Our current business strategy primarily is focused on: (i) growing our mortgage insurance business by writing high- quality mortgage insurance in the U.S.; (ii) continuing to manage losses in our legacy mortgage insurance and financial guaranty portfolios; (iii) continuing to reduce our financial guaranty exposure; and (iv) pursuing opportunities for increasing Radian Group’s available liquidity and for enhancing Radian Guaranty’ s capital position. During 2012 and to date in 2013, we have continued to execute upon this strategy , including the following: 

• In 2012, we wrote $37.1 billion of primary mortgage insurance. Substantially all of our portfolio of insurance written after 2008 is of high credit quality and is expected to generate strong returns. 

• Through the expanded eligibility criteria under the most recent Home Affordable Refinance Program (“HARP”) (see “Regulation—Federal Regulation—Homeowner Assistance Programs”), more borrowers have been able to participate in and benefit from the program and, as of December 31, 2012, approximately 9% of our total primary RIF h ad successfully completed a HARP refinance. 

• We continue to diversify and expand our customer base, adding more than 300 new customers during 2012. New customers added since 2009 accounted for 32% of our new insurance written (“NIW”) during 2012. 

• During 2012, we improved the risk-to-capital ratio for Radian Guaranty , ending with a risk-to-capital ratio of 20.8 to 1 at December 31, 2012, due to a number of actions we have taken to preserve and maintain Radian Guaranty’ s capital position, including: (1) internal and external reinsurance arrangements; (2) reductions and commutations of risk exposure; and (3) realization of statutory investment gains. 

• Radian Asset Assurance continued to reduce its financial guaranty portfolio through a series of risk commutations, transaction settlements and terminations of existing insured transactions. Since June 2008, Radian Asset Assurance has reduced its total net par exposure by 70.7% to $33.7 billion. From 2008 through the end of 2012, Radian Asset Assurance has released financial guaranty contingency reserves of $357.0 million (which has increased Radian Guaranty’s statutory surplus by an equal amount) and has paid $383.8 million in dividends to Radian Guaranty . In January 2013, an additional $6.7 million of contingency reserves were released, and on February 7, 2013, the New York State Department of Financial Services (the “NYSDFS”) approved the release of an additional $61.1 million of contingency reserves of Radian Asset Assurance. See “—Financial Guaranty—Business” for additional information. 

•  We completed a number of transactions designed to increase our financial flexibility and conserve our holding company liquidity. In February 2012, Radian Group acquired $146.5 million in aggregate principal amount of its outstanding Notes due in 2013 (the “2013 Notes”) pursuant to a tender of fer, for a price of $900 per $1,000 principal amount of 2013 Notes, which represented 59% of the principal amount of the 2013 Notes outstanding. During the second and third quarters of 2012, Radian Group purchased an additional $24.1 million in aggregate principal amount of the outstanding 2013 Notes. The remaining $79.4 million principal amount of the 2013 Notes was repaid at maturity on February 15, 2013. On January 4, 2013, Radian Group exchanged an aggregate of $195.2 million principal amount of its 5.375% Senior Notes due 2015 (the “Exchange Of fer”) for the same aggregate principal amount of 9.000% Senior Notes due 2017 and additional aggregate cash consideration of $4.9 million. We have approximately $296.2 million in immediately available unrestricted cash and liquid investments at the holding company after the recent repayment of the 2013 Notes. 

Our businesses have been significantly impacted by , and our future success may depend upon, legislative and regulatory developments impacting the housing finance industry . Freddie Mac and Fannie Mae are the primary beneficiaries of the majority of our mortgage insurance policies  and the Federal Housing Administration (“FHA”) is currently our primary competitor outside of the private mortgage insurance industry  (see “Regulation—Federal Regulation—The GSEs and FHA”). Federal and state efforts to support homeowners and the housing market have had a positive impact on our business  (see “Regulation—Federal Regulation—Homeowner Assistance Programs”). Various regulatory agencies are now in the process of developing new rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) that are expected to have a significant impact on the housing finance industry and the credit markets in general. Additionally, the U.S. Congress (“Congress”) is engaged in planning for the reform of the housing finance market, including the future roles of  Fannie Mae and Freddie Mac (referred to collectively as, the “Government Sponsored Enterprises” or “GSEs”) and the FHA  (see “Regulation—Federal Regulation—The GSEs and FHA—Housing Finance Reform and—The Dodd-Frank Act”). 

