Note 3: Insurance Activity

The Company, through WMMRC, reinsures mortgage guaranty risks of mortgage loans originated by affiliates of the Company during the period from 1997 through 2008. WMMRC is (or was) a party to reinsurance agreements with UGRIC, GMIC, MGIC, PMI, Radian, RMIC and Triad. The agreements with UGRIC and Triad were placed into runoff effective May 31, 2008. The agreements with all other primary mortgage insurers were placed into runoff effective September 26, 2008. The reinsurance agreements with Triad, PMI and UGRIC were commuted on August 31, 2009, October 2, 2012 and April 3, 2014, respectively.

All agreements between WMMRC and the primary mortgage insurers are on an excess of loss basis, except for certain reinsurance treaties with GMIC and Radian during 2007 and 2008, which are reinsured on a 50 percent quota share basis. Pursuant to the excess of loss reinsurance treaties, WMMRC reinsures a second loss layer which ranges from 5 percent to 10 percent of the risk in force in excess of the primary mortgage insurer’s first loss percentage which range from 4 percent to 5 percent. Each calendar year, or book year, is treated separately from other years when calculating losses. In return for accepting a portion of the risk, WMMRC receives, net of ceding commission, a percentage of the premium that ranges from 25 to 40 percent.

As security for the ceding insurers, WMMRC has entered into separate trust agreements with each of the primary mortgage insurance companies whereby a portion of the funds from premiums assumed are held in trust accounts for the benefit of each separate insurer. Pursuant to the terms of the reinsurance agreements, WMMRC is required to keep such assets in trust for a minimum of 5 years and are subject to claims for up to 10 years from termination of obligations arising from the last year in which insurance business was written prior to runoff. Release of funds from the trust by WMMRC requires approval from the primary mortgage guaranty companies.

Premiums assumed and earned are as follows for the periods ended September 30, 2015 and 2014, respectively:

	Three Months ended September 30, 2015		Three Months ended September 30, 2014		Nine Months ended September 30, 2015		Nine Months ended September 30, 2014
Premiums assumed	$	1,166	$	1,564	$	3,680	$	5,276
Change in unearned premiums		81		71		258		238
Premiums earned	$	1,247	$	1,635	$	3,938	$	5,514

The components of the liability for losses and loss adjustment reserves are as follows as of September 30, 2015 and December 31, 2014, respectively:


	September 30, 2015		December 31, 2014
Case-basis reserves	$	4,428	$	16,538
IBNR reserves		78		110
Premium deficiency reserves		2,076		2,299
Total losses and loss adjustment reserves	$	6,582	$	18,947

Losses and loss adjustment reserve activity are as follows for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively:


	September 30, 2015			December 31, 2014
Balance at beginning of period	$	18,947		$	44,314
(Released) incurred - prior periods		(358	)		3,281
Paid - prior periods		(12,007	)		(28,648	)
Total losses and loss adjustment reserves	$	6,582		$	18,947

The loss contract fair market reserve balance is analyzed and adjusted quarterly. The balance in the reserve was $9.8 million at September 30, 2015 and $12.5 million at December 31, 2014. The fair market value of this reserve was unchanged during the three months ended September 30, 2015 and September 30, 2014, respectively, and decreased by $2.7 million and $30.3 million during the nine months ended September 30, 2015 and September 30, 2014, respectively. As a result, a corresponding decrease in expense was reflected in the statement of operations for each of the respective periods during which there was a change in value.