didn't change essentially, is very, very close to what it was at the third quarter, the marks on the CDS and the MI went up and the marks on the Financial Guaranty business went up, the negative marks went up substantially, but as we mentioned with mostly spread related as compared to any kind of credit impairment.

Then we will next go the line of [Rajiv Patel with Sinova Capital]. Please go ahead. Rajiv Patel – Sinova Capital: Hey you guys. Thanks for taking my call. Quick question on your line of credit the $200 million, which you reference which you guys haven't even touched, have the terms of it change at all, if you were to cut a draw down on a given, the different rating agency actions and what's occurred in the market, have the terms, which are backing the line of credit, have they changed at all?

No, they haven't.

And so that facility is fully opened to you guys currently?

It's available although we have no plans about to draw down any more.

Okay. Great Thanks a lot.

Thank you. And next we move to the line of [George Urban with RBS Greenwich Capital] Please go ahead.

Oh. Hi guys. It's George here. Can we just circle back on the loss projections for going Bob said we're not going to provide projections out. Is there some other metric we could use or something little less granular for example, do you think premiums going out and you I know with the fees potential losses given the protections given by Smart Home and captive reinsurers, is there any kind of thing we can look at?

Well, there is obviously there is a lot of uncertainty in the markets, so I think at this time what we are doing is looking at a variety of different stress scenarios and as we said we believe our capital will be adequate to pay claims in all of those check scenarios. But we are not -- at the time we don't have a revised sort of base, anything like that because of the uncertainty around the near-term future.

Okay. And can you just update on the IRS tax payment?

Its still something that we expect to happen, but we have not received notice yet, so its been sort of pushed forward, likely sometime in '08.

Okay, thanks Bob.

It's alright.

(Operator Instructions) And we will go next go to the line of [Anand Krishnan with Forrester Research]. Please go ahead.

Hi, good morning. I just wanted to follow up on the structured piece of the business. You mentioned you did very little of Wall Street deals in '06. Can you give a sense for your overall structured book, how much is Wall Street related? I am also trying to compare your delinquencies in that structured business. It's running at like almost 50 percentage of where MGIC is running, so I just wanted to make sure if all of that is related to you not playing as much on the Wall Streets side? Thanks.

Yeah, as we said with regard to the Wall Street securitizations we really curbed that kind of business in the beginning of '06, so we did very little in '06 and almost none in '07. We gave you some of the prior to that, so there is some of that business within our risk in force, but it's generally older vintage.

Thank you, and next will go to line of [Mark Ilet with Barclays Capital]. Please go ahead.

Yeah, hi quick one, I am sorry if you answered this already. Could you just update us on your cash balance of the whole call please?

Its about the same as it was in the third quarter so those are some thing over $100 million.

Okay, thank you.

Operator, are there any more questions?

Yes, we'll next go to the line of David Polson with Bear Stearns. Please go ahead.

Yes, hi. Do you have some kind of breakout on how much of your investments are insured by financial guarantors?

In our investment portfolio?

Yes, investment portfolio, yes.

Yeah, we are getting more curious.

Okay.

That's 25% of the portfolio or about $1.6 billion.

Do you have an idea of what the underlying rating is of that portfolio and is it almost on [immunities] or?

Yes, it is.

Okay.

And the underlying ratings are pretty high. They are 40% plus AAA, 20% AA, almost another 20% A, almost entirely investment credit.

Great, thanks.

Then we'll next go to the line of Howard Shapiro with Fox-Pitt Kelton. Please go ahead.

Hi, thank you. SA, you mentioned earlier in the call that you are comfortable with your capital position, especially relative to rating agency action can you just give us a sense I assume you've spoken with the rating agencies. What kind of risk to capital level are you comfortable with, what kind of level are they comfortable with and at least one of them has talked about looking at profitability in to 2009 as part of the criteria, so if you are comfortable can you give us any sense as to what that means for 2009? Thanks.

Thanks Howard. First let me talk about the rating agency capital discussions to-date. In our discussions and as Bob mentioned we're in constant communications with the rating agencies, capital hasn't been the number one issue. Having said that we have to prepare for an environment where the rating agencies would change the way they view capital in this uncertain environment and we have to look at different scenarios for our business and see under what scenarios we would need additional capital. It's not for rating agency purposes, like I said it may serve a more important role in building customer confidence. In terms of your question on the level of risk to capital. I think to some extent we have been painted as being having a very high risk to capital ratio largely because of those two large international deals we have which are really for all intents and purposes Financial Guaranty type deals and the rating agencies in all our interaction with them have been very comfortable with those deals requiring very low capital and when you adjust for those as Bob mentioned our risk to capital ratio is very comfortable.

Thank you and next we'll go to the line of Brian Horey with Aurelian Management. Please go ahead.

Hi my question relates to the Financial Guaranty business. You discussed I believe $212 million of total exposure to domestic RMBS securities is that correct?

Yeah, that's in the MI business.

So that's in the MI business. Okay. And I think you said that those were rated BBB to A minus, do I have that right?

Between BBB and single A.

Single A. Okay, and can you give us anymore detail on what category those are, are they Prime, Alt-A what's your geography what the loan to value mentioned in that group?

We didn't give that information it's $212 million of total exposure there and so we didn't break it down as specifically as you are asking.

And our next question will come from the line of Craig Carlozzi of Mast Capital. Please go ahead.

Yeah. Hello. Couple of housekeeping and I have a follow-up question as well. At yearend what you estimate your RBC ratio to be at your operating company the Mortgage Insurance operating company and what is your statutory surplus not including the contingency reserve estimated with where you are at?

If we don't measure our business on RBC, so it's not a concept that we use and I don't have that number. The $2.9 billion included contingency reserve I don’t have that number without, the substantial part of that is contingency reserve.

Okay. And could you remind me what the IRS tax payment is how much you expect that to be?

The disclosure we made was approximately $84 million.

$84 million and so if you have $100 million of cash the whole current year so you expect to make $84 million presumably of interest in [whole co] expenses as well. How do you expect to bridge that liquidity gap without drawing down on your $200 million available credit facility?

Well, as we have disclosed that $84 million is allowed to be collected from the subsidiary at which the level that the taxes do.

Thank you. And now we will now turn the call back to Radian management team for closing comments. Please go ahead.

I would like to thank everyone for participating in the call. Thank you and we will see you next quarter.

Ladies and gentlemen, that does conclude the call for today. Thank you for your participation and for using the AT&T executive teleconference service. You may now disconnect.