Loss Reserves (Tables)

12 Months Ended

Dec. 31, 2019

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:



Development of loss reserves
Table	8.1
(In thousands)		2019			2018			2017
Reserve at beginning of year		$	674,019		$	985,635		$	1,438,813
Less reinsurance recoverable		33,328			48,474			50,493
Net reserve at beginning of year		640,691			937,161			1,388,320

Losses incurred:
Losses and LAE incurred in respect of delinquent notices received in:
Current year		189,581			203,928			284,913
Prior years ⁽¹⁾		(71,006		)	(167,366		)	(231,204		)
Total losses incurred		118,575			36,562			53,709

Losses paid:
Losses and LAE paid in respect of delinquent notices received in:
Current year		4,018			7,298			11,267
Prior years		235,551			327,743			493,300
Reinsurance terminations		(13,996		)	(2,009		)	301
Total losses paid		225,573			333,032			504,868
Net reserve at end of year		533,693			640,691			937,161
Plus reinsurance recoverables		21,641			33,328			48,474
Reserve at end of year		$	555,334		$	674,019		$	985,635


⁽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.

Prior year development of the reserves

Table 8.2 below shows the development of reserves in 2019, 2018 and 2017 for previously received delinquencies.



Reserve development on previously received delinquencies
Table	8.2
(In millions)		2019			2018			2017
Decrease in estimated claim rate on primary delinquencies		$	(112	)	$	(213	)	$	(248	)
(Decrease) increase in estimated severity on primary delinquencies		(1		)	29			9
Change in estimates related to pool reserves, LAE reserves, reinsurance and other		42			17			8
Total prior year loss development ⁽¹⁾		$	(71	)	$	(167	)	$	(231	)

⁽¹⁾

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

Rollforward of delinquent inventory roll-forward

A roll-forward of our primary delinquent inventory for the years ended December 31, 2019, 2018, and 2017 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.



Primary delinquent inventory roll-forward
Table	8.3
		2019		2018		2017
Beginning delinquent inventory		32,898		46,556		50,282
New Notices		54,239		54,448		68,268
Cures		(52,035	)	(60,511	)	(61,094	)
Paid claims		(4,267	)	(5,750	)	(9,206	)
Rescissions and denials		(168	)	(267	)	(357	)
Other items removed from inventory		(639	)	(1,578	)	(1,337	)
Ending delinquent inventory		30,028		32,898		46,556

Aging of the primary default inventory

The number of consecutive months that a borrower has been delinquent is shown in table 8.4 below.



Primary delinquent inventory - consecutive months delinquent
Table	8.4
		December 31,
		2019		2018		2017
3 months or less		9,447		9,829		17,119
4 - 11 months		9,664		9,655		12,050
12 months or more⁽¹⁾		10,917		13,414		17,387
Total		30,028		32,898		46,556

3 months or less		32	%	30	%	37	%
4 - 11 months		32	%	29	%	26	%
12 months or more		36	%	41	%	37	%
Total		100	%	100	%	100	%

Primary claims received inventory included in ending delinquent inventory		538		809		954

⁽¹⁾

Approximately 36%, 38%, and 45% of the delinquent inventory for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of December 31, 2019, 2018 and 2017, respectively.