Loss Reserves (Tables)

6 Months Ended

Jun. 30, 2011

Loss Reserves [Abstract]

Reconciliation of beginning and ending loss reserves

The following table provides a reconciliation of beginning and ending loss reserves for the six months ended June 30, 2011 and 2010:

	Six Months Ended
	June 30,
	2011			2010
	(In thousands)
Reserve at beginning of year	$	5,884,171		$	6,704,990
Less reinsurance recoverable		275,290			332,227
Net reserve at beginning of year (1)		5,608,881			6,372,763
Losses incurred:
Losses and LAE incurred in respect of default notices received in:
Current year		855,253			894,282
Prior years (2)		(85,270	)		(119,694	)
Subtotal (3)		769,983			774,588
Losses paid:
Losses and LAE paid in respect of default notices received in:
Current year		8,330			2,250
Prior years		1,496,727			1,095,898
Reinsurance terminations (4)		(2,925	)		(184	)
Subtotal (5)		1,502,132			1,097,964
Net reserve at end of period (6)		4,876,732			6,049,387
Plus reinsurance recoverables		206,170			339,542
Reserve at end of period	$	5,082,902		$	6,388,929

(1) At December 31, 2010 and 2009, the estimated reduction in loss reserves related to rescissions approximated $1.3 billion and $2.1 billion, respectively.

(2) A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves, and a positive number for prior year losses incurred indicates a deficiency of prior year loss reserves.

(3) Rescissions did not have a significant impact on incurred losses in the six months ended June 30, 2011. Rescissions mitigated our incurred losses by an estimated $0.6 billion in the six months ended June 30, 2010.

(4) In a termination, the reinsurance agreement is cancelled, with no future premium ceded and funds for any incurred but unpaid losses transferred to us. The transferred funds result in an increase in our investment portfolio (including cash and cash equivalents) and a decrease in net losses paid (reduction to losses incurred). In addition, there is an offsetting decrease in the reinsurance recoverable (increase in losses incurred), and thus there is no net impact to losses incurred.

(5) Rescissions mitigated our paid losses by an estimated $0.4 billion in each of the six months ended June 30, 2011 and 2010, which excludes amounts that may have been applied to a deductible.

(6) At June 30, 2011 and 2010, the estimated reduction in loss reserves related to rescissions approximated $0.9 billion and $2.3 billion, respectively.

Aging of the primary default inventory

Aging of the Primary Default Inventory

	June 30,				December 31,				June 30,
	2011				2010				2010
Consecutive months in default
3 months or less		30,107	16	%		37,640	18	%		35,838	16	%
4 - 11 months		48,148	26	%		58,701	27	%		71,089	31	%
12 months or more		106,197	58	%		118,383	55	%		121,528	53	%
Total primary default inventory		184,452	100	%		214,724	100	%		228,455	100	%
Primary claims received inventory included in ending default inventory		14,504	8	%		20,898	10	%		19,724	9	%

Number of payments delinquent

Number of Payments Delinquent

	June 30,				December 31,				June 30,
	2011				2010				2010
3 payments or less		40,968	22	%		51,003	24	%		49,308	22	%
4 - 11 payments		51,523	28	%		65,797	31	%		80,224	35	%
12 payments or more		91,961	50	%		97,924	45	%		98,923	43	%
Total primary default inventory		184,452	100	%		214,724	100	%		228,455	100	%

Estimate of impact of rescissions on loss reserves, paid and incurred losses

The table below represents our estimate of the impact rescissions have had on reducing our loss reserves, paid losses and losses incurred.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
	(In billions)
Estimated rescission reduction - beginning reserve	$	1.1	$	2.4		$	1.3	$	2.1
Estimated rescission reduction - losses incurred		-		-			-		0.6
Rescission reduction - paid claims		0.2		0.2			0.4		0.6
Amounts that may have been applied to a deductible		-		(0.1	)		-		(0.2	)
Net rescission reduction - paid claims		0.2		0.1			0.4		0.4
Estimated rescission reduction - ending reserve	$	0.9	$	2.3		$	0.9	$	2.3

Rollforward of primary default inventory

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 and by transfers of servicing between loan servicers.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Default inventory at beginning of period		195,885			241,244			214,724			250,440
Plus: New Notices		39,972			48,181			83,167			101,574
Less: Cures		(35,832	)		(47,290	)		(81,471	)		(96,500	)
Less: Paids (including those charged to a deductible or captive)		(13,553	)		(10,653	)		(27,019	)		(19,847	)
Less: Rescissions and denials		(2,020	)		(3,027	)		(4,949	)		(7,212	)
Default inventory at end of period		184,452			228,455			184,452			228,455