S&P Downgrades Radian Asset Assurance

Standard & Poor's has downgraded the financial strength rating of New York-based Radian Asset Assurance Inc. (the financial guaranty unit of Radian Group Inc., Philadelphia) from AA to A. "In our view, business prospects and financial flexibility have declined for Radian Asset, and there is ongoing uncertainty regarding its competitive position and ownership," said S&P credit analyst Robert Green. Because RAA has exited its collateralized debt obligation business lines and the disrupted mortgage market has hurt the company's reinsurance business, par written in the first quarter totaled only $2.6 billion, down from $14.4 billion in the first quarter of 2007. "Looking ahead, we believe that business growth for the company's reinsurance business is uncertain," said Mr. Green. Another issue, S&P said, is that RAA is less likely to receive capital from Radian Group because the parent is raising capital for Radian Guaranty Inc., the mortgage insurance subsidiary. In a statement, Radian Group said the downgrade was not due to a lack of capital adequacy or credit issues, reporting that RAA had $1.6 billion of statutory capital at the end of the first quarter. The downgrade, it said, is likely to restrain RAA's ability to write business. S&P can be found online at http://www.standardandpoors.com.