Question-and-Answer Session
(Operator Instruction) Our first question is from Mike Grasher. You may ask your question and please state your company name?
Michael Grasher - Piper Jaffray
Good morning everyone. It's Mike Grasher at Piper Jaffray. I wanted to bring David into the picture here. David, could you give us some color on the current trends that you're seeing in the portfolio. Has the month of the April brought any changes in terms of trends in delinquencies and forclosures? And I'll start with that, then a follow-up.
David H. Katkov - Executive Vice President, and President and Chief Operating Officer, PMI Mortgage Insurance Co.
Okay, Mike. Why don't I take the first part of the question in terms of trends in the portfolio. As Steve mentioned in his comments, we're very pleased with the underlying loan attributes that we see in the 2008 book. And in truth that really started in the late third quarter of 2007 when we made guideline changes across a number of different risk attributes, it could be FICO scores, it could be high LTV's, et cetera.
So from our perspective, in spite of the challenges that home price appreciation presents to all market participants, we're very confident that the 2008 book for PMI will be a very profitable one. Now the other question, which is, what about the risk that we own today? As you know, Mike we put out a very comprehensive statistical supplement, so I'd reference that, I won't go through it in detail. But let me highlight a couple of issues. Clearly we continue to see pressure in both Florida, in California in terms about primary default rate. That's up markedly from one year ago at this time. I don't think we're in a position to call what that ultimately will be, but today both for California and Florida our primary default rate is 14% for each of those states. Now the mitigating factor to that is that Florida represents less than 11% and California roughly 8.4%.
So we've done a good job I think in years past diversifying risk. We've also have given the addition to the loan/loss provision that we announced and described today. We are feeling pressure in terms of claim size as well as severity. I think the severity issue is directly linked to the decline in home price appreciation in most markets. I think Steve summarized in his opening remarks, while we definitely feel on plan in terms of claims paid we are continuing to see adverse development as I believe all market participants are in terms of NOD's et cetera.
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