While these reserve-strengthening actions result in a risk-to-capital level that is above 25:1, we believe we have the comprehensive balance sheet strength and a capital strategy that provides a corridor through which to manage new business writings.

Turning to Slide 5, we have provided a snapshot of our total flow risk in-force as of year-end 2011 by vintage, along with the comparative reserve levels for each book year. As you can see, the 2005 to 2007 book years are still a large part of our portfolio with a disproportionate percentage of reserves. These books have been impacted by several years of home price depreciation, especially in Sand State geographies, as well as underwriting guidelines and practices that were not consistent with today's credit policy and underwriting standards. We view the 2008 book of business as the transition vintage with overhang from the 2007 products and pricing, but better performance for business written in the second half of 2008.

You can also see that the 2009 to 2011 books have very low reserve levels as the delinquency development of these books has been favorable.

Slide 6 shows the composition of our current delinquency inventory by aging category, as well as our flow reserve per delinquency over time. This demonstrates the effects of reserve strengthening in 2010 and '11, as well as the change in aging composition while overall delinquencies continue to trend down.

With that overview of our portfolio, let's now get into a more detailed discussion of loss development and our expectation for 2012 on Slide 7.

At a very basic level, incurred losses are driven by 2 factors: Either,one, a change in expectation of claims on the current inventory delinquencies; or two, new delinquencies. A leading indicator of the need for a change in reserving can be aging, net of cures on delinquent loans. But aging pressure must be assessed as either temporary or permanent prior to making a reserve change.

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