Commonwealth Mortgage Assurance Company of Texas (“CMAC of Texas”). CMAC of Texas is domiciled and licensed  in Texas as a mortgage guaranty insurance company authorized to carry on the business of mortgage guaranty insurance. It is a  monoline insurer restricted to writing only mortgage guaranty insurance or reinsurance. CMAC of  Texas is not licensed or  authorized to write direct mortgage guaranty insurance in any state other than  Texas. Radian Insurance. Radian Insurance is domiciled and licensed in Pennsylvania as a stock casualty insurance company  authorized to carry on the business of credit insurance, which includes the authority to write mortgage guaranty and financial  guaranty insurance. Radian Insurance is also authorized in Hong Kong to carry on the business of credit insurance, suretyship  and miscellaneous financial loss (including mortgage guaranty insurance) through its Hong Kong branch of fice. Radian  Insurance is not licensed or authorized to write credit insurance in any locality other than Pennsylvania and Hong Kong. Radian Mortgage Insurance.   Radian Mortgage Insurance is domiciled and licensed in Pennsylvania as a stock casualty  insurance company authorized to carry on the business of credit insurance, which includes the authority to write mortgage  guaranty insurance. Radian Mortgage Insurance is a monoline insurer restricted to writing only mortgage guaranty insurance or  reinsurance. Radian Mortgage Insurance is not licensed or authorized to write direct mortgage guaranty insurance in any states  other than Pennsylvania and Arizona. Radian Group is an insurance holding company and our insurance subsidiaries belong to an insurance holding company  system. All states have enacted legislation regulating insurance holding company systems, including the non-insurer holding  company within that system. These laws generally require the insurance holding company to register with the insurance  regulatory authority of each state in which its insurance subsidiaries are domiciled and to furnish to the regulators in these states  applicable financial statements, statements related to intercompany transactions and other information concerning the holding  company and its affiliated companies within the holding company system that may materially af fect the operations,  management or financial condition of insurers or the holding company system. We have insurance subsidiaries domiciled in Pennsylvania,  Texas and New York. As a result, Radian Group is considered  an insurance holding company and the insurance holding company laws of Pennsylvania,  Texas and New York regulate, among  other things, certain transactions between Radian Group, our insurance subsidiaries and other parties af filiated with us and  certain transactions involving Radian Group’ s common stock, including transactions that constitute a change of “control” of  Radian Group and, consequently, a change of “control” of our insurance subsidiaries. Specifically , no person may, directly or  indirectly, seek to acquire “control” of Radian Group unless that person files a statement and other documents with the  commissioners of insurance of the states in which our insurance subsidiaries are domiciled and each commissioner ’s prior  approval is obtained. “Control” generally is defined broadly in these statutes. For example, under Pennsylvania’ s insurance  statutes, control is “presumed to exist if any person, directly or indirectly , owns, controls, holds with power to vote or holds  proxies representing ten percent (10%) or more of the voting securities” of a holding company of a Pennsylvania domestic  insurer. The statute further defines “control” as the “possession, direct or indirect, of the power to direct or cause the direction  of the management and policies of” an insurance holding company . Similarly, no person may directly or indirectly acquire  control of any of our insurance subsidiaries unless that person files a statement and other documents with the commissioner of  insurance of the state in which the tar get insurance subsidiary is domiciled and the commissioner ’s prior approval is obtained. In addition, material transactions between us or our af filiates and our insurance subsidiaries or among our insurance  subsidiaries are subject to certain conditions, including that they be “fair and reasonable.”  These conditions generally apply to  all persons controlling, or who are under common control with, us or our insurance subsidiaries. Certain transactions between  us or our affiliates and our insurance subsidiaries may not be entered into unless the applicable commissioner of insurance is  given 30 days’ prior notification and does not disapprove the transaction during that 30-day period. Radian Guaranty, Radian Insurance, RMAI and Radian Mortgage Insurance . Under Pennsylvania’s insurance laws,  dividends and other distributions may only be paid out of an insurer ’s positive unassigned surplus, measured as of the end of  the prior fiscal year, unless the Pennsylvania Insurance Commissioner approves the payment of dividends or other distributions  from another source. Radian Guaranty , Radian Insurance, RMAI and Radian Mortgage Insurance each had negative unassigned  surplus at December 31, 2012, of $685.1 million, $317.3 million, $160.5 million and $85.4 million, respectively; therefore, no  dividends or other distributions can be paid from these subsidiaries in  2013 without approval from the Pennsylvania Insurance  Commissioner. 1.  Insurance Holding Company Regulation 2.  Dividends 44