During 2009 through 2012, as market prices of our investments increased, we made the decision to sell a significant  amount of securities in our portfolio and reinvest the proceeds in similar securities.  The realized gains from these sales, some of  which had previously been unrealized, also increased the respective statutory capital positions of our subsidiaries that held the  investments, which has provided a significant benefit to Radian Guaranty’ s risk-to-capital position. During 2011, we sold our  investment in a portfolio of tobacco bonds and recognized a $21.7 million realized loss in our mortgage insurance segment,  which was offset by gains on sales of other securities in our trading portfolio during the same period of  2011. Our results for  2010 were positively impacted by net realized gains on investments in conjunction with the reallocation of our investment  portfolio from tax advantaged securities to securities that provide taxable investment income. Change in Fair Value of Derivative Instruments . In 2010, we allocated to our mortgage insurance segment a portion of  the change in fair value of derivatives (committed preferred custodial trust securities (“CPS”)) held in trusts that had been  consolidated by Radian Group, as described in “Of f-Balance Sheet Arrangements.” There were no such market value gains or  losses in 2011 or 2012 as the related CPS derivatives were eliminated. Net (Losses) Gains on Other Financial Instruments. The net (losses) gains for 2012, 2011 and 2010 reflect the impact of  the movement of Radian Group’ s CDS spread on the fair value of our net interest mar gin securities (“NIMS”). Our RIF related  to NIMS has declined from $136.0 million at December 31, 2010, to $19.0 million at December 31, 2011 and to $14.0 million  at December 31, 2012. These declines are a result of payments made by us as NIMS bonds matured. See “Part I. Item 1.  Business—Mortgage Insurance—Business— Non-Traditional Risk ” for further discussion on NIMS. In addition, in 2010, we allocated a portion of the change in fair value related to CPS  VIE to the mortgage insurance  segment.  Provision for Losses. Our mortgage insurance provision for losses decreased in  2012 compared to 2011 and in 2011  compared to 2010. The following table details the financial impact of the significant components of our mortgage insurance  provision for losses for the periods indicated: (1)  For 2012, 2011 and 2010, the financial impact for each component has been recalculated on a full year basis, such that the  sum of the individual quarterly impacts within each respective year do not equal the recalculated impacts. For example,  the impact from a loan that defaults in one quarter that then cures in the next quarter of the same year is not reflected  within the full year provision for losses, as the net impact is zero for the full year period. (2)  Represents the provision for losses attributable to loans that were in default as of the beginning of each period indicated,  including: (a) the change in reserves for loans that were in default status (including pending claims) as of both the  beginning and end of each period indicated; (b) the net impact to provision for losses from loans that were in default as of  the beginning of each period indicated; and (c) the impact to our incurred but not recorded (“IBNR”) reserve during the  period related to changes in actual and estimated reinstatements of previously rescinded policies and denied claims.  (3)  Includes the effect of reinsurance recoveries from captive and Smart Home transactions (including a $47.0 million write- down of Smart Home recoverables for  2012), second-lien activity, LAE and other miscellaneous loss-related activity .  Our mortgage insurance provision for losses for  2012 decreased by $372.4 million as compared to 2011. This decrease  was driven primarily by a decline in new default notices, an increase in claim denials and an improvement in the composition of  the delinquent loan inventory (mainly associated with a reduction in the adverse impact to reserves related to the aging of  existing defaults), as compared to the corresponding periods of  2011. Primary new defaults, which are the main driver for  incurred losses, decreased by 22% for 2012 compared to 2011. Partially offsetting these positive developments was a decrease  in our estimated reinsurance recoverable from our remaining Smart Home transactions.  This decrease was a result of recent  trends of lower claims paid and higher insurance rescissions and claim denials than were previously estimated to occur by the  scheduled termination dates of our Smart Home transactions.  The final remaining Smart Home transaction is scheduled to  mature in May 2013.  105 Year Ended December 31, (In millions) 2012 (1) 2011 (1) 2010 (1) New defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 647.8 $ 854.5 $ 940.3 Existing defaults (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222.1 434.4 847.3 Second-liens, Loss adjustment expenses (“LAE”) and Other (3). . 51.6 5.0 (56.8) Provision for losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 921.5 $ 1,293.9 $ 1,730.8