•  On March 1, 2011, our subsidiary, Enhance Financial Services Group Inc. (“EFSG”), sold its 45% interest in the  holding company of a Brazilian insurance company , which specializes in surety and agricultural insurance, to  another owner for a nominal purchase price.  This holding company and its subsidiaries are subject to regulation  by The Superintendence of Private Insurance, the regulatory agency responsible for the supervision and control of  the insurance market in Brazil. Although EFSG wrote off its entire interest in this company in 2005 and has sold  its ownership interest, under Brazilian law , it is possible that EFSG could become liable for its proportionate share  of the liabilities of the company related to the period in which EFSG was a significant shareholder , if the company  was to become insolvent and had insuf ficient capital to satisfy its outstanding liabilities. EFSG’ s share of the  liabilities of the company attributable to this period was approximately  $103.4 million as of December 31, 2010,  the date of the most recent financial information available to us. In addition to the foregoing, we use reinsurance from af filiated companies to allow Radian Guaranty to remain in  compliance with insurance regulations that limit the amount of risk that a mortgage insurance company may retain on a single  loan to 25% of the indebtedness of the insured. In addition, in the fourth quarter of 2012, Radian Guaranty , to improve its  capital position, entered into an excess-of-loss reinsurance transaction with Radian Mortgage Insurance under which Radian  Guaranty transferred approximately $2.5 billion of RIF to Radian Mortgage Insurance. In 201 1 and 2010, Radian Guaranty  entered into similar excess-of-loss reinsurance agreements with Radian Insurance under which Radian Guaranty initially  transferred a total of approximately $6.1 billion of RIF to Radian Insurance.  The pools of loans that have been reinsured by  Radian Mortgage Insurance and Radian Insurance generally consist of recently underwritten fixed-rate, prime, high FICO  loans. As of December 31, 2012, the remaining RIF under all of these reinsurance agreements was $6.3 billion.  As a provider of credit enhancement, we have provided credit protection directly on  VIEs. All VIEs must be evaluated  for consolidation in accordance with the accounting standard regarding consolidation of  VIEs. VIEs are entities, including  corporations, trusts or partnerships, in which equity investors do not have a controlling financial interest or do not have  sufficient equity at risk to finance the  VIE’s activities without additional subordinated financial support. VIEs may also be used to create securities with a specific risk profile desired by investors and as a means of transferring  risk, such as our Smart Home transactions. Our interests in  VIEs may be accounted for as insurance contracts, financial  guaranty derivatives or, in some cases, as consolidated VIEs, which are described more fully below . For insurance contracts  with VIEs that we do not consolidate, we estimate reserves for losses and LAE, and for derivative interests in  VIEs that we do  not consolidate, we estimate changes in the fair value as a corresponding derivative asset or derivative liability . Our primary  involvement with VIEs relates to transactions in which we provide a financial guaranty to one or more classes of beneficial  interest holders in the VIE. We do not record the underlying assets or liabilities of the  VIEs on our balance sheets unless we are  the primary beneficiary of the  VIE. In 2004, we developed a program referred to as “Smart Home,” for reinsuring risk associated with non-prime mortgages.  These reinsurance transactions, through the use of  VIE structures, effectively transfer risk from our portfolio to investors in the  capital markets. Since August 2004, we have completed four Smart Home reinsurance transactions.  We exercised our option to  terminate two of these transactions in March 201 1, with a total RIF of approximately $41 million. In 2012, we terminated one  of the remaining Smart Home transactions (which otherwise would have matured in November 2012) with RIF of  approximately $243 million. The final remaining Smart Home transaction is scheduled to mature in May 2013. Details of this  transaction as of the initial closing date and as of  December 31, 2012, are as follows: Off-Balance Sheet Arrangements Smart Home Initial As of December 31, 2012 Pool of mortgages (par value). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.9 billion $1.6 billion RIF (par value) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.4 billion $0.4 billion Notes sold to investors/risk ceded (principal amount). . . . . . . . . . . . . . . . $229 million $143 million 136