During the recent economic downturn, reduced liquidity in the mortgage market, tighter underwriting standards and  declining home prices in many regions in the U.S. have combined to make it more dif ficult for many borrowers with  ARMs and  interest-only mortgages to refinance their mortgages into fixed-rate products.  As a result, without available alternatives, many  borrowers have defaulted when their interest rates reset to a higher rate or when principal becomes payable.  Although there can  be no assurance, the historically low level of interest rates in the current mortgage market may help to reduce the size of interest  payment increases (and in some cases eliminate any increase) for loans resetting in the near future, but these loans will remain  more vulnerable to payment shocks if and when interest rates rise in the future.  In the long term, absent a change in the current lending environment or a positive impact from federal and private  measures aimed at reducing defaults from adjustable rate resets, defaults related to these products may continue to increase. If  this occurs, our results of operations and financial condition could be negatively af fected. Since 2008, the amount of insurance we have rescinded due to fraud, misrepresentation, underwriting negligence or other  non-compliance with our insurance policies has increased significantly . Likewise, the number of claims that we have denied has  also increased, primarily due to the inability of our servicing customers to provide the loan origination file or other servicing  records that are necessary for our review within the time periods required to perfect a claim. These rescissions and denials have materially mitigated our paid losses and resulted in a significant reduction in our loss  reserves. Our estimate of future expected rescissions and denials on defaulted loans reduced our loss reserves as of  December 31, 2012 by approximately $455.0 million. During 2012 and 2011, we rescinded or denied approximately $818.7  million and $645.1 million, respectively, of first-lien claims submitted to us for payment, (net of those loans for which we  reinstated coverage following an initial rescission or denial decision) compared to approximately  $800.0 million for 2010.  These amounts also include a small amount of submitted claims that were subsequently withdrawn by the insured.  We do not  expect that rescissions and denials will, in the longer-term, continue to mitigate paid losses at the same levels we have recently  experienced, in particular as the 2005 through 2008 origination years continue to decrease as a total percentage of our insured  portfolio. In recent periods, lenders have demonstrated an increased ability to produce the additional information necessary to  perfect a claim. As a result, we expect that a significant portion of previously denied claims will be resubmitted with the  required documentation and ultimately paid, and we have incorporated this expectation into our reserve estimate. Our IBNR  estimate, which consists primarily of our estimate of the future reinstatements of previously rescinded policies and denied  claims, was $323.0 million, $170.6 million and $39.5 million at December 31, 2012, 2011 and 2010, respectively. As part of our claims review process, we assess whether defaulted loans were serviced appropriately in accordance with  our insurance policies and servicing guidelines. To the extent a servicer has failed to satisfy its servicing obligations, our  policies provide that we may curtail the claim payment for such default, and in certain circumstances, cancel coverage or deny  the claim. In 2012, claim curtailments due to servicer non-compliance with our insurance policies and servicing guidelines have  increased both in frequency and in amount, which has contributed to a reduction in the severity of our claim payments during  this period. Further, we have identified a significant number of loans in our total defaulted portfolio (in particular , our older  defaulted portfolio) for which “Appropriate Proceedings” (actions or proceedings such as foreclosure that provide the insured  with title to the property) may not have been commenced within the outermost deadline in our master insurance policy . We  currently are in discussions with the servicers for these loans regarding this potential violation and our corresponding rights  under the master insurance policy. While we can provide no assurance regarding the outcome of these conversations or the  ultimate resolution of these issues, it is possible that this matter could result in arbitration or legal proceedings.  We cannot give  assurance regarding the extent or level at which such claim curtailments will continue, however , we expect this trend to  continue for the immediate future in light of well publicized issues in the servicing industry and our existing portfolio of aged  defaults.  Under our master insurance policy, any suit or action arising from any right of the insured under the policy generally must  be commenced within two years after such right arose and within three years for certain other policies, including certain pool  insurance policies. We have faced an increasing number of challenges from certain lender customers regarding our insurance  rescissions and claim denials, which have led us to reverse some, but not all, of our prior decisions regarding rescissions and  denials. In the last two years (for primary loans) and the last three years (for pool loans), despite challenges to our decision to  rescind, we have determined not to reinstate approximately  $461.4 million of rescinded loans.  64 Insurance rescissions and claim denials are not expected to continue at the elevated levels we have been experiencing and a  number of our lender customers are challenging our loss mitigation actions.