our rights on poorly underwritten, fraudulent or negligently serviced loans. Our average total claim paid in 2012 was $48,700, down from $51,900 in 2011, in part due to our ongoing effort to curtail claim payments based on servicing negligence. We successfully reduced our net par exposure from a peak of $115 billion in June 2008 when Radian Asset stopped writing new business, to $34 billion in the fourth quarter of 2012, which represents a decline in our total financial guaranty risk exposure of 71%. Through actions taken in 2012 alone, we successfully reduced our public finance exposure by 56%, including nearly 90% of our exposure to Jefferson County, Alabama. Similarly, our structured finance exposure was reduced by 50%, including nearly half of our CDO book. Our remaining $13.8 billion corporate CDO exposure matures over the next four years, with 35% maturing by the end of 2013. In 2012, we released $142 million of contingency reserves with the approval of the New York Department of Financial Services. In February 2013, Radian Asset received regulatory approval to release another $61 million of contingency reserves, which will benefit Radian Guaranty’s statutory capital position. Today, the total cumulative release of contingency reserves related to the direct book since 2008 stands at $425 million. Also, since 2008 Radian Asset has paid Radian Guaranty a total of $384 million in dividends, and expects to pay another dividend of approximately $35 million to Radian Guaranty this year. As of February 2013, approximately $230 million in contingency reserves remains to support Radian Asset’s existing risk. This represents an opportunity, over time, to add to Radian Guaranty’s statutory capital as the exposure is ultimately reduced and contingency reserves are released. Broad data from multiple sources indicates a solid recovery in the housing market after many years of declines. This could mean increased housing activity, improvement in default performance and reduced severities of loss. These trends also suggest a robust purchase market in the near future. In addition, the private mortgage insurance market is expected to grow as the FHA (Federal Housing Administration), which provides mortgage insurance with a government guarantee, continues its pull back from the market, returning to a more traditional and sustainable balance between government and private mortgage insurance. One example of this pull back is the FHA’s price increase in April 2013, and the elimination of automatic cancellation of FHA insurance for many products later this year. In March 2013, we successfully completed a capital raise with net proceeds of approximately $689 million. This substantially increased Radian’s holding company funds to a total of approximately $940 million, and we now expect to be able to maintain a risk-to-capital level at or below 20:1 at Radian Guaranty for the foreseeable future. While Radian maintained a strong competitive position in a very attractive business environment in 2012, our improved capital strength and the improving economy and housing market should create new opportunity for us in the marketplace, by increasing customer and regulator confidence and ultimately helping us leverage our leading market share to continue our strong momentum and seize what we believe is a profitable growth opportunity. What continues to excite us at Radian is the opportunity to realize the goal of a profitable future for our company. This will be driven in part by the size and anticipated earnings power of the high-quality new mortgage insurance business we have written since 2008, and our leading market share position. Our success in writing new business continues, driven by our strong customer relationships, our highly skilled and dedicated Radian team, and our competitive risk-to-capital ratio, as well as the support of our stakeholders. We believe Radian is in a strong position to continue promoting and preserving low downpayment lending while building strong value for our stockholders for many years ahead. Thank you as always for your support and confidence. S. A. Ibrahim Chief Executive Officer March 2013 2 Looking Ahead Position Radian for Success as the FHA Pulls Back and the Housing Market Recovers Reduce Risk Exposure in Financial Guaranty to Provide Important Capital Support to the Mortgage Insurance Business