Radian Group Inc. Notes to Consolidated Financial Statements - (Continued) 10. Losses and LAE Our reserve for losses and LAE, as of the dates indicated, consisted of: The following table presents information relating to our mortgage insurance reserves for losses, including IBNR, and  LAE as of the dates indicated:  (1)  Related to ceded losses on captive reinsurance transactions, Smart Home and quota share reinsurance transactions. See  Note 9 for additional information. (2)  Related to underlying defaulted loans with a most recent default notice dated in the year indicated. For example, if a loan  had defaulted in a prior year , but then subsequently cured and later re-defaulted in the current year , that default would be  considered a current year default. _________________________ While the aging of defaulted loans and other changes in the composition of our delinquent loan inventory , including the  rate of claims being submitted, continued to impact our reserves and incurred losses during  2012, the magnitude of such  impacts has declined compared to prior periods.  Adjustments are made to loss reserves as defaulted loans age, and therefore,  are considered to be closer to foreclosure and more likely to result in a claim payment.  With continuing declines in home values  in certain markets, persistently high unemployment and delays by servicers in either modifying loans or foreclosing on  properties, the time it has taken to cure or otherwise resolve a delinquent loan has been prolonged. Consequently , in recent  years, our default inventory has experienced an increase in its weighted average age, and because we apply higher estimated  default to claim rates on our more aged delinquent loans, this has resulted in a higher reserve per default.  As a consequence, our  aggregate weighted average default to claim rate assumption (net of rescissions and denials) used in estimating our reserve for  losses was 47% at December 31, 2012, compared to 43% and 40% at December 31, 2011 and 2010, respectively. Our default to  claim rate estimate varies depending on the age of the underlying defaulted loans, as measured by the number of monthly  payments missed. As of December 31, 2012, our aggregate weighted average default to claim rate estimate excluding pending  claims, net of our estimate for insurance rescissions and claim denials, was  39% and ranged from 20% for insured loans that  had missed two to three monthly payments to 46% for insured loans that had missed  12 or more monthly payments. 223 December 31, (In thousands) 2012 2011 Mortgage insurance reserves . . . . . . . . . . . . . . . . $ 3,083,608 $ 3,247,900 Financial guaranty reserves . . . . . . . . . . . . . . . . . 66,328 63,002 Total reserve for losses and LAE . . . . . . . . . . . . . $ 3,149,936 $ 3,310,902 Year Ended December 31, (In thousands) 2012 2011 2010 Mortgage Insurance Balance at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,247,900 $ 3,524,971 $ 3,450,538 Less reinsurance recoverables (1) . . . . . . . . . . . . . . . . . . . . . . . . . 151,569 223,254 621,644 Balance at January 1, net of reinsurance recoverables . . . . . . . . . 3,096,331 3,301,717 2,828,894 Add losses and LAE incurred in respect of default notices reported and unreported in: Current year (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899,511 1,127,079 1,173,035 Prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,996 166,778 557,766 Total incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 921,507 1,293,857 1,730,801 Deduct paid claims and LAE related to: Current year (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,503 39,642 54,410 Prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004,965 1,459,601 1,203,568 Total paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,017,468 1,499,243 1,257,978 Balance at end of period, net of reinsurance recoverables . . . . . . 3,000,370 3,096,331 3,301,717 Add reinsurance recoverables (1) . . . . . . . . . . . . . . . . . . . . . . . . . 83,238 151,569 223,254 Balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,083,608 $ 3,247,900 $ 3,524,971