Loss Reserves (Tables)

12 Months Ended

Dec. 31, 2020

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)		2020		2019		2018
Reserve at beginning of year		$	555,334	$	674,019	$	985,635
Less reinsurance recoverable		21,641		33,328		48,474
Net reserve at beginning of year		533,693		640,691		937,161

Losses incurred:
Losses and LAE incurred in respect of delinquent notices received in:
Current year		345,170		189,581		203,928
Prior years (1)		19,604		(71,006)		(167,366)
Total losses incurred		364,774		118,575		36,562

Losses paid:
Losses and LAE paid in respect of delinquent notices received in:
Current year		3,069		4,018		7,298
Prior years		109,923		235,551		327,743
Reinsurance terminations		(20)		(13,996)		(2,009)
Total losses paid		112,972		225,573		333,032
Net reserve at end of year		785,495		533,693		640,691
Plus reinsurance recoverables		95,042		21,641		33,328
Reserve at end of year		$	880,537	$	555,334	$	674,019

(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 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 2020, 2019 and 2018 for previously received delinquencies.


Reserve development on previously received delinquencies
Table	8.2
(In thousands)		2020		2019		2018
(Decrease) in estimated claim rate on primary delinquencies		$	(2,536)	$	(111,848)	$	(212,738)
Increase (decrease)in estimated severity on primary delinquencies		13,535		(434)		28,528
Change in estimates related to pool reserves, LAE reserves, reinsurance and other		8,605		41,276		16,844
Total prior year loss development (1)		$	19,604	$	(71,006)	$	(167,366)

(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 delinquent inventory roll-forward

A roll-forward of our primary delinquent inventory for the years ended December 31, 2020, 2019, and 2018 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 delinquency inventory roll-forward
Table	8.3
		2020	2019	2018
Beginning delinquent inventory		30,028	32,898	46,556
New Notices		106,099	54,239	54,448
Cures		(76,107)	(52,035)	(60,511)
Paid claims		(2,245)	(4,267)	(5,750)
Rescissions and denials		(65)	(168)	(267)
Other items removed from inventory		—	(639)	(1,578)
Ending delinquent inventory		57,710	30,028	32,898

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 delinquency inventory - consecutive months delinquent
Table	8.4
		December 31,
		2020		2019		2018
3 months or less		11,542		9,447		9,829
4 - 11 months		34,620		9,664		9,655
12 months or more (1)		11,548		10,917		13,414
Total		57,710		30,028		32,898

3 months or less		20	%	32	%	30	%
4 - 11 months		60	%	32	%	29	%
12 months or more		20	%	36	%	41	%
Total		100	%	100	%	100	%

Primary claims received inventory included in ending delinquent inventory		159		538		809

(1)Approximately 31%, 36%, and 38% of the delinquent inventory that has been delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of December 31, 2020, 2019 and 2018, respectively.