Loss Reserves (Tables)

12 Months Ended

Dec. 31, 2017

Reconciliation of beginning and ending loss reserves

Table 8.1 provides a reconciliation of beginning and ending loss reserves for each of the past three years:



	Table	8.1
Development of reserves for losses and loss adjustment expenses	(In thousands)		2017			2016			2015
	Reserve at beginning of year		$	1,438,813		$	1,893,402		$	2,396,807
	Less reinsurance recoverable		50,493			44,487			57,841
	Net reserve at beginning of year		1,388,320			1,848,915			2,338,966

	Losses incurred:
	Losses and LAE incurred in respect of delinquent notices received in:
	Current year		284,913			387,815			453,849
	Prior years ⁽¹⁾		(231,204		)	(147,658		)	(110,302		)
	Total losses incurred		53,709			240,157			343,547

	Losses paid:
	Losses and LAE paid in respect of delinquent notices received in:
	Current year		11,267			14,823			25,980
	Prior years		493,300			689,258			823,058
	Reinsurance terminations ⁽²⁾		301			(3,329		)	(15,440		)
	Total losses paid		504,868			700,752			833,598
	Net reserve at end of year		937,161			1,388,320			1,848,915
	Plus reinsurance recoverables		48,474			50,493			44,487
	Reserve at end of year		$	985,635		$	1,438,813		$	1,893,402


⁽¹⁾	A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves. See table 8.2 below for more information about prior year loss development.

⁽²⁾

In a termination, the reinsurance agreement is cancelled, with no future premium ceded and amounts for any incurred but unpaid losses paid to us. Amounts paid to (received from) reinsurers result in an increase (decrease) in net losses paid. The change in net losses paid on our losses incurred is offset by a corresponding change in the reinsurance recoverable, resulting in no net impact on losses incurred. (See Note 9 – “Reinsurance”).

Prior year development of the reserves

Table 8.2 below shows the development of reserves in 2017, 2016 and 2015 for previously received delinquencies.



	Table	8.2
Reserve development on previously received delinquencies	(In millions)		2017			2016			2015
	Decrease in estimated claim rate on primary delinquencies		$	(248	)	$	(148	)	$	(141	)
	Increase in estimated severity on primary delinquencies		9			9			43
	Change in estimates related to pool reserves, LAE reserves, reinsurance and other		8			(9		)	(12		)
	Total prior year loss development ⁽¹⁾		$	(231	)	$	(148	)	$	(110	)


⁽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 delinquent inventory for the years ended December 31, 2017, 2016, and 2015 appears in table 8.3 below. 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.



	Table	8.3
Delinquent inventory rollforward			2017		2016		2015
	Delinquent inventory at beginning of year		50,282		62,633		79,901
	New Notices		68,268		67,434		74,315
	Cures		(61,094	)	(65,516	)	(73,610	)
	Paids (including those charged to a deductible or captive)		(9,206	)	(12,367	)	(16,004	)
	Rescissions and denials		(357	)	(629	)	(848	)
	Other items removed from inventory		(1,337	)	(1,273	)	(1,121	)
	Delinquent inventory at end of year		46,556		50,282		62,633

Aging of the primary default inventory

The number of consecutive months that a borrower has been delinquent is shown in the table below.



	Table	8.4
Delinquent inventory - consecutive months delinquent			December 31,
			2017			2016			2015
	3 months or less		17,119	37	%	12,194	24	%	13,053	21	%
	4 - 11 months		12,050	26	%	13,450	27	%	15,763	25	%
	12 months or more⁽¹⁾		17,387	37	%	24,638	49	%	33,817	54	%
	Total primary delinquent inventory		46,556	100	%	50,282	100	%	62,633	100	%

	Primary claims received inventory included in ending delinquent inventory		954	2	%	1,385	3	%	2,769	4	%


⁽¹⁾	Approximately 45%, 47% and 50% of the primary delinquent inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of December 31, 2017, 2016 and 2015, respectively.

Number of payments delinquent

The number of payments that a borrower is delinquent is shown in table 8.5 below.



	Table	8.5
Delinquent inventory - number of payments delinquent			December 31,
			2017			2016			2015
	3 payments or less		21,678	46	%	18,419	36	%	20,360	33	%
	4 - 11 payments		12,446	27	%	12,892	26	%	15,092	24	%
	12 payments or more		12,432	27	%	18,971	38	%	27,181	43	%
	Total primary delinquent inventory		46,556	100	%	50,282	100	%	62,633	100	%