(i) Radian Guaranty will cede to the reinsurer 20% of all premiums and losses incurred with respect to conventional GSE  loans and will initially receive a 35% ceding commission; provided that if we do not exercise our Commutation  Option, the ceding commission will be reduced to 30% for the portion of the ceded RIF that was subject to the  Commutation Option; and (ii) Radian Guaranty has the ability to cede 100% of all premiums and losses incurred with respect to non-conventional  portfolio loans and will receive a 25% ceding commission.  We do not expect the volume of such portfolio loans to be  material. Under the Second Quota Share Reinsurance  Transaction, for the year ended December 31, 2012, ceded premiums written  were $9.6 million and ceded premiums earned were $0.5 million. Ceding commissions earned under the Second Quota Share  Reinsurance Transaction for the year ended December 31, 2012 were $3.4 million. We participated in reinsurance arrangements with mortgage lenders commonly referred to as “captive reinsurance  arrangements.” Under captive reinsurance arrangements, a mortgage lender typically establishes a reinsurance company that  assumes part of the risk associated with the portfolio of that lender ’s mortgages insured by us on a flow basis. In return for the  reinsurance company’s assumption of a portion of the risk, we ceded to the reinsurance company a portion of the mortgage  insurance premiums that would have been paid to us. Our captive reinsurance arrangements were typically conducted on an  “excess-of-loss” basis, with the captive reinsurer paying losses only after a certain level of losses had been incurred. In  addition, on a limited basis, we offered “quota share” captive reinsurance arrangements under which the captive reinsurance  company assumed a pro rata share of all losses in return for a pro rata share of the premiums collected.  As a result of the  housing and related credit market downturn that began in 2007, the deductible loss under most captive reinsurance  arrangements was exceeded and we are now entitled to cash recoveries from the captive. Ceded losses recoverable related to  captives at December 31, 2012 were $82.2 million. We expect that most of the actual cash recoveries from these captives will  be received over the next few years.In some instances, we anticipate that the ultimate recoveries from the captive reinsurers  will be greater than the assets currently held by segregated trusts established for each captive reinsurer . Recorded recoverables,  however, are limited to the current trust balances. In 2010, we terminated a significant portion of our remaining captive  reinsurance arrangements on a “cut-of f” basis, meaning that the terminated captive arrangements were dissolved and all  outstanding liabilities were settled. For additional information about our captive reinsurance arrangements, see “Part I. Item 3.  Legal Proceedings.” 103