Liability for Policy and Contract Claims

3 Months Ended

Mar. 31, 2023

Liability for Policy and Contract Claims

(15) Liability for Policy and Contract Claims

The following table presents the balances of our liability for policy and contract claims as of the dates indicated:

(Amounts in millions)	March 31, 2023		December 31, 2022
Enact segment	$	502	$	519
Life and Annuities segment (1)		157		158
Other mortgage insurance business		6		6
Total liability for policy and contract claims	$	665	$	683

(1)  Primarily includes balances related to our universal and term universal life insurance products.

The following table sets forth changes in our liability for policy and contract claims as of and for the periods indicated:

	Three months ended March 31,
(Amounts in millions)	2023			2022
Beginning balance as of January 1	$	683		$	819
Less reinsurance recoverables		(23	)		(26	)
Net beginning balance		660			793
Incurred related to insured events of:
Current year		215			243
Prior years		(47	)		(31	)
Total incurred		168			212
Paid related to insured events of:
Current year		(117	)		(146	)
Prior years		(74	)		(87	)
Total paid		(191	)		(233	)
Foreign currency translation		1			—
Net ending balance		638			772
Add reinsurance recoverables		27			37
Ending balance as of March 31	$	665		$	809

The liability for policy and contract claims represents our current best estimate; however, there may be future adjustments to this estimate and related assumptions. Such adjustments, reflecting any variety of new and adverse trends, could be significant, and result in increases in reserves by an amount that could be material to our results of operations and financial condition and liquidity. In addition, loss reserves recorded on new delinquencies in our Enact segment have a high degree of estimation, particularly due to the level of uncertainty regarding whether borrowers in forbearance will ultimately cure or result in a claim payment, as well as the timing and severity of those payments. Given the extended period of time that may exist between the reporting of a delinquency and the claim payment, and changes in economic conditions and the real estate market, significant uncertainty and variability exist on amounts actually paid.

The favorable development related to insured events of prior years for the three months ended March 31, 2023 was predominantly associated with a $70 million favorable reserve adjustment in our Enact segment primarily related to better than expected cure performance on COVID-19 delinquencies from 2020 and 2021. The favorable development related to insured events of prior years for the three months ended March 31, 2022 was largely related to a $50 million reserve release in our Enact segment on COVID-19 delinquencies from 2020.