Provision for Losses.  The provision for losses increased for  2012 due to loss developments in our public finance business, claim payments related to our exposure to insured sovereign indebtedness of Greece in our public finance reinsurance business  and increased loss severity in our structured finance business. During  2011, we reduced reserves as a result of a decrease in loss  estimates on specific credits in all lines of business, which resulted in a decrease in the provision for losses.  The majority of the  decrease in 2011 compared to 2010 was attributable to a reduction in reserves related to one of our assumed public finance  credits due to our determination that there was a higher probability of a negotiated resolution. For  2011, there was also a  reduction in incurred losses as a result of a significant commutation of reinsurance exposure with one of our primary insurers.  The following table shows financial guaranty claims paid and reserve for losses as of or for the periods indicated: We paid $23.5 million to settle our obligation related to our exposure to insured sovereign indebtedness of Greece in  2012.  Policy Acquisition Costs . Policy acquisition costs for 2012 increased from the comparable period of  2011, reflecting the  $15.7 million write-off of acquisition costs as a result of the  Assured Transaction during 2012. Policy acquisition costs for 2011  included a write-off of policy acquisition costs related to a significant commutation of reinsurance exposure with one of our  primary insurers. Other Operating Expenses.   Other operating expenses for 2012 increased slightly compared to 201 1. The decrease in  other operating expenses for 2011 compared to 2010 resulted from a decrease in employee and director compensation  associated with our stock-based compensation programs and a decrease in audit and legal fees.  Interest Expense . The results for 2012, 2011 and 2010 reflect an allocation to the financial guaranty segment of the  interest expense of Radian Group based on relative GAAP  equity. The 2011 amount reflects an increase in interest expense  from 2010 resulting from the issuance of $450 million in convertible debt in  2010.  Income Tax Provision (Benefit). The effective tax rate on our pre-tax operating loss was (18.7%) for the year ended  December 31, 2012, a change from (1.8%) on our pre-tax operating income for the year ended  December 31, 2011. The  movement in the rate was primarily due to changes in our overall valuation allowance.  The effective tax rate on our pre-tax  operating loss in 2010 was (8.0%), which was mainly impacted by the initial establishment of a valuation allowance. As of January 1, 2011, we no longer have a financial services segment.  The following table shows a summary of the  results of operations for our financial services segment prior to January 1, 201 1:  See “Part I. Item 1 .  Business—Financial Services” above for more information regarding this prior segment. Results of Operations—Financial Services Year Ended December 31, (In thousands) 2012 2011 2010 Total claims paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,338 $ 11,427 $ 65,123  As of December 31, (In thousands) 2012 2011 2010 Total reserve for losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,328 $ 63,002 $ 71,764 Year Ended December 31, (In millions) 2010 Equity in net income of affiliates—Sherman . . . . . . . . $ 14.6 Gain on sale of affiliate—Sherman . . . . . . . . . . . . . . . . 34.8 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.7 133