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


	Years Ended December 31,

(In thousands)	2024			2023			2022


Balance at beginning of year	$	364,923		$	420,955		$	823,136
Less: Reinsurance recoverables (1)		25,074			24,727			66,676
Balance at beginning of year, net of reinsurance recoverables		339,849			396,228			756,460
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)		197,719			178,665			160,049
Prior years		(199,967	)		(220,801	)		(499,423	)
Total incurred		(2,248	)		(42,136	)		(339,374	)
Deduct: Paid claims and LAE related to:
Current year (2)		1,118			246			499
Prior years		16,196			13,997			20,359
Total paid		17,314			14,243			20,858
Balance at end of year, net of reinsurance recoverables		320,287			339,849			396,228
Add: Reinsurance recoverables (1)		34,144			25,074			24,727
Balance at end of year	$	354,431		$	364,923		$	420,955

(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.

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 and Claim Severity assumptions 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 and Claim Severity assumptions applied to these loans.

New primary default notices totaled 50,535 for the year ended December 31, 2024, compared to 44,007 for the year ended December 31, 2023, and 37,738 for the year ended December 31, 2022. We believe this increase in new primary defaults is mainly due to the natural seasoning of our insured portfolio given the increase in our IIF in recent years and not the result of deteriorating credit performance of the insured portfolio.

Our gross Default to Claim Rate assumption applied to new defaults was 7.5% as of December 31, 2024, compared to 8.0% for all other periods presented, based on our review of trends in Cures and claims paid for our default inventory and taking into consideration the risks and uncertainties associated with the current economic environment.

Our provision for losses during 2024, 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. These Cures have been due primarily to favorable outcomes resulting from positive trends in home price appreciation, which has also contributed to a higher rate of claims that result in no ultimate loss to us and that are withdrawn by servicers as a result. These favorable observed trends for prior year default notices resulted in reductions in our Default to Claim Rate and other reserve assumptions in both 2024 and 2023, including our Claim Severity assumptions in 2024. 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 2024 and 2023, 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.

The following table shows our gross Default to Claim Rates on our primary portfolio based on the Time in Default and as of the dates indicated.


Default to Claim Rates

	December 31,
	2024			2023			2022

Default to Claim Rate on:
New defaults		7.5	%		8.0	%		8.0	%
Defaults not in Foreclosure Stage
Time in Default: < 2 years (1)		20.2	%		21.0	%		21.8	%
Time in Default: 2 - 5 years		45.0	%		55.0	%		65.0	%
Time in Default: > 5 years		50.0	%		60.0	%		70.0	%
Foreclosure Stage Defaults		55.0	%		65.0	%		75.0	%

(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 42.7%, 50.0% and 55.0% for more aged defaults in this category as of December 31, 2024, 2023 and 2022, respectively.

Our estimate of expected Rescissions and Claim Denials is then applied to our estimated gross Default to Claim Rates and is generally based on our historical experience.

Beginning in 2024, we estimate Claim Severity by applying observed severity rates for past paid claims within cohorts based on both Time in Default and estimated borrower equity, as adjusted to account for anticipated differences and risks in future results compared to past trends, including potential declines in estimated borrower equity. Our estimated primary Claim Severity was 89% of defaulted risk exposure as of December 31, 2024, compared to 98% as of December 31, 2023.

Total claims paid increased slightly in 2024 compared to 2023, including an increase in claims paid attributable to commutations and settlements.

As of both December 31, 2024 and 2023, Texas accounted for 10% of our Mortgage Insurance business measured by primary RIF. Texas accounted for 11%, 13% and 12% of our direct NIW for the years ended December 31, 2024, 2023 and 2022, respectively.

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.

The information about net incurred losses and paid claims development for the years ended prior to 2024 is presented as supplementary information.


Incurred losses, net of reinsurance

($ in thousands)					Years Ended December 31,																Total of IBNR Liabilities Plus Expected Development on Reported		Cumulative Number of Reported
	Unaudited																				Claims (1)		Defaults (2)
Default Year	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024		As of December 31, 2024
2015	$	222,555	$	198,186	$	178,042	$	183,952	$	183,546	$	184,066	$	182,647	$	180,435	$	179,344	$	178,738	$	2		42,607
2016				201,016		165,440		149,753		148,811		148,640		148,349		145,267		142,521		140,962		2		40,503
2017						180,851		151,802		133,357		130,274		126,989		122,407		118,033		115,317		3		42,888
2018								131,513		116,634		95,534		88,252		75,262		70,145		66,583		5		37,369
2019										143,475		136,860		109,416		66,466		51,053		43,818		9		40,985
2020												504,160		408,809		87,213		39,584		27,266		14		108,025
2021														156,328		72,475		23,308		11,974		11		37,470
2022																155,908		71,300		24,044		32		37,738
2023																		173,076		75,762		—		44,007
2024																				190,355		1,734		50,535
Total																			$	874,819

(1)

Represents reserves as of December 31, 2024, related to IBNR liabilities.

(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	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024

2015	$	10,479	$	84,271	$	142,421	$	163,916	$	172,645	$	174,812	$	175,874	$	176,823	$	177,237	$	177,883
2016				11,061		76,616		119,357		134,115		137,306		138,525		139,539		139,651		139,937
2017						24,653		66,585		99,678		108,484		111,458		112,445		113,027		113,497
2018								5,584		36,066		54,625		60,926		62,968		63,603		64,015
2019										4,220		18,703		28,896		35,594		37,960		39,082
2020												4,148		9,867		14,635		17,884		19,465
2021														1,112		2,561		4,409		6,043
2022																498		2,867		6,699
2023																		246		6,201
2024																				1,118
Total																				573,940
All outstanding liabilities before 2015, net of reinsurance																				7,411
Liabilities for claims, net of reinsurance (1)																			$	308,290

(1)

Calculated as follows:


(In thousands)
Incurred losses, net of reinsurance	$	874,819
All outstanding liabilities before 2015, net of reinsurance		7,411
Cumulative paid claims, net of reinsurance		(573,940	)
Liabilities for claims, net of reinsurance	$	308,290