231 •  the current and projected performance of the underlying obligation (both on an expected case basis and stressed for  more adverse performance and/or market circumstances than we expect);  •  the likelihood that we will pay a claim in light of credit deterioration and reductions in available payment reserves  and existing subordination;  •  our total exposure to the obligation;  •  expected future premium payments from the credit;  •  the potential impact on our capital position; and  •  the cost to us of pursuing mitigation remedies.  Issuers typically are under no obligation to restructure insured transactions to prevent losses, but often will cooperate to  avoid being associated with an obligation that experiences losses.  When appropriate, we discuss potential settlement options  regarding particular obligations with appropriate parties. On occasion, loss mitigation may include an early termination of our  obligations, which could result in payments to or from us.  To determine the appropriate loss mitigation approach, we generally  consider various factors relevant to such insured transaction, which may include:  In general, in response to deterioration in the credit performance of a transaction, risk management works with the  appropriate parties in an attempt to avoid a default or to minimize the claims that we may be obligated to pay on our policy .  Loss mitigation can consist of:  In our directly insured financial guaranty business, we establish loss and LAE reserves on our non-derivative financial  guaranty contracts. The assumptions used to determine reserves for directly insured credits are based upon the analysis as more  fully described above. In our financial guaranty reinsurance business, the primary obligation for assessing and mitigating  claims rests with the ceding company. We generally establish reserves for our assumed  Watch List credits based upon  information provided by the ceding company .  Case Reserve . This category consists of insured transactions where a payment default on the insured obligation has  occurred. LAE reserves are normally required as remediation ef forts often continue for credits classified at this level to mitigate  claims. Direct and assumed exposures in this category that satisfy certain criteria, including minimum outstanding par  thresholds, are generally reviewed quarterly .  Radian Group Inc. Notes to Consolidated Financial Statements - (Continued) •  restructuring the obligation;  •  enforcing available security arrangements;  •  working with the issuer to work through or to find alternatives to mitigate the impact of financial management and/ or potential political factors;  •  when appropriate, exercising applicable rights to replace servicers, trustees, advisers or the other parties responsible  for the performance of the transaction; and  •  purchasing the insured obligation at a discount to its net par outstanding. 