Loss Reserves (Tables)

6 Months Ended

Jun. 30, 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 six months ended June 30, 2020 and 2019.



Development of reserves for losses and loss adjustment expenses
Table	11.1
		Six Months Ended June 30,
(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		265,546			94,063
Prior years ⁽¹⁾		12,784			(33,164		)
Total losses incurred		278,330			60,899

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		271			2,650
Prior years		77,820			109,420
Reinsurance terminations		(20		)	(13,980		)
Total losses paid		78,071			98,090
Net reserve at end of period		733,952			603,500
Plus reinsurance recoverables		63,444			18,402
Reserve at end of period		$	797,396		$	621,902


⁽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. 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 2020 and 2019 is reflected in table 11.2 below.



Reserve development on previously received delinquencies
Table	11.2
		Six Months Ended June 30,
(In thousands)		2020			2019
Decrease in estimated claim rate on primary defaults		$	(2,104	)	$	(67,465	)
Increase in estimated severity on primary defaults		13,767			3,140
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		1,121			31,161
Total prior year loss development ⁽¹⁾		$	12,784		$	(33,164	)

⁽¹⁾

A positive number for prior year loss development indicates a deficiency of prior year loss 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 delinquency inventory for the three and six months ended June 30, 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.



Delinquency inventory rollforward
Table	11.3
		Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019
Delinquency inventory at beginning of period		27,384		30,921		30,028		32,898
New notices		57,584		12,915		69,982		26,526
Cures		(14,964	)	(12,882	)	(29,077	)	(27,230	)
Paid claims		(661	)	(1,112	)	(1,558	)	(2,300	)
Rescissions and denials		(17	)	(47	)	(49	)	(99	)
Delinquency inventory at end of period		69,326		29,795		69,326		29,795

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 delinquency inventory - consecutive months delinquent
Table	11.4
		June 30, 2020		December 31, 2019		June 30, 2019
3 months or less		50,646		9,447		8,970
4-11 months		8,370		9,664		8,951
12 months or more ⁽¹⁾		10,310		10,917		11,874
Total		69,326		30,028		29,795
3 months or less		73	%	32	%	30	%
4-11 months		12	%	32	%	30	%
12 months or more		15	%	36	%	40	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		247		538		630


⁽¹⁾	Approximately 33%, 36%, and 37% of the primary delinquency inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of June 30, 2020, December 31, 2019, and June 30, 2019, respectively.