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Loss Reserves | 3 Months Ended
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Mar. 31, 2026
Insurance Loss Reserves [Abstract] |
Loss Reserves | Loss Reserves We establish case reserves and LAE reserves on delinquent loans that were reported to us as two or more payments past due and have not become current or resulted in a claim payment. Such loans are referred to as being in our delinquency inventory. Case reserves are established by estimating the number of loans in our delinquency inventory that will result in a claim payment, which is referred to as the claim rate, and further estimating the amount of the claim payment, which is referred to as claim severity. IBNR reserves are established for estimated losses from delinquencies we estimate have occurred prior to the close of an accounting period, but have not yet been reported to us. IBNR reserves are also established using estimated claim rates and claim severities. Estimation of losses is inherently judgmental. The conditions that affect our estimates include the current and future state of the domestic economy, including unemployment and the strength of local housing markets; exposure on insured loans; the number of loans reported to us as delinquent; the amount of time between delinquency and claim filing (all else being equal, the longer the period between delinquency and claim filing, the greater the severity); the effectiveness of loss mitigation efforts; and curtailments and rescissions. Additionally, past and future government initiatives and actions taken by the GSEs to keep borrowers in their homes may impact our estimates. The actual amount of the claim payments may differ substantially from our loss reserve estimates, and changes in those estimates, whether arising from the factors described above or from other unforeseen circumstances, could materially affect our financial results, even in a stable economic environment. In considering the potential sensitivity of the factors underlying our estimate of loss reserves, it is possible that even a relatively small change in our estimated claim rate or claim severity could have a material impact on loss reserves and, correspondingly, on our consolidated results of operations even in a stable economic environment. For example, as of March 31, 2026, assuming all other factors remain constant, a $1,000 increase/decrease in the average severity reserve factor would change the loss reserve amount by approximately +/- $7 million. A one percentage point increase/decrease in the average claim rate reserve factor would change the loss reserve amount by approximately +/- $20 million. The “Losses incurred” section of table 8.1 below shows losses incurred on delinquencies that occurred in the current year and in prior years. The amount of losses incurred relating to delinquencies that occurred in the current year represents the estimated amount to be ultimately paid on such delinquencies. The amount of losses incurred relating to delinquencies that occurred in prior years represents the difference between the actual claim rate and claim severity associated with those delinquencies resolved in the current year compared to the estimated claim rate and claim severity at the prior year-end, as well as a re-estimation of amounts to be ultimately paid on delinquencies continuing from the end of the prior year. This re-estimation of the claim rate and claim severity is the result of our review of current trends in the delinquency inventory, such as percentages of delinquencies that have resulted in a claim, the amount of the claims relative to the average loan exposure, changes in the relative level of delinquencies by geography and changes in average loan exposure. The “Losses paid” section of table 8.1 below shows the amount of losses paid on delinquencies that occurred in the current year and losses paid on delinquencies that occurred in prior years. Table 8.1 provides a reconciliation of beginning and ending loss reserves as of and for the three months ended March 31, 2026 and 2025.
Development of Reserves for Losses and Loss Adjustment Expenses
Table | 8.1 |  |  |  |
|  |  | Three Months Ended March 31,
(In thousands) |  | 2026 |  | 2025
Reserve at beginning of period |  | $ | 474,884 |  |  | $ | 462,662 |
Less reinsurance recoverable |  | 65,055 |  |  | 47,281 |
Net reserve at beginning of period |  | 409,829 |  |  | 415,381 |
Losses incurred: |  |  |  |
Losses and LAE incurred in respect of delinquency notices received in: |  |  |  |
Current year |  | 64,471 |  |  | 59,497 |
Prior years (1) |  | (31,229) |  |  | (49,906) |
Total losses incurred |  | 33,242 |  |  | 9,591 |
Losses paid: |  |  |  |
Losses and LAE paid in respect of delinquency notices received in: |  |  |  |
Current year |  | 15 |  |  | — |
Prior years |  | 17,120 |  |  | 11,803 |
Total losses paid |  | 17,135 |  |  | 11,803 |
Net reserve at end of period |  | 425,936 |  |  | 413,169 |
Plus reinsurance recoverable |  | 73,184 |  |  | 51,864 |
Reserve at end of period |  | $ | 499,120 |  |  | $ | 465,033 |
(1)A positive number for prior year loss reserve development indicates a deficiency of prior year reserves. A negative number for prior year loss reserve development indicates a redundancy of prior year loss reserves. See the following table for more information about prior year loss reserve development. The increase in the current year losses incurred in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 is primarily due to an increase in new delinquencies reported and an increase in estimated severity on current year delinquencies. The favorable loss development on previously received delinquencies for the three months ended March 31, 2026 and March 31, 2025 primarily resulted from a decrease in the expected claim rate on previously received delinquencies. Home price appreciation experienced in recent years has allowed some borrowers to cure their delinquencies through the sale of their property. The prior year loss reserve development for the three months ended March 31, 2026 and 2025 is shown in table 8.2 below.
Reserve Development on Previously Received Delinquencies
Table | 8.2 |  |  |  |
|  |  | Three Months Ended March 31,
(In thousands) |  | 2026 |  | 2025
Increase (decrease) in estimated claim rate on primary defaults |  | $ | (26,965) |  |  | $ | (46,497) |
Change in estimates related to severity on primary defaults, pool reserves, LAE reserves, reinsurance, and other |  | (4,264) |  |  | (3,409) |
Total prior year loss development (1) |  | $ | (31,229) |  |  | $ | (49,906) |
(1)A positive number for prior year loss reserve development indicates a deficiency of prior year loss reserves. A negative number for prior year loss reserve development indicates a redundancy of prior year loss reserves. Premium Refunds Our estimate of premiums to be refunded on expected claim payments is accrued for separately in “Other Liabilities” on our consolidated balance sheets and was $11.8 million and $11.4 million at March 31, 2026 and December 31, 2025, respectively.

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480081/944-40-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/944-40/tableOfContent + Details
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