Losses and LAE

3 Months Ended

Mar. 31, 2023

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


Reserve for losses and LAE

(In thousands)	March 31, 2023		December 31, 2022
Primary case	$	378,992	$	398,874
Primary IBNR and LAE	11,307		12,169
Pool and other	9,551		9,912
Mortgage insurance	399,850		420,955
Title insurance	5,801		5,888
Total reserve for losses and LAE	$	405,651	$	426,843

For the periods indicated, the following table presents information relating to our mortgage insurance reserve for losses, including our IBNR reserve and LAE.


Rollforward of mortgage insurance reserve for losses

	Three Months Ended March 31,
(In thousands)	2023		2022
Balance at beginning of period	$	420,955	$	823,136
Less: Reinsurance recoverables (1)	24,727		66,676
Balance at beginning of period, net of reinsurance recoverables	396,228		756,460
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	50,579		40,662
Prior years	(67,442)		(124,897)
Total incurred	(16,863)		(84,235)
Deduct: Paid claims and LAE related to:
Current year (2)	32		—
Prior years	2,984		4,738
Total paid	3,016		4,738
Balance at end of period, net of reinsurance recoverables	376,349		667,487
Add: Reinsurance recoverables (1)	23,501		54,023
Balance at end of period	$	399,850	$	721,510

(1)Related to ceded losses recoverable, if any, on reinsurance transactions. 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.

Reserve Activity

Incurred Losses

Total incurred losses are driven by: (i) case reserves established for new default notices, which are primarily impacted by both the number of new primary default notices received in the period and our related gross Default to Claim Rate assumption applied to those new defaults and (ii) reserve developments on prior period defaults, which are primarily impacted by changes to our prior Default to Claim Rate assumptions.

New primary default notices totaled 10,624 for the three months ended March 31, 2023, compared to 9,393 for the three months ended March 31, 2022, representing an increase of 13%. This increase in new primary defaults is consistent with the natural seasoning of the portfolio, given the increase in our IIF in recent years.

Our gross Default to Claim Rate assumption applied to new defaults was 8.0% as of both March 31, 2023, and March 31, 2022, as we continue to closely monitor the trends in Cures and claims paid for our default inventory, while also weighing the risks and uncertainties associated with the current economic environment. As a result, the increase in new default notices was the primary driver of the increase in losses incurred related to current year defaults for the three months ended March 31, 2023, as compared to the same period in the prior year.

Our provision for losses during both the first three months of 2023 and 2022 was positively impacted by favorable reserve development on prior year defaults, primarily as a result of more favorable trends in Cures than originally estimated due to favorable outcomes resulting from mortgage forbearance programs implemented in response to the COVID-19 pandemic as well as positive trends in home price appreciation. These favorable observed trends resulted in reductions in our Default to Claim Rate assumptions for prior year default notices, particularly for those defaults first reported in 2020 following the start of the COVID-19 pandemic. As the remaining number of defaults first reported in 2020 has continued to decline, the magnitude of the impact to our provision for losses from reserve development on prior year defaults has declined as well.

Claims Paid

Total claims paid were materially unchanged for the three months ended March 31, 2023, compared to the same period in 2022.

For additional information about our Reserve for Losses and LAE, including our accounting policies, see Notes 2 and 11 of Notes to Consolidated Financial Statements in our 2022 Form 10-K.