Radian Group Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2012 2011 2010 Cash flows from operating activities: Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (451,468) $ 302,150 $ (1,805,867) Adjustments to reconcile net (loss) income to net cash used in operating  activities: Net (gains) losses on investments and other financial instruments, change in fair value of derivative instruments and net impairment losses recognized in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,409 (1,022,699) 630,539 Net payments related to derivative contracts and VIE debt . . . . . . . . . . . . . . . (8,213) (119,888) (291,936) Equity in net loss (income) of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (65) (14,668) Distributions from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 — 29,498 Gain on sale of affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,708) — (34,815) Net cash (paid) received for commutations, terminations and recaptures . . . . (240,110) (92,599) 85,657 Commutation - related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,500 — — Deferred income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 6,758 381,408 Depreciation and other amortization, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,389 63,120 39,789 Change in: Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,910 (46,665) (136,291) Deferred policy acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,504 8,420 11,949 Reinsurance recoverables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,385 86,047 58,266 Reserve for losses and LAE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (161,114) (194,486) 252,908 PDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 (7,092) (14,621) Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,706 65,388 (34,405) Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,164 53,836 (20,014) Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (510,500) (897,775) (862,603) Cash flows from investing activities: Proceeds from sales of fixed-maturity investments available for sale . . . . . . . . 79,534 136,217 1,218,460 Proceeds from sales of equity securities available for sale . . . . . . . . . . . . . . . . . 31,235 52,014 15,033 Proceeds from sales of trading securities (See Note 2) . . . . . . . . . . . . . . . . . . . . 6,004,371 6,028,267 4,735,215 Proceeds from redemptions of fixed-maturity investments available for sale . . 5,909 32,214 50,846 Proceeds from redemptions of fixed-maturity investments held to maturity . . . 2,076 8,775 9,035 Purchases of trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,895,099) (5,456,565) (6,126,303) Sales and redemptions of short-term investments, net . . . . . . . . . . . . . . . . . . . . 484,347 276,082 (86,071) Purchases of other invested assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65,090) (1,373) (33,501) Proceeds from the sale of investment in affiliate . . . . . . . . . . . . . . . . . . . . . . . . 14,700 — 172,017 Purchases of property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (910) (2,976) (2,516) Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . 661,073 1,072,655 (47,785) 166