Loss Reserves (Tables)

9 Months Ended

Sep. 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 nine months ended September 30, 2021 and 2020.


Development of reserves for losses and loss adjustment expenses
Table	11.1
		Nine Months Ended September 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		95,534		301,699
Prior years (1)		(5,968)		17,317
Total losses incurred		89,566		319,016

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		339		1,486
Prior years		48,842		93,937
Reinsurance terminations		—		(20)
Total losses paid		49,181		95,403
Net reserve at end of period		825,880		757,306
Plus reinsurance recoverables		107,029		83,143
Reserve at end of period		$	932,909	$	840,449

(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 2021 and 2020 is reflected in table 11.2 below.


Reserve development on previously received delinquencies
Table	11.2
		Nine Months Ended September 30,
(In thousands)		2021		2020
Increase (decrease) in estimated claim rate on primary defaults		$	(18,147)	$	(1,626)
Increase (decrease) in estimated severity on primary defaults		(105)		13,503
Change in estimates related to pool reserves, LAE reserves, reinsurance, and other		12,284		5,440
Total prior year loss development (1)		$	(5,968)	$	17,317

(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, 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 September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020
Delinquency inventory at beginning of period		42,999	69,326	57,710	30,028
New notices		9,862	20,924	31,909	90,906
Cures		(14,813)	(25,446)	(50,901)	(54,523)
Paid claims		(298)	(375)	(956)	(1,933)
Rescissions and denials		(11)	(11)	(23)	(60)
Other items removed from inventory		(360)	—	(360)	—
Delinquency inventory at end of period		37,379	64,418	37,379	64,418

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 is more likely to result in a claim.


Primary delinquency inventory - consecutive months delinquent
Table	11.4
		September 30, 2021		December 31, 2020		September 30, 2020
3 months or less		6,948		11,542		15,879
4-11 months		9,371		34,620		37,702
12 months or more (1)		21,060		11,548		10,837
Total		37,379		57,710		64,418
3 months or less		19	%	20	%	25	%
4-11 months		25	%	60	%	58	%
12 months or more		56	%	20	%	17	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		154		159		172

(1)Approximately 17%, 31%, and 32% 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, 2021, December 31, 2020, and September 30, 2020, respectively.