Radian Group Inc. CONSOLIDATED STATEMENTS OF OPERATIONS See Notes to Consolidated Financial Statements. 163 Year Ended December 31, ($ in thousands, except per share amounts) 2012 2011 2010 Revenues: Premiums written—insurance: Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 892,983 $ 755,758 $ 788,321 Assumed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,991) (11,162) (6,585) Ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (117,362) (37,349) (89,855) Net premiums written . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686,630 707,247 691,881 Decrease in unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . 52,352 48,778 133,852 Net premiums earned—insurance. . . . . . . . . . . . . . . . . . . . . . . 738,982 756,025 825,733 Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,337 163,520 178,760 Net gains on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,888 202,177 139,944 Total other-than-temporary impairment (“OTTI”) losses. . (3) (1,202) (90) Losses recognized in other comprehensive income (loss). — — — Net impairment losses recognized in earnings. . . . . . . . . . . . . . (3) (1,202) (90) Change in fair value of derivative instruments. . . . . . . . . . . . . (144,025) 628,395 (558,712) Net (losses) gains on other financial instruments. . . . . . . . . . . (82,269) 193,329 (211,681) Gain on sale of affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,708 — 34,815 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,790 5,599 8,696  Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 825,408 1,947,843 417,465 Expenses: Provision for losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 959,171 1,296,521 1,739,244 Change in reserve for premium deficiency (“PDR”) . . . . . . . . . 41 (7,092) (14,621) Policy acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,876 52,763 53,469 Other operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,672 175,810 191,942 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,832 61,394 41,777 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,269,592 1,579,396 2,011,811 Equity in net (loss) income of affiliates. . . . . . . . . . . . . . . . . . . . . . (13) 65 14,668 Pretax (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (444,197) 368,512 (1,579,678) Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,271 66,362 226,189 Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (451,468) $ 302,150 $ (1,805,867) Basic net (loss) income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3.41) $ 2.28 $ (15.74) Diluted net (loss) income per share . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3.41) $ 2.26 $ (15.74) Weighted-average number of common shares outstanding—basic. 132,533 132,372 114,697 Weighted-average number of common and common equivalent shares outstanding—diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,533 133,863 114,697 Dividends per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.01 $ 0.01 $ 0.01