Fannie Mae and Freddie Mac (referred to collectively as the “Government Sponsored Enterprises” or “GSEs”) and state  insurance regulators impose various capital requirements on our insurance subsidiaries.  These include risk-to-capital ratios,  risk-based capital measures and surplus requirements that potentially limit the amount of insurance that each of our insurance  subsidiaries may write. Under state insurance regulations, Radian Guaranty is required to maintain minimum surplus levels and,  in certain states, a minimum amount of statutory capital relative to the level of net risk in force (“RIF”), or “risk-to-capital.”  Sixteen states (the “RBC States”) currently impose a statutory or regulatory risk-based capital requirement (the “Statutory RBC  Requirement”). The most common Statutory RBC Requirement is that a mortgage insurer ’s risk-to-capital ratio not exceed 25  to 1. In some of the RBC States, the Statutory RBC Requirement is that Radian Guaranty must maintain a minimum  policyholder position, which is based on both risk and surplus levels (the “MPP  Requirement”). Unless an RBC State grants a  waiver or other form of relief, if a mortgage insurer is not in compliance with the Statutory RBC Requirement of an RBC State,  it may be prohibited from writing new mortgage insurance business in that state. During  2012, the RBC States accounted for  approximately 54.3% of Radian Guaranty’ s total primary new insurance written (“NIW”). In order to maximize our financial  flexibility in the event Radian Guaranty is unable to comply with applicable Statutory RBC Requirements, we have applied for  waivers or similar relief from each of the RBC States and have also obtained approval from the GSEs for Radian Mortgage  Assurance Inc. (“RMAI”), a subsidiary of Radian Guaranty that is licensed to write mortgage insurance throughout the U.S., to  operate as an eligible insurer on a limited basis in certain RBC States where Radian Guaranty would not be able to write new  mortgage insurance if it were not in compliance with applicable Statutory RBC Requirements (the “GSE  Approvals”). These  waivers and the GSE Approvals are subject to conditions and generally may be terminated or revoked at any time. See “Part I.  Item 1. Business—Regulation—State Regulation— Risk-to-Capital .” During the most recent period of prolonged economic weakness, we have actively managed Radian Guaranty’ s capital  position in various ways, including: (1) through internal and external reinsurance arrangements; (2) by seeking opportunities to  reduce our risk exposure through commutations or other negotiated transactions; (3) by contributing additional capital from  Radian Group to our mortgage insurance subsidiaries; and (4) by realizing gains in our investment portfolio through open  market sales of securities. As a result of these efforts, Radian Guaranty’ s risk-to-capital ratio improved to 20.8 to 1 as of  December 31, 2012 from 21.5 to 1 as of December 31, 2011. We intend to maintain Radian Guaranty’ s risk-to-capital below 25  to 1 throughout 2013, including, if necessary, by making contributions to Radian Guaranty from Radian Group’ s remaining  available liquidity. Based on our current projections, in the absence of these contributions or other further risk-to-capital  support, we anticipate that Radian Guaranty would exceed the 25 to 1 risk-to-capital ratio requirement during  2013. As of  December 31, 2012, Radian Guaranty was operating under waivers in two of the RBC States with MPP  Requirements for which  Radian Guaranty’s minimum policyholder position was below the applicable requirements. See “Part I. Item 1A. Risk Factors — Losses in our mortgage insurance and financial guaranty businesses have reduced Radian Guaranty’s statutory surplus and  increased Radian Guaranty’s risk-to-capital ratio; additional losses in these businesses, without a corresponding increase in  new capital or capital relief, would further negatively impact this ratio, which could limit Radian Guaranty’s ability to write  new insurance and increase restrictions and requirements placed on Radian Guaranty .” Our businesses have been significantly impacted by , and our future success may depend upon, legislative and regulatory  developments impacting the housing finance industry . The GSEs are the primary beneficiaries of the majority of our mortgage  insurance policies and the Federal Housing Administration (“FHA”) remains our primary competitor outside of the private  mortgage insurance industry. Federal and state efforts to support homeowners and the housing market, including through the  enhanced Homeowner Affordable Refinance Program (“HARP  2”), have had a positive impact on our business in recent  periods. Various regulatory agencies have produced, and are now in the process of developing additional, new rules under the  Dodd-Frank Wall Street Reform and Consumer Protection  Act (the “Dodd-Frank Act”) that are expected to have a significant  impact on the housing finance industry and the U.S. Congress is engaged in planning for the reform of the housing finance  market, including the future roles of the FHA  and the GSEs. See “Part I. Item 1A. Risk Factors— Because most of the mortgage  loans that we insure are sold to Freddie Mac and Fannie Mae, changes in their charters or business practices could  significantly impact our mortgage insurance business ” ,  “ The Dodd-Frank Act may have a material effect on our mortgage  insurance and financial guaranty businesses” and “ A decrease in the volume of home mortgage originations could result in  fewer opportunities for us to write new insurance business .”  92