Loss Reserves (Tables)

12 Months Ended

Dec. 31, 2018

Reconciliation of beginning and ending loss reserves

Table 8.1 provides a reconciliation of beginning and ending loss reserves for each of the past three years:



Development of reserves for losses and loss adjustment expenses
Table	8.1
(In thousands)		2018			2017			2016
Reserve at beginning of year		$	985,635		$	1,438,813		$	1,893,402
Less reinsurance recoverable		48,474			50,493			44,487
Net reserve at beginning of year		937,161			1,388,320			1,848,915

Losses incurred:
Losses and LAE incurred in respect of delinquent notices received in:
Current year		203,928			284,913			387,815
Prior years ⁽¹⁾		(167,366		)	(231,204		)	(147,658		)
Total losses incurred		36,562			53,709			240,157

Losses paid:
Losses and LAE paid in respect of delinquent notices received in:
Current year		7,298			11,267			14,823
Prior years		327,743			493,300			689,258
Reinsurance terminations		(2,009		)	301			(3,329		)
Total losses paid		333,032			504,868			700,752
Net reserve at end of year		640,691			937,161			1,388,320
Plus reinsurance recoverables		33,328			48,474			50,493
Reserve at end of year		$	674,019		$	985,635		$	1,438,813


⁽¹⁾	A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves. See table 8.2 below for more information about prior year loss development.

Prior year development of the reserves

Table 8.2 below shows the development of reserves in 2018, 2017 and 2016 for previously received delinquencies.



Reserve development on previously received delinquencies
Table	8.2
(In millions)		2018			2017			2016
Decrease in estimated claim rate on primary delinquencies		$	(213	)	$	(248	)	$	(148	)
Increase in estimated severity on primary delinquencies		29			9			9
Change in estimates related to pool reserves, LAE reserves, reinsurance and other		17			8			(9		)
Total prior year loss development ⁽¹⁾		$	(167	)	$	(231	)	$	(148	)


⁽¹⁾	A negative number for prior year loss development indicates a redundancy of prior year loss reserves.

Rollforward of delinquent inventory roll-forward

A roll-forward of our primary delinquent inventory for the years ended December 31, 2018, 2017, and 2016 appears in table 8.3 below. The information concerning new notices and cures is compiled from monthly reports received from loan servicers. The level of new notice and cure activity reported in a particular month can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month and transfers of servicing between loan servicers.



Primary delinquent inventory roll-forward
Table	8.3
		2018		2017		2016
Beginning delinquent inventory		46,556		50,282		62,633
New Notices		54,448		68,268		67,434
Cures		(60,511	)	(61,094	)	(65,516	)
Paid claims		(5,750	)	(9,206	)	(12,367	)
Rescissions and denials		(267	)	(357	)	(629	)
Other items removed from inventory		(1,578	)	(1,337	)	(1,273	)
Ending delinquent inventory		32,898		46,556		50,282

Aging of the primary default inventory

The number of consecutive months that a borrower has been delinquent is shown in the table below.



Primary delinquent inventory - consecutive months delinquent
Table	8.4
		December 31,
		2018		2017		2016
3 months or less		9,829		17,119		12,194
4 - 11 months		9,655		12,050		13,450
12 months or more⁽¹⁾		13,414		17,387		24,638
Total		32,898		46,556		50,282

3 months or less		30	%	37	%	24	%
4 - 11 months		29	%	26	%	27	%
12 months or more		41	%	37	%	49	%
Total		100	%	100	%	100	%

Primary claims received inventory included in ending delinquent inventory		809		954		1,385


⁽¹⁾	Approximately 38%, 45%, and 47% of the primary delinquent inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of December 31, 2018, 2017 and 2016, respectively.