Financial Guaranty Plan Defined Benefit Plan 2001 Service cost $2,531  Interest cost 1,060 Expected return on plan assets (355) Amortization of prior service cost 438  Amortization of transition obligation  2  Recognized net actuarial (gain) loss (119) Net periodic benefit cost $3,557  Curtailment/settlement charge 2,954 Total financial statement impact $6,511 Radian Plans Postretirement Defined Benefit Plan  Benefit Plan 2001 2000 1999 2001 2000 1999  Weighted average  assumptions as of December 31: Discount rate 7.00% 7.50% 7.50% 7.00% 7.25% 7.50%  Expected  return on  plan assets 8.50% 8.50% 8.50% — — — Rate of compensation  increase 6.00% 6.00% 4.00% — — — Financial Guaranty Plan Defined Benefit Plan  2001 Weighted average assumptions as of December 31:  Discount rate 7.00% Expected return on plan assets 8.50% Rate of compensation increase 6.00% Assumptions used to determine net pension and net periodic postretirement benefit costs are as follows: Due to the nature of the postretirement benefit plan,  no increase is assumed in the Company’s obligation due to any increases in the per capita cost of covered health care benefits. In addition to pension benefits, Financial Guaranty provides certain healthcare benefits for retired employees. Certain employees may be eligible for these benefits if they reach retirement age while working for Financial Guaranty.  The postretirement benefit cost for 2001, was $287,000 and includes service cost, interest cost and amortization of the transition obligation and prior service cost. At December 31, 2001, the accumulated postretirement benefit obligation under the Financial Guaranty Plan was $1,296,000 and was not funded. At December 31, 2001, the discount rate used in determining the accumulated postretirement benefit obligation was 7.0% and the health care trend was 9.5%, graded to 5.5% after 8 years. The one-percentage point change in assumed healthcare cost trend rates would have the following effects on the Financial Guaranty postretirement plan: In addition to the defined benefit plan, the nonqualified executive retirement plan, and the postretirement benefit plan, the Company also maintains a Savings Incentive Plan, which covers substantially all full-time and all part-time employees of Radian Group, Radian Guaranty and RadianExpress employed for a minimum of 90 consecutive days. Participants can contribute up to 15% of their base earnings as pretax contributions. The Company will match at least 25% of the  first 5% of base earnings contributed in any given year. These matching funds are subject to certain vesting requirements.  1-Percentage 1-Percentage Point Point (in thousands)  Increase Decrease  Effect on total of service and  interest components $ 52 $ (41)  Effect on postretirement benefit costs 230 (184) 11. COMMITMENTS AND CONTINGENCIES The expense to the Company for matching funds for the years ended December 31, 2001, 2000 and 1999 was $1,511,000, $1,094,000 and 1,220,000, respectively. Financial Guaranty also has a Savings Incentive Plan. Under the Plan, employees of Financial Guaranty can contribute up to 15% of their base earnings as pretax contributions. Financial Guaranty will match 50% of the first 6% of base salary made  to the plan by eligible employees. The expense to Financial Guaranty in 2001, since acquisition, was $219,000. In December 2000, a complaint seeking class action status on behalf of a nationwide class of home mortgage borrowers was filed against the Company in the United States District Court for the Middle District of North Carolina (Greensboro Division). The complaint alleges that the Company violated Section 8 of the Real Estate Settlement Procedures Act (“RESPA”) which generally prohibits the giving of any fee, kickback or thing of value pursuant to any agreement or understanding that real estate settlement services will be referred. The complaint asserts that the pricing of pool insurance, captive reinsurance, contract underwriting, performance notes and other, unidentified “structured transactions,” should be interpreted as imputed kickbacks made in exchange for the referral of primary mortgage insurance business, which, according to the complaint, is a settlement service under RESPA. The complaint seeks injunctive relief and damages of three times the amount of any mortgage insurance premiums paid by persons who were referred to the Company pursuant to the alleged agreement or understanding. The plaintiffs in the lawsuit are represented by the same group of plaintiffs’ lawyers who last year filed similar lawsuits against other providers of primary mortgage insurance in federal court in Georgia. The Georgia court dismissed those lawsuits for failure to state a claim. Three of those lawsuits were settled prior to appeal; two are currently on appeal. The Company has