 Item 1A. Risk Factors.  59 Our mortgage insurance incurred losses are driven primarily by new mortgage insurance defaults and adverse  developments in the assumptions used to determine our loss reserves. Establishing loss reserves in our businesses requires  significant judgment by management with respect to the likelihood, magnitude and timing of anticipated losses.  This judgment  has been made more difficult in the current period of prolonged economic uncertainty . Our estimate of the default to claim rate  is a significant assumption in our reserving methodology . Our assumed aggregate weighted average default to claim rate (which  incorporates the expected impact of rescissions and denials) was approximately 47% and 43% for the years ended  December 31, 2012 and 2011, respectively. Assuming all other factors remain constant, for each one percentage point increase  in our aggregate weighted average default to claim rate as of  December 31, 2012, incurred losses would increase by  approximately $55 million. Radian Guaranty’ s statutory capital would be reduced by the after -tax impact of these incurred  losses. Our level of incurred losses is also dependent on our estimate of anticipated rescissions and denials, including our  estimate of the likely number of successful challenges to previously rescinded policies or claim denials, among other  assumptions. If the actual losses we ultimately realize are in excess of the loss estimates we use in establishing loss reserves, we  may be required to take unexpected char ges to income, which could adversely affect Radian Guaranty’ s statutory capital  position. As of December 31, 2012, Radian Guaranty’s risk-to-capital ratio was 20.8 to 1. Radian Guaranty’ s risk-to-capital ratio  has been negatively impacted in recent years by operating losses.  The ultimate amount and timing of future losses will depend,  in part, on general economic conditions and other factors, including the health of credit markets, home prices and  unemployment rates, all of which are dif ficult to predict and beyond our control.We intend to maintain Radian Guaranty’ s risk- to-capital ratio 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  risk-to-capital support, we anticipate that Radian Guaranty will 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 RBC States with MPP  Requirements for which  Radian Guaranty’s minimum policyholder position was below the applicable requirements. Each of these RBC States has  issued to Radian Guaranty a waiver of its MPP  requirement that allows Radian Guaranty to continue writing new business in  these states regardless of whether the MPP  Requirement has been met. One of these waivers has no specified expiration date  and the other expires on December 31, 2013.  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 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 such RBC State, it may be prohibited from  writing new mortgage insurance business in that state.Radian Guaranty’s domiciliary state, Pennsylvania, is not one of the  RBC States. In 2012 and 2011, the RBC States accounted for approximately 54.3% and 50.5%, respectively , of Radian  Guaranty’s total primary NIW. The GSEs and state insurance regulators impose various capital requirements on our insurance subsidiaries.  These include  risk-to-capital ratios, other risk-based capital measures and surplus requirements that potentially may limit the amount of  insurance that each of our insurance subsidiaries may write.  The GSEs and our state insurance regulators also possess  significant discretion with respect to our insurance subsidiaries.   Our failure to maintain adequate levels of capital, among other  things, could lead to intervention by the various insurance regulatory authorities or the GSEs, which could materially and  adversely affect our business, business prospects and financial condition. We and our insurance subsidiaries are subject to comprehensive, detailed regulation by the insurance departments in the  states where our insurance subsidiaries are licensed to transact business.  These regulations are principally designed for the  protection of our policyholders rather than for the benefit of investors. Insurance laws vary from state to state, but generally  grant broad supervisory powers to state agencies or of ficials to examine insurance companies and enforce rules or exercise  discretion affecting almost every significant aspect of the insurance business, including the power to revoke or restrict an  insurance company’s ability to write new business. 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.