
Reserve for losses and LAE

	December 31,
(In thousands)	2022		2021
Primary case	$	398,874	$	790,380
Primary IBNR and LAE	12,169		22,745
Pool and other	9,912		10,011
Mortgage insurance	420,955		823,136
Title insurance	5,888		5,506
Total reserve for losses and LAE	$	426,843	$	828,642


Rollforward of mortgage insurance reserve for losses

	Years Ended December 31,
(In thousands)	2022		2021		2020
Balance at beginning of year	$	823,136	$	844,107	$	401,273
Less: Reinsurance recoverable (1)	66,676		71,769		14,594
Balance at beginning of year, net of reinsurance recoverable	756,460		772,338		386,679
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	160,049		160,565		517,807
Prior years	(499,423)		(141,126)		(34,547)
Total incurred	(339,374)		19,439		483,260
Deduct: Paid claims and LAE related to:
Current year (2)	499		1,112		4,148
Prior years	20,359		34,205		93,453
Total paid	20,858		35,317		97,601
Balance at end of period, net of reinsurance recoverable	396,228		756,460		772,338
Add: reinsurance recoverable (1)	24,727		66,676		71,769
Balance at end of year	$	420,955	$	823,136	$	844,107

(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.

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 37,738 for the year ended December 31, 2022, compared to 37,470 for the year ended December 31, 2021, and 108,025 for the year ended December 31, 2020. For the year ended December 31, 2020, the significant number of new primary default notices were substantially all related to defaults of loans subject to forbearance programs implemented in response to the COVID-19 pandemic.

Our gross Default to Claim Rate assumption applied to new defaults was 8.0% as of both December 31, 2022 and 2021, compared to 8.5% as of December 31, 2020. 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 2022 and 2021 was positively impacted by favorable reserve development on prior year defaults, primarily as a result of more favorable trends in Cures than originally estimated, due 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. These favorable observed trends resulted in reductions in our Default to Claim Rate assumptions for prior year default notices, particularly for those defaults first reported in 2020 following the start of the COVID-19 pandemic.

Our provision for losses during 2020 was also positively impacted by favorable reserve development on prior year defaults, primarily driven by a reduction in certain Default to Claim Rate assumptions for those prior year defaults based on observed trends.

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. While our estimates of ultimate losses on defaults from prior years declined in each recent year due to elevated Cures, which reduced our inventory of primary defaults, COVID-19-

related hardship forbearance plans and foreclosure moratoriums resulted in delays in resolving the remaining defaults, leading to an increase in the Default to Claim Rates applied to the remaining inventory in 2021. During 2022, the ongoing favorable trend in Cures led to reductions in our Default to Claim Rate assumptions.


Default to Claim Rates

	December 31,
	2022		2021		2020
Default to Claim Rate on:
New defaults	8.0	%	8.0	%	8.5	%
Defaults not in Foreclosure Stage
Time in Default: < 2 years (1)	21.8	%	41.6	%	21.0	%
Time in Default: 2 - 5 years	65.0	%	75.0	%	62.5	%
Time in Default: > 5 years	70.0	%	80.0	%	70.0	%
Foreclosure Stage Defaults	75.0	%	85.0	%	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 55.0%, 80.1% and 55.0% for more aged defaults in this category as of December 31, 2022, 2021 and 2020, respectively.

Our estimate of expected Rescissions and Claim Denials (net of expected Reinstatements) embedded in our estimated net Default to Claim Rate is generally based on our recent experience. Consideration is also given to differences in characteristics between those rescinded policies and denied claims and the loans remaining in our defaulted inventory.

Total claims paid decreased in 2022 compared to 2021. The decrease in claims paid is primarily attributable to a reduction in payments made to settle certain previously disclosed legal proceedings.

As of December 31, 2022 and 2021, there was no state that accounted for more than 10% of our mortgage insurance business measured by primary RIF. Texas accounted for 12.0% of our direct NIW for the year ended December 31, 2022, while California accounted for 10.9% and 10.4% for the years ended December 31, 2021 and 2020, respectively.

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.


Incurred losses, net of reinsurance

																					Total of IBNR Liabilities Plus Expected Development on Reported Claims (1)		Cumulative Number of Reported Defaults (2)
($ in thousands)			Years Ended December 31,
	Unaudited
Default Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		As of December 31, 2022
2013	$	505,732	$	405,334	$	401,444	$	404,333	$	402,259	$	400,243	$	399,356	$	399,317	$	398,820	$	397,207	$	5	58,577
2014			337,784		247,074		265,891		264,620		260,098		261,507		261,377		260,254		257,773		6		47,976
2015					222,555		198,186		178,042		183,952		183,546		184,066		182,647		180,435		9		42,607
2016							201,016		165,440		149,753		148,811		148,640		148,349		145,267		14		40,503
2017									180,851		151,802		133,357		130,274		126,989		122,407		25		42,888
2018											131,513		116,634		95,534		88,252		75,262		32		37,369
2019													143,475		136,860		109,416		66,466		79		40,985
2020															504,160		408,809		87,213		193		108,025
2021																	156,328		72,475		184		37,470
2022																			155,908		1,550		37,738
Total																			$	1,560,413

(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	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	34,504	$	191,040	$	307,361	$	357,087	$	379,036	$	388,688	$	392,818	$	395,093	$	395,292	$	395,630
2014			13,108		115,852		200,422		233,607		246,611		252,619		255,742		256,107		255,981
2015					10,479		84,271		142,421		163,916		172,645		174,812		175,874		176,823
2016							11,061		76,616		119,357		134,115		137,306		138,525		139,539
2017									24,653		66,585		99,678		108,484		111,458		112,445
2018											5,584		36,066		54,625		60,926		62,968
2019													4,220		18,703		28,896		35,594
2020															4,148		9,867		14,635
2021																	1,112		2,561
2022																			498
Total																			$	1,196,674
All outstanding liabilities before 2013, net of reinsurance																			22,206
Liabilities for claims, net of reinsurance (1)																			$	385,945


(In thousands)
Incurred losses, net of reinsurance	$	1,560,413
All outstanding liabilities before 2013, net of reinsurance	22,206
Cumulative paid claims, net of reinsurance	(1,196,674)
Liabilities for claims, net of reinsurance	$	385,945

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, 2022.


Net outstanding liabilities - mortgage insurance

(In thousands)	December 31, 2022
Reserve for losses and LAE, net of reinsurance	$	385,945
Reinsurance recoverable on unpaid claims	24,727
Unallocated LAE	10,283
Total gross reserve for losses and LAE (1)	$	420,955

The following is supplementary information about average historical claims duration as of December 31, 2022, 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	6.8%	30.0%	24.5%	10.4%	3.8%	1.5%	0.9%	0.4%	—%	0.1%