Other operating expenses decreased in 2011 as compared to 2010 due to a reduction in salaries, as well as stock-based  compensation. This was partially offset by increases in sales commissions due to our increased NIW  and increased expenses  related to the write-off of certain software and technology projects in  2011. In October 2011, we completed an expense  initiative aimed at aligning our support services to the current reduced mortgage market.  This re-alignment included a  workforce reduction of approximately 9.8% of our corporate and mortgage insurance staf f.  Contract underwriting expenses for  2012, including the impact of reserves for contract underwriting remedies, were  $12.1  million, compared to $16.1 million for 2011 and $6.1 million for 2010. During 2012, loans underwritten via contract  underwriting accounted for  5.0% of applications, 4.9% of commitments for insurance and  5.0% of insurance certificates issued,  compared to 8.8%, 8.2% and 8.7%, respectively, for 2011 and 17.9%, 16.5% and 13.9%, respectively, for 2010. Interest Expense. These amounts reflect the allocated portion of interest on Radian Group’ s long-term debt based on the  relative GAAP equity for our mortgage insurance segment.  The decrease in 2012 compared to 2011 primarily is due to the  maturity in June 2011 of our 7.75% Debentures. In addition, we purchased $170.6 million aggregate principal amount of our  2013 Notes in 2012, which reduced our interest expense.   Our consolidated interest expense significantly increased during  2011 as a result of the issuance of $450 million of  convertible notes in November 2010. This increase more than offset the decrease in the allocation percentage to the mortgage  insurance segment in 2011.  Income Tax (Benefit) Provision. The effective tax rate on our pre-tax operating losses increased to 12.3% for the year  ended December 31, 2012 from (14.8%) for the year ended  December 31, 2011. The increase to the rate was primarily due to an  increase in our provision for uncertain tax positions in 201 1 as a result of the remeasurement of certain liabilities and also due  to changes in our overall valuation allowance. The effective tax rate on our pre-tax operating loss in 2010 was (15.9%), which  was mainly impacted by the initial establishment of a valuation allowance. Since 2008, we have significantly reduced our financial guaranty operations and have reduced our financial guaranty  exposures through commutations in order to mitigate uncertainty , maximize the ultimate capital available for our mortgage  insurance business and accelerate our access to that capital.  In furtherance of these objectives, during 2012 and to date in 2013,  we completed the following transactions:  Assured Commutation.   In January 2012, Radian Asset Assurance entered into a three-part transaction (the “Assured  Transaction”) with subsidiaries of  Assured Guaranty Ltd. (collectively “Assured”) that included the following: Results of Operations—Financial Guaranty •  the commutation of $13.8 billion of financial guaranty net par outstanding that Radian  Asset Assurance reinsured from  Assured (the “Assured Commutation”); •  the cession of $1.8 billion of direct public finance business to  Assured; and •  the sale of Municipal and Infrastructure  Assurance Corporation (the “FG Insurance Shell”), a New  York domiciled  financial guaranty insurance company with licenses to conduct business in 37 states and the District of Columbia that  Radian Asset Assurance had acquired in 2011. The sale of the FG Insurance Shell was completed in the second quarter  of 2012. The Assured Transaction reduced our financial guaranty net par outstanding by approximately  22.5% and provided an  aggregate statutory capital benefit to Radian  Asset Assurance and Radian Guaranty of  $100.7 million as of December 31, 2012.  Collateralized Debt Obligation (“CDO”) of Asset-Backed Securities (“ABS”) and Trust Preferred Securities  (“TruPs”) Commutation. In the second quarter of 2012, Radian  Asset Assurance entered into a commutation with one of its  derivative counterparties (the “Counterparty”) to commute: (1) exposure to a directly insured tranche of an extremely distressed  CDO of ABS transaction (the “CDO of ABS transaction”), for which we had expected to pay claims on substantially all of the  $450.2 million net par that was outstanding at the time of the commutation; and (2) credit protection through CDS on six  directly insured TruPs CDO transactions, representing $699.0 million of net par outstanding at the time of the commutation (the  “Terminated TruPs CDOs”). In consideration for these commutations, Radian  Asset Assurance paid $210.0 million, a  significant portion of which (the “LPV  Initial Capital”) was deposited with a limited purpose vehicle (an “LPV”) to cover the  Counterparty’s potential future losses on the TruPs bonds underlying the Terminated TruPs CDOs (the “Terminated TruPs  Bonds”). The commutations described in this paragraph are referred to herein as the “CDO Commutation  Transactions.” See  Note 6 of Notes to Consolidated Financial Statements for further information regarding the accounting treatment of this  transaction under GAAP. 116