Loss Reserves (Tables)

6 Months Ended

Jun. 30, 2019

Reconciliation of beginning and ending loss reserves

Table 11.1 provides a reconciliation of beginning and ending loss reserves as of and for the six months ended June 30, 2019 and 2018.



Development of reserves for losses and loss adjustment expenses
Table	11.1
		Six Months Ended June 30,
(In thousands)		2019			2018
Reserve at beginning of period		$	674,019		$	985,635
Less reinsurance recoverable		33,328			48,474
Net reserve at beginning of period		640,691			937,161

Losses incurred:
Losses and LAE incurred in respect of delinquency notices received in:
Current year		94,063			108,361
Prior years ⁽¹⁾		(33,164		)	(97,966		)
Total losses incurred		60,899			10,395

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		2,650			263
Prior years		109,420			173,313
Reinsurance terminations		(13,980		)	(1,984		)
Total losses paid		98,090			171,592
Net reserve at end of period		603,500			775,964
Plus reinsurance recoverables		18,402			37,051
Reserve at end of period		$	621,902		$	813,015


⁽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 2019 and 2018 is reflected in table 11.2 below.



Reserve development on previously received delinquencies
Table	11.2
		Six Months Ended June 30,
(In millions)		2019			2018
Decrease in estimated claim rate on primary defaults		$	(67	)	$	(120	)
Increase in estimated severity on primary defaults		3			19
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		31			3
Total prior year loss development ⁽¹⁾		$	(33	)	$	(98	)

⁽¹⁾

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

Rollforward of primary delinquent inventory

A rollforward of our primary delinquent inventory for the three and six months ended June 30, 2019 and 2018 appears in table 11.3 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 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.



Delinquent inventory rollforward
Table	11.3
		Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018
Delinquent inventory at beginning of period		30,921		41,243		32,898		46,556
New notices		12,915		12,159		26,526		26,782
Cures		(12,882	)	(15,350	)	(27,230	)	(33,423	)
Paid claims		(1,112	)	(1,501	)	(2,300	)	(3,072	)
Rescissions and denials		(47	)	(76	)	(99	)	(144	)
Other items removed from inventory		—		(438	)	—		(662	)
Delinquent inventory at end of period		29,795		36,037		29,795		36,037

Aging of the primary delinquent inventory

Table 11.4 below shows the number of consecutive months a borrower is delinquent.



Primary delinquent inventory - consecutive months delinquent
Table	11.4
		June 30, 2019		December 31, 2018		June 30, 2018
3 months or less		8,970		9,829		8,554
4-11 months		8,951		9,655		12,506
12 months or more ⁽¹⁾		11,874		13,414		14,977
Total		29,795		32,898		36,037
3 months or less		30	%	30	%	24	%
4-11 months		30	%	29	%	35	%
12 months or more		40	%	41	%	41	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		630		809		827


⁽¹⁾	Approximately 37%, 38%, and 43% of the primary delinquent inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of June 30, 2019, December 31, 2018, and June 30, 2018, respectively.