Note 10 - Losses and Loss Adjustment Expense (Tables)

9 Months Ended

Sep. 30, 2018

Our reserve for losses and LAE, at the end of each period indicated, consisted of:



(In thousands)	September 30, 2018		December 31, 2017
Mortgage insurance loss reserves	$	408,980	$	507,588
Services loss reserves (1)	3,480		—
Total reserve for losses and LAE	$	412,460	$	507,588

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(1)

A majority of this amount is included in the reinsurance recoverables reported in other assets in our condensed consolidated balance sheet, and relates to the acquisition of EnTitle Direct, completed on March 27, 2018.

Mortgage Insurance Reserve for Losses and LAE by Category

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



(In thousands)	September 30, 2018		December 31, 2017
Reserves for losses by category:
Prime	$	231,916	$	285,022
Alt-A and A minus and below	129,262		170,873
IBNR and other	14,505		16,021
LAE	11,203		13,349
Reinsurance recoverable (1)	9,977		8,315
Total primary reserves	396,863		493,580
Total pool reserves (2)	11,705		13,463
Total First-lien reserves	408,568		507,043
Other (3)	412		545
Total reserve for losses	$	408,980	$	507,588

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(1)	Represents ceded losses on captive reinsurance transactions, the QSR Program and the Single Premium QSR Program. These amounts are included in the reinsurance recoverables reported in other assets in our condensed consolidated balance sheets.


(2)	Includes reinsurance recoverable of $20 thousand and $35 thousand as of September 30, 2018 and December 31, 2017, respectively.

(3)

Does not include our Second-lien premium deficiency reserve that is included in other liabilities.

Mortgage Insurance Reserve for Losses and LAE Rollforward

The following table presents information relating to our mortgage insurance reserve for losses, including our IBNR reserve and LAE but excluding our Second-lien premium deficiency reserve, for the periods indicated:



	Nine Months Ended September 30,
(In thousands)	2018			2017
Balance at beginning of period	$	507,588		$	760,269
Less: Reinsurance recoverables (1)	8,350			6,851
Balance at beginning of period, net of reinsurance recoverables	499,238			753,418
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	100,047			145,798
Prior years	(24,075		)	(45,331		)
Total incurred	75,972			100,467
Deduct: Paid claims and LAE related to:
Current year (2)	2,316			3,639
Prior years	173,911			301,228
Total paid	176,227			304,867			(3)
Balance at end of period, net of reinsurance recoverables	398,983			549,018
Add: Reinsurance recoverables (1)	9,997			7,470
Balance at end of period	$	408,980		$	556,488

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(1)	Related to ceded losses recoverable, if any, on captive reinsurance transactions, the QSR Program and the Single Premium QSR Program. See Note 7 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.

(3)

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