Welcome to the Radian's first quarter 2008 earnings call. At this time all participant lines are in a listen-only mode. Later, there will be an opportunity for your questions with instructions being given at that time. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to the Chief Executive Officer S.A. Ibrahim. Please go ahead.

Thank you, operator. Thank you everyone for joining us today. As always I will start off by making some opening remarks followed by Bob Quint with detail comments on the first quarter financials. David Applegate and Steve Cooke will then give more color on the Mortgage Insurance and Financial Guaranty businesses. We will then take your questions and I will wrap up with some closing remarks. 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 slides and the statements contained in our SEC filings. These are available on our investor relations website at www.radian.biz. As anticipated, in the first quarter of 2008, Radian along with others in the industry continued to be affected by the weak credit and housing markets we saw in 2007. Even so, Radian was able to make significant progress, on a variety of fronts. In the first quarter of this year, Radian reported a net income of $195.6 million and diluted earnings per share of $2.44. Excluding the impact of net unrealized gains on derivatives on hybrid securities, our net operating was $215 million and the net operating loss per share was $2.69. Net operating loss is a non-GAAP financial measure and we had provided a detail reconciliation of these numbers to our GAAP results in our press release and in the web cast slides in our website. Bob, will give you more detail in just a few minutes. Our Mortgage Insurance paid claims were inline with our guidance while our loss reserves continued to increase, reflecting market conditions. Across both businesses, we ended the quarter with $1.9 billion in reserves. Looking ahead, although it continues to be challenging for us…

Thank you S.A. For this quarter again, I will again be updating you on the unusual item that impacted our financial statements in 2007 and so far in 2008, including the adoption of SFAS 157, as well as going over the highlights of a normal P&L activity and trends for the first quarter of 2008. The change in fair value line for the quarter was significantly impacted by the adoption of SFAS 157 in 2008. The main qualitative difference in our mark-to-market methodology with 157 is the incorporation of the markets perception of Radian's credit in computing fair value. This has the impact of reversing some of all of the negative spread related marks previously booked mostly on corporate CDO's in our finance guaranty business. I think it makes sense to explain exactly what our fair value calculation does on these products. These are not assets we own. They are financial guaranty and mortgage insurance credit exposures that we took in the form of derivatives. The fair value calculation potentially re calculates the premium we would have received in today's current credit environment compared to the contractual premium. Here is an example. If we wrote a guaranty on a synthetic corporate CDO and charged 10 basis points per annum, than the current market price for the same deal based on the credit quality of the underlying collateral would be 60 basis points We used a 50-basis point difference to book a negative mark because of pricing when we did the deal was less than it would be in today's' market. That is the reason for the significant negative adjustment during 2007, which we said repeatedly was not credit related. With SFAS-157 offsetting much of that large negative mark is incorporation of Radians credit spread. The isolated pretax income of SFAS-157…

Thank you, Bob. The mortgage insurance business had another very challenging quarter, posting an after-tax loss of $226 million, but outperforming Q4 '07 where we lost $335 million. Bob did a very thorough review of our financials, so I will focus on the key operating considerations for the MI business. And I'm going to address the following areas. The first is the impact of the ratings downgrade to our GSE status and our clients. Second is the steps we're taking to improve the mix and quality of NIW and the overall future profitability of the business. And third is the steps we're taking to manage our existing risk-in-force exposure and the trends we are seeing in the portfolio. Let me start with the existing portfolio performance. Bob already addressed the deterioration of our second lien book and the positive impact the implementation of FAS 157 had on our NIMS portfolio. So, I will address the delinquency and reserve trends for our primary first liens. In Q1, our first lien net reserve build was lower than Q4, thanks to a slower increase in our default account. Q4 defaults increased approximately 10,000 or 20%, while Q1 defaults increased 8,000 or 13.5%. And that's inclusive of the service or reporting adjustment Bob previously referenced. As a result, in Q1, we added $300 million of reserves for primary first liens, $100 million lower than the prior quarter. Our primary book default rate is now 7.63%, and that's up from 6.8% in the prior quarter. Although the slowdown in gross defaults is a positive development, it is likely driven by traditional seasonal factors. So, stepping back on the quarter's performance, the underlying trends that have been developing over the last six months are still evident. We continue to see the poorest relative performance in our…

Thank you Dave. Despite the difficult and challenging environment for the financial guaranty industry as a whole, during the quarter, which has caused reduced new business production, our Financial Guaranty business continue to maintain a strong its capital position with limited exposure to vulnerable asset classes. S.A. has addressed his earlier remarks with some details, the corporate priorities with respect to the FG business related to preserving and enhancing the current and future value of the franchise. Although new written premiums were down in both our public finance direct and structured financed sectors, there remains certain positive developments of note. Our reinsurance business remained strong during the quarter, with net written premium of $23 million only down slightly from the comparable period in 2007. Net earned premium increased period-over-period, primarily due to an increase in net premiums earned in our public finance direct business, which offset smaller decreases, in other FG business lines. We have also experienced a high level of refunding activity during the quarter. $11.7 million versus $6.6 million in the comparable period of 2007. We made a conscious decision at the end of the first quarter, to refocus our efforts in the structured finance arena. Due to deterioration and uncertainties in the credit market that have significantly reduced a volume of CDO and other structured products, we have decided to discontinue for the foreseeable future insuring CDO's. We will now focus our structured finance efforts in the areas of infrastructure finance, i.e. providing credit protection on PFI, PPP and project finance projects, involving a sincerity of purpose, financial solutions, where we act as a leading provider of soft capital solution to global financial institutions and asset backed securities involving target niche issuers, in well understood sectors and strong credit in non-traditional factors. In the public finance area, we continue to target undeserved segment of the municipal market characterized by smaller and infrequent borrowers, with a particular emphasis on sectors related to land-secured financing, education, healthcare, and senior living facility. At March 31st, 2008 our FG net credit derivative liability was $211.7 million, primarily attributable in changes in credit spread and not to any material amount of credit impairment. We continue to vigorously monitor both our direct and assumed exposures, which has resulted in a higher provision for losses, primarily in the structured finance and the insurance business as a result of assumed mortgage exposures. However, in general although the overall credit performance of our FG portfolio continue to show some deterioration, it still remained stable during the first quarter, given market conditions. I will now turn the call over to S.A who will make some concluding remarks.

Thanks Steve. Let me summarize the teams prepared remarks as follows. We are managing for the present while preparing and positioning for the future. At the moment, the markets in which we operate are cyclically tough but we have the ability to our pay our claims and we have an eye on the future with the business we are writing. As we see demand, discipline and profitability return to the mortgage insurance and financial guaranty markets, we look forward to a more positive and profitable future for Radiant as the current cycle bottoms out and we move inevitably to the recovery period, a period that historically has presented participants with exiting shareholder value creation opportunities. With that operator we will now start taking questions.

(Operator Instructions). And we will first go to the line of David Hochstim with Bear Stearns.

I had a couple of questions just on the SFAS-157, is that option consistent with the number, somebody, maybe Steve, explain what would happen now, as assuming spreads tighten, would you realize less of a benefit than you had if you hadn't adopted 157?

Yeah. I mean, we received a sort of a big positive benefit this quarter from incorporating our own spread. So I think in the future, you have to look at the relative spread between the underlying collateral. So that's going to go the way it goes either, plus or minus. And then, Radians own spread would be taken as well. So assuming they go in the same direction, they would, they may offset. If they are going to different direction, that would have a different impact.

But over time, assuming you get paid the way you expect and this would all kind of washout and you recover those losses you booked last year?

That's right. Whatever is left, assuming it is only spread related, no matter whether it was the underlying collateral or Radian spread over time as deals expire the marks will be reversed out to zero.

Okay. Can one of you provide some more color on the service adjustments, that you referenced and, and then may be also just again on the trend over the course of the quarter? Are we starting to see some more normal seasonality in delinquencies or is it just way too early to know that things aren't looking all worse?

The servicer adjustment was from a large national servicer where a previously standard processor was to report loans that were 90 days delinquent and greater. The MI industry as a whole traditionally looks for loans to be reported in 60 days. So that adjustment had to be made. We anticipated what that number would be through a discussion with the partner and then put up another accordingly a consistent reserve amount. The general trends in terms of delinquencies we are seeing. I think at this point you would have to describe as seasonal. There was definitely in February and March a strong seasonal benefit, but as I referenced in my points all day books are seeing continued weakness and the areas of the country where you have seen property values decline are certainly in some level distressed. So it's too premature to say that we would pass this thing.

Did you see some seasonal benefit in Florida and California or was it other places?

I couldn't state specifically how cures and seasonality hit California and Florida.

Okay. Fine thanks.

Next we will go to the line of Mike Grasher from Piper Jaffray. Please go ahead.

Thank you. David, a couple of follow up questions from your comments? I think you spoke to the Fast Advance program, as a tool in terms of loss mitigation. How much of an impact, did that have in terms of cures for your book of business?

The Fast Advance in terms of number of units; I don't have the specific number at my finger tips. We have to follow up with you on that.

Okay and then just a follow up to the question. I am just curious, as to how you are differentiating among those that are delinquent in terms of helping them cure?

Well, the way the Fast Advance program is set up, as we work with our servicer partner. And we will advance to them up to 15% of our financial claim amount. And so what we will do is work with them, to determine if there is a loan modification option, for example that contribution with whatever the servicer may be dealing, will cure the loan. And so for us to advance the loan has to cure at the same time and then that's just an additional tool in conjunction with the other traditional loss mitigation steps we would take, but we have seen a significant to its is including a third party service, the not-for-profit counseling agencies are creating a lot of value right now. We are just a more friendly tone to recall. We are more a switch-around like feel to it and there is a better preparation for the consumer on what some of their options could be. Rick, we are seeing a lot of traction with that as well. So lot of new things and more aggressive postures we are taking than we would have in the past.

Okay and I guess just a follow-up on that. My concern would be are you throwing more good money or chasing more bad loans with good money here in terms of keeping home owners in a loan or curing them when perhaps they had no business having a mortgage to begin with.

Now look the way that Fast Advance works, it's truly an advance of the potential claim amount. So if the loan goes back in a default and eventually the claim then we remit the claim minus the 15% advance.

We will now go to the line Steve Stellmach from FBR Capital Markets. Please go ahead.

Hi good morning and this is for Dave. If you could, could you please sort of give some context about what we should expect in some of the growth in the book of business, if you layer in, when your capital demands? And two, and sort of, the more competitive FHA potentially in throughout '08 and '09 and then lastly your underwriting changes, which I think obviously can be applauded but at the same time has some negative impact to the gross in the book of business.

Well I think, lot of points in there that we can address, first the overall change in guidelines has had a pretty dramatic benefit to the book of business. I think it is probably fair to say that it does shrink the total size of the conventional market to some degree. Then what we are seeing is some surge in FHA, VA business. That the first quarter stats, I don't think are a pure indicator of what's going on but there are directionally valuable. And my penetration it was a little bit over 17% in Q4. This quarter it is around 13%. So FHA definitely picked up share but another driver there, there was a large amount of refinanced business down in the first quarter and that would generally lead to a little less MI penetration. So, I think we will see some shrinkage of the market that will have some minor impact on our ability to grow NIW, but I would say its probably pretty prudent in that the product that we are doing before has proven to be challenging from a loss perspective. So I think it's a business that is wise to see at this stage.

Sure. Would you expect, insurance-in-force could be a lower number in '09 than '08 or are you still think sort of incremental growth year-over-year?

We really haven't forecasted publicly what we think insurance-in-force levels are going to be for the full year.

Next we go to line of Howard Shapiro with Fox-Pitt. Please go ahead.

Hi. I just wanted to ask on, I guess the potential capital raised and what you are planning to do with Financial Guaranty. Obviously a pure common raise will be tremendously dilutive at this point. Can you tell us what kind of capacity you might have for issuing preferred and then kind of may be an waterfall like description. Your preferences in terms of preferred, com and selling businesses or what other alternatives you are looking at right now.

Sure. First, it's difficult given the stage we are into comment in more specific terms, about our exact capital raise strategy. What we have said in our statement, in terms of raising sufficient capital to pay back the bank clients, outstanding amounts, and to inject significant capital in to Radian Guaranty. With respect to Financial Guaranty, what I said in my comments was, we at this point do not have any intention of taking capital out of Financial Guaranty. As the market valuations for financial guarantors recover we would remain open to a strategic alternative, particularly strategic alternative, that will enhance the franchise value of the Financial Guaranty business and will highlight very powerfully, the value we believe we have at in our Financial Guaranty business for the future value we have in it.

Okay. Thank you.

Next we go to the line of Donna Halverstadt with Goldman Sachs. Please go ahead.

Good morning. Maybe I just wanted to make sure I copied the comments you made about the credit facility and liquidity at the HoldCo? You said at that time, you did plan to pay the facility down? The $150 million you mentioned that besides the facility would be after you repay it?

That's right.

And you made a comment about a $100 million. Did you say that you plan to maintain a $100 million of the proceeds at the HoldCo?

No, the comment was we have currently over $100 million at the HoldCo.

Okay and then the last thing, I wanted to ask, you said that you have minimal holding company needs, even before you drew the facility you had roughly $50 million of interest expense. Are you calling them minimal because you are in fact continuing to get reimbursed from the OpCo through the tax and expense sharing arrangements?

That's right.

And you expect that will continue in the future that the regulators won't stop those payments.

Well we, they're currently in place, that's what we would expect.

Okay, thank you.

You are welcome.

And ladies and gentlemen we have time for one final question. It's a follow-up Mike Grasher with Piper Jaffray. Please go ahead.

Just a quick follow-up from Halverstadt question, Bob what is the general target on debt to total cap, that rating we're looking for?

I think Mike, long term in the 20% range.

20 being the ceiling?

Well, yeah. I mean I think long-term as both S.A and Dave said were, it's our target to get back to the AA level of the OpCo in MI and therefore the A level at the HoldCo and that's around where we see a appropriate debt to cap ratio.

Okay thanks Bob.

Sure.

Okay. Operator that was the last question. I would d like to thank all the participants for participating in our call and look forward to seeing you on our next call. Thank you.

Ladies and gentlemen that does conclude your conference for today. Thank you for your participation. You may now disconnect.