Note 11 - Losses and Loss Adjustment Expenses Level 3 (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Liability for Future Policy Benefits, by Product Segment [Table Text Block]

The following table shows our reserve for losses and LAE by category at the end of each period indicated:



	Year Ended December 31,
(In thousands)	2017		2016
Reserves for losses by category:
Prime	$	285,022	$	379,845
Alt-A and A minus and below	170,873		249,659
IBNR and other (1)	16,021		71,107
LAE	13,349		18,630
Reinsurance recoverable (2)	8,315		6,816
Total primary reserves	493,580		726,057
Pool	12,794		31,853
IBNR and other	278		673
LAE	356		932
Reinsurance recoverable (2)	35		35
Total pool reserves	13,463		33,493
Total First-lien reserves	507,043		759,550
Other (3)	545		719
Total reserve for losses	$	507,588	$	760,269

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(1)

At December 31, 2016, primarily related to expected payments under the Freddie Mac Agreement. During the third quarter of 2017, the scheduled final settlement date under the Freddie Mac Agreement occurred and therefore, except for loans with loss mitigation and claims activity already in process, most of the loans subject to the Freddie Mac Agreement were removed from RIF and IIF because the insurance no longer remains in force. See “—Agreements—Freddie Mac Agreement,” below for additional information.


(2)	Represents ceded losses on captive reinsurance transactions, the QSR Transactions and the 2016 Single Premium QSR Transaction.


(3)	Does not include our second-lien mortgage loan PDR that is included in other liabilities.

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

the following table presents information relating to our reserve for losses, including our IBNR reserve and LAE, but excluding our second-lien mortgage loan PDR:



	Year Ended December 31,
(In thousands)	2017				2016			2015
Balance at January 1,	$	760,269			$	976,399		$	1,560,032
Less: Reinsurance recoverables (1)	6,851				8,286			26,665
Balance at January 1, net of reinsurance recoverables	753,418				968,113			1,533,367
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	185,486				206,383			229,061
Prior years	(49,286		)		(3,516		)	(29,647		)
Total incurred	136,200				202,867			199,414
Deduct: Paid claims and LAE related to:
Current year (2)	25,011				11,410			10,837
Prior years	365,369				406,152			753,831
Total paid	390,380			(3)	417,562			764,668
Balance at end of period, net of reinsurance recoverables	499,238				753,418			968,113
Add: reinsurance recoverables (1)	8,350				6,851			8,286
Balance at December 31,	$	507,588			$	760,269		$	976,399

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(1)	Related to ceded losses recoverable, if any, on captive reinsurance transactions, the QSR Transactions and the 2016 Single Premium QSR Transaction. See Note 8 for additional information.


(2)	Related to underlying defaulted loans with a most recent default notice dated 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. For 2017, includes payments made on pool commutations, in some cases for loans not previously in default.


(3)	Includes the payment of $54.8 million made in connection with the scheduled settlement of the Freddie Mac Agreement in the third quarter of 2017.

Short-duration Insurance Contracts, Claims Development [Table Text Block]

The information about net incurred losses and paid claims development for the years ended prior to 2017 is presented as supplementary information.



	Incurred Losses, Net of Reinsurance
	Year Ended December 31,																				As of December 31, 2017
($ in thousands)																					Total of IBNR Liabilities Plus Expected Development on Reported Claims (1)		Cumulative Number of Reported Defaults (2)
	Unaudited
Default Year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
2008	$	1,957,510	$	1,715,144	$	1,969,581	$	2,009,551	$	2,018,794	$	2,074,295	$	2,088,719	$	2,110,922	$	2,115,083	$	2,122,647	$	2,370	215,837
2009			1,671,239		1,894,783		1,930,263		1,939,479		1,974,568		1,991,796		2,016,412		2,018,907		2,022,629		1,535		213,836
2010					1,102,856		1,215,136		1,192,482		1,195,056		1,207,774		1,220,289		1,218,264		1,219,469		958		146,324
2011							1,058,625		1,152,016		1,052,277		1,050,555		1,062,579		1,061,161		1,059,116		904		118,972
2012									803,831		763,969		711,213		720,502		715,646		714,783		756		89,845
2013											505,732		405,334		401,444		404,333		402,259		653		71,749
2014													337,784		247,074		265,891		264,620		776		58,215
2015															222,555		198,186		178,042		874		49,825
2016																	201,016		165,440		2,185		46,264
2017																			180,851		2,672		47,283
																	Total		$	8,329,856

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(1)	Represents reserves as of December 31, 2017 related to IBNR liabilities.

(2)

Represents total number of new default notices received in each calendar year as compiled monthly based on reports received from loan servicers. As reflected in our Default to Claim Rate assumptions, a significant portion of reported defaults generally do not result in a claim. In certain instances, a defaulted loan may cure, and then re-default in a later period. Consistent with our reserving practice, each new event of default is treated as a unique occurrence and therefore certain loans that cure and re-default may be included as a reported default in multiple periods. Included in this amount for the year ended December 31, 2017 and December 31, 2016 are 8,862 and 3,852 notices, respectively, of new primary defaults related to the FEMA Designated Areas associated with Hurricanes Harvey and Irma.



	Cumulative Paid Claims, Net of Reinsurance
	Year Ended December 31,
(In thousands)
	Unaudited
Default Year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
2008	$	189,458	$	740,578	$	1,297,867	$	1,635,069	$	1,744,559	$	1,872,804	$	1,932,283	$	2,022,019	$	2,051,495	$	2,088,124
2009			136,413		619,496		1,236,210		1,471,264		1,711,019		1,807,031		1,921,134		1,958,660		1,986,076
2010					11,810		394,278		700,316		956,598		1,055,935		1,145,497		1,178,546		1,198,031
2011							40,392		323,216		756,820		892,959		982,830		1,016,855		1,038,582
2012									19,200		295,332		528,744		631,982		672,271		692,291
2013											34,504		191,040		307,361		357,087		379,036
2014													13,108		115,852		200,422		233,607
2015															10,479		84,271		142,421
2016																	11,061		76,616
2017																			24,653
																	Total		$	7,859,437
									All outstanding liabilities before 2008, net of reinsurance										15,492
									Liabilities for claims, net of reinsurance (1)										$	485,911

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(1)	Calculated as follows:



(In thousands)
Incurred losses, net of reinsurance	$	8,329,856
Add: All outstanding liabilities before 2008, net of reinsurance	15,492
Less: Cumulative paid claims, net of reinsurance	7,859,437
Liabilities for claims, net of reinsurance	$	485,911

Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Table Text Block]

The following table provides a reconciliation of the net incurred losses and paid claims development tables above to the reserve for losses and LAE in the consolidated balance sheet at December 31, 2017:



(In thousands)	December 31, 2017
Net outstanding liabilities - Mortgage Insurance:
Reserve for losses and LAE, net of reinsurance	$	485,911
Reinsurance recoverables on unpaid claims	8,350
Unallocated LAE	13,327
Total gross reserve for losses and LAE	$	507,588

Short-duration Insurance Contracts, Schedule of Historical Claims Duration [Table Text Block]

The following is supplementary information about average historical claims duration as of December 31, 2017, representing the average distribution of when claims are paid relative to the year of default:



	Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance (Unaudited)
Years	1	2	3	4	5	6	7	8	9	10
Mortgage Insurance	6.3%	33.9%	31.1%	14.4%	7.5%	4.8%	3.3%	2.6%	1.4%	1.7%