Loss Reserves (Tables)

9 Months Ended

Sep. 30, 2023

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, 2023 and 2022.


Development of reserves for losses and loss adjustment expenses
Table	11.1
		Nine Months Ended September 30,
(In thousands)		2023		2022
Reserve at beginning of period		$	557,988	$	883,522
Less reinsurance recoverable		28,240		66,905
Net reserve at beginning of period		529,748		816,617

Losses incurred:
Losses and LAE incurred in respect of delinquency notices received in:
Current year		137,626		104,086
Prior years (1)		(148,948)		(327,512)
Total losses incurred		(11,322)		(223,426)

Losses paid:
Losses and LAE paid in respect of delinquency notices received in:
Current year		153		116
Prior years		33,679		36,089

Total losses paid		33,832		36,205
Net reserve at end of period		484,594		556,986
Plus reinsurance recoverable		40,934		46,384
Reserve at end of period		$	525,528	$	603,370

(1)A positive number for prior year loss reserve development indicates a deficiency of prior year reserves. A negative number for prior year loss reserve development indicates a redundancy of prior year loss reserves. See the following table for more information about prior year loss reserve development.

Prior year development of the reserves

The prior year loss reserve development for the nine months ended September 30, 2023 and 2022 is shown in table 11.2 below.


Reserve development on previously received delinquencies
Table	11.2
		Nine Months Ended September 30,
(In thousands)		2023		2022
Increase (decrease) in estimated claim rate on primary defaults		$	(142,764)	$	(324,556)

Change in estimates related to severity on primary defaults, pool reserves, LAE reserves, reinsurance, and other		(6,184)		(2,956)
Total prior year loss development (1)		$	(148,948)	$	(327,512)

(1)A positive number for prior year loss reserve development indicates a deficiency of prior year loss reserves. A negative number for prior year loss reserve 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, 2023 and 2022 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,
		2023	2022	2023	2022
Delinquency inventory at beginning of period		23,823	26,855	26,387	33,290
New notices		12,240	10,990	34,117	31,089
Cures		(10,975)	(11,494)	(34,738)	(37,371)
Paid claims		(359)	(337)	(1,018)	(978)
Rescissions and denials		(9)	(11)	(28)	(27)
Other items removed from inventory		—	(125)	—	(125)
Delinquency inventory at end of period		24,720	25,878	24,720	25,878

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, 2023		December 31, 2022		September 30, 2022
3 months or less		8,732		8,820		7,825
4-11 months		8,220		8,217		7,619
12 months or more (1)		7,768		9,350		10,434
Total		24,720		26,387		25,878
3 months or less		35	%	33	%	30	%
4-11 months		33	%	31	%	30	%
12 months or more		32	%	36	%	40	%
Total		100	%	100	%	100	%
Primary claims received inventory included in ending delinquent inventory		284		267		244

(1)Approximately 39%, 36%, 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 September 30, 2023, December 31, 2022, and September 30, 2022, respectively.