A sharp increase in the delinquent loan inventory resulted, in part, from a transition of delinquencies into prime loans," said Ron Joas, S&P's credit analyst. Subprime delinquencies continued to rise, which combined with prime loan delinquencies for $971m in incurred losses for MGIC – compared to $778m in Q308, according to S&P. "Claims payments remain below our expectations, which is reflective of the backlog of foreclosures and the moratoria that had been implemented earlier in the year," according to S&P. The rating cut also comes as S&P anticipates the high probability of MGIC breaching the risk-to-capital regulatory requirement. As of Sept. 30, 2009, MGIC's risk-to-capital increased from its reported ratio in June.