Loss Reserves (Tables)

9 Months Ended

Sep. 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 nine months ended September 30, 2020 and 2019.


Development of reserves for losses and loss adjustment expenses
Table	11.1
		Nine Months Ended September 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		301,699		142,644
Prior years (1)		17,317		(47,760)
Total losses incurred		319,016		94,884

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		1,486		980
Prior years		93,937		165,844
Reinsurance terminations		(20)		(13,980)
Total losses paid		95,403		152,844
Net reserve at end of period		757,306		582,731
Plus reinsurance recoverables		83,143		19,566
Reserve at end of period		$	840,449	$	602,297

(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 nine months of 2020 and 2019 is reflected in table 11.2 below.


Reserve development on previously received delinquencies
Table	11.2
		Nine Months Ended September 30,
(In thousands)		2020		2019
Decrease in estimated claim rate on primary defaults		$	(1,626)	$	(94,294)
Increase in estimated severity on primary defaults		13,503		2,637
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		5,440		43,897
Total prior year loss development (1)		$	17,317	$	(47,760)

(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 nine months ended September 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 September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019
Delinquency inventory at beginning of period		69,326	29,795	30,028	32,898
New notices		20,924	14,019	90,906	40,545
Cures		(25,446)	(12,592)	(54,523)	(39,822)
Paid claims		(375)	(1,045)	(1,933)	(3,345)
Rescissions and denials		(11)	(42)	(60)	(141)
Other items removed from inventory		—	(195)	—	(195)
Delinquency inventory at end of period		64,418	29,940	64,418	29,940

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
		September 30, 2020		December 31, 2019		September 30, 2019
3 months or less		15,879		9,447		9,462
4-11 months		37,702		9,664		9,082
12 months or more (1)		10,837		10,917		11,396
Total		64,418		30,028		29,940
3 months or less		25	%	32	%	32	%
4-11 months		58	%	32	%	30	%
12 months or more		17	%	36	%	38	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		172		538		557

(1)Approximately 32%, 36%, and 36% of the primary delinquency inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of September 30, 2020, December 31, 2019, and September 30, 2019, respectively.