Deterioration in our financial guaranty portfolio could reduce Radian Asset Assurance’s statutory surplus and negatively  impact its ability to pay dividends to Radian Guaranty. We face risks associated with our exposure to other financial guaranty issuers. Primary ceding customers sometimes delegate their loss adjustment functions to third parties, the cost of which is then  proportionally allocated to us and any other reinsurers for the insured transaction.  Accordingly, the losses and LAE allocated to  us on our reinsured risks may be higher than otherwise would have been the case if we were responsible for surveillance, loss  mitigation and salvage for these risks. In addition, should a primary insurer become insolvent, there is a risk that the recoveries  that it receives in any given transaction may become a part of its general estate rather than being allocated among the reinsurers  paying the related claim. These factors could have a material adverse ef fect on our financial condition and operating results.  Our ceding customers are primarily responsible for surveillance, loss mitigation and salvage on the risks that they cede to  us. Our ceding customers may be less willing to perform these tasks to the extent necessary to minimize potential losses and/or  maximize potential salvage on the credits we reinsure. In addition, these customers may have dif ferent incentives to eliminate  long-term liabilities than we do. We generally do not have direct access to the insured obligation or the right to perform our  own loss mitigation or salvage work on these transactions.  We also have limited visibility with respect to the performance of  many of the obligations we reinsure. See “ If the estimates we use in establishing loss reserves are incorrect, we may be required  to take unexpected charges to income, which could adversely affect our capital position. ”  After giving effect to the FGIC Commutation, substantially all of our remaining financial guaranty reinsurance business is  currently assumed from af filiates of Assured. Our financial guaranty ceding customers, including  Assured, have the right to take  back or recapture all of their business previously ceded to us under their reinsurance agreements with us.  While our treaties  with Assured do not permit it to selectively recapture business previously ceded to us, because we have entered into multiple  treaties with Assured, it is possible that it may choose to recapture business only under those treaties that it perceives as  covering less risky portions of our reinsurance portfolio.  This selective recapture, if it occurs, could potentially leave us with  risk that is more concentrated in troubled asset classes or exposures.  As of December 31, 2012, Radian Asset Assurance had approximately $6.3 billion outstanding par on its total reinsurance  portfolio. On January 9, 2013, Radian  Asset Assurance completed the commutation of the remaining $822.2 million of  outstanding par reinsured by Radian  Asset Assurance from FGIC. The timing and amount of these dividend payments will depend on the dividend capacity of our financial guaranty  business, which is governed by New York insurance laws. Under New York insurance laws, Radian Asset Assurance may only  pay dividends from statutory earned surplus.  Without the prior approval from the NYSDFS, Radian  Asset Assurance can only  pay a dividend, which when totaled with all other dividends declared or distributed on it during the preceding 12 months, is the  lesser of 10% of its surplus to policyholders as shown by its last statutory statement on file with the NYSDFS, or 100% of  statutory adjusted net income. If the performance of our financial guaranty portfolio deteriorates materially or the amount we  pay to terminate any particular financial guaranty exposure is lar ger than the amount of the statutory reserves for such exposure,  Radian Asset Assurance’s statutory surplus may be reduced. If this were to occur , Radian Asset Assurance would likely have  less capacity to pay dividends to Radian Guaranty and could be prohibited from paying dividends altogether , which could have  a negative impact on Radian Guaranty’ s available liquidity. The performance of our financial guaranty business may af fect whether Radian Asset Assurance can pay dividends to  Radian Guaranty in the future as it has in past years, and the amount of any such dividends.  At December 31, 2012, Radian  Asset Assurance maintained claims paying resources of $1.8 billion, including statutory surplus of approximately $1.1 billion.  Radian Asset Assurance paid dividends to Radian Guaranty in  2011 and 2012 totaling $53.4 million and $54.0 million,  respectively. We expect that Radian Asset Assurance will next have the capacity to pay an ordinary dividend, of approximately  $35.0 million, to Radian Guaranty in the third quarter of  2013. 68