4.	FINANCIAL GUARANTEES IN FORCE

Financial guarantees outstanding includes the exposures of policies that insure variable interest entities (“VIEs”) consolidated in accordance with ASC Topic 810, Consolidation. Financial guarantees outstanding excludes the exposures of policies that insure bonds which have been called, pre-refunded or refunded. The gross par amount of financial guarantees outstanding was $245,030,000 and $296,463,000 at December 31, 2012 and 2011, respectively. The par amount of financial guarantees outstanding, net of reinsurance, was $223,633,000 and $272,504,000 at December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, the guarantee portfolio was diversified by type of guaranteed bond as shown in the following table:


	Net Par Amount Outstanding
	2012		2011
Public Finance:
Lease and tax-backed revenue	$	50,415,000	$	59,864,000
General obligation		34,623,000		42,959,000
Utility revenue		18,651,000		22,529,000
Transportation revenue		13,892,000		18,945,000
Higher education		10,382,000		13,618,000
Housing revenue ⁽¹⁾		8,176,000		8,823,000
Health care revenue		5,266,000		7,824,000
Other		1,613,000		2,255,000

Total Public Finance		143,018,000		176,817,000


Structured Finance:
Mortgage-backed and home equity		19,117,000		23,164,000
Investor-owned utilities		7,071,000		9,049,000
Other CDOs		5,941,000		8,060,000
Student loan		5,411,000		7,824,000
Asset-backed ⁽²⁾		2,905,000		4,732,000
Other		1,914,000		2,316,000

Total Structured Finance		42,359,000		55,145,000


International Finance:
Investor-owned and public utilities		10,314,000		10,510,000
Asset-backed ⁽²⁾		8,702,000		9,560,000
Sovereign/sub-sovereign		7,289,000		7,282,000
Transportation		6,002,000		5,914,000
Other CDOs		3,191,000		4,375,000
Mortgage-backed and home equity		1,268,000		1,397,000
Other		1,490,000		1,504,000

Total International Finance		38,256,000		40,542,000

Total	$	223,633,000	$	272,504,000

(1)	Includes $6,324,000 and $6,373,243 of military housing net par at December 31, 2012 and 2011, respectively.

(2)	At December 31, 2012, all asset-backed net par amounts outstanding relate to commercial asset-based transactions.

As of December 31, 2012 and 2011, the International Finance guaranteed portfolio is shown in the following table by location of risk:


	Net Par Amount Outstanding
	2012		2011
United Kingdom	$	22,585,000	$	22,317,000
Australia		4,820,000		5,176,000
Italy		3,068,000		3,346,000
Austria		943,000		956,000
Germany		598,000		619,000
Internationally diversified ⁽¹⁾		3,968,000		5,318,000
Other international		2,274,000		2,810,000

Total International Finance	$	38,256,000	$	40,542,000

(1)	Internationally diversified obligations represent pools of geographically diversified exposures which includes significant components of domestic exposure.

Gross financial guarantees in force (principal and interest) was $385,803,000 and $474,305,000 at December 31, 2012 and 2011, respectively. Net financial guarantees in force (after giving effect to reinsurance) was $350,163,000 and $433,484,000 as of December 31, 2012 and 2011, respectively.

In the United States, California, New York and Florida were the states with the highest aggregate net par amounts in force, accounting for 14.4%, 6.4% and 5.0% of the total at December 31, 2012, respectively. No other state accounted for more than 5%. The highest single insured risk represented 1.3% of the aggregate net par amount guaranteed.