Loss Reserves (Tables)

9 Months Ended

Sep. 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 nine months ended September 30, 2011 and 2010:

	Nine Months Ended
	September 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		1,328,906			1,463,509
Prior years (2)		(96,269	)		(304,343	)
Subtotal (3)		1,232,637			1,159,166
Losses paid:
Losses and LAE paid in respect of default notices received in:
Current year		37,111			11,437
Prior years		2,218,490			1,675,759
Reinsurance terminations (4)		(38,769	)		(35,120	)
Subtotal (5)		2,216,832			1,652,076
Net reserve at end of period (6)		4,624,686			5,879,853
Plus reinsurance recoverables		166,874			299,239
Reserve at end of period	$	4,791,560		$	6,179,092

(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 nine months ended September 30, 2011. Rescissions mitigated our incurred losses by an estimated $0.5 billion in the nine months ended September 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 $0.5 billion in the nine months ended September 30, 2011 and  by an estimated $0.7 billion in the nine months ends September 30, 2010, which excludes amounts that may have been applied to a deductible.

(6) At September 30, 2011 and 2010, the estimated reduction in loss reserves related to rescissions approximated $0.8 billion and $1.9 billion, respectively.

Aging of the primary default inventory

Aging of the Primary Default Inventory
	September 30,				December 31,				September 30,
	2011				2010				2010
Consecutive months in default
3 months or less		33,167	18	%		37,640	18	%		39,516	18	%
4 - 11 months		45,110	25	%		58,701	27	%		60,472	27	%
12 months or more		102,617	57	%		118,383	55	%		123,385	55	%
Total primary default inventory		180,894	100	%		214,724	100	%		223,373	100	%
Primary claims received inventory included in ending default inventory		13,799	8	%		20,898	10	%		21,306	10	%

Number of payments delinquent

Number of Payments Delinquent
	September 30,				December 31,				September 30,
	2011				2010				2010
3 payments or less		43,312	24	%		51,003	24	%		52,056	23	%
4 - 11 payments		47,929	26	%		65,797	31	%		70,681	32	%
12 payments or more		89,653	50	%		97,924	45	%		100,636	45	%
Total primary default inventory		180,894	100	%		214,724	100	%		223,373	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					Nine Months Ended
	September 30,					September 30,
	2011		2010			2011		2010
	(In billions)
Estimated rescission reduction - beginning reserve	$	0.9	$	2.3		$	1.3	$	2.1
Estimated rescission reduction - losses incurred		-		(0.1	)		-		0.5
Rescission reduction - paid claims		0.1		0.3			0.5		0.9
Amounts that may have been applied to a deductible		-		-			-		(0.2	)
Net rescission reduction - paid claims		0.1		0.3			0.5		0.7
Estimated rescission reduction - ending reserve	$	0.8	$	1.9		$	0.8	$	1.9

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						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Default inventory at beginning of period		184,452			228,455			214,724			250,440
Plus: New Notices		44,342			53,134			127,509			154,708
Less: Cures		(34,335	)		(43,326	)		(115,806	)		(139,826	)
Less: Paids (including those charged to a deductible or captive)		(12,033	)		(11,722	)		(39,052	)		(31,569	)
Less: Rescissions and denials		(1,532	)		(3,168	)		(6,481	)		(10,380	)
Default inventory at end of period		180,894			223,373			180,894			223,373