Radian Group Inc. Notes to Consolidated Financial Statements - (Continued) We have made several attempts to reach a compromised settlement with  Appeals, but in January 2013, we were notified  that Appeals had rejected our latest settlement of fer and plans to issue a formal notice of deficiency within three to six months.  Based on these recent developments, we do not currently believe that a settlement is likely . Upon receipt of the notice of  deficiency, we will have ninety days to either pay the assessed tax liabilities, penalties and interest (the “deficiency amount”) in  full or petition the U.S. Tax Court to litigate the deficiency amount. Litigation of the deficiency amount may result in  substantial legal expenses and the litigation process could take several years to resolve.  We can provide no assurance regarding  the outcome of any such litigation. Radian Group and Commonwealth Mortgage  Assurance Company of Texas (“CMAC of  Texas”) are parties to an Assumption and Indemnification  Agreement with regard to the proposed adjustments resulting from  the IRS examination. Through this agreement, Radian Group agreed to indemnify CMAC of  Texas for the amount of any tax  payments ultimately due to the IRS for the proposed adjustments.  This indemnification agreement was made in lieu of an  immediate capital contribution to CMAC of  Texas that otherwise may have been required as a result of our remeasurement of  uncertain tax positions related to the portfolio of REMIC residual interests.  After giving effect to the 2015 Debt Exchange that settled in January 2013, our most significant needs for liquidity  beyond the next 12 months are: (i) the repayment of the principal amount of our outstanding long-term debt, including  approximately $54.8 million in principal amount due in 2015, $195.2 million of principal amount of debt due in June 2017 and  $450 million in principal amount of convertible debt due in 2017; (ii) potential additional capital contributions to our mortgage  insurance subsidiaries; and (iii) potential payments to the U.S. Department of the  Treasury resulting from the examination of  our 2000 through 2007 federal tax returns by the IRS.  We regularly consider various measures to improve our capital and  liquidity positions, as well as our debt maturity profile.  We have repurchased and exchanged, prior to maturity , some of our  outstanding debt, and in the future, we may , from time to time, seek to redeem, repurchase, or exchange for other securities,  prior to maturity, some or all of our outstanding debt in the open market, through private transactions, pursuant to one or more  tender offers or through any combination of the foregoing, as circumstances may allow . The timing or amount of any potential  transactions, which may or may not occur , will depend on a number of factors, including our capital and liquidity needs. If  necessary, we may seek to refinance all or a portion of our long-term debt, which we may not be able to do on favorable terms,  if at all. In light of Radian Group’s long- and short-term needs, we are considering various options to increase our capital and  liquidity position, such as incurring additional debt, issuing additional equity or selling assets, which we may not be able to do  on favorable terms, if at all. Accordingly, we expect to meet the long-term liquidity needs of Radian Group with a combination  of: (i) available cash and marketable securities; (ii) private or public issuances of debt or equity securities, which we may not  be able to do on favorable terms, if at all; (iii) cash received under expense-sharing arrangements with our subsidiaries; (iv) the  potential sale of assets; and (v) dividends from our subsidiaries, to the extent available. See “Risks and Uncertainties” below in  this Note 1.  Radian Group and its subsidiaries are subject to risks and uncertainties that could af fect amounts reported in our financial  statements in future periods.  Adverse business and economic conditions have resulted in incurred losses that have reduced our  insurance subsidiaries’ statutory capital, requiring contributions that have reduced holding company liquidity . Further, statutory  capital requirements are subject to regulatory discretion and approval. Our future performance and financial condition are  subject to significant risks and uncertainties that could cause actual results to be materially dif ferent from our estimates and  forward-looking statements, including but not limited to, the following: Risks and Uncertainties •  Potential adverse effects of the continued delay of the U.S. economy to fully recover from the most recent recession  and prolonged economic downturn, including ongoing high unemployment, uncertainty in the housing, municipal,  foreign sovereign and related credit markets, which could increase our mortgage insurance or financial guaranty losses  beyond existing expectations. (See Notes 10, 11 and 12). •  Potential adverse effects if there are adverse developments with respect to our estimates related to the likelihood,  magnitude and timing of losses in connection with establishing loss reserves or premium deficiency reserves for our  mortgage insurance or financial guaranty businesses. (See Notes 10, 1 1 and 12). •  Potential adverse effects on us if the capital and liquidity levels of Radian Group or our regulated subsidiaries’ statutory capital levels are deemed inadequate to support current business operations and strategies. 176