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Loss Reserves (Tables)
 6 Months Ended
Jun. 30, 2016
Insurance Loss Reserves [Abstract]  
Reconciliation of beginning and ending loss reserves
The following table provides a reconciliation of beginning and ending loss reserves for the six months ended June 30, 2016 and 2015:
 
 
Six months ended June 30,
(In thousands)
 
2016
 
2015
Reserve at beginning of period
 
$
1,893,402

 
$
2,396,807

Less reinsurance recoverable
 
44,487

 
57,841

Net reserve at beginning of period
 
1,848,915

 
2,338,966

 
 
 
 
 
Losses incurred:
 
 
 
 
Losses and LAE incurred in respect of defaults related to:
 
 
 
 
Current year
 
196,543

 
223,564

Prior years (1)
 
(64,941
)
 
(51,541
)
Subtotal
 
131,602

 
172,023

 
 
 
 
 
Losses paid:
 
 
 
 
Losses and LAE paid in respect of defaults related to:
 
 
 
 
Current year
 
1,396

 
2,382

Prior years
 
392,007

 
451,317

Reinsurance terminations (2)
 
(4
)
 
(15
)
Subtotal
 
393,399

 
453,684

 
 
 
 
 
Net reserve at end of period
 
1,587,118

 
2,057,305

Plus reinsurance recoverables
 
45,215

 
53,456

 
 
 
 
 
Reserve at end of period
 
$
1,632,333

 
$
2,110,761

(1) 
A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves.
(2) 
In a termination or commutation, the reinsurance agreement is cancelled, with no future premium ceded and funds for any incurred but unpaid losses transferred to us. The transferred funds result in an increase in our investment portfolio (including cash and cash equivalents) and a decrease in net losses paid (reduction in losses incurred). In addition, there is an offsetting decrease in the reinsurance recoverable (increase in losses incurred), and thus there is no net impact to losses incurred.
Prior year development of the reserves
The prior year development of the reserves in the first six months of 2016 and 2015 is reflected in the following table.
 
 
Six months ended June 30,
(In millions)
 
2016
 
2015
Decrease in estimated claim rate on primary defaults
 
$
(76
)
 
$
(59
)
Increase in estimated severity on primary defaults
 
17

 
15

Change in estimates related to pool reserves, LAE reserves and reinsurance
 
(6
)
 
(8
)
Total prior year loss development (1)
 
$
(65
)
 
$
(52
)
(1) 
A negative number for prior year loss development indicates a redundancy of prior year loss reserves, and a positive number indicates a deficiency of prior year loss reserves.
Rollforward of primary default inventory
A rollforward of our primary default inventory for the three and six months ended June 30, 2016 and 2015 appears in the following table. 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.
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Default inventory at beginning of period
 
55,590

 
72,236

 
62,633

 
79,901

New notices
 
16,080

 
17,451

 
32,811

 
36,347

Cures
 
(15,640
)
 
(17,897
)
 
(34,693
)
 
(39,664
)
Paids (including those charged to a deductible or captive)
 
(3,195
)
 
(4,140
)
 
(6,568
)
 
(8,713
)
Rescissions and denials
 
(142
)
 
(172
)
 
(352
)
 
(393
)
Other items removed from inventory
 
(135
)
 
(1,121
)
 
(1,273
)
 
(1,121
)
Default inventory at end of period
 
52,558

 
66,357

 
52,558

 
66,357
Aging of the primary default inventory
As of June 30, 2016 the percentage of loans in the inventory that have been in default for 12 or more consecutive months remained consistent compared with the prior year end and declined compared to one year prior, as shown in the following table. Historically as a default ages it becomes more likely to result in a claim. The percentage of loans that have been in default for 12 or more consecutive months and the number of loans in our primary claims received inventory have been affected by our suspended rescissions and the resolution of certain of those rescissions discussed below and in Note 5 – “Litigation and Contingencies.”
Consecutive months in default
June 30, 2016
 
December 31, 2015
 
June 30, 2015
3 months or less
11,547

 
22
%
 
13,053

 
21
%
 
12,545

 
19
%
4 - 11 months
12,680

 
24
%
 
15,763

 
25
%
 
15,487

 
23
%
12 months or more (1)
28,331

 
54
%
 
33,817

 
54
%
 
38,325

 
58
%
Total primary default inventory
52,558

 
100
%
 
62,633

 
100
%
 
66,357

 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
Primary claims received inventory included in ending default inventory
1,829

 
3
%
 
2,769

 
4
%
 
3,440

 
5
%
(1) 
Approximately 49%, 50%, and 51% of the primary default inventory in default for 12 consecutive months or more has been in default for at least 36 consecutive months as of June 30, 2016, December 31, 2015, and June 30, 2015, respectively.
Number of payments delinquent
The number of payments that a borrower is delinquent is shown in the table below.
Number of payments delinquent
June 30, 2016
 
December 31, 2015
 
June 30, 2015
3 payments or less
17,299

 
33
%
 
20,360

 
33
%
 
19,274

 
29
%
4 - 11 payments
12,746

 
24
%
 
15,092

 
24
%
 
15,710

 
24
%
12 payments or more
22,513

 
43
%
 
27,181

 
43
%
 
31,373

 
47
%
Total primary default inventory
52,558

 
100
%
 
62,633

 
100
%
 
66,357

 
100
%