•  Changes in Fair Value of Obligations.  Many of our structured finance contracts are accounted for as derivatives or  variable interest entities (“VIEs”), which are carried at fair market value. Our results are therefore impacted by  changes in the fair value of these contracts.  The estimated fair value of these obligations and instruments is measured  as of a specific point in time and may be influenced by changes in interest rates, credit spreads (of both the underlying  collateral as well as Radian Group’s credit spread), credit ratings and other market, asset-class and transaction-specific  conditions and factors that may be unrelated to our obligation to pay future claims.  •  Losses/Credit Performance . Our financial guaranty incurred losses are driven primarily by economic conditions that  affect the ability of the issuers of our insured obligations to meet such financial obligations and by adverse  developments in the assumptions used to determine our losses, including assumptions with respect to the likelihood,  magnitude and timing of anticipated losses, and our estimate of the rate at which we expect defaults will ultimately  result in paid claims. Stronger economic conditions increase the likelihood that obligors will have the ability to pay  interest and principal on the bonds we insure. Weaker economic conditions often place strains on the revenue flows  available to pay interest and principal. Other factors influencing defaults and incurred losses include: -  Our ability, and the ability of the companies that have ceded reinsurance to us, to mitigate claims; -  Real estate values, which can affect the ability of municipalities and other governmental entities to generate  sufficient tax revenues to satisfy their financial obligations; -  The potential impact of federal, state and local budgetary constraints af fecting funding and payments  (including Medicare and Medicaid payments) to healthcare, long term care, educational and other  governmental and non-governmental entities whose obligations we insure; -  Potential changes to entitlement programs, such as Social Security , Medicare and Medicaid, that could af fect  the ability of individuals and entities to utilize the services provided by the entities whose obligations we  insure; -  Performance of commercial and residential mortgage loans and other types of indebtedness that we insure; -  The performance of the primary insurers from whom we have ceded reinsurance or who have the primary  obligation to pay claims on our second-to-pay obligations (if such insurers have financial dif ficulties, they  may not devote sufficient resources to loss mitigation ef forts or could fail to pay claims on transactions where  we have second-to-pay obligations); -  The movement of interest rates (should interest rates rise, the interest component of our aggregate exposure  will increase on the variable rate obligations we insure, and as a result, will increase the strain on the obligors  to make payments on these obligations; consequently , the likelihood of default and amount of any claim  payments would increase).  95 Radian Group’s credit spread reflects the perceived risk that investors associate with us, which we are required to  consider when determining our fair market values.  A higher credit spread is indicative of a higher perception of risk.  When our credit spread increases, or widens, the fair value liability of our insured obligations declines, and when our  credit spread decreases, or tightens, the fair value liability of our insured obligations increases. Because we generally do not settle our insurance contracts before maturity (other than in a negotiated termination), in  the absence of actual credit losses on which we are obligated to make claim payments, unrealized losses related to  changes in fair value are expected to reverse before or at the maturity of these obligations. In addition, if we agree to  settle obligations prior to maturity at amounts that are greater or less than their fair values at the time of settlement, it  could result in the realization of additional gains or losses.