Loss Reserves (Tables)

3 Months Ended

Mar. 31, 2020

Reconciliation of beginning and ending loss reserves

Table 11.1 provides a reconciliation of beginning and ending loss reserves as of and for the three months ended March 31, 2020 and 2019.



Development of reserves for losses and loss adjustment expenses
Table	11.1
		Three Months Ended March 31,
(In thousands)		2020			2019
Reserve at beginning of period		$	555,334		$	674,019
Less reinsurance recoverable		21,641			33,328
Net reserve at beginning of period		533,693			640,691

Losses incurred:
Losses and LAE incurred in respect of delinquency notices received in:
Current year		59,799			47,488
Prior years ⁽¹⁾		1,157			(8,425		)
Total losses incurred		60,956			39,063

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		39			—
Prior years		45,633			56,365
Reinsurance terminations		(20		)	—
Total losses paid		45,652			56,365
Net reserve at end of period		548,997			623,389
Plus reinsurance recoverables		25,756			31,875
Reserve at end of period		$	574,753		$	655,264


⁽¹⁾	A positive number for prior year loss development indicates a deficiency of prior year reserves. 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 three months of 2020 and 2019 is reflected in table 11.2 below.



Reserve development on previously received delinquencies
Table	11.2
		Three Months Ended March 31,
(In millions)		2020			2019
Decrease in estimated claim rate on primary defaults		$	—		$	(31	)
Increase in estimated severity on primary defaults		3			—
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		(2		)	23
Total prior year loss development ⁽¹⁾		$	1		$	(8	)

⁽¹⁾

A positive number for prior year loss development indicates a deficiency of prior year reserves. 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 months ended March 31, 2020 and 2019 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 number of business days in a month and transfers of servicing between loan servicers.



Delinquent inventory rollforward
Table	11.3
		Three Months Ended March 31,
		2020		2019
Delinquent inventory at beginning of period		30,028		32,898
New notices		12,398		13,611
Cures		(14,113	)	(14,348	)
Paid claims		(897	)	(1,188	)
Rescissions and denials		(32	)	(52	)
Delinquent inventory at end of period		27,384		30,921

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
		March 31, 2020		December 31, 2019		March 31, 2019
3 months or less		7,567		9,447		8,568
4-11 months		9,535		9,664		9,997
12 months or more ⁽¹⁾		10,282		10,917		12,356
Total		27,384		30,028		30,921
3 months or less		28	%	32	%	28	%
4-11 months		35	%	32	%	32	%
12 months or more		37	%	36	%	40	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		472		538		665


⁽¹⁾	Approximately 34%, 36%, and 38% of the primary delinquent inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of March 31, 2020, December 31, 2019, and March 31, 2019, respectively.