Loss Reserves (Tables)

12 Months Ended

Dec. 31, 2022

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)		2022		2021		2020
Reserve at beginning of year		$	883,522	$	880,537	$	555,334
Less reinsurance recoverable		66,905		95,042		21,641
Net reserve at beginning of year		816,617		785,495		533,693

Losses incurred:
Losses and LAE incurred in respect of delinquent notices received in:
Current year		149,565		124,592		345,170
Prior years (1)		(404,130)		(60,015)		19,604
Total losses incurred		(254,565)		64,577		364,774

Losses paid:
Losses and LAE paid in respect of delinquent notices received in:
Current year		362		664		3,069
Prior years		49,626		68,769		109,923
Reinsurance terminations (2)		(17,684)		(35,978)		(20)
Total losses paid		32,304		33,455		112,972
Net reserve at end of year		529,748		816,617		785,495
Plus reinsurance recoverables		28,240		66,905		95,042
Reserve at end of year		$	557,988	$	883,522	$	880,537

(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 reinsurance termination, amounts for any incurred but unpaid losses are due to us from the reinsurers. 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 to losses incurred. (See Note 9 - "Reinsurance")

Prior Year Development of the Reserves

The prior year development of the reserves in 2022, 2021 and 2020 is reflected in the table 8.2 below.


Reserve development on previously received delinquencies
Table	8.2
(In thousands)		2022		2021		2020
(Decrease) in estimated claim rate on primary delinquencies		$	(400,577)	$	(82,904)	$	(2,536)
Increase (decrease) in estimated claim severity on primary delinquencies		(21,995)		310		13,535
Change in estimates related to pool reserves, LAE reserves, reinsurance and other		18,442		22,579		8,605
Total prior year loss development (1)		$	(404,130)	$	(60,015)	$	19,604

(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, 2022, 2021, and 2020 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
		2022	2021	2020
Beginning delinquent inventory		33,290	57,710	30,028
New Notices		42,988	42,432	106,099
Cures		(48,262)	(64,896)	(76,107)
Paid claims		(1,305)	(1,223)	(2,245)
Rescissions and denials		(35)	(38)	(65)
Other items removed from inventory		(289)	(695)	—
Ending delinquent inventory		26,387	33,290	57,710

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,
		2022		2021		2020
3 months or less		8,820		7,586		11,542
4 - 11 months		8,217		7,990		34,620
12 months or more (1)		9,350		17,714		11,548
Total		26,387		33,290		57,710

3 months or less		33	%	23	%	20	%
4 - 11 months		31	%	24	%	60	%
12 months or more		36	%	53	%	20	%
Total		100	%	100	%	100	%

Primary claims received inventory included in ending delinquent inventory		267		211		159

(1)Approximately 36%, 20%, and 31% 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, 2022, 2021 and 2020, respectively.