Loss Reserves (Tables)

3 Months Ended

Mar. 31, 2015

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, 2015 and 2014:

	Three months ended March 31,
	2015			2014
	(In thousands)

Reserve at beginning of period	$	2,396,807		$	3,061,401
Less reinsurance recoverable		57,841			64,085
Net reserve at beginning of period		2,338,966			2,997,316

Losses incurred:
Losses and LAE incurred in respect of default notices related to:
Current year		109,381			155,982
Prior years (1)		(27,596	)		(33,374	)
Subtotal		81,785			122,608

Losses paid:
Losses and LAE paid in respect of default notices related to:
Current year		312			314
Prior years		231,230			342,669
Subtotal		231,542			342,983

Net reserve at end of period		2,189,209			2,776,941
Plus reinsurance recoverables		55,415			57,618

Reserve at end of period	$	2,244,624		$	2,834,559

(1)	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.

Prior year development of the reserves

The prior year development of the reserves in the first three months of 2015 and 2014 is reflected in the table below.

	Three months ended March 31,
	2015			2014
	(In millions)

Decrease in estimated claim rate on primary defaults	$	(39	)	$	(30	)
Increase in estimated severity on primary defaults		17			5
Change in estimates related to pool reserves, LAE reserves and reinsurance		(6	)		(8	)
Total prior year loss development (1)	$	(28	)	$	(33	)

(1)	A negative number for prior year loss development indicates a redundancy of prior year loss reserves, and a positive number indicates a deficiency of prior year loss reserves.

Rollforward of primary default inventory

A rollforward of our primary default inventory for the three months ended March 31, 2015 and 2014 appears in the table 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 by transfers of servicing between loan servicers.

	Three months ended March 31,
	2015			2014

Default inventory at beginning of period		79,901			103,328
New notices		18,896			23,346
Cures		(21,767	)		(27,318	)
Paids (including those charged to a deductible or captive)		(4,573	)		(7,064	)
Rescissions and denials		(221	)		(450	)
Default inventory at end of period		72,236			91,842

Aging of the primary default inventory

The decrease in the primary default inventory experienced during 2015 and 2014 was generally across all markets and primarily in book years 2008 and prior. As of March 31, 2015, the percentage of loans in the inventory that have been in default for 12 or more consecutive months is consistent with one year prior, but higher than the percentage as of December 31, 2014, as shown in the table below. Historically as a default ages it becomes more likely to result in a claim. The percentage of loans that have been in default for 12 or more consecutive months and the number of loans in our primary claims received inventory have been affected by our suspended rescissions and the resolution of certain of those rescissions discussed below and in Note 5 – “Litigation and Contingencies.”

	March 31, 2015				December 31, 2014				March 31, 2014
Consecutive months in default
3 months or less		11,604	16	%		15,319	19	%		14,313	16	%
4 - 11 months		18,940	26	%		19,710	25	%		23,305	25	%
12 months or more		41,692	58	%		44,872	56	%		54,224	59	%

Total primary default inventory		72,236	100	%		79,901	100	%		91,842	100	%

Primary claims received inventory included in ending default inventory (1)		4,448	6	%		4,746	6	%		5,990	7	%

(1)

Our claims received inventory includes suspended rescissions, as we have voluntarily suspended rescissions of coverage related to loans that we believed would be included in a potential resolution. As of March 31, 2015, rescissions of coverage on approximately 1,470 loans had been voluntarily suspended compared to 1,425 at December 31, 2014 and 1,525 at March 31, 2014.

Number of payments delinquent

The number of payments that a borrower is delinquent is shown in the table below.

	March 31, 2015				December 31, 2014				March 31, 2014

3 payments or less		19,159	27	%		23,253	29	%		23,035	25	%
4 - 11 payments		18,372	25	%		19,427	24	%		22,766	25	%
12 payments or more		34,705	48	%		37,221	47	%		46,041	50	%

Total primary default inventory		72,236	100	%		79,901	100	%		91,842	100	%