Loss Reserves (Tables)

9 Months Ended

Sep. 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 nine months ended September 30, 2019 and 2018.



Development of reserves for losses and loss adjustment expenses
Table	11.1
		Nine Months Ended September 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		142,644			155,808
Prior years ⁽¹⁾		(47,760		)	(146,931		)
Total losses incurred		94,884			8,877

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		980			2,449
Prior years		165,844			257,808
Reinsurance terminations		(13,980		)	(1,984		)
Total losses paid		152,844			258,273
Net reserve at end of period		582,731			687,765
Plus reinsurance recoverables		19,566			33,281
Reserve at end of period		$	602,297		$	721,046


⁽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 nine months of 2019 and 2018 is reflected in table 11.2 below.



Reserve development on previously received delinquencies
Table	11.2
		Nine Months Ended September 30,
(In millions)		2019			2018
Decrease in estimated claim rate on primary defaults		$	(94	)	$	(184	)
Increase in estimated severity on primary defaults		2			22
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		44			15
Total prior year loss development ⁽¹⁾		$	(48	)	$	(147	)

⁽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 nine months ended September 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 September 30,				Nine Months Ended September 30,
		2019		2018		2019		2018
Delinquent inventory at beginning of period		29,795		36,037		32,898		46,556
New notices		14,019		13,569		40,545		40,351
Cures		(12,592	)	(14,197	)	(39,822	)	(47,620	)
Paid claims		(1,045	)	(1,374	)	(3,345	)	(4,446	)
Rescissions and denials		(42	)	(56	)	(141	)	(200	)
Other items removed from inventory		(195	)	(581	)	(195	)	(1,243	)
Delinquent inventory at end of period		29,940		33,398		29,940		33,398

Aging of the primary delinquent inventory

Table 11.4 below shows the number of consecutive months a borrower is delinquent. Historically as a delinquency ages it becomes more likely to result in a claim.



Primary delinquent inventory - consecutive months delinquent
Table	11.4
		September 30, 2019		December 31, 2018		September 30, 2018
3 months or less		9,462		9,829		9,484
4-11 months		9,082		9,655		9,564
12 months or more ⁽¹⁾		11,396		13,414		14,350
Total		29,940		32,898		33,398
3 months or less		32	%	30	%	28	%
4-11 months		30	%	29	%	29	%
12 months or more		38	%	41	%	43	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		557		809		766


⁽¹⁾	Approximately 36%, 38%, and 39% of the primary delinquent inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of September 30, 2019, December 31, 2018, and September 30, 2018, respectively.