Losses and LAE

9 Months Ended

Sep. 30, 2023

Our reserve for losses and LAE consisted of the following as of the dates indicated.


Reserve for losses and LAE

(In thousands)	September 30, 2023		December 31, 2022
Primary case	$	343,336	$	398,874
Primary IBNR and LAE	10,005		12,169
Pool and other	8,497		9,912
Mortgage insurance	361,838		420,955
Title insurance	5,730		5,888
Total reserve for losses and LAE	$	367,568	$	426,843

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

	Nine Months Ended September 30,
(In thousands)	2023		2022
Balance at beginning of period	$	420,955	$	823,136
Less: Reinsurance recoverables (1)	24,727		66,676
Balance at beginning of period, net of reinsurance recoverables	396,228		756,460
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	130,740		115,159
Prior years	(177,483)		(411,024)
Total incurred	(46,743)		(295,865)
Deduct: Paid claims and LAE related to:
Current year (2)	204		381
Prior years	10,712		12,123
Total paid	10,916		12,504
Balance at end of period, net of reinsurance recoverables	338,569		448,091
Add: Reinsurance recoverables (1)	23,269		29,656
Balance at end of period	$	361,838	$	477,747

(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.

Reserve Activity

Incurred Losses

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 31,555 for the nine months ended September 30, 2023, compared to 27,003 for the nine months ended September 30, 2022, representing an increase of 17%. This increase in new primary defaults is consistent with the natural seasoning of the portfolio, given the increase in our IIF in recent years.

Our gross Default to Claim Rate assumption applied to new defaults was 8.0% as of both September 30, 2023, and September 30, 2022, 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 both the first nine months of 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 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.

Claims Paid

Total claims paid were materially unchanged for the nine months ended September 30, 2023, compared to the same period in 2022.

For additional information about our Reserve for Losses and LAE, including our accounting policies, see Notes 2 and 11 of Notes to Consolidated Financial Statements in our 2022 Form 10-K.