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Losses and LAE | 12 Months Ended
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Dec. 31, 2024
Insurance Loss Reserves [Abstract] |
Losses and LAE | 11. Losses a nd LAE Our reserve for losses and LAE consisted of the following as of the dates indicated.
Reserve for losses and LAE |
|  | December 31, |
(In thousands) |  | 2024 |  |  | 2023 |
Primary case |  | $ | 336,553 |  |  | $ | 344,235 |
Primary IBNR and LAE |  |  | 13,399 |  |  |  | 12,177 |
Pool and other |  |  | 4,479 |  |  |  | 8,511 |
Mortgage insurance |  |  | 354,431 |  |  |  | 364,923 |
Title insurance |  |  | 5,895 |  |  |  | 5,225 |
Total reserve for losses and LAE |  | $ | 360,326 |  |  | $ | 370,148 |
Provision for losses consisted of the following.
Provision for losses |  |  |  |
|  | Years Ended December 31, |
(In thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Mortgage insurance |  | $ | (2,248 | ) |  | $ | (42,136 | ) |  | $ | (339,374 | )
Title insurance |  |  | (266 | ) |  |  | (390 | ) |  |  | 1,135 |
Total provision for losses |  | $ | (2,514 | ) |  | $ | (42,526 | ) |  | $ | (338,239 | )
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. 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 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. Default to Claim Rate 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. Claim Severity 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. Claims Paid Total claims paid increased slightly in 2024 compared to 2023, including an increase in claims paid attributable to commutations and settlements. Concentration of Risk 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. Additional Disclosures 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 |
The following table provides a reconciliation of the net incurred losses and paid claims development tables above to the mortgage insurance reserve for losses and LAE at December 31, 2024.
Net outstanding liabilities - mortgage insurance |
(In thousands) |  | December 31, 2024 |
Reserve for losses and LAE, net of reinsurance |  | $ | 308,290 |
Reinsurance recoverable on unpaid claims |  |  | 34,144 |
Unallocated LAE |  |  | 11,997 |
Total gross reserve for losses and LAE (1) |  | $ | 354,431 |
(1) Excludes title insurance reserve for losses and LAE of $6 million. The following is supplementary information about average historical claims duration as of December 31, 2024, representing the average distribution of when claims are paid relative to the year of default.
Average annual percentage payout of incurred losses by age, net of reinsurance (unaudited)
Years |  | 1 |  | 2 |  | 3 |  | 4 |  | 5 |  | 6 |  | 7 |  | 8 |  | 9 |  | 10
Mortgage insurance |  | 8.1% |  | 28.2% |  | 23.9% |  | 11.5% |  | 4.0% |  | 1.3% |  | 0.6% |  | 0.3% |  | 0.2% |  | 0.4%

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