Loss Reserves (Tables)

6 Months Ended

Jun. 30, 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 six months ended June 30, 2017 and 2016:



	Six months ended June 30,
(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	158,906			196,543
Prior years ⁽¹⁾	(103,948		)	(64,941		)
Total losses incurred	54,958			131,602

Losses paid:
Losses and LAE paid in respect of default notices received in:
Current year	2,125			1,396
Prior years	298,847			392,007
Reinsurance terminations	—			(4		)
Total losses paid	300,972			393,399
Net reserve at end of period	1,142,306			1,587,118
Plus reinsurance recoverables	44,783			45,215
Reserve at end of period	$	1,187,089		$	1,632,333


⁽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 six months of 2017 and 2016 is reflected in the following table.



	Six months ended June 30,
(In millions)	2017			2016
Decrease in estimated claim rate on primary defaults	$	(104	)	$	(76	)
Increase in estimated severity on primary defaults	2			17
Change in estimates related to pool reserves, LAE reserves and reinsurance	(2		)	(6		)
Total prior year loss development ⁽¹⁾	$	(104	)	$	(65	)


⁽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 and six months ended June 30, 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 accuracy of the data provided by servicers, the number of business days in a month, transfers of servicing between loan servicers and whether all servicers have provided the reports in a given month.



	Three months ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Default inventory at beginning of period	45,349		55,590		50,282		62,633
New notices	14,463		16,080		29,402		32,811
Cures	(14,708	)	(15,640	)	(31,836	)	(34,693	)
Paids (including those charged to a deductible or captive)	(2,573	)	(3,195	)	(5,208	)	(6,568	)
Rescissions and denials	(100	)	(142	)	(195	)	(352	)
Other items removed from inventory	(1,114	)	(135	)	(1,128	)	(1,273	)
Default inventory at end of period	41,317		52,558		41,317		52,558

Aging of the primary default inventory

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

Consecutive months in default

	June 30, 2017			December 31, 2016			June 30, 2016
3 months or less	10,299	25	%	12,194	24	%	11,547	22	%
4 - 11 months	11,018	27	%	13,450	27	%	12,680	24	%
12 months or more ^{(1) (2)}	20,000	48	%	24,638	49	%	28,331	54	%
Total primary default inventory	41,317	100	%	50,282	100	%	52,558	100	%

Primary claims received inventory included in ending default inventory:
	1,258	3	%	1,385	3	%	1,829	3	%


⁽¹⁾	Approximately 46%, 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 June 30, 2017, December 31, 2016, and June 30, 2016, respectively.


⁽²⁾	The majority of items removed from our default inventory under NPL settlements during the six months ended June 30, 2017 were in default for 12 consecutive months or more as of December 31, 2016.

Number of payments delinquent

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

Number of payments delinquent

	June 30, 2017			December 31, 2016			June 30, 2016
3 payments or less	15,858	38	%	18,419	36	%	17,299	33	%
4 - 11 payments	10,560	26	%	12,892	26	%	12,746	24	%
12 payments or more ⁽¹⁾	14,899	36	%	18,971	38	%	22,513	43	%
Total primary default inventory	41,317	100	%	50,282	100	%	52,558	100	%


⁽¹⁾	The majority of items removed from our default inventory under NPL settlements during the six months ended June 30, 2017 had 12 or more payments delinquent as of December 31, 2016.