Loss Reserves (Tables)

12 Months Ended

Dec. 31, 2021

Reconciliation of beginning and ending loss reserves

Table 8.1 provides a reconciliation of beginning and ending loss reserves as of and for the past three years:


Development of loss reserves
Table	8.1
(In thousands)		2021		2020		2019
Reserve at beginning of year		$	880,537	$	555,334	$	674,019
Less reinsurance recoverable		95,042		21,641		33,328
Net reserve at beginning of year		785,495		533,693		640,691

Losses incurred:
Losses and LAE incurred in respect of delinquent notices received in:
Current year		124,592		345,170		189,581
Prior years (1)		(60,015)		19,604		(71,006)
Total losses incurred		64,577		364,774		118,575

Losses paid:
Losses and LAE paid in respect of delinquent notices received in:
Current year		664		3,069		4,018
Prior years		68,769		109,923		235,551
Reinsurance terminations (2)		(35,978)		(20)		(13,996)
Total losses paid		33,455		112,972		225,573
Net reserve at end of year		816,617		785,495		533,693
Plus reinsurance recoverables		66,905		95,042		21,641
Reserve at end of year		$	883,522	$	880,537	$	555,334

(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.

(2)In a termination, amounts for any incurred but unpaid losses are paid to us. As a result, the amount due from the reinsurers is reclassified from reinsurance recoverable on loss reserves to reinsurance recoverable on paid losses, resulting in no impact on losses incurred. (See Note 9 - "Reinsurance")

Prior year development of the reserves

The prior year development of the reserves in 2021, 2020 and 2019 is reflected in the table 8.2 below.


Reserve development on previously received delinquencies
Table	8.2
(In thousands)		2021		2020		2019
(Decrease) in estimated claim rate on primary delinquencies		$	(82,904)	$	(2,536)	$	(111,848)
Increase (decrease)in estimated claim severity on primary delinquencies		310		13,535		(434)
Change in estimates related to pool reserves, LAE reserves, reinsurance and other		22,579		8,605		41,276
Total prior year loss development (1)		$	(60,015)	$	19,604	$	(71,006)

(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 delinquency inventory for the years ended December 31, 2021, 2020, and 2019 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
		2021	2020	2019
Beginning delinquent inventory		57,710	30,028	32,898
New Notices		42,432	106,099	54,239
Cures		(64,896)	(76,107)	(52,035)
Paid claims		(1,223)	(2,245)	(4,267)
Rescissions and denials		(38)	(65)	(168)
Other items removed from inventory		(695)	—	(639)
Ending delinquent inventory		33,290	57,710	30,028

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,
		2021		2020		2019
3 months or less		7,586		11,542		9,447
4 - 11 months		7,990		34,620		9,664
12 months or more (1)		17,714		11,548		10,917
Total		33,290		57,710		30,028

3 months or less		23	%	20	%	32	%
4 - 11 months		24	%	60	%	32	%
12 months or more		53	%	20	%	36	%
Total		100	%	100	%	100	%

Primary claims received inventory included in ending delinquent inventory		211		159		538

(1)Approximately 20%, 31%, and 36% 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, 2021, 2020 and 2019, respectively.