Loss Reserves (Tables)

3 Months Ended

Mar. 31, 2012

Loss reserves [Abstract]

Reconciliation of beginning and ending loss reserves

The following table provides a reconciliation of beginning and ending loss reserves for the three months ended March 31, 2012 and 2011:

	Three Months Ended
	March 31,
	2012			2011
	(In thousands)
Reserve at beginning of year	$	4,557,512		$	5,884,171
Less reinsurance recoverable		154,607			275,290
Net reserve at beginning of year (1)		4,402,905			5,608,881
Losses incurred:
Losses and LAE incurred in respect of default notices related to:
Current year		280,565			347,399
Prior years (2)		56,523			(36,968	)
Subtotal (3)		337,088			310,431
Losses paid:
Losses and LAE paid in respect of default notices related to:
Current year		280			26
Prior years		673,257			686,748
Reinsurance terminations (4)		(425	)		(917	)
Subtotal (5)		673,112			685,857
Net reserve at end of period (6)		4,066,881			5,233,455
Plus reinsurance recoverables		142,289			238,039
Reserve at end of period	$	4,209,170		$	5,471,494

(1) At December 31, 2011 and 2010, the estimated reduction in loss reserves related to rescissions approximated $0.7 billion and $1.3 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 three months ended March 31, 2012 or 2011.

(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 $0.1 billion in the three months ended March 31, 2012 and by an estimated $0.2 billion in the three months ended March 31, 2011, which excludes amounts that may have been applied to a deductible.

(6) At March 31, 2012 and 2011, the estimated reduction in loss reserves related to rescissions approximated $0.6 billion and $1.1 billion, respectively.

Aging of the primary default inventory

Aging of the Primary Default Inventory
	March 31,				December 31,				March 31,
	2012				2011				2011
Consecutive months in default
3 months or less		22,516	14	%		31,456	18	%		27,744	14	%
4 - 11 months		45,552	28	%		46,352	26	%		57,319	29	%
12 months or more		92,405	58	%		97,831	56	%		110,822	57	%
Total primary default inventory		160,473	100	%		175,639	100	%		195,885	100	%
Primary claims received inventory  included in ending default inventory		12,758	8	%		12,610	7	%		17,686	9	%

Number of payments delinquent

Number of Payments Delinquent
	March 31,				December 31,				March 31,
	2012				2011				2011
3 payments or less		33,579	21	%		42,804	24	%		40,680	21	%
4 - 11 payments		45,539	28	%		47,864	27	%		61,060	31	%
12 payments or more		81,355	51	%		84,971	49	%		94,145	48	%
Total primary default inventory		160,473	100	%		175,639	100	%		195,885	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
	March 31,
	2012		2011
	(In billions)
Estimated rescission reduction - beginning reserve	$	0.7	$	1.3
Estimated rescission reduction - losses incurred		-		-
Rescission reduction - paid claims		0.1		0.2
Amounts that may have been applied to a deductible		-		-
Net rescission reduction - paid claims		0.1		0.2
Estimated rescission reduction - ending reserve	$	0.6	$	1.1

Rollforward of primary default inventory

	Three Months Ended
	March 31,
	2012			2011
Default inventory at beginning of period		175,639			214,724
Plus: New Notices		34,781			43,195
Less: Cures		(37,144	)		(45,639	)
Less: Paids (including those charged to a deductible or captive)		(11,909	)		(13,466	)
Less: Rescissions and denials		(894	)		(2,929	)
Default inventory at end of period		160,473			195,885