Not Applicable | ||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
September 30, | December 31, | |||||||||||||
(In thousands, except per share amounts) | 2021 | 2020 | ||||||||||||
Assets | ||||||||||||||
Investments | ||||||||||||||
Fixed maturities available for sale, at fair value (amortized cost: 2021 — $ 2020 — $ | $ | $ | ||||||||||||
Short-term investments available for sale, at fair value (amortized cost: 2021 — $ | ||||||||||||||
Total investments available for sale | ||||||||||||||
Other invested assets | ||||||||||||||
Total investments | ||||||||||||||
Cash | ||||||||||||||
Accrued investment income | ||||||||||||||
Accounts receivable | ||||||||||||||
Deferred policy acquisition costs | ||||||||||||||
Property and equipment (at cost, less accumulated depreciation of $ $ | ||||||||||||||
Prepaid federal income tax | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||
Liabilities | ||||||||||||||
Reserve for losses and LAE | $ | $ | ||||||||||||
Unearned premium reserve | ||||||||||||||
Net deferred tax liability | ||||||||||||||
Credit facility borrowings (at carrying value, less unamortized deferred costs of $ | ||||||||||||||
Other accrued liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (see Note 7) | ||||||||||||||
Stockholders’ Equity | ||||||||||||||
Common shares, $ | ||||||||||||||
Authorized - shares in 2020 | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive income | ||||||||||||||
Retained earnings | ||||||||||||||
Total stockholders’ equity | ||||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands, except per share amounts) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Net premiums written | $ | $ | $ | $ | ||||||||||||||||||||||
Decrease in unearned premiums | ||||||||||||||||||||||||||
Net premiums earned | ||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||
Realized investment gains, net | ||||||||||||||||||||||||||
Income (loss) from other invested assets | ( | ( | ||||||||||||||||||||||||
Other income | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Losses and expenses: | ||||||||||||||||||||||||||
(Benefit) provision for losses and LAE | ( | |||||||||||||||||||||||||
Other underwriting and operating expenses | ||||||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||
Total losses and expenses | ||||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Income tax expense | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||
Change in unrealized (depreciation) appreciation of investments, net of tax (benefit) expense of ($ | ( | ( | ||||||||||||||||||||||||
Total other comprehensive (loss) income | ( | ( | ||||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Common Shares | ||||||||||||||||||||||||||
Balance, beginning of period | $ | $ | $ | $ | ||||||||||||||||||||||
Issuance of common shares | — | — | — | |||||||||||||||||||||||
Issuance of management incentive shares | — | — | ||||||||||||||||||||||||
Cancellation of treasury stock | ( | — | ( | ( | ||||||||||||||||||||||
Balance, end of period | ||||||||||||||||||||||||||
Additional Paid-In Capital | ||||||||||||||||||||||||||
Balance, beginning of period | ||||||||||||||||||||||||||
Issuance of common shares, net of issuance costs of $ | — | ( | — | |||||||||||||||||||||||
Dividends and dividend equivalents declared | ||||||||||||||||||||||||||
Issuance of management incentive shares | — | — | ( | ( | ||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||
Cancellation of treasury stock | ( | — | ( | ( | ||||||||||||||||||||||
Balance, end of period | ||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||
Balance, beginning of period | ||||||||||||||||||||||||||
Other comprehensive (loss) income | ( | ( | ||||||||||||||||||||||||
Balance, end of period | ||||||||||||||||||||||||||
Retained Earnings | ||||||||||||||||||||||||||
Balance, beginning of period | ||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||
Dividends and dividend equivalents declared | ( | ( | ( | ( | ||||||||||||||||||||||
Balance, end of period | ||||||||||||||||||||||||||
Treasury Stock | ||||||||||||||||||||||||||
Balance, beginning of period | ||||||||||||||||||||||||||
Treasury stock acquired | ( | — | ( | ( | ||||||||||||||||||||||
Cancellation of treasury stock | — | |||||||||||||||||||||||||
Balance, end of period | ||||||||||||||||||||||||||
Total Stockholders' Equity | $ | $ | $ | $ |
Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2021 | 2020 | ||||||||||||
Operating Activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Gain on the sale of investments, net | ( | ( | ||||||||||||
(Income) loss from other invested assets | ( | |||||||||||||
Distribution of income from other invested assets | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Amortization of premium on investment securities | ||||||||||||||
Deferred income tax provision | ||||||||||||||
Change in: | ||||||||||||||
Accrued investment income | ( | ( | ||||||||||||
Accounts receivable | ( | |||||||||||||
Deferred policy acquisition costs | ( | |||||||||||||
Prepaid federal income tax | ( | ( | ||||||||||||
Other assets | ( | ( | ||||||||||||
Reserve for losses and LAE | ||||||||||||||
Unearned premium reserve | ( | ( | ||||||||||||
Other accrued liabilities | ||||||||||||||
Net cash provided by operating activities | ||||||||||||||
Investing Activities | ||||||||||||||
Net change in short-term investments | ( | |||||||||||||
Purchase of investments available for sale | ( | ( | ||||||||||||
Proceeds from maturity of investments available for sale | ||||||||||||||
Proceeds from sales of investments available for sale | ||||||||||||||
Purchase of other invested assets | ( | ( | ||||||||||||
Return of investment from other invested assets | ||||||||||||||
Purchase of property and equipment | ( | ( | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Financing Activities | ||||||||||||||
Issuance of common shares, net of costs | ||||||||||||||
Credit facility borrowings | ||||||||||||||
Credit facility repayments | ( | |||||||||||||
Treasury stock acquired | ( | ( | ||||||||||||
Payment of issuance costs for credit facility | ( | |||||||||||||
Dividends paid | ( | ( | ||||||||||||
Net cash (used in) provided by financing activities | ( | |||||||||||||
Net (decrease) increase in cash | ( | |||||||||||||
Cash at beginning of year | ||||||||||||||
Cash at end of period | $ | $ | ||||||||||||
Supplemental Disclosure of Cash Flow Information | ||||||||||||||
Income tax payments | $ | ( | $ | ( | ||||||||||
Interest payments | ( | ( | ||||||||||||
September 30, 2021 (In thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | ( | $ | |||||||||||||||||||||
U.S. agency securities | ||||||||||||||||||||||||||
U.S. agency mortgage-backed securities | ( | |||||||||||||||||||||||||
Municipal debt securities (1) | ( | |||||||||||||||||||||||||
Non-U.S. government securities | ( | |||||||||||||||||||||||||
Corporate debt securities (2) | ( | |||||||||||||||||||||||||
Residential and commercial mortgage securities | ( | |||||||||||||||||||||||||
Asset-backed securities | ( | |||||||||||||||||||||||||
Money market funds | ||||||||||||||||||||||||||
Total investments available for sale | $ | $ | $ | ( | $ |
December 31, 2020 (In thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | ( | $ | |||||||||||||||||||||
U.S. agency securities | ||||||||||||||||||||||||||
U.S. agency mortgage-backed securities | ( | |||||||||||||||||||||||||
Municipal debt securities (1) | ( | |||||||||||||||||||||||||
Non-U.S. government securities | ||||||||||||||||||||||||||
Corporate debt securities (2) | ( | |||||||||||||||||||||||||
Residential and commercial mortgage securities | ( | |||||||||||||||||||||||||
Asset-backed securities | ( | |||||||||||||||||||||||||
Money market funds | ( | |||||||||||||||||||||||||
Total investments available for sale | $ | $ | $ | ( | $ |
September 30, | December 31, | |||||||||||||
(1) The following table summarizes municipal debt securities as of : | 2021 | 2020 | ||||||||||||
Special revenue bonds | % | % | ||||||||||||
General obligation bonds | ||||||||||||||
Certificate of participation bonds | ||||||||||||||
Tax allocation bonds | ||||||||||||||
Total | % | % |
September 30, | December 31, | |||||||||||||
(2) The following table summarizes corporate debt securities as of : | 2021 | 2020 | ||||||||||||
Financial | % | % | ||||||||||||
Consumer, non-cyclical | ||||||||||||||
Communications | ||||||||||||||
Industrial | ||||||||||||||
Consumer, cyclical | ||||||||||||||
Energy | ||||||||||||||
Technology | ||||||||||||||
Utilities | ||||||||||||||
Basic materials | ||||||||||||||
Government | ||||||||||||||
Total | % | % |
(In thousands) | Amortized Cost | Fair Value | ||||||||||||
U.S. Treasury securities: | ||||||||||||||
Due in 1 year | $ | $ | ||||||||||||
Due after 1 but within 5 years | ||||||||||||||
Due after 5 but within 10 years | ||||||||||||||
Due after 10 years | ||||||||||||||
Subtotal | ||||||||||||||
U.S. agency securities: | ||||||||||||||
Due in 1 year | ||||||||||||||
Subtotal | ||||||||||||||
Municipal debt securities: | ||||||||||||||
Due in 1 year | ||||||||||||||
Due after 1 but within 5 years | ||||||||||||||
Due after 5 but within 10 years | ||||||||||||||
Due after 10 years | ||||||||||||||
Subtotal | ||||||||||||||
Non-U.S. government securities: | ||||||||||||||
Due in 1 year | ||||||||||||||
Due after 1 but within 5 years | ||||||||||||||
Due after 5 but within 10 years | ||||||||||||||
Due after 10 years | ||||||||||||||
Subtotal | ||||||||||||||
Corporate debt securities: | ||||||||||||||
Due in 1 year | ||||||||||||||
Due after 1 but within 5 years | ||||||||||||||
Due after 5 but within 10 years | ||||||||||||||
Due after 10 years | ||||||||||||||
Subtotal | ||||||||||||||
U.S. agency mortgage-backed securities | ||||||||||||||
Residential and commercial mortgage securities | ||||||||||||||
Asset-backed securities | ||||||||||||||
Money market funds | ||||||||||||||
Total investments available for sale | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Realized gross gains | $ | $ | $ | $ | ||||||||||||||||||||||
Realized gross losses |
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||||
September 30, 2021 (In thousands) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
U.S. agency mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Municipal debt securities | ( | ( | ||||||||||||||||||||||||||||||||||||
Non-U.S. government securities | ( | ( | ||||||||||||||||||||||||||||||||||||
Corporate debt securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Residential and commercial mortgage securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | $ | $ | ( |
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||||
December 31, 2020 (In thousands) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
U.S. agency mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Municipal debt securities | ( | ( | ||||||||||||||||||||||||||||||||||||
Corporate debt securities | ( | ( | ||||||||||||||||||||||||||||||||||||
Residential and commercial mortgage securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Asset-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Money market funds | ( | ( | ||||||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | $ | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Fixed maturities | $ | $ | $ | $ | ||||||||||||||||||||||
Short-term investments | ||||||||||||||||||||||||||
Gross investment income | ||||||||||||||||||||||||||
Investment expenses | ( | ( | ( | ( | ||||||||||||||||||||||
Net investment income | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Net premiums written: | ||||||||||||||||||||||||||
Direct | $ | $ | $ | $ | ||||||||||||||||||||||
Ceded (1) | ( | ( | ( | ( | ||||||||||||||||||||||
Net premiums written | $ | $ | $ | $ | ||||||||||||||||||||||
Net premiums earned: | ||||||||||||||||||||||||||
Direct | $ | $ | $ | $ | ||||||||||||||||||||||
Ceded (1) | ( | ( | ( | ( | ||||||||||||||||||||||
Net premiums earned | $ | $ | $ | $ |
Vintage Year | Reinsurer | Effective Date | Optional Termination Date | ||||||||||||||||||||
2015 & 2016 | Radnor Re 2019-2 Ltd. | June 20, 2019 | June 25, 2024 | ||||||||||||||||||||
2017 | Radnor Re 2018-1 Ltd. | March 22, 2018 | March 25, 2023 | (1) | |||||||||||||||||||
2017 | Panel of Reinsurers | November 1, 2018 | October 1, 2023 | (2) | |||||||||||||||||||
2018 | Radnor Re 2019-1 Ltd. | February 28, 2019 | February 25, 2026 | ||||||||||||||||||||
2018 | Panel of Reinsurers | February 28, 2019 | February 25, 2026 | ||||||||||||||||||||
2019 | Radnor Re 2020-1 Ltd. | January 30, 2020 | January 25, 2027 | ||||||||||||||||||||
2019 | Panel of Reinsurers | January 30, 2020 | January 25, 2027 | ||||||||||||||||||||
2019 & 2020 | Radnor Re 2020-2 Ltd. | October 8, 2020 | October 25, 2027 | ||||||||||||||||||||
2020 & 2021 | Radnor Re 2021-1 Ltd. | June 23, 2021 | June 26, 2028 |
(In thousands) | Remaining Reinsurance in Force | ||||||||||||||||||||||||||||||||||||||||
Vintage Year | Remaining Insurance in Force | Remaining Risk in Force | ILN | Other Reinsurance | Total | Remaining First Layer Retention | |||||||||||||||||||||||||||||||||||
2015 & 2016 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
2017 | (6) | ||||||||||||||||||||||||||||||||||||||||
2018 | (7) | ||||||||||||||||||||||||||||||||||||||||
2019 (3) | (8) | ||||||||||||||||||||||||||||||||||||||||
2019 & 2020 (4) | |||||||||||||||||||||||||||||||||||||||||
2020 & 2021 (5) | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Maximum Exposure to Loss | ||||||||||||||||||||||||||
(In thousands) | Total VIE Assets | On - Balance Sheet | Off - Balance Sheet | Total | ||||||||||||||||||||||
Radnor Re 2018-1 Ltd. | $ | $ | $ | $ | ||||||||||||||||||||||
Radnor Re 2019-1 Ltd. | ( | ( | ||||||||||||||||||||||||
Radnor Re 2019-2 Ltd. | ( | ( | ||||||||||||||||||||||||
Radnor Re 2020-1 Ltd. | ( | ( | ||||||||||||||||||||||||
Radnor Re 2020-2 Ltd. | ( | ( | ||||||||||||||||||||||||
Radnor Re 2021-1 Ltd. | ( | ( | ||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( |
(In thousands) | 2021 | 2020 | ||||||||||||
Reserve for losses and LAE at beginning of period | $ | $ | ||||||||||||
Less: Reinsurance recoverables | ||||||||||||||
Net reserve for losses and LAE at beginning of period | ||||||||||||||
Add provision for losses and LAE, net of reinsurance, occurring in: | ||||||||||||||
Current period | ||||||||||||||
Prior years | ( | ( | ||||||||||||
Net incurred losses and LAE during the current period | ||||||||||||||
Deduct payments for losses and LAE, net of reinsurance, occurring in: | ||||||||||||||
Current period | ||||||||||||||
Prior years | ||||||||||||||
Net loss and LAE payments during the current period | ||||||||||||||
Net reserve for losses and LAE at end of period | ||||||||||||||
Plus: Reinsurance recoverables | ||||||||||||||
Reserve for losses and LAE at end of period | $ | $ | ||||||||||||
Quarter Ended | 2020 | ||||||||||
March 31 | $ | ||||||||||
June 30 | |||||||||||
September 30 | |||||||||||
December 31 | |||||||||||
Total dividends per common share declared and paid | $ | ||||||||||
Quarter Ended | 2021 | ||||||||||
March 31 | $ | ||||||||||
June 30 | |||||||||||
September 30 | |||||||||||
Total dividends per common share declared and paid | $ |
Time and Performance- Based Share Awards | Time-Based Share Awards | Share Units | DEUs | |||||||||||||||||||||||||||||||||||||||||||||||
(Shares in thousands) | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Share Units | Weighted Average Grant Date Fair Value | Dividend Equivalent Units | Weighted Average Grant Date Fair Value | ||||||||||||||||||||||||||||||||||||||||||
Outstanding at beginning of year | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||||||||||||||||||||||||||
Vested | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Forfeited | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Outstanding at September 30, 2021 | $ | $ | $ | $ |
Relative Total Shareholder Return vs. S&P 1500 Financial Services Index | ||||||||||||||||||||||||||
≤25th percentile | 50th percentile "Target" | ≥75th percentile | ||||||||||||||||||||||||
Three-Year Book Value Per Share CAGR | % | % | % | |||||||||||||||||||||||
% | % | % | ||||||||||||||||||||||||
% | % | % | ||||||||||||||||||||||||
% | % | % | ||||||||||||||||||||||||
% | % | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Compensation expense | $ | $ | $ | $ | ||||||||||||||||||||||
Income tax benefit |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands, except per share amounts) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Basic weighted average shares outstanding | ||||||||||||||||||||||||||
Dilutive effect of nonvested shares | ||||||||||||||||||||||||||
Diluted weighted average shares outstanding | ||||||||||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ |
2018 Performance-Based Grants | % | |||||||
2019 Performance-Based Grants | % | |||||||
2020 Performance-Based Grants | % |
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | Before Tax | Tax Effect | Net of Tax | ||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on investments: | ||||||||||||||||||||||||||||||||||||||
Unrealized holding (losses) gains arising during the period | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Less: Reclassification adjustment for gains included in net income (1) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Net unrealized (losses) gains on investments | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Balance at end of period | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | Before Tax | Tax Effect | Net of Tax | ||||||||||||||||||||||||||||||||
Balance at beginning of year | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on investments: | ||||||||||||||||||||||||||||||||||||||
Unrealized holding (losses) gains arising during the period | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Less: Reclassification adjustment for gains included in net income (1) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Net unrealized (losses) gains on investments | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Balance at end of period | $ | $ | ( | $ | $ | $ | ( | $ |
September 30, 2021 (In thousands) | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. agency securities | ||||||||||||||||||||||||||
U.S. agency mortgage-backed securities | ||||||||||||||||||||||||||
Municipal debt securities | ||||||||||||||||||||||||||
Non-U.S. government securities | ||||||||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||||||||
Residential and commercial mortgage securities | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Money market funds | ||||||||||||||||||||||||||
Total assets at fair value (1) (2) | $ | $ | $ | $ | ||||||||||||||||||||||
December 31, 2020 (In thousands) | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. agency securities | ||||||||||||||||||||||||||
U.S. agency mortgage-backed securities | ||||||||||||||||||||||||||
Municipal debt securities | ||||||||||||||||||||||||||
Non-U.S. government securities | ||||||||||||||||||||||||||
Corporate debt securities | ||||||||||||||||||||||||||
Residential and commercial mortgage securities | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Money market funds | ||||||||||||||||||||||||||
Total assets at fair value (1) | $ | $ | $ | $ | ||||||||||||||||||||||
(In thousands) | 2021 | 2020 | ||||||||||||
Essent Guaranty | ||||||||||||||
Statutory net income | $ | $ | ||||||||||||
Statutory surplus | ||||||||||||||
Contingency reserve liability | ||||||||||||||
Essent PA | ||||||||||||||
Statutory net income | $ | $ | ||||||||||||
Statutory surplus | ||||||||||||||
Contingency reserve liability |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
IIF, beginning of period | $ | 203,559,859 | $ | 174,646,273 | $ | 198,882,352 | $ | 164,005,853 | ||||||||||||||||||
NIW - Flow | 23,579,884 | 36,664,583 | 67,838,752 | 78,377,094 | ||||||||||||||||||||||
NIW - Bulk | — | — | — | 151 | ||||||||||||||||||||||
Cancellations | (18,923,194) | (20,499,564) | (58,504,555) | (51,571,806) | ||||||||||||||||||||||
IIF, end of period | $ | 208,216,549 | $ | 190,811,292 | $ | 208,216,549 | $ | 190,811,292 | ||||||||||||||||||
Average IIF during the period | $ | 206,732,478 | $ | 183,135,315 | $ | 201,623,472 | $ | 172,595,003 | ||||||||||||||||||
RIF, end of period | $ | 45,074,159 | $ | 41,219,216 | $ | 45,074,159 | $ | 41,219,216 |
($ in thousands) | $ | % | ||||||||||||
2021 (through September 30) | $ | 65,623,701 | 31.5 | % | ||||||||||
2020 | 83,556,296 | 40.1 | ||||||||||||
2019 | 23,609,156 | 11.3 | ||||||||||||
2018 | 11,062,279 | 5.3 | ||||||||||||
2017 | 9,881,021 | 4.8 | ||||||||||||
2016 and prior | 14,484,096 | 7.0 | ||||||||||||
$ | 208,216,549 | 100.0 | % |
Summary of Operations | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Net premiums written | $ | 202,348 | $ | 222,223 | $ | 608,996 | $ | 619,870 | ||||||||||||||||||
Decrease in unearned premiums | 16,370 | 35 | 46,226 | 20,355 | ||||||||||||||||||||||
Net premiums earned | 218,718 | 222,258 | 655,222 | 640,225 | ||||||||||||||||||||||
Net investment income | 21,573 | 18,639 | 65,104 | 59,138 | ||||||||||||||||||||||
Realized investment gains, net | 221 | 267 | 609 | 2,133 | ||||||||||||||||||||||
Income (loss) from other invested assets | 40,741 | (445) | 41,389 | (217) | ||||||||||||||||||||||
Other income | 2,283 | 2,319 | 9,270 | 6,676 | ||||||||||||||||||||||
Total revenues | 283,536 | 243,038 | 771,594 | 707,955 | ||||||||||||||||||||||
Losses and expenses: | ||||||||||||||||||||||||||
(Benefit) provision for losses and LAE | (7,483) | 55,280 | 34,490 | 239,220 | ||||||||||||||||||||||
Other underwriting and operating expenses | 42,272 | 37,100 | 125,625 | 117,866 | ||||||||||||||||||||||
Interest expense | 2,063 | 2,227 | 6,187 | 6,925 | ||||||||||||||||||||||
Total losses and expenses | 36,852 | 94,607 | 166,302 | 364,011 | ||||||||||||||||||||||
Income before income taxes | 246,684 | 148,431 | 605,292 | 343,944 | ||||||||||||||||||||||
Income tax expense | 41,331 | 23,895 | 104,496 | 54,505 | ||||||||||||||||||||||
Net income | $ | 205,353 | $ | 124,536 | $ | 500,796 | $ | 289,439 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Fixed maturities | $ | 23,001 | $ | 19,952 | $ | 69,037 | $ | 61,135 | ||||||||||||||||||
Short-term investments | 30 | 86 | 158 | 1,566 | ||||||||||||||||||||||
Gross investment income | 23,031 | 20,038 | 69,195 | 62,701 | ||||||||||||||||||||||
Investment expenses | (1,458) | (1,399) | (4,091) | (3,563) | ||||||||||||||||||||||
Net investment income | $ | 21,573 | $ | 18,639 | $ | 65,104 | $ | 59,138 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Beginning default inventory | 23,504 | 38,068 | 31,469 | 5,947 | ||||||||||||||||||||||
Plus: new defaults | 5,132 | 12,614 | 17,488 | 53,904 | ||||||||||||||||||||||
Less: cures | (8,862) | (15,135) | (29,052) | (24,032) | ||||||||||||||||||||||
Less: claims paid | (41) | (67) | (148) | (329) | ||||||||||||||||||||||
Less: rescissions and denials, net | (12) | (16) | (36) | (26) | ||||||||||||||||||||||
Ending default inventory | 19,721 | 35,464 | 19,721 | 35,464 |
As of September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Case reserves (in thousands) (1) | $ | 380,036 | $ | 280,447 | ||||||||||
Total reserves (in thousands) (1) | $ | 411,567 | $ | 307,019 | ||||||||||
Ending default inventory | 19,721 | 35,464 | ||||||||||||
Average case reserve per default (in thousands) | $ | 19.3 | $ | 7.9 | ||||||||||
Average total reserve per default (in thousands) | $ | 20.9 | $ | 8.7 | ||||||||||
Default rate | 2.47 | % | 4.54 | % | ||||||||||
Claims received included in ending default inventory | 52 | 46 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Reserve for losses and LAE at beginning of period | $ | 421,872 | $ | 250,890 | $ | 374,941 | $ | 69,362 | ||||||||||||||||||
Less: Reinsurance recoverables | 27,286 | 7,761 | 19,061 | 71 | ||||||||||||||||||||||
Net reserve for losses and LAE at beginning of period | 394,586 | 243,129 | 355,880 | 69,291 | ||||||||||||||||||||||
Add provision for losses and LAE occurring in: | ||||||||||||||||||||||||||
Current period | 11,373 | 56,372 | 83,973 | 253,567 | ||||||||||||||||||||||
Prior years | (18,856) | (1,092) | (49,483) | (14,347) | ||||||||||||||||||||||
Incurred losses and LAE during the current period | (7,483) | 55,280 | 34,490 | 239,220 | ||||||||||||||||||||||
Deduct payments for losses and LAE occurring in: | ||||||||||||||||||||||||||
Current period | 103 | 205 | 231 | 494 | ||||||||||||||||||||||
Prior years | 1,014 | 2,365 | 4,153 | 12,178 | ||||||||||||||||||||||
Loss and LAE payments during the current period | 1,117 | 2,570 | 4,384 | 12,672 | ||||||||||||||||||||||
Net reserve for losses and LAE at end of period | 385,986 | 295,839 | 385,986 | 295,839 | ||||||||||||||||||||||
Plus: Reinsurance recoverables | 26,970 | 11,898 | 26,970 | 11,898 | ||||||||||||||||||||||
Reserve for losses and LAE at end of period | $ | 412,956 | $ | 307,737 | $ | 412,956 | $ | 307,737 |
As of September 30, 2021 | ||||||||||||||||||||||||||||||||||||||
($ in thousands) | Number of Policies in Default | Percentage of Policies in Default | Amount of Reserves | Percentage of Reserves | Defaulted RIF | Reserves as a Percentage of Defaulted RIF | ||||||||||||||||||||||||||||||||
Missed payments: | ||||||||||||||||||||||||||||||||||||||
Three payments or less | 3,823 | 20 | % | $ | 20,438 | 5 | % | $ | 223,065 | 9 | % | |||||||||||||||||||||||||||
Four to eleven payments | 6,738 | 34 | 103,062 | 27 | 426,282 | 24 | ||||||||||||||||||||||||||||||||
Twelve or more payments | 9,108 | 46 | 254,499 | 67 | 595,444 | 43 | ||||||||||||||||||||||||||||||||
Pending claims | 52 | — | 2,037 | 1 | 2,516 | 81 | ||||||||||||||||||||||||||||||||
Total case reserves (1) | 19,721 | 100 | % | 380,036 | 100 | % | $ | 1,247,307 | 30 | |||||||||||||||||||||||||||||
IBNR | 28,503 | |||||||||||||||||||||||||||||||||||||
LAE | 3,028 | |||||||||||||||||||||||||||||||||||||
Total reserves for losses and LAE (1) | $ | 411,567 |
As of September 30, 2020 | ||||||||||||||||||||||||||||||||||||||
($ in thousands) | Number of Policies in Default | Percentage of Policies in Default | Amount of Reserves | Percentage of Reserves | Defaulted RIF | Reserves as a Percentage of Defaulted RIF | ||||||||||||||||||||||||||||||||
Missed payments: | ||||||||||||||||||||||||||||||||||||||
Three payments or less | 9,237 | 26 | % | $ | 58,296 | 21 | % | $ | 554,524 | 11 | % | |||||||||||||||||||||||||||
Four to eleven payments | 25,290 | 71 | 194,892 | 69 | 1,697,419 | 11 | ||||||||||||||||||||||||||||||||
Twelve or more payments | 891 | 3 | 24,842 | 9 | 48,612 | 51 | ||||||||||||||||||||||||||||||||
Pending claims | 46 | — | 2,417 | 1 | 2,840 | 85 | ||||||||||||||||||||||||||||||||
Total case reserves (2) | 35,464 | 100 | % | 280,447 | 100 | % | $ | 2,303,395 | 12 | |||||||||||||||||||||||||||||
IBNR | 21,034 | |||||||||||||||||||||||||||||||||||||
LAE | 5,538 | |||||||||||||||||||||||||||||||||||||
Total reserves for losses and LAE (2) | $ | 307,019 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
($ in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Number of claims paid | 41 | 67 | 148 | 329 | ||||||||||||||||||||||
Amount of claims paid | $ | 1,069 | $ | 2,557 | $ | 4,212 | $ | 12,432 | ||||||||||||||||||
Claim severity | 60 | % | 77 | % | 63 | % | 78 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||
Compensation and benefits | $ | 27,236 | 64 | % | $ | 22,701 | 61 | % | $ | 77,626 | 62 | % | $ | 71,741 | 61 | % | ||||||||||||||||||||||||||||||||||
Premium taxes | 4,593 | 11 | 5,412 | 15 | 13,645 | 11 | 14,808 | 13 | ||||||||||||||||||||||||||||||||||||||||||
Other | 10,443 | 25 | 8,987 | 24 | 34,354 | 27 | 31,317 | 26 | ||||||||||||||||||||||||||||||||||||||||||
Total other underwriting and operating expenses | $ | 42,272 | 100 | % | $ | 37,100 | 100 | % | $ | 125,625 | 100 | % | $ | 117,866 | 100 | % | ||||||||||||||||||||||||||||||||||
Number of employees at end of period | 343 | 383 |
Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2021 | 2020 | ||||||||||||
Net cash provided by operating activities | $ | 518,167 | $ | 548,506 | ||||||||||
Net cash used in investing activities | (403,412) | (1,083,317) | ||||||||||||
Net cash (used in) provided by financing activities | (151,760) | 582,152 | ||||||||||||
Net (decrease) increase in cash | $ | (37,005) | $ | 47,341 |
Combined statutory capital: ($ in thousands) | |||||
Policyholders’ surplus | $ | 1,138,173 | |||
Contingency reserves | 1,778,629 | ||||
Combined statutory capital | $ | 2,916,802 | |||
Combined net risk in force | $ | 30,766,379 | |||
Combined risk-to-capital ratio | 10.5:1 |
Asset Class | September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||
($ in thousands) | Fair Value | Percent | Fair Value | Percent | ||||||||||||||||||||||
U.S. Treasury securities | $ | 331,216 | 6.8 | % | $ | 268,444 | 5.9 | % | ||||||||||||||||||
U.S. agency securities | 5,536 | 0.1 | 18,085 | 0.4 | ||||||||||||||||||||||
U.S. agency mortgage-backed securities | 989,552 | 20.3 | 995,905 | 21.8 | ||||||||||||||||||||||
Municipal debt securities(1) | 592,458 | 12.2 | 551,517 | 12.1 | ||||||||||||||||||||||
Non-U.S. government securities | 79,994 | 1.6 | 61,607 | 1.3 | ||||||||||||||||||||||
Corporate debt securities(2) | 1,524,144 | 31.3 | 1,126,512 | 24.7 | ||||||||||||||||||||||
Residential and commercial mortgage securities | 539,186 | 11.1 | 409,282 | 9.0 | ||||||||||||||||||||||
Asset-backed securities | 554,475 | 11.4 | 454,717 | 9.9 | ||||||||||||||||||||||
Money market funds | 253,456 | 5.2 | 679,304 | 14.9 | ||||||||||||||||||||||
Total Investments Available for Sale | $ | 4,870,017 | 100.0 | % | $ | 4,565,373 | 100.0 | % |
September 30, | December 31, | |||||||||||||
(1) The following table summarizes municipal debt securities as of : | 2021 | 2020 | ||||||||||||
Special revenue bonds | 78.0 | % | 76.8 | % | ||||||||||
General obligation bonds | 19.4 | 20.3 | ||||||||||||
Certificate of participation bonds | 2.0 | 2.3 | ||||||||||||
Tax allocation bonds | 0.6 | 0.6 | ||||||||||||
Total | 100.0 | % | 100.0 | % |
September 30, | December 31, | |||||||||||||
(2) The following table summarizes corporate debt securities as of : | 2021 | 2020 | ||||||||||||
Financial | 35.8 | % | 34.9 | % | ||||||||||
Consumer, non-cyclical | 19.2 | 19.1 | ||||||||||||
Communications | 11.7 | 9.3 | ||||||||||||
Industrial | 7.6 | 5.3 | ||||||||||||
Consumer, cyclical | 6.4 | 8.0 | ||||||||||||
Energy | 5.5 | 8.2 | ||||||||||||
Technology | 5.4 | 6.1 | ||||||||||||
Utilities | 4.9 | 5.9 | ||||||||||||
Basic materials | 3.4 | 3.1 | ||||||||||||
Government | 0.1 | 0.1 | ||||||||||||
Total | 100.0 | % | 100.0 | % |
Rating(1) | September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||
($ in thousands) | Fair Value | Percent | Fair Value | Percent | ||||||||||||||||||||||
Aaa | $ | 2,356,302 | 48.4 | % | $ | 2,564,746 | 56.2 | % | ||||||||||||||||||
Aa1 | 106,743 | 2.2 | 133,100 | 2.9 | ||||||||||||||||||||||
Aa2 | 320,018 | 6.6 | 260,462 | 5.7 | ||||||||||||||||||||||
Aa3 | 212,516 | 4.4 | 204,917 | 4.5 | ||||||||||||||||||||||
A1 | 288,177 | 5.9 | 249,710 | 5.5 | ||||||||||||||||||||||
A2 | 459,205 | 9.4 | 401,175 | 8.8 | ||||||||||||||||||||||
A3 | 293,220 | 6.0 | 229,882 | 5.0 | ||||||||||||||||||||||
Baa1 | 302,771 | 6.2 | 260,602 | 5.7 | ||||||||||||||||||||||
Baa2 | 260,360 | 5.4 | 178,926 | 3.9 | ||||||||||||||||||||||
Baa3 | 190,999 | 3.9 | 48,199 | 1.1 | ||||||||||||||||||||||
Below Baa3 | 79,706 | 1.6 | 33,654 | 0.7 | ||||||||||||||||||||||
Total Investments Available for Sale | $ | 4,870,017 | 100.0 | % | $ | 4,565,373 | 100.0 | % |
Effective Duration | September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||
($ in thousands) | Fair Value | Percent | Fair Value | Percent | ||||||||||||||||||||||
< 1 Year | $ | 1,181,803 | 24.3 | % | $ | 1,568,505 | 34.4 | % | ||||||||||||||||||
1 to < 2 Years | 644,007 | 13.2 | 581,003 | 12.7 | ||||||||||||||||||||||
2 to < 3 Years | 530,003 | 10.9 | 616,069 | 13.5 | ||||||||||||||||||||||
3 to < 4 Years | 688,472 | 14.1 | 426,333 | 9.3 | ||||||||||||||||||||||
4 to < 5 Years | 493,847 | 10.1 | 367,633 | 8.1 | ||||||||||||||||||||||
5 or more Years | 1,331,885 | 27.4 | 1,005,830 | 22.0 | ||||||||||||||||||||||
Total Investments Available for Sale | $ | 4,870,017 | 100.0 | % | $ | 4,565,373 | 100.0 | % |
September 30, 2021 | ||||||||||||||||||||||||||||||||
Rank ($ in thousands) | Security | Fair Value | Amortized Cost | Unrealized Gain (Loss)(1) | Credit Rating(2) | |||||||||||||||||||||||||||
1 | U.S. Treasury 1.500% 8/15/2026 | $ | 34,839 | $ | 34,553 | $ | 286 | Aaa | ||||||||||||||||||||||||
2 | U.S. Treasury 0.250% 5/31/2025 | 25,174 | 25,573 | (399) | Aaa | |||||||||||||||||||||||||||
3 | Fannie Mae 3.500% 1/1/2058 | 23,079 | 21,816 | 1,263 | Aaa | |||||||||||||||||||||||||||
4 | U.S. Treasury 2.625% 6/30/2023 | 20,571 | 19,704 | 867 | Aaa | |||||||||||||||||||||||||||
5 | U.S. Treasury 0.875% 6/30/2026 | 19,573 | 19,636 | (63) | Aaa | |||||||||||||||||||||||||||
6 | U.S. Treasury 5.250% 11/15/2028 | 19,351 | 18,268 | 1,083 | Aaa | |||||||||||||||||||||||||||
7 | U.S. Treasury 0.125% 10/15/2023 | 17,564 | 17,603 | (39) | Aaa | |||||||||||||||||||||||||||
8 | Fannie Mae 2.000% 8/1/2050 | 16,469 | 16,958 | (489) | Aaa | |||||||||||||||||||||||||||
9 | U.S. Treasury 0.375% 1/31/2026 | 15,161 | 15,363 | (202) | Aaa | |||||||||||||||||||||||||||
10 | Freddie Mac 2.500% 5/1/2051 | 14,956 | 15,034 | (78) | Aaa | |||||||||||||||||||||||||||
Total | $ | 206,737 | $ | 204,508 | $ | 2,229 | ||||||||||||||||||||||||||
Percent of Investments Available for Sale | 4.2 | % |
Rank | December 31, 2020 | |||||||||||||
($ in thousands) | Security | Fair Value | ||||||||||||
1 | Fannie Mae 3.500% 1/1/2058 | $ | 26,634 | |||||||||||
2 | U.S. Treasury 0.250% 5/31/2025 | 25,558 | ||||||||||||
3 | U.S. Treasury 2.625% 6/30/2023 | 20,966 | ||||||||||||
4 | Fannie Mae 2.000% 8/1/2050 | 20,549 | ||||||||||||
5 | U.S. Treasury 5.250% 11/15/2028 | 20,540 | ||||||||||||
6 | Freddie Mac 4.000% 11/1/2048 | 20,371 | ||||||||||||
7 | U.S. Treasury 1.500% 8/15/2026 | 18,525 | ||||||||||||
8 | U.S. Treasury 0.125% 10/15/2023 | 17,611 | ||||||||||||
9 | Freddie Mac 2.500% 7/1/2050 | 17,063 | ||||||||||||
10 | U.S. Treasury 2.625% 7/15/2021 | 14,946 | ||||||||||||
Total | $ | 202,763 | ||||||||||||
Percent of Investments Available for Sale | 4.4 | % |
($ in thousands) | Fair Value | Amortized Cost | Credit Rating (1), (2) | |||||||||||||||||
Texas | ||||||||||||||||||||
North Texas Tollway System | $ | 9,198 | $ | 8,868 | A2 | |||||||||||||||
University of Houston | 6,529 | 6,294 | Aa2 | |||||||||||||||||
Texas A&M University | 6,190 | 5,753 | Aaa | |||||||||||||||||
Love Field Airport Modernization Corp | 5,947 | 6,128 | Aa2 | |||||||||||||||||
State of Texas | 5,694 | 5,343 | Aaa | |||||||||||||||||
City of Houston TX Combined Utility System Revenue | 5,106 | 4,569 | Aa2 | |||||||||||||||||
LCRA Transmission Services Corp | 3,085 | 3,008 | A2 | |||||||||||||||||
Dallas Fort Worth International Airport | 2,545 | 2,445 | A2 | |||||||||||||||||
City of Austin TX Electric Utility Revenue | 2,326 | 2,113 | Aa3 | |||||||||||||||||
Harris County-Houston Sports Authority | 2,256 | 2,055 | A2 | |||||||||||||||||
City of Houston TX | 2,213 | 2,058 | Aa3 | |||||||||||||||||
North Texas Municipal Water District | 2,017 | 1,900 | Aaa | |||||||||||||||||
Lifeschool of Dallas | 1,836 | 1,840 | Aaa | |||||||||||||||||
City of Dallas TX | 1,822 | 1,642 | Aa3 | |||||||||||||||||
City of Houston TX Airport System Revenue | 1,718 | 1,654 | A1 | |||||||||||||||||
Houston Community College System | 1,612 | 1,665 | Aaa | |||||||||||||||||
City of Fort Worth TX Water & Sewer System Revenue | 1,503 | 1,427 | Aa1 | |||||||||||||||||
Tarrant Regional Water District Water Supply System Revenue | 1,495 | 1,411 | Aaa | |||||||||||||||||
City of San Antonio TX Airport System | 1,270 | 1,174 | A1 | |||||||||||||||||
City of Corpus Christi TX Utility System Revenue | 1,159 | 1,058 | Aa3 | |||||||||||||||||
Harris County Toll Road Authority | 1,029 | 996 | Aa1 | |||||||||||||||||
Texas Tech University System | 1,003 | 1,000 | Aa1 | |||||||||||||||||
Central Texas Turnpike System | 970 | 936 | Baa1 | |||||||||||||||||
Metropolitan Transit Authority of Harris County Sales & Use Tax Revenue | 925 | 910 | Aaa | |||||||||||||||||
Frisco Independent School District | 857 | 861 | Aaa | |||||||||||||||||
County of Fort Bend TX | 849 | 782 | Aa1 | |||||||||||||||||
Austin-Bergstrom Landhost Enterprises, Inc. | 613 | 579 | A3 | |||||||||||||||||
San Jacinto Community College District | 577 | 533 | Aa3 | |||||||||||||||||
City of Houston TX Reinvestment Zone No 16 | 352 | 332 | A2 | |||||||||||||||||
Austin Independent School District | 293 | 295 | Aaa | |||||||||||||||||
$ | 72,989 | $ | 69,629 |
($ in thousands) | Fair Value | Amortized Cost | Credit Rating (1), (2) | |||||||||||||||||
New York | ||||||||||||||||||||
New York City Transitional Finance Authority Future Tax Secured Revenue | $ | 12,707 | $ | 12,064 | Aa1 | |||||||||||||||
The Port Authority of New York and New Jersey | 7,590 | 7,175 | Aa3 | |||||||||||||||||
Metropolitan Transportation Authority | 7,582 | 7,135 | A3 | |||||||||||||||||
State of New York Personal Income Tax Revenue | 7,261 | 6,799 | Aa2 | |||||||||||||||||
City of New York NY | 7,215 | 6,466 | Aa2 | |||||||||||||||||
New York City Water & Sewer System | 6,456 | 6,393 | Aa1 | |||||||||||||||||
Long Island Power Authority | 4,286 | 4,158 | A2 | |||||||||||||||||
Metropolitan Transportation Authority Payroll Mobility Tax Revenue | 3,652 | 3,652 | Aa1 | |||||||||||||||||
The Research Foundation of State University of New York | 3,016 | 2,750 | A1 | |||||||||||||||||
New York State Dormitory Authority | 2,832 | 2,724 | A1 | |||||||||||||||||
TSASC, Inc. | 2,472 | 2,158 | A2 | |||||||||||||||||
City of Yonkers NY | 2,415 | 2,297 | A3 | |||||||||||||||||
County of Nassau NY | 2,149 | 1,964 | A2 | |||||||||||||||||
New York City Transitional Finance Authority Building Aid Revenue | 1,572 | 1,491 | Aa3 | |||||||||||||||||
Town of Oyster Bay NY | 1,041 | 1,018 | Aa2 | |||||||||||||||||
Yankee Stadium LLC | 841 | 797 | A2 | |||||||||||||||||
$ | 73,087 | $ | 69,041 |
Period ($ in thousands, except per share amounts) | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||||||||||||
July 1 - July 31, 2021 | 586,169 | $ | 44.10 | 586,169 | ||||||||||||||||||||||
August 1 - August 31, 2021 | 472,369 | $ | 46.59 | 472,369 | ||||||||||||||||||||||
September 1 - September 30, 2021 | 506,819 | $ | 45.39 | 506,819 | ||||||||||||||||||||||
Total | 1,565,357 | 1,565,357 | $ | 160,753 |
Exhibit No. | Description | |||||||
10.1* | Letter Agreement between Essent Guaranty, Inc. and Jeff R. Cashmer dated September 13, 2021 | |||||||
Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||
Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||||||
101 | The following financial information from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL: (i) the Condensed Consolidated Balance Sheets (Unaudited); (ii) the Condensed Consolidated Statements of Comprehensive Income (Unaudited); (iii) the Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited); (iv) the Condensed Consolidated Statements of Cash Flows (Unaudited); and (v) the Notes to Condensed Consolidated Financial Statements (Unaudited). | |||||||
* Management contract or compensatory plan or arrangement. |
ESSENT GROUP LTD. | ||||||||
Date: November 5, 2021 | /s/ MARK A. CASALE | |||||||
Mark A. Casale | ||||||||
President, Chief Executive Officer and Chairman (Principal Executive Officer) | ||||||||
Date: November 5, 2021 | /s/ LAWRENCE E. MCALEE | |||||||
Lawrence E. McAlee | ||||||||
Senior Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||||
Date: November 5, 2021 | /s/ DAVID B. WEINSTOCK | |||||||
David B. Weinstock | ||||||||
Vice President and Chief Accounting Officer (Principal Accounting Officer) |
/s/ MARK A. CASALE | ||||||||
Mark A. Casale | ||||||||
President, Chief Executive Officer and Chairman | ||||||||
(Principal Executive Officer) |
/s/ LAWRENCE E. MCALEE | ||||||||
Lawrence E. McAlee | ||||||||
Senior Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer) |
/s/ MARK A. CASALE | |||||
Mark A. Casale | |||||
President, Chief Executive Officer and Chairman | |||||
/s/ LAWRENCE E. MCALEE | |||||
Lawrence E. McAlee | |||||
Senior Vice President and Chief Financial Officer |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Investment available for sale | ||
Amortized cost | $ 4,772,397 | $ 4,404,690 |
Property and equipment | ||
Accumulated depreciation | 63,545 | 60,967 |
Credit facility borrowings | ||
Unamortized deferred costs | $ 2,386 | $ 3,280 |
Stockholders’ equity | ||
Common shares, par value (in dollars per share) | $ 0.015 | $ 0.015 |
Common shares, authorized (in shares) | 233,333 | 233,333 |
Common shares, issued (in shares) | 110,915 | 112,423 |
Common shares, outstanding (in shares) | 110,915 | 112,423 |
Fixed maturities | ||
Investment available for sale | ||
Amortized cost | $ 4,462,616 | $ 3,677,815 |
Short-term investments | ||
Investment available for sale | ||
Amortized cost | $ 309,781 | $ 726,875 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Revenues: | ||||
Net premiums written | $ 202,348 | $ 222,223 | $ 608,996 | $ 619,870 |
Decrease in unearned premiums | 16,370 | 35 | 46,226 | 20,355 |
Net premiums earned | 218,718 | 222,258 | 655,222 | 640,225 |
Net investment income | 21,573 | 18,639 | 65,104 | 59,138 |
Realized investment gains, net | 221 | 267 | 609 | 2,133 |
Income (loss) from other invested assets | 40,741 | (445) | 41,389 | (217) |
Other income | 2,283 | 2,319 | 9,270 | 6,676 |
Total revenues | 283,536 | 243,038 | 771,594 | 707,955 |
Losses and expenses: | ||||
(Benefit) provision for losses and LAE | (7,483) | 55,280 | 34,490 | 239,220 |
Other underwriting and operating expenses | 42,272 | 37,100 | 125,625 | 117,866 |
Interest expense | 2,063 | 2,227 | 6,187 | 6,925 |
Total losses and expenses | 36,852 | 94,607 | 166,302 | 364,011 |
Income before income taxes | 246,684 | 148,431 | 605,292 | 343,944 |
Income tax expense | 41,331 | 23,895 | 104,496 | 54,505 |
Net income | $ 205,353 | $ 124,536 | $ 500,796 | $ 289,439 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 1.85 | $ 1.11 | $ 4.48 | $ 2.78 |
Diluted (in dollars per share) | $ 1.84 | $ 1.11 | $ 4.47 | $ 2.77 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 111,001 | 111,908 | 111,708 | 104,147 |
Diluted (in shares) | 111,387 | 112,134 | 112,070 | 104,383 |
Net income | $ 205,353 | $ 124,536 | $ 500,796 | $ 289,439 |
Other comprehensive income (loss): | ||||
Change in unrealized (depreciation) appreciation of investments, net of tax (benefit) expense of ($8,599) and $3,856 in the three months ended September 30, 2021 and 2020 and ($10,944) and $14,469 in the nine months ended September 30, 2021 and 2020 | (36,917) | 12,036 | (59,760) | 76,247 |
Total other comprehensive (loss) income | (36,917) | 12,036 | (59,760) | 76,247 |
Comprehensive income | $ 168,436 | $ 136,572 | $ 441,036 | $ 365,686 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||||
Change in unrealized appreciation (depreciation) of investments, tax expense (benefit) | $ (8,599) | $ 3,856 | $ (10,944) | $ 14,469 |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
|
Additional Paid-In Capital | ||
Issuance costs | $ 18,894 | $ 18,894 |
Nature of Operations and Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Essent Group Ltd. (“Essent Group”) is a Bermuda-based holding company, which, through its wholly-owned subsidiaries, offers private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Mortgage insurance facilitates the sale of low down payment (generally less than 20%) mortgage loans into the secondary mortgage market, primarily to two government-sponsored enterprises (“GSEs”), Fannie Mae and Freddie Mac. The primary mortgage insurance operations are conducted through Essent Guaranty, Inc. (“Essent Guaranty”), a wholly-owned subsidiary approved as a qualified mortgage insurer by the GSEs and is licensed to write mortgage insurance in all 50 states and the District of Columbia. Essent Guaranty reinsures new insurance written ("NIW") to Essent Reinsurance Ltd. (“Essent Re”), an affiliated Bermuda domiciled Class 3A Insurer licensed pursuant to Section 4 of the Bermuda Insurance Act 1978 that provides insurance and reinsurance coverage of mortgage credit risk. In April 2021, Essent Guaranty and Essent Re agreed to increase the quota share reinsurance coverage of Essent Guaranty’s NIW provided by Essent Re from 25% to 35% effective January 1, 2021. The quota share reinsurance coverage provided by Essent Re for Essent Guaranty’s NIW prior to January 1, 2021 will continue to be 25%, the quota share percentage in effect at the time NIW was first ceded. Essent Re also provides insurance and reinsurance to Freddie Mac and Fannie Mae. In 2016, Essent Re formed Essent Agency (Bermuda) Ltd., a wholly-owned subsidiary, which provides underwriting consulting services to third-party reinsurers. In accordance with certain state law requirements then in effect, Essent Guaranty also reinsures that portion of the risk that is in excess of 25% of the mortgage balance with respect to loans insured prior to April 1, 2019, after consideration of other reinsurance, to Essent Guaranty of PA, Inc. (“Essent PA”), an affiliate. In addition to offering mortgage insurance, we provide contract underwriting services on a limited basis through CUW Solutions, LLC ("CUW Solutions"), a Delaware limited liability company, that provides, among other things, mortgage contract underwriting services to lenders and mortgage insurance underwriting services to affiliates. We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). We have condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair statement of financial position, results of operations and cash flows for the interim periods presented. These statements should be read in conjunction with the consolidated financial statements and notes thereto, including Note 1 and Note 2 to the consolidated financial statements, included in our Annual Report on Form 10-K for the year ended December 31, 2020, which discloses the principles of consolidation and a summary of significant accounting policies. The results of operations for the interim periods are not necessarily indicative of the results for the full year. We evaluated the need to recognize or disclose events that occurred subsequent to September 30, 2021 prior to the issuance of these condensed consolidated financial statements. Certain amounts in prior years have been reclassified to conform to the current year presentation.
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Recently Issued Accounting Standards |
9 Months Ended |
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Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide temporary optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform. It provides optional expedients and exceptions for applying generally accepted accounting principles to contract, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This standard may be elected and applied prospectively over time from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. The adoption of, and future elections under, this ASU are not expected to have a material impact on our consolidated financial statements as the ASU will ease, if warranted, the requirements for accounting for the future effects of the rate reform. We continue to monitor the impact the discontinuance of LIBOR or another reference rate will have on our contracts and other transactions.
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Investments |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Investments available for sale consist of the following:
The amortized cost and fair value of investments available for sale at September 30, 2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most U.S. agency mortgage-backed securities, residential and commercial mortgage securities and asset-backed securities provide for periodic payments throughout their lives, they are listed below in separate categories.
Gross gains and losses realized on the sale of investments available for sale were as follows:
The fair value of investments available for sale in an unrealized loss position and the related unrealized losses for which no allowance for credit loss has been recorded were as follows:
At September 30, 2021 and December 31, 2020, we held 866 and 363 individual investment securities, respectively, that were in an unrealized loss position. We assess our intent to sell these securities and whether we will be required to sell these securities before the recovery of their amortized cost basis when determining whether to record an impairment on the securities in an unrealized loss position. In assessing whether the decline in the fair value at September 30, 2021 of any of these securities resulted from a credit loss or other factors, we made inquiries of our investment managers to determine that each issuer was current on its scheduled interest and principal payments. We reviewed the credit rating of these securities noting that over 98% of the securities at September 30, 2021 had investment-grade ratings. We concluded that gross unrealized losses noted above are principally associated with the changes in interest rates subsequent to purchase rather than due to credit impairment. There were no impairments in the three or nine months ended September 30, 2021. There were no impairments in the three months ended September 30, 2020 and we recorded impairments of $0.4 million in the nine months ended September 30, 2020. The Company's other invested assets at September 30, 2021 and December 31, 2020 totaled $161.3 million and $88.9 million, respectively. Other invested assets are principally comprised of limited partnership interests which are generally accounted for under the equity method or fair value using net asset value (or its equivalent) as a practical expedient. Our proportionate share of earnings or losses are reported in income from other invested assets on the condensed consolidated statements of comprehensive income. For entities accounted for under the equity method that follow industry-specific guidance for investment companies, our proportionate share of earnings or losses includes changes in the fair value of the underlying assets of these entities. Due to the timing of receiving financial information from these partnerships, the results are generally reported on a one month or quarter lag. Through June 30, 2021, unrealized gains and losses reported by these entities were included in other comprehensive income (“OCI”). In the three months ended September 30, 2021, management concluded that unrealized gains and losses on these investments should be reflected in earnings rather than OCI. Income from other invested assets for the three and nine months ended September 30, 2021, includes $39.5 million of net unrealized gains, which includes $21.1 million of net unrealized gains that were accumulated in OCI at June 30, 2021 and prior periods. Other invested assets that are accounted for at fair value using the net asset value (or its equivalent) as a practical expedient totaled $83.4 as of September 30, 2021. Approximately 59% of these investments were in limited partnerships invested in real estate, with the remaining limited partnerships invested in financial services, technology, and traditional private equity investments. At September 30, 2021, maximum future funding commitments were $12.8 million. For limited partnership investments that have a contractual expiration date, we expect the liquidation of the underlying assets to occur over the next to nine years. For certain of these investments, the Company does not have the contractual option to redeem but receives distributions based on the liquidation of the underlying assets. In addition, the Company generally does not have the ability to sell or transfer these investments without the consent from the general partner of individual limited partnerships. The fair value of investments deposited with insurance regulatory authorities to meet statutory requirements was $9.7 million at September 30, 2021 and $9.7 million at December 31, 2020. In connection with its insurance and reinsurance activities, Essent Re is required to maintain assets in trusts for the benefit of its contractual counterparties. The fair value of the investments on deposit in these trusts was $931.8 million at September 30, 2021 and $1.1 billion at December 31, 2020. Essent Guaranty is required to maintain assets on deposit in connection with its fully collateralized reinsurance agreements (see Note 4). The fair value of the assets on deposit was $8.5 million at September 30, 2021 and $8.5 million at December 31, 2020. Essent Guaranty is also required to maintain assets on deposit for the benefit of the sponsor of a fixed income investment commitment. The fair value of the assets on deposit was $9.0 million at September 30, 2021 and $12.0 million at December 31, 2020. Net investment income consists of:
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Reinsurance |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance In the ordinary course of business, our insurance subsidiaries may use reinsurance to provide protection against adverse loss experience and to expand our capital sources. Reinsurance recoverables are recorded as assets and included in other assets on our condensed consolidated balance sheets, predicated on a reinsurer's ability to meet their obligations under the reinsurance agreements. If the reinsurers are unable to satisfy their obligations under the agreements, our insurance subsidiaries would be liable for such defaulted amounts. The effect of reinsurance on net premiums written and earned is as follows:
(1)Net of profit commission. Quota Share Reinsurance Effective September 1, 2019, Essent Guaranty entered into a quota share reinsurance agreement with a panel of third-party reinsurers (the "QSR Agreement"). Each of the third-party reinsurers has an insurer financial strength rating of A or better by S&P Global Ratings, A.M. Best or both. Under the QSR Agreement, Essent Guaranty will cede premiums earned related to 40% of risk on eligible single premium policies and 20% of risk on all other eligible policies written September 1, 2019 through December 31, 2020, in exchange for reimbursement of ceded claims and claims expenses on covered policies, a 20% ceding commission, and a profit commission of up to 60% that varies directly and inversely with ceded claims. The QSR Agreement is scheduled to terminate on December 31, 2030. Essent Guaranty has certain termination rights under the QSR Agreement, including the option to terminate the QSR Agreement with no termination fee on December 31, 2021, and the option, subject to a termination fee, to terminate the QSR Agreement on December 31, 2022, or annually thereafter. As Essent Guaranty did not exercise its option to terminate the QSR Agreement effective December 31, 2021, the maximum profit commission that Essent Guaranty could earn will increase to 63% in 2022 and thereafter. RIF ceded under the QSR Agreement was $5.0 billion as of September 30, 2021. Excess of Loss Reinsurance Essent Guaranty has entered into fully collateralized reinsurance agreements ("Radnor Re Transactions") with unaffiliated special purpose insurers domiciled in Bermuda. For the reinsurance coverage periods, Essent Guaranty and its affiliates retain the first layer of the respective aggregate losses, and a Radnor Re special purpose insurer will then provide second layer coverage up to the outstanding reinsurance coverage amount. Essent Guaranty and its affiliates retain losses in excess of the outstanding reinsurance coverage amount. The reinsurance premium due to each Radnor Re special purpose insurer is calculated by multiplying the outstanding reinsurance coverage amount at the beginning of a period by a coupon rate, which is the sum of one-month LIBOR or SOFR plus a risk margin, and then subtracting actual investment income collected on the assets in the related reinsurance trust during that period. The aggregate excess of loss reinsurance coverage decreases over a ten-year period as the underlying covered mortgages amortize. Essent Guaranty has rights to terminate the Radnor Re Transactions. The Radnor Re entities collateralized the coverage by issuing mortgage insurance-linked notes ("ILNs") in an aggregate amount equal to the initial coverage to unaffiliated investors. The notes have ten-year legal maturities and are non-recourse to any assets of Essent Guaranty or its affiliates. The proceeds of the notes were deposited into reinsurance trusts for the benefit of Essent Guaranty and will be the source of reinsurance claim payments to Essent Guaranty and principal repayments on the ILNs. Essent Guaranty has also entered into reinsurance agreements with panels of reinsurers that provide aggregate excess of loss coverage immediately above or pari-passu to the coverage provided by the Radnor Re Transactions. The aggregate excess of loss reinsurance coverage decreases over a ten-year period as the underlying covered mortgages amortize. Essent Guaranty has rights to terminate these reinsurance agreements. The following table summarizes Essent Guaranty's excess of loss reinsurance agreements as of September 30, 2021:
(1)If the reinsurance agreement is not terminated at the optional termination date, the risk margin component of the reinsurance premium increases by 50%. (2)If the reinsurance agreement is not terminated at the optional termination date, the reinsurance premium increases by 50%. The following table summarizes Essent Guaranty's excess of loss reinsurance coverages and retentions as of September 30, 2021:
(3)Reinsurance coverage on new insurance written from January 1, 2019 through August 31, 2019. (4)Reinsurance coverage on new insurance written from September 1, 2019 through July 31, 2020. (5)Reinsurance coverage on new insurance written from August 1, 2020 through March 31, 2021. (6)Coverage provided immediately above the coverage provided by Radnor Re 2018-1 Ltd. (7)Coverage provided pari-passu to the coverage provided by Radnor Re 2019-1 Ltd. (8)Coverage provided pari-passu to the coverage provided by Radnor Re 2020-1 Ltd. Based on the level of delinquencies reported to us, the ILN transactions entered into prior to March 31, 2020 became subject to a "trigger event" as of June 25, 2020. The amortization of principal of the notes issued by the unaffiliated special purpose insurers in connection with the ILNs is suspended and the aggregate excess of loss reinsurance coverage will not amortize during the continuation of a trigger event. The amount of monthly reinsurance premium ceded to the Radnor Re entities will fluctuate due to changes in one-month LIBOR or SOFR and changes in money market rates that affect investment income collected on the assets in the reinsurance trusts. As the reinsurance premium will vary based on changes in these rates, we concluded that the Radnor Re Transactions contain embedded derivatives that will be accounted for separately like freestanding derivatives. In connection with the Radnor Re Transactions, we concluded that the risk transfer requirements for reinsurance accounting were met as each Radnor Re entity is assuming significant insurance risk and a reasonable possibility of a significant loss. In addition, we assessed whether each Radnor Re entity was a variable interest entity ("VIE") and the appropriate accounting for the Radnor Re entities if they were VIEs. A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity. A VIE is consolidated by its primary beneficiary. The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of the decision-making ability and ability to influence activities that significantly affect the economic performance of the VIE. We concluded that the Radnor Re entities are VIEs. However, given that Essent Guaranty (1) does not have the unilateral power to direct the activities that most significantly affect their economic performance and (2) does not have the obligation to absorb losses or the right to receive benefits that could be potentially significant to these entities, the Radnor Re entities are not consolidated in these financial statements. The following table presents total assets of each Radnor Re special purpose insurer as well as our maximum exposure to loss associated with each Radnor Re entity, representing the fair value of the embedded derivative, using observable inputs in active markets (Level 2), included in other assets (other accrued liabilities) on our condensed consolidated balance sheet and the estimated net present value of investment earnings on the assets in the reinsurance trust, each as of September 30, 2021:
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Reserve for Losses and Loss Adjustment Expenses |
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Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve for Losses and Loss Adjustment Expenses | Reserve for Losses and Loss Adjustment Expenses The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“LAE”) for the nine months ended September 30:
For the nine months ended September 30, 2021, $4.2 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There has been a $49.5 million favorable prior year development during the nine months ended September 30, 2021. Reserves remaining as of September 30, 2021 for prior years are $302.2 million as a result of re-estimation of unpaid losses and loss adjustment expenses. For the nine months ended September 30, 2020, $12.2 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There was a $14.3 million favorable prior year development during the nine months ended September 30, 2020. Reserves remaining as of September 30, 2020 for prior years were $42.8 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. Due to business restrictions, stay-at-home orders and travel restrictions initially implemented in March 2020 as a result of COVID-19, unemployment in the United States increased significantly in the second quarter of 2020 and remained elevated at September 30, 2021. As unemployment is one of the most common reasons for borrowers to default on their mortgage, the increase in unemployment has increased the number of delinquencies on the mortgages that we insure and has the potential to increase claim frequencies on defaults. As of September 30, 2021, insured loans in default totaled 19,721. For borrowers that have the ability to begin to pay their mortgage at the end of the forbearance period, we expect that mortgage servicers will work with them to modify their loans at which time the mortgage will be removed from delinquency status. We believe that the forbearance process could have a favorable effect on the frequency of claims that we ultimately pay. Based on the forbearance programs in place and the credit characteristics of the defaulted loans, we expect the ultimate number of COVID-19-related defaults notices received in April 2020 through September 2020 ("Early COVID Defaults") that result in claims will be less than our historical default-to-claim experience. Accordingly, we recorded a reserve equal to approximately 7% of the risk in force for the Early COVID Defaults. We have not adjusted the loss reserves associated with the Early COVID Defaults as we continue to believe that these reserves represent the best estimate of the ultimate loss. The credit characteristics of defaults reported in October 2020 through September 2021 have trended towards those of the pre-pandemic periods and we have observed the normalization of other default patterns during this period. In addition, beginning in the fourth quarter of 2020 we observed a normalization of the proportion of unemployment claims related to permanent layoffs as compared to a higher proportion of temporary layoffs during the second and third quarters of 2020. We believe that while defaults in October 2020 through September 2021 were impacted by the pandemic's effect on the economy, the underlying credit performance of these defaults may not be the same as the expected performance for the Early COVID Defaults that occurred following the onset of the pandemic and defaults after September 30, 2020 are more likely to transition like pre-pandemic defaults. Accordingly, beginning in the fourth quarter of 2020, we resumed establishing reserves for defaults reported after September 30, 2020 using our normal reserve methodology. The reserve for losses and LAE on COVID-19 defaults was $380.6 million at September 30, 2021 and includes $243.4 million of reserves for Early COVID Defaults. It is reasonably possible that our estimate of the losses for the COVID-19 defaults could change in the near term as a result of the continued impact of the pandemic on the economic environment, the results of existing and future governmental programs designed to assist individuals and businesses impacted by the virus and the performance of the COVID-19 defaults in the forbearance programs. A 100 basis point increase or decrease in the reserve rate applied to Early COVID Defaults would result in a corresponding increase or decrease in our reserve for losses and LAE of approximately $35 million as of September 30, 2021. The impact on our reserves in future periods will be dependent upon the amount of delinquent notices received from loan servicers, the performance of COVID-19 defaults and our expectations for the amount of ultimate losses on these delinquencies.
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Debt Obligations |
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Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations Credit Facility Essent Group and its subsidiaries, Essent Irish Intermediate Holdings Limited and Essent US Holdings, Inc. (collectively, the "Borrowers"), are parties to a secured credit facility (the “Credit Facility”) with committed capacity of $625 million. The Credit Facility provides for a $300 million revolving credit facility and $325 million of term loans. The Credit Facility also provides an option to increase the capacity to $775 million. Borrowings under the Credit Facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to Essent’s insurance and reinsurance subsidiaries. Borrowings accrue interest at a floating rate tied to a standard short-term borrowing index, selected at the Company’s option, plus an applicable margin. A commitment fee is due quarterly on the average daily amount of the undrawn revolving commitment. The applicable margin and the commitment fee are based on the senior unsecured debt rating or long-term issuer rating of Essent Group to the extent available, or the insurer financial strength rating of Essent Guaranty. The annual commitment fee rate at September 30, 2021 was 0.35%. The obligations under the Credit Facility are secured by certain assets of the Borrowers, excluding the stock and assets of its insurance and reinsurance subsidiaries. The Credit Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and Essent Guaranty's compliance with the PMIERs (see Note 14). The borrowings under the Credit Facility contractually mature on October 16, 2023. As of September 30, 2021, the Company was in compliance with the covenants and $325 million had been borrowed under the Credit Facility with a weighted average interest rate of 2.13%. As of December 31, 2020, $325 million had been borrowed with a weighted average interest rate of 2.19%.
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Commitments and Contingencies |
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Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Obligations under Guarantees Under the terms of CUW Solutions' contract underwriting agreements with lenders and subject to contractual limitations on liability, we agree to indemnify certain lenders against losses incurred in the event that we make an error in determining whether loans processed meet specified underwriting criteria, to the extent that such error materially restricts or impairs the salability of such loan, results in a material reduction in the value of such loan or results in the lender repurchasing the loan. The indemnification may be in the form of monetary or other remedies. We paid less than $0.1 million related to remedies for each of the nine months ended September 30, 2021 and 2020. As of September 30, 2021, management believes any potential claims for indemnification related to contract underwriting services through September 30, 2021 are not material to our consolidated financial position or results of operations. In addition to the indemnifications discussed above, in the normal course of business, we enter into agreements or other relationships with third parties pursuant to which we may be obligated under specified circumstances to indemnify the counterparties with respect to certain matters. Our contractual indemnification obligations typically arise in the context of agreements entered into by us to, among other things, purchase or sell services, finance our business and business transactions, lease real property and license intellectual property. The agreements we enter into in the normal course of business generally require us to pay certain amounts to the other party associated with claims or losses if they result from our breach of the agreement, including the inaccuracy of representations or warranties. The agreements we enter into may also contain other indemnification provisions that obligate us to pay amounts upon the occurrence of certain events, such as the negligence or willful misconduct of our employees, infringement of third-party intellectual property rights or claims that performance of the agreement constitutes a violation of law. Generally, payment by us under an indemnification provision is conditioned upon the other party making a claim, and typically we can challenge the other party’s claims. Further, our indemnification obligations may be limited in time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us under an indemnification agreement or obligation. As of September 30, 2021, contingencies triggering material indemnification obligations or payments have not occurred historically and are not expected to occur. The nature of the indemnification provisions in the various types of agreements and relationships described above are believed to be low risk and pervasive, and we consider them to have a remote risk of loss or payment. We have not recorded any provisions on the condensed consolidated balance sheets related to indemnifications.
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Capital Stock |
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Capital Stock | Capital Stock Our authorized share capital consists of 233.3 million shares of a single class of common shares. The common shares have no pre-emptive rights or other rights to subscribe for additional shares, and no rights of redemption, conversion or exchange. Under certain circumstances and subject to the provisions of Bermuda law and our bye-laws, we may be required to make an offer to repurchase shares held by members. The common shares rank pari-passu with one another in all respects as to rights of payment and distribution. In general, holders of common shares will have one vote for each common share held by them and will be entitled to vote, on a non-cumulative basis, at all meetings of shareholders. In the event that a shareholder is considered a 9.5% Shareholder under our bye-laws, such shareholder's votes will be reduced by whatever amount is necessary so that after any such reduction the votes of such shareholder will not result in any other person being treated as a 9.5% Shareholder with respect to the vote on such matter. Under these provisions certain shareholders may have their voting rights limited to less than one vote per share, while other shareholders may have voting rights in excess of one vote per share. Dividends The following table presents the amounts declared and paid per common share each quarter:
In November 2021, the Board of Directors declared a quarterly cash dividend of $0.19 per common share payable on December 10, 2021, to shareholders of record on December 1, 2021. Share Repurchase Plan In May 2021, the Board of Directors approved a share repurchase plan that authorized the Company to repurchase $250 million of its common shares in the open market by the end of 2022. During the three months ended September 30, 2021, the Company repurchased 1,565,357 common shares, for a total year to date repurchase of 1,956,673 common shares at a cost of $89.2 million leaving $160.8 million remaining unused under the authorized repurchase plan as of September 30, 2021. The shares repurchased were recorded at cost and included in treasury stock. All treasury stock has been cancelled as of September 30, 2021.
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation In connection with the IPO in 2013, Essent Group's Board of Directors adopted, and Essent Group's shareholders approved, the Essent Group Ltd. 2013 Long-Term Incentive Plan (the "2013 Plan"), which was effective upon completion of the initial public offering. The types of awards available under the 2013 Plan include nonvested shares, nonvested share units, non-qualified share options, incentive stock options, share appreciation rights, and other share-based or cash-based awards. Nonvested shares and nonvested share units granted under the 2013 Plan have rights to dividends, which entitle holders to the same dividend value per share as holders of common shares in the form of dividend equivalent units ("DEUs"). DEUs are subject to the same vesting and other terms and conditions as the corresponding nonvested shares and nonvested share units. DEUs vest when the underlying shares or share units vest and are forfeited if the underlying share or share units forfeit prior to vesting. The following table summarizes nonvested common share, nonvested common share unit and DEU activity for the nine months ended September 30, 2021:
In February 2021, certain members of senior management were granted nonvested common shares under the Essent Group Ltd. 2013 Long-Term Incentive Plan ("2013 Plan") that were subject to time-based and performance-based vesting. The time-based share awards granted in February 2021 vest in equal installments on March 1, 2022, 2023 and 2024. The performance-based share awards granted in February 2021 vest based upon our compounded annual book value per share growth percentage and relative total shareholder return during a three-year performance period that commenced on January 1, 2021 and vest on March 1, 2024. Shares were issued at the maximum 200% of target. The portion of these nonvested performance-based share awards that will be earned is as follows:
In the event that the compounded annual book value per share growth or the relative total shareholder return falls between the performance levels shown above, the nonvested common shares earned will be determined on a straight-line basis between the respective levels shown. In connection with our incentive program covering bonus awards for performance year 2020, in February 2021, time-based share units were issued to certain employees that vest in equal installments on March 1, 2022, 2023 and 2024. Quoted market prices are used for the valuation of common shares granted that do not contain a market condition under ASC 718. The performance-based share awards granted in February 2021 contain a market condition and were valued based on analysis provided by a third-party valuation firm using a risk neutral simulation taking into effect the vesting conditions of the grant. In February 2021, the performance-based share awards granted in 2019 and 2020 to certain members of senior management were amended to provide that such awards will no longer be subject to the achievement of the compounded annual book value per share growth metrics and will be subject to only service-based vesting. As a result, the unvested shares subject to the amended 2019 and 2020 awards will vest on March 1, 2022 and March 1, 2023, respectively, subject to the continued service requirements and other terms and conditions set forth in the applicable award agreements, without taking into consideration any performance metrics. Total incremental compensation expense related to amending these awards is $4.0 million. As of September 30, 2021, there was $2.2 million of unrecognized compensation expense related to amending these awards and we expect to recognize the expense over a weighted average period of 1.3 years. The total fair value on the vesting date of nonvested shares, share units or DEUs that vested was $18.4 million and $18.5 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, there was $27.7 million of total unrecognized compensation expense related to nonvested shares or share units outstanding at September 30, 2021 and we expect to recognize the expense over a weighted average period of 2.2 years. Employees have the option to tender shares to Essent Group to pay the minimum employee statutory withholding taxes associated with shares upon vesting. Common shares tendered by employees to pay employee withholding taxes totaled 126,025 in the nine months ended September 30, 2021. The tendered shares were recorded at cost and included in treasury stock. All treasury stock has been cancelled as of September 30, 2021. Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares was as follows:
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Dividend Restrictions |
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Sep. 30, 2021 | |
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments [Abstract] | |
Dividends Restrictions | Dividends Restrictions Our U.S. insurance subsidiaries are subject to certain capital and dividend rules and regulations as prescribed by jurisdictions in which they are authorized to operate. Under the insurance laws of the Commonwealth of Pennsylvania, Essent Guaranty and Essent PA may pay dividends during any 12-month period in an amount equal to the greater of (i) 10% of the preceding year-end statutory policyholders' surplus or (ii) the preceding year's statutory net income. For 2021, Essent Guaranty has dividend capacity of $312.1 million and Essent PA has dividend capacity of $5.4 million. The Pennsylvania statute also specifies that dividends and other distributions can be paid out of positive unassigned surplus without prior approval. At September 30, 2021, Essent Guaranty had unassigned surplus of approximately $377.0 million and Essent PA had unassigned surplus of approximately $16.8 million. Under PMIERs guidance issued by the GSEs effective June 30, 2020 through June 30, 2021, Essent Guaranty was required to obtain GSE written approval before paying a dividend. As a result of PMIERs guidance issued by the GSEs on June 30, 2021, Essent Guaranty may pay a dividend without prior GSE approval in the three months ended September 30, 2021 as long as the dividend payment would not cause its Available Assets to fall below 150% of its Minimum Required Assets. In addition, the guidance specifies that Essent Guaranty may pay a dividend without prior GSE approval in the three months ended December 31, 2021 as long as the dividend payment would not cause its Available Assets to fall below 115% of its Minimum Required Assets. In three and nine months ended September 2021, Essent Guaranty paid dividends of $47.2 million and $147.2 million, respectively, to its parent, Essent US Holdings, Inc. Essent Guaranty did not pay dividends to Essent Group or any intermediate holding companies in the three and nine months ended September 30, 2020. Essent PA did not pay a dividend in the three and nine months ended September 30, 2021 or 2020. Essent Re is subject to certain dividend restrictions as prescribed by the Bermuda Monetary Authority and under certain agreements with counterparties. In connection with the quota share reinsurance agreement with Essent Guaranty, Essent Re has agreed to maintain a minimum total equity of $100 million. As of September 30, 2021, Essent Re had total equity of $1.2 billion. At September 30, 2021, our insurance subsidiaries were in compliance with these rules, regulations and agreements.
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Earnings per Share (EPS) |
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Earnings per Share (EPS) | Earnings per Share (EPS) The following table reconciles the net income and the weighted average common shares outstanding used in the computations of basic and diluted earnings per common share:
There were 181,476 and 369,460 antidilutive shares for the three months ended September 30, 2021 and 2020, respectively, and 230,595 and 433,548 antidilutive shares for the nine months ended September 30, 2021 and 2020, respectively. The nonvested performance-based share awards are considered contingently issuable for purposes of the EPS calculation. Based on the compounded annual book value per share growth and relative total shareholder return as of September 30, 2021, the 2021 performance-based share awards would be issuable at 100% of target under the terms of the arrangements if September 30, 2021 was the end of the contingency period, which is 50% of the shares issued. Based on the compounded annual book value per share growth as of September 30, 2020, the following percentages of the performance-based share awards would have been issuable under the terms of the arrangements if September 30, 2020 was the end of the contingency period:
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table presents the rollforward of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020:
(1)Included in net realized investment gains (losses) on our condensed consolidated statements of comprehensive income.
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments We carry certain of our financial instruments at fair value. We define fair value as the current amount that would be exchanged to sell an asset or transfer a liability, other than in a forced liquidation. Fair Value Hierarchy ASC No. 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The level within the fair value hierarchy to measure the financial instrument shall be determined based on the lowest level input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows: •Level 1 — Quoted prices for identical instruments in active markets accessible at the measurement date. •Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and valuations in which all significant inputs are observable in active markets. Inputs are observable for substantially the full term of the financial instrument. •Level 3 — Valuations derived from one or more significant inputs that are unobservable. Determination of Fair Value When available, we generally use quoted market prices to determine fair value and classify the financial instrument in Level 1. In cases where quoted market prices for similar financial instruments are available, we utilize these inputs for valuation techniques and classify the financial instrument in Level 2. In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flows, present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rates and estimates of future cash flows and we classify the financial instrument in Level 3. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. We used the following methods and assumptions in estimating fair values of financial instruments: •Investments available for sale — Investments available for sale are valued using quoted market prices in active markets, when available, and those investments are classified as Level 1 of the fair value hierarchy. Level 1 investments available for sale include investments such as U.S. Treasury securities and money market funds. Investments available for sale are classified as Level 2 of the fair value hierarchy if quoted market prices are not available and fair values are estimated using quoted prices of similar securities or recently executed transactions for the securities. U.S. agency securities, U.S. agency mortgage-backed securities, municipal debt securities, non-U.S. government securities, corporate debt securities, residential and commercial mortgage securities and asset-backed securities are classified as Level 2 investments. We use independent pricing sources to determine the fair value of securities available for sale in Level 1 and Level 2 of the fair value hierarchy. We use one primary pricing service to provide individual security pricing based on observable market data and receive one quote per security. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing service and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. U.S. agency securities, U.S. agency mortgage-backed securities, municipal debt securities, non-U.S. government securities and corporate debt securities are valued by our primary vendor using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves and credit risk. Residential and commercial mortgage securities and asset-backed securities are valued by our primary vendor using proprietary models based on observable inputs, such as interest rate spreads, prepayment speeds and credit risk. As part of our evaluation of investment prices provided by our primary pricing service, we obtained and reviewed their pricing methodologies which include a description of how each security type is evaluated and priced. We review the reasonableness of prices received from our primary pricing service by comparison to prices obtained from additional pricing sources. We have not made any adjustments to the prices obtained from our primary pricing service. Assets and Liabilities Measured at Fair Value All assets measured at fair value are categorized in the table below based upon the lowest level of significant input to the valuations. All fair value measurements at the reporting date were on a recurring basis.
(1)Does not include the fair value of embedded derivatives, which we have accounted for separately as freestanding derivatives and included in other assets or other accrued liabilities in our condensed consolidated balance sheet. See Note 4 for more information. (2)Does not include certain other invested assets that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient, as applicable accounting standards do not provide for classification within the fair value hierarchy.
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Statutory Accounting |
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Statutory Accounting | Statutory Accounting Our U.S. insurance subsidiaries prepare statutory-basis financial statements in accordance with the accounting practices prescribed or permitted by their respective state’s department of insurance, which is a comprehensive basis of accounting other than GAAP. We did not use any prescribed or permitted statutory accounting practices (individually or in the aggregate) that resulted in reported statutory surplus or capital that was significantly different from the statutory surplus or capital that would have been reported had National Association of Insurance Commissioners’ statutory accounting practices been followed. The following table presents Essent Guaranty’s and Essent PA’s statutory net income, statutory surplus and contingency reserve liability as of and for the nine months ended September 30:
Net income determined in accordance with statutory accounting practices differs from GAAP. In 2021 and 2020, the more significant differences between net income determined under statutory accounting practices and GAAP for Essent Guaranty and Essent PA relate to policy acquisition costs and income taxes. Under statutory accounting practices, policy acquisition costs are expensed as incurred while such costs are capitalized and amortized to expense over the life of the policy under GAAP. We are eligible for a tax deduction, subject to certain limitations for amounts required by state law or regulation to be set aside in statutory contingency reserves when we purchase non-interest-bearing United States Mortgage Guaranty Tax and Loss Bonds (“T&L Bonds”) issued by the Treasury Department. Under statutory accounting practices, this deduction reduces the tax provision recorded by Essent Guaranty and Essent PA and, as a result, increases statutory net income and surplus as compared to net income and equity determined in accordance with GAAP. At September 30, 2021 and 2020, the statutory capital of our U.S. insurance subsidiaries, which is defined as the total of statutory surplus and contingency reserves, was in excess of the statutory capital necessary to satisfy their regulatory requirements. Effective December 31, 2015, Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency, implemented new coordinated Private Mortgage Insurer Eligibility Requirements, which we refer to as the "PMIERs." The PMIERs represent the standards by which private mortgage insurers are eligible to provide mortgage insurance on loans owned or guaranteed by Fannie Mae and Freddie Mac. The PMIERs include financial strength requirements incorporating a risk-based framework that require approved insurers to have a sufficient level of liquid assets from which to pay claims. The PMIERs also include enhanced operational performance expectations and define remedial actions that apply should an approved insurer fail to comply with these requirements. In 2018, the GSEs released revised PMIERs framework ("PMIERs 2.0") which became effective on March 31, 2019. As of September 30, 2021, Essent Guaranty, our GSE-approved mortgage insurance company, was in compliance with PMIERs 2.0. Statement of Statutory Accounting Principles No. 58, Mortgage Guaranty Insurance, requires mortgage insurers to establish a special contingency reserve for statutory accounting purposes included in total liabilities equal to 50% of earned premium for that year. During the nine months ended September 30, 2021, Essent Guaranty increased its contingency reserve by $221.6 million and Essent PA increased its contingency reserve by $1.2 million. This reserve is required to be maintained for a period of 120 months to protect against the effects of adverse economic cycles. After 120 months, the reserve is released to unassigned funds. In the event an insurer’s loss ratio in any calendar year exceeds 35%, however, the insurer may, after regulatory approval, release from its contingency reserves an amount equal to the excess portion of such losses. During the nine months ended September 30, 2021, Essent Guaranty and Essent PA released contingency reserves of $2.0 million and $0.1 million, respectively, to unassigned funds upon completion of the 120 month holding period. Essent Guaranty and Essent PA did not release any amounts from their contingency reserves in the nine months ended September 30, 2020. Under The Insurance Act 1978, as amended, and related regulations of Bermuda (the "Insurance Act"), Essent Re is required to annually prepare statutory financial statements and a statutory financial return in accordance with the financial reporting provisions of the Insurance Act, which is a basis other than GAAP. The Insurance Act also requires that Essent Re maintain minimum share capital of $1 million and must ensure that the value of its general business assets exceeds the amount of its general business liabilities by an amount greater than the prescribed minimum solvency margins and enhanced capital requirement pertaining to its general business. At December 31, 2020, all such requirements were met. Essent Re's statutory capital and surplus was $1.2 billion as of September 30, 2021 and $1.1 billion as of December 31, 2020. Essent Re's statutory net income was $166.2 million and $100.4 million for the nine months ended September 30, 2021 and 2020, respectively. Statutory capital and surplus as of September 30, 2021 and December 31, 2020 and statutory net income in the nine months ended September 30, 2021 and 2020 determined in accordance with statutory accounting practices were not significantly different than the amounts determined under GAAP.
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Recently Issued Accounting Standards (Policies) |
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Accounting Policies [Abstract] | |
Accounting Standards Not Yet Adopted | Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide temporary optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform. It provides optional expedients and exceptions for applying generally accepted accounting principles to contract, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This standard may be elected and applied prospectively over time from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. The adoption of, and future elections under, this ASU are not expected to have a material impact on our consolidated financial statements as the ASU will ease, if warranted, the requirements for accounting for the future effects of the rate reform. We continue to monitor the impact the discontinuance of LIBOR or another reference rate will have on our contracts and other transactions.
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Investments (Tables) |
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Schedule of investments available for sale | Investments available for sale consist of the following:
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Schedule of amortized cost and fair value of investments available for sale by contractual maturity | The amortized cost and fair value of investments available for sale at September 30, 2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most U.S. agency mortgage-backed securities, residential and commercial mortgage securities and asset-backed securities provide for periodic payments throughout their lives, they are listed below in separate categories.
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Schedule of realized gross gains and losses on sale of investments available for sale | Gross gains and losses realized on the sale of investments available for sale were as follows:
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Schedule of fair value of investments in an unrealized loss position and related unrealized losses | The fair value of investments available for sale in an unrealized loss position and the related unrealized losses for which no allowance for credit loss has been recorded were as follows:
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Schedule of net investment income | Net investment income consists of:
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Reinsurance (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of reinsurance | The effect of reinsurance on net premiums written and earned is as follows:
(1)Net of profit commission.
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Schedule of coverages and retentions | The following table summarizes Essent Guaranty's excess of loss reinsurance agreements as of September 30, 2021:
(1)If the reinsurance agreement is not terminated at the optional termination date, the risk margin component of the reinsurance premium increases by 50%. (2)If the reinsurance agreement is not terminated at the optional termination date, the reinsurance premium increases by 50%. The following table summarizes Essent Guaranty's excess of loss reinsurance coverages and retentions as of September 30, 2021:
(3)Reinsurance coverage on new insurance written from January 1, 2019 through August 31, 2019. (4)Reinsurance coverage on new insurance written from September 1, 2019 through July 31, 2020. (5)Reinsurance coverage on new insurance written from August 1, 2020 through March 31, 2021. (6)Coverage provided immediately above the coverage provided by Radnor Re 2018-1 Ltd. (7)Coverage provided pari-passu to the coverage provided by Radnor Re 2019-1 Ltd. (8)Coverage provided pari-passu to the coverage provided by Radnor Re 2020-1 Ltd.
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Schedule of VIE assets and maximum exposure | The following table presents total assets of each Radnor Re special purpose insurer as well as our maximum exposure to loss associated with each Radnor Re entity, representing the fair value of the embedded derivative, using observable inputs in active markets (Level 2), included in other assets (other accrued liabilities) on our condensed consolidated balance sheet and the estimated net present value of investment earnings on the assets in the reinsurance trust, each as of September 30, 2021:
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Reserve for Losses and Loss Adjustment Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of beginning and ending reserve balances for losses and loss adjustment expenses (LAE) | The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“LAE”) for the nine months ended September 30:
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Capital Stock (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking Regulation, Total Capital [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of dividends declared and paid per common share | The following table presents the amounts declared and paid per common share each quarter:
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of nonvested common share and nonvested common share unit activity | The following table summarizes nonvested common share, nonvested common share unit and DEU activity for the nine months ended September 30, 2021:
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Schedule of portion of nonvested shares earned based upon achievement of compounded annual book value per share growth | The portion of these nonvested performance-based share awards that will be earned is as follows:
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Schedule of compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares | Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares was as follows:
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Earnings per Share (EPS) (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of net income and weighted average common shares outstanding used in computations of basic and diluted earnings per common share | The following table reconciles the net income and the weighted average common shares outstanding used in the computations of basic and diluted earnings per common share:
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Schedule of percent of shares issuable under terms of agreement | Based on the compounded annual book value per share growth as of September 30, 2020, the following percentages of the performance-based share awards would have been issuable under the terms of the arrangements if September 30, 2020 was the end of the contingency period:
|
Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of accumulated other comprehensive income (loss) | The following table presents the rollforward of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020:
(1)Included in net realized investment gains (losses) on our condensed consolidated statements of comprehensive income.
|
Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair vale on a recurring basis | All assets measured at fair value are categorized in the table below based upon the lowest level of significant input to the valuations. All fair value measurements at the reporting date were on a recurring basis.
(1)Does not include the fair value of embedded derivatives, which we have accounted for separately as freestanding derivatives and included in other assets or other accrued liabilities in our condensed consolidated balance sheet. See Note 4 for more information. (2)Does not include certain other invested assets that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient, as applicable accounting standards do not provide for classification within the fair value hierarchy.
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Statutory Accounting (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of statutory net income, statutory surplus and contingency reserve liability | The following table presents Essent Guaranty’s and Essent PA’s statutory net income, statutory surplus and contingency reserve liability as of and for the nine months ended September 30:
|
Nature of Operations and Basis of Presentation (Details) - state |
9 Months Ended | |||
---|---|---|---|---|
Jan. 01, 2021 |
Dec. 31, 2020 |
Mar. 31, 2019 |
Sep. 30, 2021 |
|
Affiliated Entity | Essent Guaranty | ||||
Insurance Premium Revenue Recognition | ||||
Number of states in which the entity is licensed to write mortgage insurance | 50 | |||
Affiliated Entity | Essent Re | Quota share reinsurance | ||||
Insurance Premium Revenue Recognition | ||||
Reinsurance percentage | 35.00% | 25.00% | ||
Affiliated Entity | Essent PA | Reinsurance for mortgage insurance coverage in excess of 25% | ||||
Insurance Premium Revenue Recognition | ||||
Reinsurance for mortgage insurance coverage threshold (in excess of) | 25.00% | |||
Maximum | ||||
Insurance Premium Revenue Recognition | ||||
Residential mortgage down payment percentage for which mortgage insurance is generally required (less than) | 20.00% |
Investments - Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Components of net investment income | ||||
Gross investment income | $ 23,031 | $ 20,038 | $ 69,195 | $ 62,701 |
Investment expenses | (1,458) | (1,399) | (4,091) | (3,563) |
Net investment income | 21,573 | 18,639 | 65,104 | 59,138 |
Fixed maturities | ||||
Components of net investment income | ||||
Gross investment income | 23,001 | 19,952 | 69,037 | 61,135 |
Short-term investments | ||||
Components of net investment income | ||||
Gross investment income | $ 30 | $ 86 | $ 158 | $ 1,566 |
Reinsurance - Effect on Net Premiums Written and Earned (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Net premiums written: | ||||
Direct | $ 229,228 | $ 243,390 | $ 693,434 | $ 677,414 |
Ceded | (26,880) | (21,167) | (84,438) | (57,544) |
Net premiums written | 202,348 | 222,223 | 608,996 | 619,870 |
Net premiums earned: | ||||
Direct | 245,598 | 243,425 | 739,660 | 697,769 |
Ceded | (26,880) | (21,167) | (84,438) | (57,544) |
Net premiums earned | $ 218,718 | $ 222,258 | $ 655,222 | $ 640,225 |
Reinsurance - Quota Share Reinsurance (Details) - Quota Share Reinsurance - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Sep. 01, 2019 |
Dec. 31, 2022 |
Sep. 30, 2021 |
|
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Ceded premiums earned related to percent of risk on eligible single premium policies | 40.00% | ||
Ceded premiums earned related to percent of risk on all other eligible policies written | 20.00% | ||
Ceding commission, percent | 20.00% | ||
Profit commission, percent, maximum | 60.00% | ||
RIF ceded | $ 5.0 | ||
Forecast | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Profit commission, percent, maximum | 63.00% |
Reinsurance - Excess of Loss Reinsurance (Details) - Mortgage Insurance |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Essent Guaranty | Other Reinsurance | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Amortization period | 10 years |
VIE | Radnor Re | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Amortization period | 10 years |
VIE | Radnor Re | Mortgage Insurance Linked Notes | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Reinsurance retention policy, debt issued to cover insurance, term | 10 years |
Reinsurance - Premium Details (Details) - 2017 |
Sep. 30, 2021 |
---|---|
Radnor Re 2018-1 Ltd. | |
Effects of Reinsurance [Line Items] | |
Increase of margin component of reinsurance premium | 50.00% |
Panel of Reinsurers | |
Effects of Reinsurance [Line Items] | |
Increase of margin component of reinsurance premium | 50.00% |
Reserve for Losses and Loss Adjustment Expenses - Narrative (Details) $ in Thousands |
6 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
loan
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||
Incurred claims and claim adjustment expenses | $ 4,153 | $ 12,178 | |||
Favorable prior year development | 49,483 | 14,347 | |||
Reserve for losses and LAE, for prior years | $ 42,800 | $ 302,200 | 42,800 | ||
Debt Instrument [Line Items] | |||||
Loans in default at end of period | loan | 19,721 | ||||
Reserve for losses and LAE | $ 307,737 | $ 412,956 | $ 307,737 | $ 374,941 | $ 69,362 |
COVID-19 | |||||
Debt Instrument [Line Items] | |||||
Reserve rate | 7.00% | ||||
Reserve for losses and LAE | $ 380,600 | ||||
Percent change used in calculation of expense | 1.00% | ||||
Effect of percentage point decrease on liability claim and claim expense adjustment expense | $ 35,000 | ||||
Early COVID-19 defaults | |||||
Debt Instrument [Line Items] | |||||
Reserve for losses and LAE | $ 243,400 |
Debt Obligations (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 625 | |
Option to increase capacity | 775 | |
Amount outstanding, gross | $ 325 | $ 325 |
Weighted average interest during period | 2.13% | 2.19% |
Revolving Credit Facility | ||
Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 300 | |
Annual commitment fee rate | 0.35% | |
Term Loan | ||
Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 325 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Indemnifications related to contract underwriting services | ||
Loss Contingencies [Line Items] | ||
Amount paid for remedies (less than) | $ 0.1 | $ 0.1 |
Capital Stock - Narrative (Details) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 05, 2021
$ / shares
|
Sep. 30, 2021
USD ($)
vote
$ / shares
shares
|
Jun. 30, 2021
$ / shares
|
Mar. 31, 2021
$ / shares
|
Dec. 31, 2020
$ / shares
shares
|
Sep. 30, 2020
$ / shares
|
Jun. 30, 2020
$ / shares
|
Mar. 31, 2020
$ / shares
|
Sep. 30, 2021
USD ($)
vote
$ / shares
shares
|
Dec. 31, 2020
$ / shares
shares
|
May 31, 2021
USD ($)
|
|
Dividends Payable [Line Items] | |||||||||||
Common shares, authorized (in shares) | shares | 233,333,000 | 233,333,000 | 233,333,000 | 233,333,000 | |||||||
Number of votes per share | vote | 1 | 1 | |||||||||
Maximum percent of individual ownership | 9.50% | 9.50% | |||||||||
Minimum number of votes per share for other shareholders under 9.5% shareholder provision | vote | 1 | 1 | |||||||||
Quarterly cash dividends declared (in dollars per share) | $ / shares | $ 0.18 | $ 0.17 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.51 | $ 0.64 | ||
Share repurchase approved amount | $ 250,000,000 | ||||||||||
Stock repurchased (in shares) | shares | 1,565,357 | 1,956,673 | |||||||||
Shares acquired and cancelled | $ 89,200,000 | ||||||||||
Remaining authorized repurchase amount | $ 160,800,000 | $ 160,800,000 | |||||||||
Subsequent event | |||||||||||
Dividends Payable [Line Items] | |||||||||||
Quarterly cash dividends declared (in dollars per share) | $ / shares | $ 0.19 |
Capital Stock - Dividends (Details) - $ / shares |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2021 |
Dec. 31, 2020 |
|
Banking Regulation, Total Capital [Abstract] | |||||||||
Quarterly cash dividends paid (in dollars per share) | $ 0.18 | $ 0.17 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.51 | $ 0.64 |
Quarterly cash dividends declared (in dollars per share) | $ 0.18 | $ 0.17 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.51 | $ 0.64 |
Stock-Based Compensation - Summary of Compensation Expense, Net of Forfeitures (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Share-based Payment Arrangement [Abstract] | ||||
Compensation expense | $ 5,511 | $ 4,567 | $ 16,075 | $ 13,915 |
Income tax benefit | $ 1,111 | $ 864 | $ 3,156 | $ 2,650 |
Dividend Restrictions (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
Dividends Restrictions | |||||
Stockholders' equity | $ 4,167,984,000 | $ 3,746,544,000 | $ 4,167,984,000 | $ 3,746,544,000 | $ 3,862,633,000 |
Affiliated Entity | Essent Guaranty | |||||
Dividends Restrictions | |||||
Amount available for dividend distribution | 312,100,000 | 312,100,000 | |||
Unassigned surplus | 377,000,000 | 377,000,000 | |||
Dividends paid to parent company | 47,200,000 | 0 | 147,200,000 | 0 | |
Affiliated Entity | Essent PA | |||||
Dividends Restrictions | |||||
Amount available for dividend distribution | 5,400,000 | 5,400,000 | |||
Unassigned surplus | 16,800,000 | 16,800,000 | |||
Dividends paid to parent company | 0 | $ 0 | 0 | $ 0 | |
Affiliated Entity | Essent Re | |||||
Dividends Restrictions | |||||
Stockholders' equity | 1,200,000,000 | 1,200,000,000 | |||
Affiliated Entity | Essent Re | Quota share reinsurance | Minimum | |||||
Dividends Restrictions | |||||
Stockholders' equity | $ 100,000,000 | $ 100,000,000 |
Earnings per Share (EPS) - Reconciliation of Net Income and Weighted Average Common Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 205,353 | $ 124,536 | $ 500,796 | $ 289,439 |
Basic weighted average shares outstanding (in shares) | 111,001 | 111,908 | 111,708 | 104,147 |
Dilutive effect of nonvested shares (in shares) | 386 | 226 | 362 | 236 |
Diluted weighted average shares outstanding (in shares) | 111,387 | 112,134 | 112,070 | 104,383 |
Basic earnings per share (in dollars per share) | $ 1.85 | $ 1.11 | $ 4.48 | $ 2.78 |
Diluted earnings per share (in dollars per share) | $ 1.84 | $ 1.11 | $ 4.47 | $ 2.77 |
Earnings per Share (EPS) - Narrative (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive nonvested shares (in shares) | 181,476 | 369,460 | 230,595 | 433,548 |
2021 Performance based share awards | ||||
EPS calculation | ||||
Vesting percent | 100.00% | |||
Percentage of award issuable if current period end were end of contingency period | 50.00% | 50.00% |
Statutory Accounting - Schedule of Statutory Net Income, Statutory Surplus and Contingency Reserve Liability (Details) - Affiliated Entity - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Essent Guaranty | ||
Dividends Restrictions | ||
Statutory net income | $ 364,654 | $ 236,345 |
Statutory surplus | 1,082,334 | 1,048,040 |
Contingency reserve liability | 1,721,424 | 1,423,364 |
Essent PA | ||
Dividends Restrictions | ||
Statutory net income | 2,623 | 3,745 |
Statutory surplus | 55,779 | 54,176 |
Contingency reserve liability | $ 57,205 | $ 55,413 |
Statutory Accounting - Narrative (Details) - Affiliated Entity - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
Essent Guaranty | |||
Dividends Restrictions | |||
Increase in contingency reserve | $ 221,600 | ||
Released contingency reserve | 2,000 | ||
Statutory net income | 364,654 | $ 236,345 | |
Essent PA | |||
Dividends Restrictions | |||
Increase in contingency reserve | 1,200 | ||
Released contingency reserve | 100 | ||
Statutory net income | 2,623 | 3,745 | |
Essent Re | |||
Dividends Restrictions | |||
Statutory capital and surplus | 1,200,000 | $ 1,100,000 | |
Statutory net income | $ 166,200 | $ 100,400 |
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