
Reserve for losses and LAE

	December 31,
(In thousands)	2023		2022
Primary case	$	344,235	$	398,874
Primary IBNR and LAE	12,177		12,169
Pool and other	8,511		9,912
Mortgage insurance	364,923		420,955
Title insurance	5,225		5,888
Total reserve for losses and LAE	$	370,148	$	426,843


Rollforward of mortgage insurance reserve for losses

	Years Ended December 31,
(In thousands)	2023		2022		2021
Balance at beginning of year	$	420,955	$	823,136	$	844,107
Less: Reinsurance recoverables (1)	24,727		66,676		71,769
Balance at beginning of year, net of reinsurance recoverables	396,228		756,460		772,338
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	178,665		160,049		160,565
Prior years	(220,801)		(499,423)		(141,126)
Total incurred	(42,136)		(339,374)		19,439
Deduct: Paid claims and LAE related to:
Current year (2)	246		499		1,112
Prior years	13,997		20,359		34,205
Total paid	14,243		20,858		35,317
Balance at end of period, net of reinsurance recoverables	339,849		396,228		756,460
Add: Reinsurance recoverables (1)	25,074		24,727		66,676
Balance at end of year	$	364,923	$	420,955	$	823,136

(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.

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 44,007 for the year ended December 31, 2023, compared to 37,738 for the year ended December 31, 2022, and 37,470 for the year ended December 31, 2021.

Our gross Default to Claim Rate assumption applied to new defaults was 8.0% for all periods presented, 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.

Our provision for losses during 2023, 2022 and 2021 was positively impacted by favorable reserve development on prior year defaults, primarily as a result of more favorable trends in Cures than originally estimated. These Cures have been due primarily 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, which has also contributed to a higher rate of claims that result in no ultimate loss and that are withdrawn by servicers as a result. These favorable observed trends resulted in reductions in our Default to Claim Rate and other reserve adjustments for prior year default notices. As the remaining number of defaults 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.

Our Default to Claim Rate estimates on defaulted loans are mainly developed based on the Stage of Default and Time in Default of the underlying defaulted loans grouped according to the period in which the default occurred, as measured by the progress toward foreclosure sale and the number of months in default. During 2023 and 2022, the ongoing favorable trend in Cures resulting from the positive effects of mortgage forbearance programs and the positive trends in home price appreciation contributed to reductions in our claims paid, including as a result of an increase in the number of claims that are withdrawn by servicers with no ultimate loss, which in turn led to a reduction in our Default to Claim Rates and other reserve assumptions.


Default to Claim Rates

	December 31,
	2023		2022		2021
Default to Claim Rate on:
New defaults	8.0	%	8.0	%	8.0	%
Defaults not in Foreclosure Stage
Time in Default: < 2 years (1)	21.0	%	21.8	%	41.6	%
Time in Default: 2 - 5 years	55.0	%	65.0	%	75.0	%
Time in Default: > 5 years	60.0	%	70.0	%	80.0	%
Foreclosure Stage Defaults	65.0	%	75.0	%	85.0	%

(1)Represents the weighted average Default to Claim Rate for all defaults not in foreclosure stage that have been in default for up to two years, including new defaults. The estimated Default to Claim Rates applied to defaults within this population vary by Time in Default, and range from the Default to Claim Rates on new defaults shown above, up to 50.0%, 55.0% and 80.1% for more aged defaults in this category as of December 31, 2023, 2022 and 2021, respectively.

Our estimate of expected Rescissions, Claim Denials and claim withdrawals (net of expected Reinstatements) is then applied to our estimated gross Default to Claim Rates and is generally based on our recent experience. Consideration is also given to differences in characteristics between those rescinded policies, denied claims and claim withdrawals and the loans remaining in our defaulted inventory.

As of December 31, 2023, Texas accounted for 10% of our mortgage insurance business measured by primary RIF, as compared to no states at or above this measure as of December 31, 2022. Texas accounted for 13% and 12% of our direct NIW for the years ended December 31, 2023 and 2022, respectively, while California accounted for 11% for the year ended December 31, 2021.

The following tables provide information as of and for the periods indicated about: (i) incurred losses, net of reinsurance; (ii) the total of IBNR liabilities plus expected development on reported claims, included within the net incurred loss amounts; (iii) the cumulative number of reported defaults; and (iv) cumulative paid claims, net of reinsurance. The default year represents the period that a new default notice is first reported to us by loan servicers, related to borrowers who missed two monthly payments.


Incurred losses, net of reinsurance

																					Total of IBNR Liabilities Plus Expected Development on Reported Claims (1)		Cumulative Number of Reported Defaults (2)
($ in thousands)			Years Ended December 31,
	Unaudited
Default Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		As of December 31, 2023
2014	$	337,784	$	247,074	$	265,891	$	264,620	$	260,098	$	261,507	$	261,377	$	260,254	$	257,773	$	257,529	$	3	47,976
2015			222,555		198,186		178,042		183,952		183,546		184,066		182,647		180,435		179,344		5		42,607
2016					201,016		165,440		149,753		148,811		148,640		148,349		145,267		142,521		7		40,503
2017							180,851		151,802		133,357		130,274		126,989		122,407		118,033		12		42,888
2018									131,513		116,634		95,534		88,252		75,262		70,145		16		37,369
2019											143,475		136,860		109,416		66,466		51,053		33		40,985
2020													504,160		408,809		87,213		39,584		55		108,025
2021															156,328		72,475		23,308		48		37,470
2022																	155,908		71,300		176		37,738
2023																			173,076		1,425		44,007
Total																			$	1,125,893

(2)Represents total number of new primary 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.


Cumulative paid claims, net of reinsurance

(In thousands)			Years Ended December 31,
	Unaudited
Default Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
2014	$	13,108	$	115,852	$	200,422	$	233,607	$	246,611	$	252,619	$	255,742	$	256,107	$	255,981	$	256,185
2015			10,479		84,271		142,421		163,916		172,645		174,812		175,874		176,823		177,237
2016					11,061		76,616		119,357		134,115		137,306		138,525		139,539		139,651
2017							24,653		66,585		99,678		108,484		111,458		112,445		113,027
2018									5,584		36,066		54,625		60,926		62,968		63,603
2019											4,220		18,703		28,896		35,594		37,960
2020													4,148		9,867		14,635		17,884
2021															1,112		2,561		4,409
2022																	498		2,867
2023																			246
Total																			813,069
All outstanding liabilities before 2014, net of reinsurance																			16,380
Liabilities for claims, net of reinsurance (1)																			$	329,204


(In thousands)
Incurred losses, net of reinsurance	$	1,125,893
All outstanding liabilities before 2014, net of reinsurance	16,380
Cumulative paid claims, net of reinsurance	(813,069)
Liabilities for claims, net of reinsurance	$	329,204

The following table provides a reconciliation of the net incurred losses and paid claims development tables above to the mortgage insurance reserve for losses and LAE at December 31, 2023.


Net outstanding liabilities - mortgage insurance

(In thousands)	December 31, 2023
Reserve for losses and LAE, net of reinsurance	$	329,204
Reinsurance recoverable on unpaid claims	25,074
Unallocated LAE	10,645
Total gross reserve for losses and LAE (1)	$	364,923

The following is supplementary information about average historical claims duration as of December 31, 2023, 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	7.2%	28.7%	23.7%	10.4%	3.7%	1.2%	0.8%	0.2%	0.1%	0.1%