Loss Reserves (Tables)

6 Months Ended

Jun. 30, 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 six months ended June 30, 2021 and 2020.


Development of reserves for losses and loss adjustment expenses
Table	11.1
		Six Months Ended June 30,
(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		67,068		265,546
Prior years (1)		1,732		12,784
Total losses incurred		68,800		278,330

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		48		271
Prior years		29,164		77,820
Reinsurance terminations		—		(20)
Total losses paid		29,212		78,071
Net reserve at end of period		825,083		733,952
Plus reinsurance recoverables		111,153		63,444
Reserve at end of period		$	936,236	$	797,396

(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 2021 and 2020 is reflected in table 11.2 below.


Reserve development on previously received delinquencies
Table	11.2
		Six Months Ended June 30,
(In thousands)		2021		2020
Increase (decrease) in estimated claim rate on primary defaults		$	(356)	$	(2,104)
Increase (decrease) in estimated severity on primary defaults		512		13,767
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		1,576		1,121
Total prior year loss development (1)		$	1,732	$	12,784

(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, 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 June 30,		Six Months Ended June 30,
		2021	2020	2021	2020
Delinquency inventory at beginning of period		52,775	27,384	57,710	30,028
New notices		9,036	57,584	22,047	69,982
Cures		(18,460)	(14,964)	(36,088)	(29,077)
Paid claims		(346)	(661)	(658)	(1,558)
Rescissions and denials		(6)	(17)	(12)	(49)
Delinquency inventory at end of period		42,999	69,326	42,999	69,326

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, 2021		December 31, 2020		June 30, 2020
3 months or less		6,513		11,542		50,646
4-11 months		12,840		34,620		8,370
12 months or more (1)		23,646		11,548		10,310
Total		42,999		57,710		69,326
3 months or less		15	%	20	%	73	%
4-11 months		30	%	60	%	12	%
12 months or more		55	%	20	%	15	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		159		159		247

(1)Approximately 15%, 31%, and 33% 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, 2021, December 31, 2020, and June 30, 2020, respectively.