XML 32 R32.htm IDEA: XBRL DOCUMENT v3.2.0.727
Loss Reserves (Tables)
 6 Months Ended
Jun. 30, 2015
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, 2015 and 2014:
 
  
Six months ended June 30,
 
  
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
  
223,564
   
306,386
 
Prior years (1)
  
(51,541
)
  
(42,637
)
Subtotal
  
172,023
   
263,749
 
         
Losses paid:
        
Losses and LAE paid in respect of default notices related to:
        
Current year
  
2,382
   
2,674
 
Prior years
  
451,317
   
640,560
 
Reinsurance terminations
  
(15
)
  
-
 
Subtotal
  
453,684
   
643,234
 
         
Net reserve at end of period
  
2,057,305
   
2,617,831
 
Plus reinsurance recoverables
  
53,456
   
57,763
 
         
Reserve at end of period
 
$
2,110,761
  
$
2,675,594
 
 
(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 six months of 2015 and 2014 is reflected in the table below.
 
  
Six months ended June 30,
 
  
2015
  
2014
 
  
(In millions)
 
     
Decrease in estimated claim rate on primary defaults
 
$
(59
)
 
$
(25
)
Increase in estimated severity on primary defaults
  
15
   
(8
)
Change in estimates related to pool reserves, LAE reserves and reinsurance
  
(8
)
  
(10
)
Total prior year loss development (1)
 
$
(52
)
 
$
(43
)
 
(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 and six months ended June 30, 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 June 30,
  
Six months ended June 30,
 
  
2015
  
2014
  
2015
  
2014
 
     
Default inventory at beginning of period
  
72,236
   
91,842
   
79,901
   
103,328
 
New notices
  
17,451
   
21,178
   
36,347
   
44,524
 
Cures
  
(17,897
)
  
(21,182
)
  
(39,664
)
  
(48,500
)
Paids (including those charged to a deductible or captive)
  
(4,140
)
  
(6,068
)
  
(8,713
)
  
(13,132
)
Rescissions and denials
  
(172
)
  
(354
)
  
(393
)
  
(804
)
Items removed from inventory resulting from the Countrywide settlement on GSE loans
  
(1,121
)
  
-
   
(1,121
)
  
-
 
Default inventory at end of period
  
66,357
   
85,416
   
66,357
   
85,416
 
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 June 30, 2015 the percentage of loans in the inventory that have been in default for 12 or more consecutive months has declined compared with one year prior, but is 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.”
 
  
June 30, 2015
  
December 31, 2014
  
June 30, 2014
 
Consecutive months in default
            
3 months or less
  
12,545
   
19
%
  
15,319
   
19
%
  
15,297
   
18
%
4 - 11 months
  
15,487
   
23
%
  
19,710
   
25
%
  
19,362
   
23
%
12 months or more
  
38,325
   
58
%
  
44,872
   
56
%
  
50,757
   
59
%
                         
Total primary default inventory
  
66,357
   
100
%
  
79,901
   
100
%
  
85,416
   
100
%
                         
Primary claims received inventory included in ending default inventory (1)
  
3,440
   
5
%
  
4,746
   
6
%
  
5,398
  
6
%

(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 June 30, 2015, rescissions of coverage on approximately 430 loans had been voluntarily suspended compared to 1,425 at December 31, 2014 and 1,558 at June 30, 2014.
Number of payments delinquent
The number of payments that a borrower is delinquent is shown in the table below.
 
  
June 30, 2015
  
December 31, 2014
  
June 30, 2014
 
Number of payments delinquent
            
3 payments or less
  
19,274
   
29
%
  
23,253
   
29
%
  
22,867
   
27
%
4 - 11 payments
  
15,710
   
24
%
  
19,427
   
24
%
  
19,666
   
23
%
12 payments or more
  
31,373
   
47
%
  
37,221
   
47
%
  
42,883
   
50
%
                         
Total primary default inventory
  
66,357
   
100
%
  
79,901
   
100
%
  
85,416
   
100
%