
(In thousands)	2026		2025
Reserve for losses and LAE at beginning of period	$	446,822	$	328,866
Less: Reinsurance recoverables	56,219		36,754
Net reserve for losses and LAE at beginning of period	390,603		292,112
Add provision for losses and LAE, net of reinsurance, occurring in:
Current period	264,679		159,447
Prior years	(84,013)		(66,183)
Net incurred losses and LAE during the current period	180,666		93,264
Deduct payments for losses and LAE, net of reinsurance, occurring in:
Current period	1,282		918
Prior years	55,818		35,376
Net loss and LAE payments during the current period	57,100		36,294
Net reserve for losses and LAE at end of period	514,169		349,082
Plus: Reinsurance recoverables, net of unpaid claims	71,309		48,056
Reserve for losses and LAE at end of period	$	585,478	$	397,138

For the nine months ended September 30, 2026, $55.8 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There has been $84.0 million of favorable prior year development during the nine months ended September 30, 2026. Net reserves remaining as of September 30, 2026 for prior years are $250.8 million as a result of re-estimation of unpaid losses and loss adjustment expenses. For the nine months ended September 30, 2025, $35.4 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There was $66.2 million of favorable prior year development during the nine months ended September 30, 2025. Net reserves remaining as of September 30, 2025 for prior years were $190.6 million as a result of re-estimation of unpaid losses and loss adjustment expenses. In both periods, the favorable prior years' loss development was the result of a re-estimation of amounts ultimately to be paid on prior year defaults in the default inventory, including the impact of previously identified defaults that cured. Original estimates are increased or decreased as additional information becomes known regarding individual claims.

On September 26, 2024, Hurricane Helene made landfall and caused property damage in certain counties in Florida, Georgia, South Carolina, North Carolina, Tennessee and Virginia. On October 9, 2024, Hurricane Milton made landfall, causing damage in certain counties in Florida. Loans in default increased by 3,620 in the year ended December 31, 2024, including 2,119 defaults we identified as hurricane-related defaults. Based on prior industry experience, we expected the ultimate number of hurricane-related defaults that result in claims would be less than the default-to-claim experience of non-hurricane-related defaults. In addition, under our master policy, our exposure may be limited on hurricane-related claims. For example, we are permitted to exclude a claim entirely where damage to the property underlying a mortgage was the proximate cause of the default and adjust a claim where the property underlying a mortgage in default is subject to unrestored physical damage. Accordingly, when establishing our loss reserves as of December 31, 2024, we applied a lower estimated claim rate to new default notices received in the fourth quarter of 2024 from the affected areas than the claim rate we apply to other notices in our default inventory.

During 2025 and through the second quarter of 2026, we observed a decline in the number of defaults associated with hurricanes Helene and Milton. In the second quarter of 2026, we began reserving for the remaining hurricane-related defaults consistently with the standard methodology used for our default inventory, which did not have a significant impact on our provision for losses and loss adjustment expenses in the nine months ended September 30, 2026 or the reserve balance at September 30, 2026.

Mortgage interest rates remain elevated, with the average 30-year mortgage interest rate closing above 7.30% at September 30, 2026, which has reduced home sale activity and may affect the options available to delinquent borrowers. It is reasonably possible that our estimate of losses could change in the near term as a result of changes in the economic environment, the impact of elevated mortgage interest rates on home sale activity, housing inventory and home prices.