(1) The negative allowance balance includes certain portfolios of nonperforming loans for which the Company holds a beneficial interest representing approximately 1% of the balance.

Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended September 30, 2020 were as follows (amounts in thousands):


	For the Three Months Ended September 30, 2020
	Core		Insolvency		Total
Balance at beginning of period	$	2,908,136	$	443,396	$	3,351,532
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	159,069		18,531		177,600
Foreign currency translation adjustment	53,934		6,752		60,686
Recoveries applied to negative allowance (2)	(246,738)		(35,735)		(282,473)
Changes in expected recoveries (3)	23,744		1,659		25,403
Balance at end of period	$	2,898,145	$	434,603	$	3,332,748


	For the Three Months Ended September 30, 2020
	Core		Insolvency		Total
Face value	$	1,106,910	$	91,793	$	1,198,703
Noncredit discount	(159,766)		(8,522)		(168,288)
Allowance for credit losses at acquisition	(788,075)		(64,740)		(852,815)
Purchase price	$	159,069	$	18,531	$	177,600


	For the Three Months Ended September 30, 2020
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(788,075)	$	(64,740)	$	(852,815)
Writeoffs, net	788,075		64,740		852,815
Expected recoveries	159,069		18,531		177,600
Initial negative allowance for expected recoveries	$	159,069	$	18,531	$	177,600


	For the Three Months Ended September 30, 2020
	Core		Insolvency		Total
Recoveries (a)	$	470,056	$	52,667	$	522,723
Less - amounts reclassified to portfolio income (b)	223,318		16,932		240,250
Recoveries applied to negative allowance	$	246,738	$	35,735	$	282,473


	For the Three Months Ended September 30, 2020
	Core		Insolvency		Total
Changes in expected future recoveries	$	(62,999)	$	(588)	$	(63,587)
Recoveries received in excess of forecast	86,743		2,247		88,990
Changes in expected recoveries	$	23,744	$	1,659	$	25,403

Changes in the negative allowance for expected recoveries by portfolio segment for the nine months ended September 30, 2020 were as follows (amounts in thousands):


	For the Nine Months Ended September 30, 2020
	Core		Insolvency		Total
Balance at beginning of period	$	3,051,426	$	462,739	$	3,514,165
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	537,477		77,859		615,336
Foreign currency translation adjustment	(42,065)		(3,020)		(45,085)
Recoveries applied to negative allowance (2)	(677,211)		(106,845)		(784,056)
Changes in expected recoveries (3)	28,518		3,870		32,388
Balance at end of period	$	2,898,145	$	434,603	$	3,332,748


	For the Nine Months Ended September 30, 2020
	Core		Insolvency		Total
Face value	$	4,286,296	$	366,211	$	4,652,507
Noncredit discount	(533,465)		(29,533)		(562,998)
Allowance for credit losses at acquisition	(3,215,354)		(258,819)		(3,474,173)
Purchase price	$	537,477	$	77,859	$	615,336


	For the Nine Months Ended September 30, 2020
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(3,215,354)	$	(258,819)	$	(3,474,173)
Writeoffs, net	3,215,354		258,819		3,474,173
Expected recoveries	537,477		77,859		615,336
Initial negative allowance for expected recoveries	$	537,477	$	77,859	$	615,336


	For the Nine Months Ended September 30, 2020
	Core		Insolvency		Total
Recoveries (a)	$	1,371,988	$	162,624	$	1,534,612
Less - amounts reclassified to portfolio income (b)	694,777		55,779		750,556
Recoveries applied to negative allowance	$	677,211	$	106,845	$	784,056


	For the Nine Months Ended September 30, 2020
	Core		Insolvency		Total
Changes in expected future recoveries	$	(181,433)	$	(2,478)	$	(183,911)
Recoveries received in excess of forecast	209,951		6,348		216,299
Changes in expected recoveries	$	28,518	$	3,870	$	32,388

In order to evaluate the impact of the COVID-19 pandemic on expectations of future cash collections, the Company considered historical performance, current economic forecasts regarding the duration of the impact to short-term and long-term growth in the various geographies in which the Company operates, and evolving information regarding its effect on economic activity and consumer habits as conditions related to the pandemic continue to evolve. The Company also considered current collection activity in its determination to adjust the estimated timing of near term ERC for certain pools. Based on these considerations, the Company’s estimates incorporate changes in both amounts and in the timing of expected cash collections over the forecast period.

For the three months ended September 30, 2020, changes in expected recoveries were $25.4 million. This reflects $89.0 million in recoveries received during the quarter in excess of forecast, partially offset by a $63.6 million decrease to the present value of expected future recoveries. The majority of the decrease reflects the Company's assumption that the overperformance was acceleration in cash collections rather than an increase to total expected collections. Additionally, the Company made forecast adjustments deemed appropriate given the current environment in which the Company operates.

For the nine months ended September 30, 2020, changes in expected recoveries were $32.4 million. This reflects $216.3 million in recoveries in excess of forecast, which was largely due to significant cash collections overperformance during the second and third quarters. This was mostly offset by a $183.9 million decrease in the present value of expected future recoveries. The decrease reflects the Company's assumption that the majority of the current year overperformance was primarily due to acceleration in the timing of cash collections rather than an increase to total expected collections. Additionally, the Company made forecast adjustments in all quarters deemed appropriate given the current environment in which the Company operates.

Changes in the Company’s assumptions regarding the duration and impact of COVID-19 to cash collections could change significantly as conditions evolve.

The following information reflects finance receivables, net as previously disclosed in the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019 which was under previous revenue recognition accounting standard ASC 310-30.


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019

Balance at beginning of period	$	3,230,949	$	3,084,777
Acquisitions of finance receivables (1)	276,918		874,812

Foreign currency translation adjustment	(59,172)		(60,213)
Cash collections	(453,217)		(1,384,662)
Income recognized on finance receivables	247,471		735,526
Net allowance charges	(4,136)		(11,427)

Balance at end of period	$	3,238,813	$	3,238,813

(1) Includes portfolio purchases adjusted for buybacks and acquisition related costs, and portfolios from the acquisition of a business in Canada made during the first quarter of 2019.

During the three months ended September 30, 2019, the Company acquired finance receivable portfolios with a face value of $2.4 billion for $279.0 million. During the nine months ended September 30, 2019, the Company acquired finance receivables portfolios with a face value of $8.9 billion for $887.0 million. At September 30, 2019, the ERC on the receivables acquired during the three and nine months ended September 30, 2019 were $494.8 million and $1.4 billion, respectively.

At the time of acquisition and each quarter thereafter, the life of each quarterly accounting pool was estimated based on projected amounts and timing of future cash collections using the proprietary models of the Company. Based upon projections, cash collections expected to be applied to principal were estimated to be as follows for the twelve-month periods ending September 30, (amounts in thousands):


2020	$	864,692
2021	692,946
2023	507,491
2024	378,679
2025	259,808
2026	171,873
2027	110,078
2028	84,212
2029	61,656
2030	47,347
Thereafter	60,031
Total ERC expected to be applied to principal	$	3,238,813

At September 30, 2019, the Company had aggregate net finance receivables balances in pools accounted for under the cost recovery method of $36.2 million.

Accretable yield represented the amount of income on finance receivables the Company expected to recognize over the remaining life of its existing portfolios based on estimated future cash flows as of the balance sheet date. Additions represented the original expected accretable yield on portfolios acquired during the period. Net reclassifications from nonaccretable difference to accretable yield primarily resulted from the increase in the Company's estimate of future cash flows. When applicable, net reclassifications to nonaccretable difference from accretable yield resulted from the decrease in the Company's estimates of future cash flows and allowance charges that together exceeded the increase in the Company's estimate of future cash flows.


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Balance at beginning of period	$	3,173,013	$	3,058,445
Income recognized on finance receivables	(247,471)		(735,526)
Net allowance charges	4,136		11,427
Additions from portfolio acquisitions	228,443		693,053
Reclassifications from nonaccretable difference	59,694		191,756
Foreign currency translation adjustment	(60,944)		(62,284)
Balance at end of period	$	3,156,871	$	3,156,871

The following is a summary of activity within the Company's valuation allowance account, all of which relates to acquired finance receivables, for the three and nine months ended September 30, 2019 (amounts in thousands):


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Beginning balance	$	264,591	$	257,148
Allowance charges	8,087		21,596
Reversal of previously recorded allowance charges	(3,951)		(10,169)
Net allowance charges	4,136		11,427
Foreign currency translation adjustment	(1,192)		(1,040)
Ending balance	$	267,535	$	267,535