Note 3: Insurance Activity

The Company, through WMMRC, reinsures mortgage guaranty risks of mortgage loans originated by affiliates of the Company during the period from 1997 through 2008. WMMRC is (or was) a party to reinsurance agreements with UGRIC, GMIC, MGIC, PMI, Radian, RMIC and Triad. The agreements with UGRIC and Triad were placed into runoff effective May 31, 2008. The agreements with all other primary mortgage insurers were placed into runoff effective September 26, 2008. The reinsurance agreements with Triad, PMI and UGRIC were commuted on August 31, 2009, October 2, 2012 and April 3, 2014, respectively.

All agreements between WMMRC and the primary mortgage insurers are on an excess of loss basis, except for certain reinsurance treaties with GMIC and Radian during 2007 and 2008, which are reinsured on a 50% quota share basis. Pursuant to the excess of loss reinsurance treaties, WMMRC reinsures a second loss layer which ranges from 5% to 10% of the risk in force in excess of the primary mortgage insurer’s first loss percentage which range from 4% to 5%. Each calendar year, or book year, is treated separately from other years when calculating losses. In return for accepting a portion of the risk, WMMRC receives, net of ceding commission, a percentage of the premium that ranges from 25% to 40%.

As security for the ceding insurers, WMMRC has entered into separate trust agreements with each of the primary mortgage insurance companies whereby a portion of the funds from premiums assumed are held in trust accounts for the benefit of each separate insurer. Pursuant to the terms of the reinsurance agreements, WMMRC is required to keep such assets in trust for a minimum of five years and are subject to claims for up to ten years from termination of obligations arising from the last year in which insurance business was written prior to runoff. Release of funds from the trust by WMMRC requires approval from the primary mortgage insurance companies.

Premiums assumed and earned are as follows for the periods ended September 30, 2016 and 2015, respectively:

	Three months ended September 30, 2016		Three months ended September 30, 2015		Nine months ended September 30, 2016		Nine months ended September 30, 2015
Premiums assumed	$	739	$	1,166	$	1,963	$	3,680
Change in unearned premiums		47		81		463		258
Premiums earned	$	786	$	1,247	$	2,426	$	3,938

The components of the liability for losses and loss adjustment reserves are as follows as of September 30, 2016 and December 31, 2015, respectively:


	September 30, 2016		December 31, 2015
Case-basis reserves	$	576	$	4,193
IBNR reserves		—		75
Premium deficiency reserves		1,754		795
Total losses and loss adjustment reserves	$	2,330	$	5,063

Losses and loss adjustment reserve activity are as follows for the nine months ended September 30, 2016 and the year ended December 31, 2015, respectively:


	Nine months ended September 30, 2016			Year ended December 31, 2015
Balance at beginning of period	$	5,063		$	18,947
Incurred or (released) - prior periods		702			(1,115	)
Paid or terminated - prior periods		(3,435	)		(12,769	)
Total losses and loss adjustment reserves	$	2,330		$	5,063

The loss contract reserve balance is analyzed and adjusted quarterly. The balance in the reserve was $7.3 million and $9.6 million at September 30, 2016 and December 31, 2015, respectively. The value of this reserve decreased by $2.3 million during the nine months ended September 30, 2016 and decreased by $2.7 million during the nine months ended September 30, 2015. In periods during which a reduction in the loss contract reserve occurs, a corresponding decrease in expense is reflected in the statement of operations for the respective period.