the Company will evaluate the realizability of the goodwill annually and revalue if necessary. The financial results for the year ended December 31, 2000 include the results of RadianExpress’ operations for the period from November 10, 2000 through December 31, 2000. The cash component of the acquisition  was financed using the Company’s cash flow from operations. The pro forma results for 2000 including this acquisition would not be materially different from reported results. On November 22, 1998, the Company was formed by the merger of CMAC Investment Corporation (“CMAC”) and Amerin Corporation (“Amerin”). The merger closed on June 9, 1999 after approval by the stockholders of both companies, at which time the name of the merged company was changed to Radian Group Inc. At the same time, the name of the Company’s main operating subsidiary, Commonwealth Mortgage Assurance Company,  was changed to Radian Guaranty, while the main operating subsidiary of Amerin, Amerin Guaranty, retained its name. As a result of the merger, Amerin stockholders received 0.5333 shares (14,168,635 shares were issued) of CMAC common stock in a  tax-free exchange for each share of Amerin common stock that they owned. CMAC’s stockholders continued to own their existing shares after the merger. The merger transaction was accounted for on a pooling of interests basis and, therefore, all financial statements presented reflect the combined entity. There were no intercompany transactions requiring elimination for any periods presented prior to the merger. The operating results of the separate companies through the merger in 1999 are as follows (in thousands): SFAS No. 60, “Accounting and Reporting by Insurance Enterprises,” specifically excludes mortgage guaranty insurance from its guidance relating to the earning of insurance premiums. Consistent with GAAP and industry accounting practices, mortgage insurance premiums written on an annual and multiyear basis are initially deferred as unearned premiums and earned over the policy term, and premiums written on a monthly basis are primarily earned as they are received. Annual premiums are amortized on a monthly, straight-line basis. Multiyear premiums are amortized over the terms of the contracts in accordance with the anticipated  claim payment pattern based on historical industry experience.  Ceded premiums written are initially set up as prepaid reinsurance and are amortized in accordance with direct premiums earned. INSURANCE PREMIUMS USEOFESTIMATES RESERVE FOR LOSSES AND LOSS ADJUSTMENT EXPENSES (“LAE”) CONSOLIDATION The accompanying financial statements include the accounts of all subsidiaries. Investments in which the Company, or one  of its subsidiaries, owns from 20% to 50% of those companies, and where the Company has a majority voting interest, but where the minority shareholders have substantive participating rights or where the Company has the intent and ability to divest its investment in the short term, are accounted for in accordance with the equity method of accounting (See note 13). All significant intercompany accounts and transactions, and intercompany profits and losses, including those transactions with equity method investee companies, have been eliminated. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the financial guaranty business, insurance premiums are earned in proportion to the level amortization of insured principal over the contract period. Premiums written on a monthly basis are primarily earned as they are received, which approximates a level amount of premium income recognition  in proportion to the insured principal over the contract period. Unearned premium revenue represents that portion of premiums which will be earned over the remainder of the contract period, based upon information reported by ceding companies and management’s estimates of amortization of insured principal on policies written on a direct basis. When insured issues are refunded or called, the remaining unearned premium revenue is generally earned at that time, since the risk to the Company is eliminated. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The mortgage insurance reserve for losses consists of the estimated cost of settling claims on defaults reported and defaults that have occurred but have not been reported.  SFAS No. 60 specifically excludes mortgage guaranty insurance from its guidance relating to the reserve for losses. Consistent with GAAP and industry accounting practices, the Company does not establish loss reserves for future claims on insured loans that are not currently in default. In determining the liability for unpaid losses related to reported outstanding defaults, the Company establishes loss reserves on a case- by-case basis. The amount reserved for any particular loan is dependent upon the characteristics of the loan, the status of the loan as reported by the servicer of the insured loan as well as the economic condition and estimated foreclosure period in the area in which the default exists. As the default progresses closer to foreclosure, the amount of loss reserve for that particular loan is increased, in stages, to approximately 100%  of the Company’s exposure and that adjustment is included  in current operations. The Company also reserves for defaults that have occurred but have not been reported using historical Total Net Revenues Income For the year ended December 31, 1999: Radian Group Inc. $418,428 $110,785 CMAC Investment Corporation  (through March 31, 1999) 89,415 22,878 Amerin Corporation  (through March 31, 1999) 43,400 14,475 Combined $551,243 $148,138 > 21