E. Customers IV.  Financial Services We have historically conducted our structured finance business with many of the major global financial institutions that  structure, underwrite or trade securities issued in structured finance transactions.  These institutions typically are large  commercial or investment banks that focus on high-quality deals in the public finance and structured finance markets.  While  our public finance customers have included many of the same financial institutions as our structured finance business, our  public finance customers have also included regional financial institutions and issuers that may focus on lower investment  grade obligors or obligations. Our financial guaranty ceding companies have consisted mainly of the lar gest primary insurance  companies licensed to write financial guaranty insurance and their foreign-based af filiates. Since we have discontinued writing or assuming new financial guaranty business, other than as may be necessary to  commute, restructure, hedge, or otherwise mitigate losses or reduce exposure in our existing portfolio, we are not seeking new  financial guaranty customers and we have terminated all or a substantial portion of our reinsurance relationships with many of  the primary financial guaranty insurers with whom we have historically conducted business. However , we continue to maintain  relationships with many of the financial institutions that participate in the public finance and structured finance transactions,  which we believe will assist us as we explore ways to mitigate losses in and maximize the value of our existing insured  financial guaranty portfolio. Our financial services segment existed prior to January 1, 201 1, and consisted mainly of our ownership interests in  Credit-Based Asset Servicing and Securitization LLC (“C-BASS”), a mortgage investment company that we wrote of f  completely in 2007, and Sherman Financial Group LLC (“Sherman”), a consumer asset and servicing firm specializing in  charged-off and bankruptcy plan consumer assets. C-BASS filed for Chapter 1 1 bankruptcy protection on November 12, 2010,  and was subsequently liquidated. Our equity interest in C-BASS, and a related note receivable from C-BASS that had also been  previously written off, were extinguished as part of C-BASS’ s liquidation. On May 3, 2010, Radian Guaranty sold all of its  remaining 28.7% equity interest in Sherman for approximately $172.0 million in cash, pursuant to a Securities Purchase  Agreement dated as of May 3, 2010, between Radian Guaranty and Sherman.  Our investment portfolio is one of our primary sources of cash flow to support our operations and claim payments. We follow an investment policy that, at a minimum, requires the following: V.  Investment Policy and Portfolio •  At least 75% of our investment portfolio, based on market value, must consist of investment securities and  instruments that are assigned a “1” rating designating the highest quality ranking by the National  Association of  Insurance Commissioners (“NAIC”) or equivalent ratings by a NRSRO (i.e., “A-” or better by S&P  and “A3” or  better by Moody’s Investor Service (“Moody’s”)); •  A maximum of 15% of our investment portfolio, based on market value, may consist of investment securities and  instruments that are assigned a “2” rating designating a high quality ranking by the NAIC or equivalent ratings by  a NRSRO (i.e., “BBB+” to “BBB-” by S&P and “Baa1” to “Baa3” by Moody’s); and •  A maximum of 10% of our investment portfolio, based on market value, may consist of investment securities and  instruments that are assigned a “3 or below” rating designating lower quality debt and equity rankings by the  NAIC or equivalent ratings by a NRSRO (i.e., “BB+” and below by S&P  and “Ba1” and below by Moody’s). Under our investment policy, which is applied on a consolidated risk and asset allocation basis, we are permitted to invest  in equity securities (including convertible debt and convertible preferred stock), provided our equity component does not  exceed 20% of our total investment portfolio and at least 90% of the market value of the portfolio is investment grade.  We  manage our investment portfolio to minimize volatility through active portfolio management and monitoring of investments to  seek an optimal mix of the types of securities held and to stagger the maturities of fixed-income securities. Our investment  policy focuses on the generation of optimal returns, stable tax-ef ficient current returns and the preservation and growth of  capital. The level of our short-term investments is managed to meet our expected short-term cash requirements. 39