Loss Reserves (Tables)

3 Months Ended

Mar. 31, 2021

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, 2021 and 2020.


Development of reserves for losses and loss adjustment expenses
Table	11.1
		Three Months Ended March 31,
(In thousands)		2021		2020
Reserve at beginning of period		$	880,537	$	555,334
Less reinsurance recoverable		95,042		21,641
Net reserve at beginning of period		785,495		533,693

Losses incurred:
Losses and LAE incurred in respect of delinquency notices received in:
Current year		41,425		59,799
Prior years (1)		(1,789)		1,157
Total losses incurred		39,636		60,956

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		—		39
Prior years		14,922		45,633
Reinsurance terminations		—		(20)
Total losses paid		14,922		45,652
Net reserve at end of period		810,209		548,997
Plus reinsurance recoverables		102,901		25,756
Reserve at end of period		$	913,110	$	574,753

(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 three months of 2021 and 2020 is reflected in table 11.2 below.


Reserve development on previously received delinquencies
Table	11.2
		Three Months Ended March 31,
(In thousands)		2021		2020
Increase (decrease) in estimated claim rate on primary defaults		$	87	$	(705)
Increase (decrease) in estimated severity on primary defaults		59		3,833
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		(1,935)		(1,971)
Total prior year loss development (1)		$	(1,789)	$	1,157

(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 months ended March 31, 2021 and 2020 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 March 31,
		2021	2020
Delinquency inventory at beginning of period		57,710	30,028
New notices		13,011	12,398
Cures		(17,628)	(14,113)
Paid claims		(312)	(897)
Rescissions and denials		(6)	(32)
Delinquency inventory at end of period		52,775	27,384

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
		March 31, 2021		December 31, 2020		March 31, 2020
3 months or less		9,194		11,542		7,567
4-11 months		29,832		34,620		9,535
12 months or more (1)		13,749		11,548		10,282
Total		52,775		57,710		27,384
3 months or less		17	%	20	%	28	%
4-11 months		57	%	60	%	35	%
12 months or more		26	%	20	%	37	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		151		159		472

(1)Approximately 26%, 31%, and 34% of the primary delinquency inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of March 31, 2021, December 31, 2020, and March 31, 2020, respectively.