Note 8 - Losses and LAE (Tables)

9 Months Ended

Sep. 30, 2013

Loss Reserves By Segment [Table Text Block]

Our reserve for losses and LAE, as of the dates indicated, consisted of:



(In thousands)	September 30, 2013		December 31, 2012
Mortgage insurance reserves	$	2,314,785	$	3,083,608
Financial guaranty reserves	32,094		66,328
Total reserve for losses and LAE	$	2,346,879	$	3,149,936

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block]

The following table presents information relating to our mortgage insurance reserves for losses, including our estimate of defaults incurred but not reported (“IBNR”), and LAE as of the dates indicated:



	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2013		2012			2013			2012
Mortgage Insurance
Balance at beginning of period	$	2,690,861	$	3,155,343		$	3,083,608		$	3,247,900
Less reinsurance recoverables (1)	58,427		97,845			83,238			151,569
Balance at beginning of period, net of reinsurance recoverables	2,632,434		3,057,498			3,000,370			3,096,331
Add losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	140,015		248,806			477,155			686,080
Prior years	11,997		(77,001		)	(56,777		)	(71,468		)
Total incurred	152,012		171,805			420,378			614,612
Deduct paid claims and LAE related to:
Current year (2)	21,334		2,912			21,483			3,185
Prior years	498,002		269,486			1,134,155			750,853
Total paid	519,336		272,398			1,155,638			754,038
Balance at end of period, net of reinsurance recoverables	2,265,110		2,956,905			2,265,110			2,956,905
Add reinsurance recoverables (1)	49,675		89,801			49,675			89,801
Balance at end of period	$	2,314,785	$	3,046,706		$	2,314,785		$	3,046,706

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(1)	Related to ceded losses on captive reinsurance transactions, capital markets reinsurance transactions (“Smart Home”) and QSR transactions.


(2)	Related to underlying defaulted loans with a most recent date of default notice in the year indicated. For example, if a loan had defaulted in a prior year, but then subsequently cured and later re-defaulted in the current year, that default would be considered a current year default.

Rescissions And Denials [Table Text Block]

The following table illustrates the amount of first-lien claims submitted to us for payment that were rescinded or denied, for the periods indicated, net of any reinstatements of previously rescinded policies or denied claims within each period:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2013		2012		2013		2012
Rescissions	$	21.6	$	95.8	$	56.5	$	193.7
Denials	4.1		131.9		131.3		537.1
Total first-lien claims submitted for payment that were rescinded or denied (1)	$	25.7	$	227.7	$	187.8	$	730.8

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(1)	Includes an amount related to a small number of submitted claims that were subsequently withdrawn by the insured.

Projected Rescission and Denial Rates [Table Text Block]

The following table shows the cumulative rescission/denial rates in our total first-lien portfolio, net of both actual and expected reinstatements, as of September 30, 2013, with respect to claims received in each quarter indicated below:



Claim Received Quarter	Projected Net Cumulative Rescission/Denial Rate for Each Quarter (1)	Percentage of Total Claims Resolved (2)
Q1 2011	20.4%	99%
Q2 2011	25.4%	99%
Q3 2011	30.9%	99%
Q4 2011	27.0%	99%
Q1 2012	23.5%	98%
Q2 2012	20.7%	97%
Q3 2012	17.8%	89%
Q4 2012	16.0%	78%
Q1 2013	16.4%	57%

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(1)

Projected net cumulative rescission/denial rates represent the ratio of claims rescinded or denied to claims received (by claim count). Rescissions and denials are net of actual reinstatements, plus our current estimate for expected reinstatements of previously rescinded policies or denied claims (excluding certain potential reinstatements we are in the process of discussing with servicers). These projected amounts represent the cumulative rates for each quarter as of September 30, 2013. Until all of the claims received during the periods shown have been internally resolved, the rescission/denial rates for each quarter will be subject to change; these rates also will remain subject to change based on differences between estimated and actual reinstatements of previously rescinded policies or denied claims.

(2)

The percentage of claims resolved for each quarter presented in the table above represents the number of claims that have been internally resolved as a percentage of the total number of claims received for that specific quarter. A claim is considered internally resolved when it is either paid or it is concluded that the claim should be denied or rescinded, though such denials and rescissions could be challenged and potentially reinstated or overturned. For the second and third quarters of 2013, a significant portion of claims received for those quarters have not been internally resolved; therefore, we do not believe the projected net cumulative rescission/denial rates for those periods are presently meaningful.