Oct. 8, 2009 (PR Newswire) -- PHILADELPHIA, Oct. 8 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE: RDN) today announced that its Board of Directors has adopted a Tax Benefit Preservation Plan designed to protect stockholder value by preserving important tax assets. The Tax Benefit Plan was adopted to reduce the likelihood that Radian's use of its net operating losses, loss carryforwards and other tax assets (NOLs) would be substantially limited under Section 382 of the Internal Revenue Code.

NOLs can generally be used to offset future taxable income and therefore reduce federal income tax obligations. However, Radian's ability to use its NOLs may be substantially limited if there occurs an "ownership change" of Radian as defined under Section 382. In general, an ownership change will occur if Radian's "5-percent shareholders," as defined under Section 382, collectively increase their ownership in Radian by more than 50 percentage points over a rolling three-year period.

"A tax benefit preservation plan protects the interests of our stockholders by preserving valuable corporate assets," said Chief Executive Officer S. A. Ibrahim. "This plan is designed to protect the significant tax benefits of our net operating loss carryforwards and built-in losses."

As part of the Tax Benefit Plan, Radian's Board of Directors declared a dividend of one preferred share purchase right (a Right) for each outstanding share of its common stock. The dividend will be payable to holders of record as of the close of business on October 19, 2009. Any shares of Radian's common stock issued after the record date will be issued together with the Rights.

The Rights are not currently exercisable and initially will trade only with the common stock. However, if any person or group acquires 4.90 percent or more of the outstanding shares of Radian's common stock (subject to certain exceptions), there will be a triggering event under the Tax Benefit Plan, which would cause the Rights to become exercisable and would be expected to result in significant dilution in the ownership interest of such a person or group.

At its discretion, the Board may exempt certain persons and certain transactions under the Tax Benefit Plan if the Board determines that this would not jeopardize Radian's NOLs or is otherwise in the best interests of the Company.