Loss Reserves (Tables)

3 Months Ended

Mar. 31, 2017

Reconciliation of beginning and ending loss reserves

The following table provides a reconciliation of beginning and ending loss reserves as of and for the three months ended March 31, 2017 and 2016:



	Three months ended March 31,
(In thousands)	2017			2016
Reserve at beginning of period	$	1,438,813		$	1,893,402
Less reinsurance recoverable	50,493			44,487
Net reserve at beginning of period	1,388,320			1,848,915

Losses incurred:
Losses and LAE incurred in respect of default notices received in:
Current year	80,416			92,479
Prior years ⁽¹⁾	(52,797		)	(7,467		)
Total losses incurred	27,619			85,012

Losses paid:
Losses and LAE paid in respect of default notices received in:
Current year	331			204
Prior years	127,224			221,457
Reinsurance terminations	—			(4		)
Total losses paid	127,555			221,657
Net reserve at end of period	1,288,384			1,712,270
Plus reinsurance recoverables	46,658			41,119
Reserve at end of period	$	1,335,042		$	1,753,389


⁽¹⁾	A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves. See the following table for more information about prior year loss development.

Prior year development of the reserves

The prior year development of the reserves in the first three months of 2017 and 2016 is reflected in the following table.



	Three months ended March 31,
(In millions)	2017			2016
Decrease in estimated claim rate on primary defaults	$	(54	)	$	(26	)
Increase in estimated severity on primary defaults	4			22
Change in estimates related to pool reserves, LAE reserves and reinsurance	(3		)	(3		)
Total prior year loss development ⁽¹⁾	$	(53	)	$	(7	)


⁽¹⁾	A negative number for prior year loss development indicates a redundancy of prior year loss reserves.

Rollforward of primary default inventory

A rollforward of our primary default inventory for the three months ended March 31, 2017 and 2016 appears in the following table. The information concerning new notices and cures is compiled from monthly reports received from loan servicers. The level of new notice and cure activity reported in a particular month can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month and transfers of servicing between loan servicers.



	Three months ended March 31,
	2017		2016
Default inventory at beginning of period	50,282		62,633
New notices	14,939		16,731
Cures	(17,128	)	(19,053	)
Paids (including those charged to a deductible or captive)	(2,635	)	(3,373	)
Rescissions and denials	(95	)	(210	)
Other items removed from inventory	(14	)	(1,138	)
Default inventory at end of period	45,349		55,590

Aging of the primary default inventory

Historically as a default ages it becomes more likely to result in a claim.

Consecutive months in default

	March 31, 2017			December 31, 2016			March 31, 2016
3 months or less	9,184	20	%	12,194	24	%	10,120	18	%
4 - 11 months	13,617	30	%	13,450	27	%	15,319	28	%
12 months or more ⁽¹⁾	22,548	50	%	24,638	49	%	30,151	54	%
Total primary default inventory	45,349	100	%	50,282	100	%	55,590	100	%

Primary claims received inventory included in ending default inventory	1,390	3	%	1,385	3	%	2,267	4	%


⁽¹⁾	Approximately 48%, 47%, and 49% of the primary default inventory in default for 12 consecutive months or more has been in default for at least 36 consecutive months as of March 31, 2017, December 31, 2016, and March 31, 2016, respectively.

Number of payments delinquent

The number of payments that a borrower is delinquent is shown in the table below.

Number of payments delinquent

	March 31, 2017			December 31, 2016			March 31, 2016
3 payments or less	15,692	35	%	18,419	36	%	16,864	30	%
4 - 11 payments	12,275	27	%	12,892	26	%	14,595	26	%
12 payments or more	17,382	38	%	18,971	38	%	24,131	44	%
Total primary default inventory	45,349	100	%	50,282	100	%	55,590	100	%