(Mark One) | ||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the quarterly period ended |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from ______ to ______ |
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
, | , | |||||
(Address of principal executive offices) | (Zip Code) |
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 |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
• | changes in the business practices of Fannie Mae and Freddie Mac (collectively, the GSEs), including decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement; |
• | our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (PMIERs) and other requirements imposed by the GSEs, which they may change at any time; |
• | retention of our existing certificates of authority in each state and the District of Columbia (D.C.) and our ability to remain a mortgage insurer in good standing in each state and D.C.; |
• | our future profitability, liquidity and capital resources; |
• | actions of existing competitors, including other private mortgage insurers and government mortgage insurers like the Federal Housing Administration (FHA), the U.S. Department of Agriculture's Rural Housing Service (USDA) and the Veterans Administration (VA) (collectively, government MIs), and potential market entry by new competitors or consolidation of existing competitors; |
• | developments in the world's financial and capital markets and our access to such markets, including reinsurance; |
• | adoption of new or changes to existing laws and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including any action by the Consumer Financial Protection Bureau to address the planned expiration of the "QM Patch" under the Dodd-Frank Act Ability to Repay/Qualified Mortgage rule; |
• | legislative or regulatory changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular; |
• | potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; |
• | changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance; |
• | our ability to successfully execute and implement our capital plans, including our ability to access the capital, credit and reinsurance markets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; |
• | our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry; |
• | our ability to attract and retain a diverse customer base, including the largest mortgage originators; |
• | failure of risk management or pricing or investment strategies; |
• | emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience; |
• | potential adverse impacts arising from natural disasters, including, with respect to affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; |
• | the inability of our counter-parties, including third party reinsurers, to meet their obligations to us; |
• | failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; and |
• | ability to recruit, train and retain key personnel. |
Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018 | |
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2019 and 2018 | |
Condensed Consolidated Statements of Changes in Shareholders' Equity for the six months ended June 30, 2019 and 2018 | |
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 | |
Notes to Condensed Consolidated Financial Statements |
June 30, 2019 | December 31, 2018 | ||||||
Assets | (In Thousands, except for share data) | ||||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $994,543 and $924,987 as of June 30, 2019 and December 31, 2018, respectively) | $ | $ | |||||
Cash and cash equivalents (including restricted cash of $1,430 and $1,414 as of June 30, 2019 and December 31, 2018, respectively) | |||||||
Premiums receivable | |||||||
Accrued investment income | |||||||
Prepaid expenses | |||||||
Deferred policy acquisition costs, net | |||||||
Software and equipment, net | |||||||
Intangible assets and goodwill | |||||||
Prepaid reinsurance premiums | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities | |||||||
Term loan | $ | $ | |||||
Unearned premiums | |||||||
Accounts payable and accrued expenses | |||||||
Reserve for insurance claims and claim expenses | |||||||
Reinsurance funds withheld | |||||||
Warrant liability, at fair value | |||||||
Deferred tax liability, net | |||||||
Other liabilities (1) | |||||||
Total liabilities | |||||||
Commitments and contingencies | |||||||
Shareholders' equity | |||||||
Common stock - class A shares, $0.01 par value; 67,768,466 and 66,318,849 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively (250,000,000 shares authorized) | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive income (loss), net of tax | ( | ) | |||||
Retained earnings | |||||||
Total shareholders' equity | |||||||
Total liabilities and shareholders' equity | $ | $ |
(1) |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | (In Thousands, except for per share data) | ||||||||||||||
Net premiums earned | $ | $ | $ | $ | |||||||||||
Net investment income | |||||||||||||||
Net realized investment (losses) gains | ( | ) | ( | ) | |||||||||||
Other revenues | |||||||||||||||
Total revenues | |||||||||||||||
Expenses | |||||||||||||||
Insurance claims and claim expenses | |||||||||||||||
Underwriting and operating expenses | |||||||||||||||
Total expenses | |||||||||||||||
Other expense | |||||||||||||||
(Loss) gain from change in fair value of warrant liability | ( | ) | ( | ) | |||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income before income taxes | |||||||||||||||
Income tax expense | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Earnings per share | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Weighted average common shares outstanding | |||||||||||||||
Basic | |||||||||||||||
Diluted | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Unrealized gains (losses) in accumulated other comprehensive income, net of tax expense (benefit) of $3,662 and ($2,879) for the three months ended June 30, 2019 and 2018 and $7,615 and ($3,304) for the six months ended June 30, 2019 and 2018, respectively | ( | ) | ( | ) | |||||||||||
Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of ($24) and $12 for the three months ended June 30, 2019 and 2018 and ($63) and $10 for the six months ended June 30, 2019 and 2018, respectively | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||||||||||
Comprehensive income | $ | $ | $ | $ |
Common Stock - Class A | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total | |||||||||||||
Shares | Amount | ||||||||||||||||
(In Thousands) | |||||||||||||||||
Balances, January 1, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||
Common stock: class A shares issued related to warrants | * | — | — | ||||||||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | ( | ) | — | — | ( | ) | |||||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||
Change in unrealized investment gains/losses, net of tax expense of $3,992 | — | — | — | — | |||||||||||||
Net income | — | — | — | — | |||||||||||||
Balances, March 31, 2019 | $ | $ | $ | $ | $ | ||||||||||||
Common stock: class A shares issued related to warrants | — | — | |||||||||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | — | — | |||||||||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||
Change in unrealized investment gains/losses, net of tax benefit of $3,686 | — | — | — | — | |||||||||||||
Net income | — | — | — | — | |||||||||||||
Balances, June 30, 2019 | $ | $ | $ | $ | $ |
* | During the three months ended March 31, 2019, we issued |
Common Stock - Class A | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Total | |||||||||||||
Shares | Amount | ||||||||||||||||
(In Thousands) | |||||||||||||||||
Balances, January 1, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Cumulative effect of change in accounting principle | — | — | — | ( | ) | — | |||||||||||
Common stock: class A shares issued related to public offering | — | — | |||||||||||||||
Common stock: class A shares issued related to warrants | * | — | — | ||||||||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | ( | ) | — | — | ( | ) | |||||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||
Change in unrealized investment gains/losses, net of tax benefit of $423 | — | — | — | ( | ) | — | ( | ) | |||||||||
Net income | — | — | — | — | |||||||||||||
Balances, March 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Common stock: class A shares issued related to warrants | * | — | — | ||||||||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | — | — | |||||||||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||
Change in unrealized investment gains/losses, net of tax benefit of $2,891 | — | — | — | ( | ) | — | ( | ) | |||||||||
Net income | — | — | — | — | |||||||||||||
Balances, June 30, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
* | During the three months ended March 31, 2018 and June 30, 2018, we issued |
For the six months ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | (In Thousands) | ||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Net realized investment losses (gains) | ( | ) | |||||
Loss (gain) from change in fair value of warrant liability | ( | ) | |||||
Depreciation and amortization | |||||||
Net amortization of premium on investment securities | |||||||
Amortization of debt discount and debt issuance costs | |||||||
Share-based compensation expense | |||||||
Deferred income taxes | |||||||
Changes in operating assets and liabilities: | |||||||
Premiums receivable | ( | ) | ( | ) | |||
Accrued investment income | ( | ) | ( | ) | |||
Prepaid expenses | ( | ) | ( | ) | |||
Deferred policy acquisition costs, net | ( | ) | ( | ) | |||
Other assets | ( | ) | |||||
Unearned premiums | ( | ) | |||||
Reserve for insurance claims and claim expenses | |||||||
Reinsurance balances, net | ( | ) | |||||
Accounts payable and accrued expenses | ( | ) | ( | ) | |||
Net cash provided by operating activities | |||||||
Cash flows from investing activities | |||||||
Purchase of short-term investments | ( | ) | ( | ) | |||
Purchase of fixed-maturity investments, available-for-sale | ( | ) | ( | ) | |||
Proceeds from maturity of short-term investments | |||||||
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | |||||||
Additions to software and equipment | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities | |||||||
Proceeds from issuance of common stock related to public offering, net of issuance costs | |||||||
Proceeds from issuance of common stock related to employee equity plans | |||||||
Taxes paid related to net share settlement of equity awards | ( | ) | ( | ) | |||
Proceeds from senior note, net | |||||||
Repayments of term loan | ( | ) | ( | ) | |||
Payments of debt issuance/modification costs | ( | ) | |||||
Net cash (used in) provided by financing activities | ( | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||
Supplemental disclosures of cash flow information | |||||||
Interest paid | $ | $ | |||||
Income tax (refunded) paid, net | $ | ( | ) | $ |
Amortized Cost | Gross Unrealized | Fair Value | |||||||||||||
Gains | Losses | ||||||||||||||
As of June 30, 2019 | (In Thousands) | ||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | $ | $ | ( | ) | $ | |||||||||
Municipal debt securities | ( | ) | |||||||||||||
Corporate debt securities | ( | ) | |||||||||||||
Asset-backed securities | ( | ) | |||||||||||||
Total bonds | ( | ) | |||||||||||||
Short-term investments | |||||||||||||||
Total investments | $ | $ | $ | ( | ) | $ |
Amortized Cost | Gross Unrealized | Fair Value | |||||||||||||
Gains | Losses | ||||||||||||||
As of December 31, 2018 | (In Thousands) | ||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | $ | $ | ( | ) | $ | |||||||||
Municipal debt securities | ( | ) | |||||||||||||
Corporate debt securities | ( | ) | |||||||||||||
Asset-backed securities | ( | ) | |||||||||||||
Total bonds | ( | ) | |||||||||||||
Short-term investments | |||||||||||||||
Total investments | $ | $ | $ | ( | ) | $ |
June 30, 2019 | December 31, 2018 | ||||
Financial | % | % | |||
Consumer | |||||
Communications | |||||
Utilities | |||||
Industrial | |||||
Technology | |||||
Energy | |||||
Other | |||||
Total | % | % |
As of June 30, 2019 | Amortized Cost | Fair Value | |||||
(In Thousands) | |||||||
Due in one year or less | $ | $ | |||||
Due after one through five years | |||||||
Due after five through ten years | |||||||
Due after ten years | |||||||
Asset-backed securities | |||||||
Total investments | $ | $ |
As of December 31, 2018 | Amortized Cost | Fair Value | |||||
(In Thousands) | |||||||
Due in one year or less | $ | $ | |||||
Due after one through five years | |||||||
Due after five through ten years | |||||||
Due after ten years | |||||||
Asset-backed securities | |||||||
Total investments | $ | $ |
Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||||
# of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | ||||||||||||||||||
As of June 30, 2019 | (Dollars in Thousands) | |||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
Municipal debt securities(1) | ( | ) | ( | ) | ||||||||||||||||||||||
Corporate debt securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
(1) | Includes securities with unrealized losses of less than 12 months which are not identifiable in the schedule due to rounding. |
Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||||
# of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | ||||||||||||||||||
As of December 31, 2018 | (Dollars in Thousands) | |||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
Municipal debt securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Corporate debt securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In Thousands) | |||||||||||||||
Investment income | $ | $ | $ | $ | |||||||||||
Investment expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net investment income | $ | $ | $ | $ |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In Thousands) | |||||||||||||||
Gross realized investment gains | $ | $ | $ | $ | |||||||||||
Gross realized investment losses | ( | ) | ( | ) | |||||||||||
Net realized investment losses | $ | ( | ) | $ | $ | ( | ) | $ |
Fair Value Measurements Using | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | ||||||||||||
As of June 30, 2019 | (In Thousands) | ||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | $ | $ | $ | |||||||||||
Municipal debt securities | |||||||||||||||
Corporate debt securities | |||||||||||||||
Asset-backed securities | |||||||||||||||
Cash, cash equivalents and short-term investments | |||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||
Warrant liability | |||||||||||||||
Total liabilities | $ | $ | $ | $ |
Fair Value Measurements Using | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | ||||||||||||
As of December 31, 2018 | (In Thousands) | ||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | $ | $ | $ | |||||||||||
Municipal debt securities | |||||||||||||||
Corporate debt securities | |||||||||||||||
Asset-backed securities | |||||||||||||||
Cash, cash equivalents and short-term investments | |||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||
Warrant liability | |||||||||||||||
Total liabilities | $ | $ | $ | $ |
For the six months ended June 30, | |||||||
Warrant Liability | 2019 | 2018 | |||||
(In Thousands) | |||||||
Balance, January 1 | $ | $ | |||||
Change in fair value of warrant liability included in earnings | ( | ) | |||||
Issuance of common stock on warrant exercise | ( | ) | ( | ) | |||
Balance, June 30 | $ | $ |
As of June 30, | |||||||
2019 | 2018 | ||||||
Common stock price | $ | $ | |||||
Risk free interest rate | 1.72 - 1.95% | 2.60 | % | ||||
Expected life | 0.92 - 2.81 years | 2.49 years | |||||
Expected volatility | 33.8 - 40.0% | 32.7 | % | ||||
Dividend yield | 0 | % | 0 | % |
As of June 30, 2019 | Principal | |||
(In thousands) | ||||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Total | $ |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
(In Thousands) | |||||||||||||||
Net premiums written | |||||||||||||||
Direct | $ | $ | $ | $ | |||||||||||
Ceded (1) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net premiums written | $ | $ | $ | $ | |||||||||||
Net premiums earned | |||||||||||||||
Direct | $ | $ | $ | $ | |||||||||||
Ceded (1) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net premiums earned | $ | $ | $ | $ |
(1) |
• |
• |
• |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
(In Thousands) | |||||||||||||||
Ceded risk-in-force | $ | $ | $ | $ | |||||||||||
Ceded premiums written | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Ceded premiums earned | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Ceded claims and claim expenses | |||||||||||||||
Ceding commission written | |||||||||||||||
Ceding commission earned | |||||||||||||||
Profit commission |
For the six months ended June 30, | |||||||
2019 | 2018 | ||||||
(In Thousands) | |||||||
Beginning balance | $ | $ | |||||
Less reinsurance recoverables (1) | ( | ) | ( | ) | |||
Beginning balance, net of reinsurance recoverables | |||||||
Add claims incurred: | |||||||
Claims and claim expenses incurred: | |||||||
Current year (2) | |||||||
Prior years (3) | ( | ) | ( | ) | |||
Total claims and claim expenses incurred | |||||||
Less claims paid: | |||||||
Claims and claim expenses paid: | |||||||
Current year (2) | |||||||
Prior years (3) | |||||||
Reinsurance terminations (4) | ( | ) | |||||
Total claims and claim expenses paid | |||||||
Reserve at end of period, net of reinsurance recoverables | |||||||
Add reinsurance recoverables (1) | |||||||
Ending balance | $ | $ |
(1) | Related to ceded losses recoverable on the QSR Transactions, included in "Other Assets" on the Condensed Consolidated Balance Sheets. See Note 5, "Reinsurance" for additional information. |
(2) | Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year. Amounts are presented net of reinsurance. |
(3) | Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time. Amounts are presented net of reinsurance. |
(4) | Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016 QSR Transaction on a cut-off basis. See Note 5, "Reinsurance" for additional information. |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(In Thousands, except for per share data) | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Basic weighted average shares outstanding | |||||||||||||||
Basic earnings per share | $ | $ | $ | $ | |||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Warrant gain, net of tax | ( | ) | ( | ) | |||||||||||
Diluted net income | $ | $ | $ | $ | |||||||||||
Basic weighted average shares outstanding | |||||||||||||||
Dilutive effect of issuable shares | |||||||||||||||
Diluted weighted average shares outstanding | |||||||||||||||
Diluted earnings per share | $ | $ | $ | $ | |||||||||||
Anti-dilutive shares |
Weighted-average remaining lease term | ||
Weighted-average discount rate | % |
As of June 30, 2019 | (In Thousands) | ||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Total undiscounted lease payments | |||
Less effects of discounting | ( | ) | |
Present value of lease payments | $ |
Year ending December 31, 2018 | |||
(In Thousands) | |||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Totals | $ |
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
(In Thousands) | ||||||||||||||
Statutory net income (loss) | $ | $ | $ | ( | ) |
June 30, 2019 | December 31, 2018 | ||||||
(Dollars In Thousands) | |||||||
Statutory surplus | $ | $ | |||||
Contingency reserve | |||||||
RTC Ratio | 15.8:1 | 13.1:1 |
• | NIW; |
• | premium rates and the mix of premium payment type, which are either single, monthly or annual premiums, as described below; |
• | cancellation rates of our insurance policies, which are impacted by payments or prepayments on mortgages, refinancings (which are affected by prevailing mortgage interest rates as compared to interest rates on loans underpinning our in force policies), levels of claim payments and home prices; and |
• | cession of premiums under third-party reinsurance arrangements. |
Primary and pool IIF and NIW | As of and for the three months ended | For the six months ended | |||||||||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||||||||||
IIF | NIW | IIF | NIW | NIW | |||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
Monthly | $ | 63,922 | $ | 11,067 | $ | 41,843 | $ | 5,711 | $ | 17,278 | $ | 11,152 | |||||||||||
Single | 17,786 | 1,112 | 16,246 | 802 | 1,814 | 1,821 | |||||||||||||||||
Primary | 81,708 | 12,179 | 58,089 | 6,513 | 19,092 | 12,973 | |||||||||||||||||
Pool | 2,758 | — | 3,064 | — | — | — | |||||||||||||||||
Total | $ | 84,466 | $ | 12,179 | $ | 61,153 | $ | 6,513 | $ | 19,092 | $ | 12,973 |
Primary and pool premiums written and earned | For the three months ended | For the six months ended | |||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
(In Thousands) | |||||||||||||||
Net premiums written | $ | 82,609 | $ | 64,443 | $ | 154,532 | $ | 123,473 | |||||||
Net premiums earned | 83,249 | 61,615 | 157,118 | 116,529 |
Primary portfolio trends | As of and for the three months ended | ||||||||||||||||||
June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | |||||||||||||||
($ Values In Millions) | |||||||||||||||||||
New insurance written | $ | 12,179 | $ | 6,913 | $ | 6,962 | $ | 7,361 | $ | 6,513 | |||||||||
Percentage of monthly premium | 91 | % | 90 | % | 90 | % | 91 | % | 88 | % | |||||||||
Percentage of single premium | 9 | % | 10 | % | 10 | % | 9 | % | 12 | % | |||||||||
New risk written | $ | 3,183 | $ | 1,799 | $ | 1,799 | $ | 1,883 | $ | 1,647 | |||||||||
Insurance-in-force (IIF) (1) | 81,708 | 73,234 | 68,551 | 63,527 | 58,089 | ||||||||||||||
Percentage of monthly premium | 78 | % | 76 | % | 75 | % | 74 | % | 72 | % | |||||||||
Percentage of single premium | 22 | % | 24 | % | 25 | % | 26 | % | 28 | % | |||||||||
Risk-in-force (1) | $ | 20,661 | $ | 18,373 | $ | 17,091 | $ | 15,744 | $ | 14,308 | |||||||||
Policies in force (count) (1) | 324,876 | 297,232 | 280,825 | 262,485 | 241,993 | ||||||||||||||
Average loan size (1) | $ | 0.252 | $ | 0.246 | $ | 0.244 | $ | 0.242 | $ | 0.240 | |||||||||
Coverage percentage (2) | 25.3 | % | 25.1 | % | 24.9 | % | 24.8 | % | 24.6 | % | |||||||||
Loans in default (count) (1) | 1,028 | 940 | 877 | 746 | 768 | ||||||||||||||
Percentage of loans in default (1) | 0.3 | % | 0.3 | % | 0.3 | % | 0.3 | % | 0.3 | % | |||||||||
Risk in force on defaulted loans (1) | $ | 58 | $ | 53 | $ | 48 | $ | 42 | $ | 43 | |||||||||
Average premium yield (3) | 0.43 | % | 0.42 | % | 0.42 | % | 0.43 | % | 0.44 | % | |||||||||
Earnings from cancellations | $ | 4.5 | $ | 2.3 | $ | 2.1 | $ | 2.6 | $ | 3.1 | |||||||||
Annual persistency (4) | 86.0 | % | 87.2 | % | 87.1 | % | 86.1 | % | 85.5 | % | |||||||||
Quarterly run-off (5) | 5.1 | % | 3.3 | % | 3.1 | % | 3.3 | % | 3.5 | % |
(1) | Reported as of the end of the period. |
(2) | Calculated as end of period RIF divided by end of period IIF. |
(3) | Calculated as net premiums earned divided by average primary IIF for the period, annualized. |
(4) | Defined as the percentage of IIF that remains on our books after a given 12-month period. |
(5) | Defined as the percentage of IIF that is no longer on our books after a given three month period. |
Primary IIF | For the three months ended | For the six months ended | |||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
(In Millions) | |||||||||||||||
IIF, beginning of period | $ | 73,234 | $ | 53,434 | $ | 68,551 | $ | 48,465 | |||||||
NIW | 12,179 | 6,513 | 19,092 | 12,973 | |||||||||||
Cancellations and other reductions | (3,705 | ) | (1,858 | ) | (5,935 | ) | (3,349 | ) | |||||||
IIF, end of period | $ | 81,708 | $ | 58,089 | $ | 81,708 | $ | 58,089 |
Primary IIF and RIF | As of June 30, 2019 | As of June 30, 2018 | |||||||||||||
IIF | RIF | IIF | RIF | ||||||||||||
(In Millions) | |||||||||||||||
June 30, 2019 | $ | 18,745 | $ | 4,892 | $ | — | $ | — | |||||||
2018 | 24,344 | 6,177 | 12,758 | 3,174 | |||||||||||
2017 | 17,512 | 4,319 | 19,784 | 4,837 | |||||||||||
2016 | 13,903 | 3,454 | 16,800 | 4,109 | |||||||||||
2015 | 6,218 | 1,569 | 7,505 | 1,877 | |||||||||||
2014 and before | 986 | 250 | 1,242 | 311 | |||||||||||
Total | $ | 81,708 | $ | 20,661 | $ | 58,089 | $ | 14,308 |
Primary NIW by FICO | For the three months ended | For the six months ended | |||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
($ In Millions) | |||||||||||||||
>= 760 | $ | 5,627 | $ | 2,807 | $ | 8,684 | $ | 5,425 | |||||||
740-759 | 2,165 | 1,129 | 3,389 | 2,203 | |||||||||||
720-739 | 1,785 | 964 | 2,829 | 1,878 | |||||||||||
700-719 | 1,337 | 747 | 2,129 | 1,558 | |||||||||||
680-699 | 891 | 469 | 1,444 | 1,036 | |||||||||||
<=679 | 374 | 397 | 617 | 873 | |||||||||||
Total | $ | 12,179 | $ | 6,513 | $ | 19,092 | $ | 12,973 | |||||||
Weighted average FICO | 751 | 747 | 751 | 745 |
Primary NIW by LTV | For the three months ended | For the six months ended | |||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
($ In Millions) | |||||||||||||||
95.01% and above | $ | 971 | $ | 971 | $ | 1,540 | $ | 1,968 | |||||||
90.01% to 95.00% | 5,931 | 2,932 | 9,355 | 5,696 | |||||||||||
85.01% to 90.00% | 4,085 | 1,888 | 6,326 | 3,644 | |||||||||||
85.00% and below | 1,192 | 722 | 1,871 | 1,665 | |||||||||||
Total | $ | 12,179 | $ | 6,513 | $ | 19,092 | $ | 12,973 | |||||||
Weighted average LTV | 92.0 | % | 92.7 | % | 92.1 | % | 92.6 | % |
Primary NIW by purchase/refinance mix | For the three months ended | For the six months ended | |||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
(In Millions) | |||||||||||||||
Purchase | $ | 10,697 | $ | 6,137 | $ | 17,080 | $ | 11,562 | |||||||
Refinance | 1,482 | 376 | 2,012 | 1,411 | |||||||||||
Total | $ | 12,179 | $ | 6,513 | $ | 19,092 | $ | 12,973 |
Primary IIF by FICO | As of | ||||||||||||
June 30, 2019 | June 30, 2018 | ||||||||||||
($ In Millions) | |||||||||||||
>= 760 | $ | 37,830 | 46 | % | $ | 27,311 | 47 | % | |||||
740-759 | 13,731 | 17 | 9,460 | 16 | |||||||||
720-739 | 11,388 | 14 | 7,722 | 14 | |||||||||
700-719 | 9,028 | 11 | 6,355 | 11 | |||||||||
680-699 | 6,045 | 7 | 4,174 | 7 | |||||||||
<=679 | 3,686 | 5 | 3,067 | 5 | |||||||||
Total | $ | 81,708 | 100 | % | $ | 58,089 | 100 | % |
Primary RIF by FICO | As of | ||||||||||||
June 30, 2019 | June 30, 2018 | ||||||||||||
($ In Millions) | |||||||||||||
>= 760 | $ | 9,551 | 46 | % | $ | 6,758 | 47 | % | |||||
740-759 | 3,499 | 17 | 2,344 | 16 | |||||||||
720-739 | 2,904 | 14 | 1,905 | 14 | |||||||||
700-719 | 2,286 | 11 | 1,558 | 11 | |||||||||
680-699 | 1,524 | 8 | 1,016 | 7 | |||||||||
<=679 | 897 | 4 | 727 | 5 | |||||||||
Total | $ | 20,661 | 100 | % | $ | 14,308 | 100 | % |
Primary IIF by LTV | As of | ||||||||||||
June 30, 2019 | June 30, 2018 | ||||||||||||
($ In Millions) | |||||||||||||
95.01% and above | $ | 7,925 | 10 | % | $ | 5,747 | 10 | % | |||||
90.01% to 95.00% | 38,371 | 47 | 26,119 | 45 | |||||||||
85.01% to 90.00% | 25,099 | 31 | 17,319 | 30 | |||||||||
85.00% and below | 10,313 | 12 | 8,904 | 15 | |||||||||
Total | $ | 81,708 | 100 | % | $ | 58,089 | 100 | % |
Primary RIF by LTV | As of | ||||||||||||
June 30, 2019 | June 30, 2018 | ||||||||||||
($ In Millions) | |||||||||||||
95.01% and above | $ | 2,145 | 10 | % | $ | 1,522 | 11 | % | |||||
90.01% to 95.00% | 11,206 | 54 | 7,610 | 53 | |||||||||
85.01% to 90.00% | 6,108 | 30 | 4,154 | 29 | |||||||||
85.00% and below | 1,202 | 6 | 1,022 | 7 | |||||||||
Total | $ | 20,661 | 100 | % | $ | 14,308 | 100 | % |
Primary RIF by Loan Type | As of | ||||
June 30, 2019 | June 30, 2018 | ||||
Fixed | 98 | % | 98 | % | |
Adjustable rate mortgages: | |||||
Less than five years | — | — | |||
Five years and longer | 2 | 2 | |||
Total | 100 | % | 100 | % |
As of June 30, 2019 | ||||||||||||||||||||||||||||||
Book year | Original Insurance Written | Remaining Insurance in Force | % Remaining of Original Insurance | Policies Ever in Force | Number of Policies in Force | Number of Loans in Default | # of Claims Paid | Incurred Loss Ratio (Inception to Date) (1) | Cumulative default rate (2) | Current default rate (3) | ||||||||||||||||||||
($ Values in Millions) | ||||||||||||||||||||||||||||||
2013 | $ | 162 | $ | 27 | 16 | % | 655 | 145 | — | 1 | 0.2% | 0.2 | % | — | % | |||||||||||||||
2014 | 3,451 | 960 | 28 | % | 14,786 | 5,085 | 46 | 35 | 3.8% | 0.5 | % | 0.9 | % | |||||||||||||||||
2015 | 12,422 | 6,218 | 50 | % | 52,548 | 29,049 | 183 | 69 | 2.9% | 0.5 | % | 0.6 | % | |||||||||||||||||
2016 | 21,187 | 13,902 | 66 | % | 83,626 | 58,662 | 209 | 67 | 2.0% | 0.3 | % | 0.4 | % | |||||||||||||||||
2017 | 21,582 | 17,512 | 81 | % | 85,897 | 72,988 | 355 | 17 | 3.1% | 0.4 | % | 0.5 | % | |||||||||||||||||
2018 | 27,288 | 24,344 | 89 | % | 104,015 | 95,477 | 231 | 3 | 3.0% | 0.2 | % | 0.2 | % | |||||||||||||||||
2019 | 19,092 | 18,745 | 98 | % | 64,429 | 63,470 | 4 | — | 0.3% | — | % | — | % | |||||||||||||||||
Total | $ | 105,184 | $ | 81,708 | 405,956 | 324,876 | 1,028 | 192 |
(1) | The ratio of total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance. |
(2) | The sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force. |
(3) | The ratio of the number of loans in default divided by number of policies in force. |
Top 10 primary RIF by state | As of | ||||
June 30, 2019 | June 30, 2018 | ||||
California | 12.3 | % | 13.4 | % | |
Texas | 8.2 | 8.0 | |||
Florida | 5.4 | 4.7 | |||
Virginia | 5.2 | 5.0 | |||
Arizona | 4.6 | 5.0 | |||
Illinois | 3.6 | 3.3 | |||
Pennsylvania | 3.6 | 3.6 | |||
Michigan | 3.5 | 3.7 | |||
Colorado | 3.4 | 3.5 | |||
Maryland | 3.3 | 3.3 | |||
Total | 53.1 | % | 53.5 | % |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
(In Thousands) | |||||||||||||||
Beginning balance | $ | 15,537 | $ | 10,391 | $ | 12,811 | $ | 8,761 | |||||||
Less reinsurance recoverables (1) | (3,678 | ) | (2,334 | ) | (3,001 | ) | (1,902 | ) | |||||||
Beginning balance, net of reinsurance recoverables | 11,859 | 8,057 | 9,810 | 6,859 | |||||||||||
Add claims incurred: | |||||||||||||||
Claims and claim expenses incurred: | |||||||||||||||
Current year (2) | 3,492 | 1,212 | 7,401 | 3,152 | |||||||||||
Prior years (3) | (569 | ) | (569 | ) | (1,735 | ) | (940 | ) | |||||||
Total claims and claim expenses incurred | 2,923 | 643 | 5,666 | 2,212 | |||||||||||
Less claims paid: | |||||||||||||||
Claims and claim expenses paid: | |||||||||||||||
Current year (2) | — | — | — | — | |||||||||||
Prior years (3) | 674 | 481 | 1,368 | 852 | |||||||||||
Reinsurance terminations (4) | (549 | ) | — | (549 | ) | — | |||||||||
Total claims and claim expenses paid | 125 | 481 | 819 | 852 | |||||||||||
Reserve at end of period, net of reinsurance recoverables | 14,657 | 8,219 | 14,657 | 8,219 | |||||||||||
Add reinsurance recoverables (1) | 3,775 | 2,382 | 3,775 | 2,382 | |||||||||||
Ending balance | $ | 18,432 | $ | 10,601 | $ | 18,432 | $ | 10,601 |
(1) | Related to ceded losses recoverable on the QSR Transactions, included in "Other Assets" on the Condensed Consolidated Balance Sheets. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance" for additional information. |
(2) | Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year. Amounts are presented net of reinsurance. |
(3) | Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time. Amounts are presented net of reinsurance. |
(4) | Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016 QSR Transaction on a cut-off basis. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance" for additional information. |
For the three months ended | For the six months ended | ||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||
Beginning default inventory | 940 | 1,000 | 877 | 928 | |||||||
Plus: new defaults | 546 | 287 | 1,120 | 700 | |||||||
Less: cures | (433 | ) | (501 | ) | (907 | ) | (825 | ) | |||
Less: claims paid | (25 | ) | (18 | ) | (62 | ) | (35 | ) | |||
Ending default inventory | 1,028 | 768 | 1,028 | 768 |
For the three months ended | For the six months ended | ||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
($ In Thousands) | |||||||||||||||
Number of claims paid (1) | 25 | 18 | 62 | 35 | |||||||||||
Total amount paid for claims | $ | 788 | $ | 607 | $ | 1,714 | $ | 1,089 | |||||||
Average amount paid per claim | $ | 32 | $ | 34 | $ | 28 | $ | 31 | |||||||
Severity(2) | 77 | % | 78 | % | 69 | % | 76 | % |
(1) | Count includes 4 and 7 claims settled without payment for the three and six months ended June 30, 2019, respectively, and 1 and 4 claims settled without payment for the three and six months ended June 30, 2018, respectively. |
(2) | Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment. |
Average reserve per default: | As of June 30, 2019 | As of June 30, 2018 | |||||
(In Thousands) | |||||||
Case (1) | $ | 16 | $ | 13 | |||
IBNR | 2 | 1 | |||||
Total (2) | $ | 18 | $ | 14 |
(1) | Defined as the gross reserve per insured loan in default. |
(2) | Amount includes claims adjustment expenses. |
As of | |||||||
June 30, 2019 | June 30, 2018 | ||||||
(In Thousands) | |||||||
Available assets | $ | 878,550 | $ | 653,080 | |||
Risk-based required assets | 782,460 | 587,235 |
Consolidated statements of operations | Three months ended | Six months ended | |||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||
Revenues | (In Thousands) | ||||||||||||||
Net premiums earned | $ | 83,249 | $ | 61,615 | $ | 157,118 | $ | 116,529 | |||||||
Net investment income | 7,629 | 5,735 | 15,012 | 10,309 | |||||||||||
Net realized investment (losses) gains | (113 | ) | 59 | (300 | ) | 59 | |||||||||
Other revenues | 415 | 44 | 456 | 108 | |||||||||||
Total revenues | 91,180 | 67,453 | 172,286 | 127,005 | |||||||||||
Expenses | |||||||||||||||
Insurance claims and claim expenses | 2,923 | 643 | 5,666 | 2,212 | |||||||||||
Underwriting and operating expenses | 32,543 | 29,020 | 63,392 | 57,473 | |||||||||||
Total expenses | 35,466 | 29,663 | 69,058 | 59,685 | |||||||||||
Other expense | |||||||||||||||
(Loss) gain from change in fair value of warrant liability | (1,685 | ) | 109 | (7,164 | ) | 529 | |||||||||
Interest expense | (3,071 | ) | (5,560 | ) | (6,132 | ) | (8,979 | ) | |||||||
Income before income taxes | 50,958 | 32,339 | 89,932 | 58,870 | |||||||||||
Income tax expense | 11,858 | 7,098 | 17,933 | 11,274 | |||||||||||
Net income | $ | 39,100 | $ | 25,241 | $ | 71,999 | $ | 47,596 | |||||||
Earnings per share - Basic | $ | 0.58 | $ | 0.38 | $ | 1.07 | $ | 0.74 | |||||||
Earnings per share - Diluted | $ | 0.56 | $ | 0.37 | $ | 1.04 | $ | 0.70 | |||||||
Loss ratio(1) | 3.5 | % | 1.0 | % | 3.6 | % | 1.9 | % | |||||||
Expense ratio(2) | 39.1 | % | 47.1 | % | 40.3 | % | 49.3 | % | |||||||
Combined ratio(3) | 42.6 | % | 48.1 | % | 44.0 | % | 51.2 | % |
(1) | Loss ratio is calculated by dividing the provision for insurance claims and claim expenses by net premiums earned. |
(2) | Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned. |
(3) | Combined ratio may not foot due to rounding. |
Consolidated balance sheets | June 30, 2019 | December 31, 2018 | |||||
(In Thousands) | |||||||
Total investment portfolio | $ | 1,017,607 | $ | 911,490 | |||
Cash and cash equivalents | 35,735 | 25,294 | |||||
Premiums receivable | 42,225 | 36,007 | |||||
Deferred policy acquisition costs, net | 52,607 | 46,840 | |||||
Software and equipment, net | 25,827 | 24,765 | |||||
Prepaid reinsurance premiums | 20,426 | 30,370 | |||||
Other assets | 25,972 | 17,277 | |||||
Total assets | $ | 1,220,399 | $ | 1,092,043 | |||
Term loan | $ | 146,253 | $ | 146,757 | |||
Unearned premiums | 151,358 | 158,893 | |||||
Accounts payable and accrued expenses | 24,351 | 31,141 | |||||
Reserve for insurance claims and claim expenses | 18,432 | 12,811 | |||||
Reinsurance funds withheld | 18,092 | 27,114 | |||||
Warrant liability | 9,679 | 7,296 | |||||
Deferred tax liability, net | 28,258 | 2,740 | |||||
Other liabilities | 11,597 | 3,791 | |||||
Total liabilities | 408,020 | 390,543 | |||||
Total shareholders' equity | 812,379 | 701,500 | |||||
Total liabilities and shareholders' equity | $ | 1,220,399 | $ | 1,092,043 |
Consolidated cash flows | For the six months ended June 30, | ||||||
2019 | 2018 | ||||||
Net cash provided by (used in): | (In Thousands) | ||||||
Operating activities | $ | 87,324 | $ | 61,353 | |||
Investing activities | (74,969 | ) | (142,193 | ) | |||
Financing activities | (1,914 | ) | 78,098 | ||||
Net increase (decrease) in cash and cash equivalents | $ | 10,441 | $ | (2,742 | ) |
Percentage of portfolio's fair value | June 30, 2019 | December 31, 2018 | |||
Corporate debt securities | 62 | % | 58 | % | |
Asset-backed securities | 16 | 18 | |||
Municipal debt securities | 9 | 10 | |||
Cash, cash equivalents, and short-term investments | 8 | 9 | |||
U.S. treasury securities and obligations of U.S. government agencies | 5 | 5 | |||
Total | 100 | % | 100 | % |
Investment portfolio ratings at fair value (1) | June 30, 2019 | December 31, 2018 | |||
AAA | 19 | % | 22 | % | |
AA(2) | 15 | 18 | |||
A(2) | 51 | 42 | |||
BBB(2) | 15 | 18 | |||
BB(3) | — | — | |||
Total | 100 | % | 100 | % |
(1) | Excluding certain operating cash accounts. |
(2) | Includes +/– ratings. |
(3) | We held one security with a BB rating at December 31, 2018, which is not identifiable in the table due to rounding. |
• | Changes to the level of interest rates. Increasing interest rates may reduce the value of certain fixed-rate bonds held in the investment portfolio. Higher rates may cause variable rate assets to generate additional income. Decreasing rates will have the reverse impact. Significant changes in interest rates can also affect persistency and claim rates of our insurance portfolio, and as a result we may determine that our investment portfolio needs to be restructured to better align it with future liabilities and claim payments. Such restructuring may cause investments to be liquidated when market conditions are adverse. Additionally, the changes in Eurodollar based interest rates affect the interest expense related to the Company's debt. |
• | Changes to the term structure of interest rates. Rising or falling rates typically change by different amounts along the yield curve. These changes may have unforeseen impacts on the value of certain assets. |
• | Market volatility/changes in the real or perceived credit quality of investments. Deterioration in the quality of investments, identified through changes to our own or third party (e.g., rating agency) assessments, will reduce the value and potentially the liquidity of investments. |
• | Concentration Risk. If the investment portfolio is highly concentrated in one asset, or in multiple assets whose values are highly correlated, the value of the total portfolio may be greatly affected by the change in value of just one asset or a group of highly correlated assets. |
• | Prepayment Risk. Bonds may have call provisions that permit debtors to repay prior to maturity when it is to their advantage. This typically occurs when rates fall below the interest rate of the debt. |
Exhibit Number | Description | |
2.1 | Stock Purchase Agreement, dated November 30, 2011, between NMI Holdings, Inc. and MAC Financial Ltd. (incorporated herein by reference to Exhibit 2.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
2.2 | Amendment to Stock Purchase Agreement, dated April 6, 2012, between NMI Holdings, Inc. and MAC Financial Ltd. (incorporated herein by reference to Exhibit 2.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
3.1 | Second Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
3.2 | Third Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.1 to our Form 8-K, filed on December 9, 2014) | |
4.1 | Specimen Class A common stock certificate (incorporated herein by reference to Exhibit 4.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
4.2 | Registration Rights Agreement between NMI Holdings, Inc. and FBR Capital Markets & Co., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
4.3 | Registration Rights Agreement by and between MAC Financial Ltd. and NMI Holdings, Inc., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.3 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
4.4 | Registration Rights Agreement between FBR & Co., FBR Capital Markets LT, Inc., FBR Capital Markets & Co., FBR Capital Markets PT, Inc. and NMI Holdings, Inc., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.4 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
4.5 | Warrant No. 1 to Purchase Common Stock of NMI Holdings, Inc. issued to FBR Capital Markets & Co., dated June 13, 2013 (incorporated herein by reference to Exhibit 4.5 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
4.6 | Form of Warrant to Purchase Common Stock of NMI Holdings, Inc. issued to former stockholders of MAC Financial Ltd. (incorporated herein by reference to Exhibit 4.6 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
10.1 ~ | NMI Holdings Inc. 2012 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to our Form S-1 Registration Statement (registration No. 333-191635), filed on October 9, 2013) | |
10.2 ~ | Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement for Management (incorporated herein by reference to Exhibit 10.3 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
10.3 ~ | Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Chief Executive Officer and Chief Financial Officer (incorporated herein by reference to Exhibit 10.5 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
10.4 ~ | Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Management (incorporated herein by reference to Exhibit 10.6 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
10.5 ~ | Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Directors (incorporated herein by reference to Exhibit 10.7 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013) | |
10.6 ~ | Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Chief Executive Officer and Chief Financial Officer (incorporated herein by reference to Exhibit 10.8 to our Form 10-K, filed on February 17, 2017) | |
10.7 ~ | Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Employees (incorporated herein by reference to Exhibit 10.9 to our Form 10-K, filed on February 17, 2017) | |
10.8 ~ | Amended and Restated Employment Agreement by and between NMI Holdings, Inc. and Bradley M. Shuster, dated December 23, 2015 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on December 29, 2015) | |
10.9 ~ | Offer Letter by and between NMI Holdings, Inc. and William Leatherberry, dated July 11, 2014 (incorporated herein by reference to Exhibit 10.10 to our Form 10-Q, filed on April 28, 2016) | |
10.10 ~ | Offer Letter by and between NMI Holdings, Inc. and Adam Pollitzer, dated February 1, 2017 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on February 3, 2017) |
10.33~ | Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Independent Directors (incorporated herein by reference to Exhibit 10.33 to our Form 10-Q, filed on May 2, 2019) | |
10.34~ | Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Employees (incorporated herein by reference to Exhibit 10.34 to our Form 10-Q, filed on May 2, 2019) | |
10.35~ | Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Nonqualified Stock Option Agreement for Employees (incorporated herein by reference to Exhibit 10.35 to our Form 10-Q, filed on May 2, 2019) | |
21.1 | Subsidiaries of NMI Holdings, Inc. (incorporated herein by reference to Exhibit 21.1 to our Form 10-Q, filed on October 30, 2015) | |
31.1 | ||
31.2 | ||
32.1 # | ||
101 | The following financial information from NMI Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 formatted in XBRL (eXtensible Business Reporting Language): | |
(i) Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018; | ||
(ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2019 and 2018; | ||
(iii) Condensed Consolidated Statements of Changes in Shareholders' Equity for the six months ended June 30, 2019 and 2018; | ||
(iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018; | ||
and (v) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
~ | Indicates a management contract or compensatory plan or contract. |
+ | Confidential treatment granted as to certain portions, which portions have been filed separately with the SEC. |
# | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference. |
NMI HOLDINGS, INC. | |
Date: July 31, 2019 | |
By: /s/ Adam S. Pollitzer | |
Name: Adam S. Pollitzer | |
Title: Chief Financial Officer and Duly Authorized Signatory |
1. | I have reviewed this quarterly report on Form 10-Q of NMI Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
July 31, 2019 | /s/ Claudia J. Merkle___________ |
Claudia J. Merkle | |
Chief Executive Officer | |
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of NMI Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
July 31, 2019 | |
/s/ Adam Pollitzer | |
Adam S. Pollitzer | |
Chief Financial Officer | |
(Principal Financial Officer) |
July 31, 2019 | |
/s/ Claudia J. Merkle | |
Claudia Merkle | |
Chief Executive Officer | |
(Principal Executive Officer) |
July 31, 2019 | |
/s/ Adam S. Pollitzer | |
Adam S. Pollitzer | |
Chief Financial Officer | |
(Principal Financial Officer) |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed maturities, available-for-sale, amortized cost | $ 994,543 | $ 924,987 |
Restricted cash | $ 1,430 | $ 1,414 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 67,768,466 | 66,318,849 |
Common stock, outstanding (in shares) | 67,768,466 | 66,318,849 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Revenues | ||||
Net premiums earned | $ 83,249 | $ 61,615 | $ 157,118 | $ 116,529 |
Net investment income | 7,629 | 5,735 | 15,012 | 10,309 |
Net realized investment (losses) gains | (113) | 59 | (300) | 59 |
Other revenues | 415 | 44 | 456 | 108 |
Total revenues | 91,180 | 67,453 | 172,286 | 127,005 |
Expenses | ||||
Insurance claims and claim expenses | 2,923 | 643 | 5,666 | 2,212 |
Underwriting and operating expenses | 32,543 | 29,020 | 63,392 | 57,473 |
Total expenses | 35,466 | 29,663 | 69,058 | 59,685 |
Other expense | ||||
(Loss) gain from change in fair value of warrant liability | (1,685) | 109 | (7,164) | 529 |
Interest expense | (3,071) | (5,560) | (6,132) | (8,979) |
Total other expense | (4,756) | (5,451) | (13,296) | (8,450) |
Income before income taxes | 50,958 | 32,339 | 89,932 | 58,870 |
Income tax expense | 11,858 | 7,098 | 17,933 | 11,274 |
Net income | $ 39,100 | $ 25,241 | $ 71,999 | $ 47,596 |
Earnings per share | ||||
Basic earnings per share (in dollars per share) | $ 0.58 | $ 0.38 | $ 1.07 | $ 0.74 |
Diluted earnings per share (in dollars per share) | $ 0.56 | $ 0.37 | $ 1.04 | $ 0.70 |
Weighted average common shares outstanding | ||||
Basic weighted average shares outstanding (in shares) | 67,590 | 65,664 | 67,143 | 63,891 |
Dilutive weighted average shares outstanding (in shares) | 69,590 | 68,616 | 69,348 | 67,171 |
Comprehensive income: | ||||
Net income | $ 39,100 | $ 25,241 | $ 71,999 | $ 47,596 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gains (losses) in accumulated other comprehensive income, net of tax expense (benefit) of $3,662 and ($2,879) for the three months ended June 30, 2019 and 2018 and $7,615 and ($3,304) for the six months ended June 30, 2019 and 2018, respectively | 13,779 | (1,464) | 28,647 | (12,429) |
Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of ($24) and $12 for the three months ended June 30, 2019 and 2018 and ($63) and $10 for the six months ended June 30, 2019 and 2018, respectively | 89 | (46) | 237 | (37) |
Other comprehensive income (loss), net of tax | 13,868 | (1,510) | 28,884 | (12,466) |
Comprehensive income | $ 52,968 | $ 23,731 | $ 100,883 | $ 35,130 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||||
Net unrealized (losses) gains in accumulated other comprehensive income, tax (benefit) expense | $ 3,662 | $ (2,879) | $ 7,615 | $ (3,304) |
Reclassification adjustment for realized losses included in net income, tax expense | $ (24) | $ 12 | $ (63) | $ 10 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands |
Total |
Common Stock - Class A |
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
Retained Earnings |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2017 | $ 509,077 | $ 605 | $ 585,488 | $ (2,859) | $ (74,157) | ||||||
Beginning balance (in shares) at Dec. 31, 2017 | 60,518,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common stock: class A shares issued related to public offering | 79,165 | $ 43 | 79,122 | ||||||||
Common stock: class A shares issued related to public offering (in shares) | 4,255,000 | ||||||||||
Common stock: class A shares issued related to warrants | [1] | $ 489 | 489 | ||||||||
Common stock: class A shares issued related to warrants (in shares) | 25,686 | 26,000 | [1] | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ (991) | $ 8 | (999) | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 770,000 | ||||||||||
Share-based compensation expense | 2,805 | 2,805 | |||||||||
Change in unrealized investment gains/losses, net of tax | (10,956) | (10,956) | |||||||||
Net income | 22,355 | 22,355 | |||||||||
Ending balance at Mar. 31, 2018 | 601,944 | $ 656 | 666,905 | (13,533) | (52,084) | ||||||
Ending balance (in shares) at Mar. 31, 2018 | 65,569,000 | ||||||||||
Beginning balance at Dec. 31, 2017 | $ 509,077 | $ 605 | 585,488 | (2,859) | (74,157) | ||||||
Beginning balance (in shares) at Dec. 31, 2017 | 60,518,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common stock: class A shares issued related to warrants (in shares) | 29,000 | ||||||||||
Net income | $ 47,596 | ||||||||||
Ending balance at Jun. 30, 2018 | 629,642 | $ 658 | 670,870 | (15,043) | (26,843) | ||||||
Ending balance (in shares) at Jun. 30, 2018 | 65,754,000 | ||||||||||
Beginning balance at Mar. 31, 2018 | 601,944 | $ 656 | 666,905 | (13,533) | (52,084) | ||||||
Beginning balance (in shares) at Mar. 31, 2018 | 65,569,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common stock: class A shares issued related to warrants | [1] | $ 63 | 63 | ||||||||
Common stock: class A shares issued related to warrants (in shares) | 3,751 | 3,000 | [1] | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ 887 | $ 2 | 885 | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 182,000 | ||||||||||
Share-based compensation expense | 3,017 | 3,017 | |||||||||
Change in unrealized investment gains/losses, net of tax | (1,510) | (1,510) | |||||||||
Net income | 25,241 | 25,241 | |||||||||
Ending balance at Jun. 30, 2018 | 629,642 | $ 658 | 670,870 | (15,043) | (26,843) | ||||||
Ending balance (in shares) at Jun. 30, 2018 | 65,754,000 | ||||||||||
Beginning balance at Dec. 31, 2018 | 701,500 | $ 663 | 682,181 | (14,832) | 33,488 | ||||||
Beginning balance (in shares) at Dec. 31, 2018 | 66,319,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common stock: class A shares issued related to warrants | [2] | $ 944 | 944 | ||||||||
Common stock: class A shares issued related to warrants (in shares) | 39,195 | 39,000 | [2] | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ (1,459) | $ 12 | (1,471) | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 1,144,000 | ||||||||||
Share-based compensation expense | 2,981 | 2,981 | |||||||||
Change in unrealized investment gains/losses, net of tax | 15,016 | 15,016 | |||||||||
Net income | 32,899 | 32,899 | |||||||||
Ending balance at Mar. 31, 2019 | 751,881 | $ 675 | 684,635 | 184 | 66,387 | ||||||
Ending balance (in shares) at Mar. 31, 2019 | 67,502,000 | ||||||||||
Beginning balance at Dec. 31, 2018 | $ 701,500 | $ 663 | 682,181 | (14,832) | 33,488 | ||||||
Beginning balance (in shares) at Dec. 31, 2018 | 66,319,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common stock: class A shares issued related to warrants (in shares) | 168,000 | ||||||||||
Net income | $ 71,999 | ||||||||||
Ending balance at Jun. 30, 2019 | 812,379 | $ 677 | 692,163 | 14,052 | 105,487 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 67,768,000 | ||||||||||
Beginning balance at Mar. 31, 2019 | 751,881 | $ 675 | 684,635 | 184 | 66,387 | ||||||
Beginning balance (in shares) at Mar. 31, 2019 | 67,502,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common stock: class A shares issued related to warrants | 3,836 | $ 1 | 3,835 | ||||||||
Common stock: class A shares issued related to warrants (in shares) | 128,000 | ||||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | 219 | $ 1 | 218 | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 138,000 | ||||||||||
Share-based compensation expense | 3,475 | 3,475 | |||||||||
Change in unrealized investment gains/losses, net of tax | 13,868 | 13,868 | |||||||||
Net income | 39,100 | 39,100 | |||||||||
Ending balance at Jun. 30, 2019 | $ 812,379 | $ 677 | $ 692,163 | $ 14,052 | $ 105,487 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 67,768,000 | ||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Change in unrealized investment gains/losses, tax expense (benefit) | $ (3,686) | $ 3,992 | $ (2,891) | $ (423) |
Stock issued upon exercise of warrants (in shares) | 39,195 | 3,751 | 25,686 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Cash flows from operating activities | ||
Net income | $ 71,999 | $ 47,596 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Net realized investment losses (gains) | 300 | (59) |
Loss (gain) from change in fair value of warrant liability | 7,164 | (529) |
Depreciation and amortization | 4,339 | 3,810 |
Net amortization of premium on investment securities | 622 | 810 |
Amortization of debt discount and debt issuance costs | 499 | 2,851 |
Share-based compensation expense | 6,456 | 5,822 |
Deferred income taxes | 17,840 | 10,864 |
Changes in operating assets and liabilities: | ||
Premiums receivable | (6,218) | (6,073) |
Accrued investment income | (607) | (577) |
Prepaid expenses | (312) | (756) |
Deferred policy acquisition costs, net | (5,767) | (4,438) |
Other assets | (260) | 68 |
Unearned premiums | (7,535) | 2,492 |
Reserve for insurance claims and claim expenses | 5,621 | 1,840 |
Reinsurance balances, net | (438) | 365 |
Accounts payable and accrued expenses | (6,379) | (2,733) |
Net cash provided by operating activities | 87,324 | 61,353 |
Cash flows from investing activities | ||
Purchase of short-term investments | (113,276) | (83,874) |
Purchase of fixed-maturity investments, available-for-sale | (126,179) | (219,093) |
Proceeds from maturity of short-term investments | 119,748 | 52,562 |
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 49,229 | 111,485 |
Additions to software and equipment | (4,491) | (3,273) |
Net cash used in investing activities | (74,969) | (142,193) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock related to public offering, net of issuance costs | 0 | 79,165 |
Proceeds from issuance of common stock related to employee equity plans | 12,374 | 6,173 |
Taxes paid related to net share settlement of equity awards | (13,538) | (6,480) |
Proceeds from senior note, net | 0 | 149,250 |
Repayments of term loan | (750) | (146,625) |
Payments of debt issuance/modification costs | 0 | (3,385) |
Net cash (used in) provided by financing activities | (1,914) | 78,098 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 10,441 | (2,742) |
Cash, cash equivalents and restricted cash, beginning of period | 25,294 | 19,196 |
Cash, cash equivalents and restricted cash, end of period | 35,735 | 16,454 |
Supplemental disclosures of cash flow information | ||
Interest paid | 5,365 | 6,425 |
Income tax (refunded) paid, net | $ (134) | |
Income tax (refunded) paid, net | $ 447 |
Organization, Basis of Presentation and Summary of Accounting Principles |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Summary of Accounting Principles | Organization, Basis of Presentation and Summary of Accounting Principles NMI Holdings, Inc. (NMIH) is a Delaware corporation, incorporated in May 2011, to provide private mortgage guaranty insurance (which we refer to as mortgage insurance or MI) through its wholly owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One). Our common stock is listed on the NASDAQ exchange under the ticker symbol "NMIH." In April 2013, NMIC, our primary insurance subsidiary, issued its first mortgage insurance policy. NMIC is licensed to write mortgage insurance in all 50 states and D.C. In August 2015, NMIH capitalized a wholly owned subsidiary, NMI Services, Inc. (NMIS), through which we offer outsourced loan review services to mortgage loan originators. Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2018, included in our 2018 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to our previously reported financial information have been made to conform to current period presentation. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2019. Significant Accounting Principles There have been no changes to our significant accounting principles as described in Item 8, "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Summary of Accounting Principles" of our 2018 10-K, other than as noted in "Recent Accounting Pronouncements - Adopted" below. Recent Accounting Pronouncements - Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). This update requires that businesses recognize rights and obligations associated with certain leases as assets and liabilities on the balance sheet. The standard also requires additional disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. We adopted this ASU on January 1, 2019 using the modified-retrospective method and applied it prospectively as of the effective date, without adjusting comparative periods presented as permitted by ASU 2018-11, Leases (Topic 842), Targeted Improvements. Adoption of this new standard increased our assets and liabilities by $7.6 million in connection with the recognition of right-of-use assets and lease liabilities, primarily related to the operating lease on our corporate headquarters. Adoption of this standard did not impact our consolidated statements of operations or cash flows. See Note 10, "Leases" for additional information related to our leases. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815). This update is intended to simplify the accounting for certain equity-linked financial instruments. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This update expands the scope of Topic 718 to include share-based payments made to non-employees in connection with the acquisition of goods and services. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our financial results at this time as we have not made any share-based grants to non-employees as defined in ASC 718-10-20. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and in April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which includes codification improvements to Topic 326. These updates will require companies to measure and establish reserves for lifetime expected credit losses on many financial assets held at a given reporting date. Under the guidance, the methodology for measuring lifetime credit losses will generally shift from an incurred loss model, whereby losses are only recognized once probable and estimable, to a current expected credit loss (CECL) model, whereby losses are recognized upfront based on a future economic forecast. Credit losses relating to available-for-sale fixed maturity securities will be recorded through an allowance for credit losses, rather than a write-down of the asset as is currently required, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. The length of time an available-for sale fixed maturity security has been held in an unrealized loss position will no longer impact its credit loss determination. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. While we are still finalizing our analysis of this guidance, we do not expect it to have a material impact on our consolidated financial statements. This standard will not impact our accounting for insurance claims and claim expenses as these items are not in the scope of this ASU. In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts. This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This update modifies the fair value measurement disclosure requirements of ASC 820. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Adoption of this ASU will not have an impact on our Consolidated Balance Sheet, Statements of Operations and Comprehensive Income, Changes in Shareholders Equity or Cash Flows. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This update applies to cloud computing arrangements hosted by a vendor and provides companies with guidance on the criteria for capitalizing implementation, set-up and other up-front costs incurred in association with these arrangements. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements.
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments We have designated our investment portfolio as available-for-sale and report it at fair value. The related unrealized gains and losses are, after considering the related tax expense or benefit, recognized through comprehensive income and loss, and on an accumulated basis in shareholders' equity. Net realized investment gains and losses are reported in earnings based on specific identification of securities sold or other-than-temporarily impaired. Fair Values and Gross Unrealized Gains and Losses on Investments
We did not own any mortgage-backed securities in our asset-backed securities portfolio at June 30, 2019 or December 31, 2018. The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of June 30, 2019 and December 31, 2018:
As of June 30, 2019 and December 31, 2018, approximately $5.5 million and $5.3 million, respectively, of our cash and investments were held in the form of U.S. Treasury securities on deposit with various state insurance departments to satisfy regulatory requirements. Scheduled Maturities The amortized cost and fair values of available-for-sale securities as of June 30, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category.
Aging of Unrealized Losses As of June 30, 2019, the investment portfolio had gross unrealized losses of $1.0 million, of which $0.8 million had been in an unrealized loss position for a period of 12 months or greater. We did not consider these securities to be other-than-temporarily impaired as of June 30, 2019. We based our conclusion that these investments were not other-than-temporarily impaired as of June 30, 2019 on the following facts: (i) the unrealized losses were primarily caused by interest rate movements and market fluctuations in credit spreads since the purchase date; (ii) we do not intend to sell these investments; and (iii) we do not believe that it is more likely than not that we will be required to sell these investments before recovery of our amortized cost basis, which may not occur until maturity. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:
Net Investment Income The following table presents the components of net investment income:
The following table presents the components of net realized investment losses:
Investment Securities - Other-than-Temporary Impairment (OTTI) As of June 30, 2019, we held no other-than-temporarily impaired securities. During the six months ended June 30, 2019, we recognized a $0.4 million OTTI loss in earnings related to the planned sale of a security in a loss position that was disposed of in April 2019. We did not recognize any OTTI losses for the three months ended June 30, 2019 or the three and six months ended June 30, 2018. There were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss) for the three or six months ended June 30, 2019.
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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 The following describes the valuation techniques used by us to determine the fair value of our financial instruments: We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this standard are described below: Level 1 - Fair value measurements based on quoted prices in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments. Level 2 - Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 - Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions, which require significant management judgment or estimation about the inputs a hypothetical market participant would use to value that asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assets classified as Level 1 and Level 2 To determine the fair value of securities available-for-sale in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources 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. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including data published in market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. This model combines all inputs to arrive at a value assigned to each security. We have not made any adjustments to the prices obtained from the independent pricing sources. Liabilities classified as Level 3 We calculate the fair value of outstanding warrants utilizing Level 3 inputs, including a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. Variables in the model include the risk-free rate of return, dividend yield, expected life and expected volatility of our stock price. The following tables present the level within the fair value hierarchy at which our financial instruments were measured:
There were no transfers between Level 1 and Level 2, nor any transfers in or out of Level 3, of the fair value hierarchy during the six months ended June 30, 2019 and the year ended December 31, 2018. The following is a roll-forward of Level 3 liabilities measured at fair value:
The following table outlines the key inputs and assumptions used to calculate the fair value of the warrant liability in the Black-Scholes option-pricing model as of the dates indicated.
The changes in fair value of the warrant liability for the six months ended June 30, 2019 and 2018 are primarily attributable to changes in the price of our common stock during the respective periods, with additional impact related to changes in the Black-Scholes model inputs and exercises of outstanding warrants.
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Debt | Debt On May 24, 2018, we entered into a credit agreement (2018 Credit Agreement), which provides for (i) a $150 million 5-year senior secured term loan facility (2018 Term Loan) that matures on May 24, 2023; and (ii) a $85 million three-year secured revolving credit facility (2018 Revolving Credit Facility) that matures on May 24, 2021. Proceeds from the 2018 Term Loan were used to repay in full the outstanding amount due under our $150 million amended term loan (2015 Term Loan) due on November 10, 2019, and to pay fees and expenses incurred in connection with the 2018 Credit Agreement. 2018 Term Loan The 2018 Term Loan bears interest at the Eurodollar Rate, as defined in the 2018 Credit Agreement and subject to a 1.00% floor, plus an annual margin rate of 4.75%, representing an all-in rate of 6.95% as of June 30, 2019, payable monthly based on our current interest period election. Quarterly principal payments of $375 thousand are also required. As of June 30, 2019, the outstanding principal balance of the 2018 Term Loan was $148.5 million. Interest expense for the 2018 Term Loan includes interest and the amortization of issuance costs, an original issue discount and capitalized modification costs related to the 2015 Term Loan. For the three and six months ended June 30, 2019, interest expense was $2.8 million and $5.7 million, respectively. Remaining unamortized issuance costs were $2.2 million as of June 30, 2019 and are being amortized to interest expense using the effective interest method over the contractual life of the 2018 Term Loan. We are subject to certain covenants under the 2018 Term Loan (as defined in the 2018 Credit Agreement), including (but not limited to) a maximum debt-to-total capitalization ratio (as defined in the 2018 Credit Agreement) of 35% under the 2018 Term Loan. We were in compliance with all covenants as of June 30, 2019. Future principal payments due under the 2018 Term Loan as of June 30, 2019 are as follows:
2018 Revolving Credit Facility Borrowings under the 2018 Revolving Credit Facility may be used for general corporate purposes and will accrue interest at a variable rate equal to, at our discretion, (i) a base rate (as defined in the 2018 Credit Agreement, subject to a floor of 1.00% per annum) plus a margin of 1.00% to 2.50% per annum, based on the applicable corporate credit rating at the time, or (ii) the Eurodollar Rate (subject to a floor of 0.00% per annum) plus a margin of 2.00% to 3.50% per annum, based on the applicable corporate credit rating at the time. As of June 30, 2019, no borrowings had been made under the 2018 Revolving Credit Facility. We are required to pay a quarterly commitment fee on the average daily undrawn amount of the 2018 Revolving Credit Facility, which ranges from 0.30% to 0.60%, based on the applicable corporate credit rating at the time. As of June 30, 2019, the applicable commitment fee was 0.40%. For the three and six months ended June 30, 2019, we recorded $0.1 million and $0.2 million of commitment fees in interest expense, respectively. We incurred issuance costs of $1.5 million in connection with the establishment of the 2018 Revolving Credit Facility, which were deferred and recorded within Other Assets. These costs are being amortized through interest expense over the three-year life of the 2018 Revolving Credit Facility on a straight line basis. For the three and six months ended June 30, 2019, we recognized $0.1 million and $0.3 million, respectively, of interest expense from the amortization of deferred issuance costs. At June 30, 2019, remaining deferred issuance costs were $1.0 million, net of accumulated amortization. We are subject to certain covenants under the 2018 Revolving Credit Facility, including (but not limited to) the following: a maximum debt-to-total capitalization ratio of 35%, a minimum liquidity requirement, compliance with the PMIERs financial requirements (subject to any GSE-approved waivers), and minimum consolidated net worth and statutory capital requirements (respectively, as defined therein). We were in compliance with all covenants as of June 30, 2019.
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Reinsurance |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance We enter into third-party reinsurance transactions to actively manage our risk, ensure PMIERs compliance and support the growth of our business. The GSEs and the Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) have approved all such transactions (subject to certain conditions and ongoing review, including levels of approved capital credit). The effect of our reinsurance agreements on premiums written and earned is as follows:
Excess-of-loss reinsurance 2017 ILN Transaction In May 2017, NMIC entered into a reinsurance agreement with Oaktown Re Ltd. (Oaktown Re), which provides for up to $211.3 million of aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existing portfolio of mortgage insurance policies written from 2013 through December 31, 2016. For the reinsurance coverage period, NMIC retains the first layer of $126.8 million of aggregate losses, of which $124.4 million remained at June 30, 2019, and Oaktown Re then provides second layer coverage up to the outstanding reinsurance coverage amount. NMIC then retains losses in excess of the outstanding reinsurance coverage amount. The outstanding reinsurance coverage amount decreases from $211.3 million at inception over a ten-year period as the underlying covered mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled and was $91.5 million as of June 30, 2019. The outstanding reinsurance coverage amount will stop amortizing if certain credit enhancement or delinquency thresholds are triggered. Oaktown Re financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $211.3 million to unaffiliated investors (the 2017 Notes). The 2017 Notes mature on April 26, 2027. All of the proceeds paid to Oaktown Re from the sale of the 2017 Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re to NMIC under the reinsurance agreement. Funds in the reinsurance trust account are required to be invested in high credit quality money market funds at all times. We refer collectively to NMIC's reinsurance agreement with Oaktown Re and the issuance of the 2017 Notes by Oaktown Re as the 2017 ILN Transaction. Under the terms of the 2017 ILN Transaction, NMIC makes risk premium payments for the applicable outstanding reinsurance coverage amount and pays Oaktown Re for anticipated operating expenses (capped at $300 thousand per year). NMIC ceded risk premiums to Oaktown Re of $1.3 million and $2.6 million during the three and six months ended June 30, 2019, respectively, and $1.6 million and $3.3 million during the three and six months ended June 30, 2018, respectively. NMIC did not cede any losses to Oaktown Re during the three and six months ended June 30, 2019 and 2018. 2018 ILN Transaction In July 2018, NMIC entered into a reinsurance agreement with Oaktown Re II Ltd. (Oaktown Re II), which provides for up to $264.5 million of aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existing portfolio of mortgage insurance policies written between January 1, 2017 and May 31, 2018. For the reinsurance coverage period, NMIC retains the first layer of $125.3 million of aggregate losses, of which $125.2 million remained at June 30, 2019, and Oaktown Re II then provides second layer coverage up to the outstanding reinsurance coverage amount. NMIC then retains losses in excess of the outstanding reinsurance coverage amount. The outstanding reinsurance coverage amount decreases from $264.5 million at inception over a ten-year period as the underlying covered mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled, and was $258.2 million as of June 30, 2019. The outstanding reinsurance coverage amount will stop amortizing if certain credit enhancement or delinquency thresholds are triggered. Oaktown Re II financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $264.5 million to unaffiliated investors (the 2018 Notes). The 2018 Notes mature on July 25, 2028. All of the proceeds paid to Oaktown Re II from the sale of the 2018 Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re II to NMIC under the reinsurance agreement. Funds in the reinsurance trust account are required to be invested in high credit quality money market funds at all times. We refer collectively to NMIC's reinsurance agreement with Oaktown Re II and the issuance of the 2018 Notes by Oaktown Re II as the 2018 ILN Transaction. Under the terms of the 2018 ILN Transaction, NMIC makes risk premium payments for the applicable outstanding reinsurance coverage amount and pays Oaktown Re II for anticipated operating expenses (capped at $250 thousand per year). For the three and six months ended June 30, 2019, NMIC ceded risk premiums of $1.6 million and $3.3 million, respectively, to Oaktown Re II. NMIC did not cede any losses to Oaktown Re II during the three and six months ended June 30, 2019. Under the terms of the 2018 ILN Transaction, we are required to maintain a certain level of restricted funds in a premium deposit account with Bank of New York Mellon until the 2018 Notes have been redeemed in full. "Cash and cash equivalents" on our balance sheet includes restricted cash of $1.4 million as of June 30, 2019. We are not required to deposit additional funds into the premium deposit account and the restricted balance will decrease over time as the principal balance of the 2018 Notes declines. We refer collectively to the 2017 ILN Transaction and 2018 ILN Transaction as the ILN Transactions. NMIC holds optional termination rights under each ILN Transaction in the event of certain occurrences, including, among others, a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment afforded to NMIC under a given agreement. In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC's failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others. At inception of each ILN Transaction, we determined that Oaktown Re and Oaktown Re II were variable interest entities (VIEs). However, we concluded that we are not the primary beneficiary of either Oaktown Re or Oaktown Re II because NMIC does not have significant economic exposure to either Oaktown Re or Oaktown Re II, and, as such, we do not consolidate the VIEs in our consolidated financial statements. The amount of reinsurance premium ceded under the ILN Transactions fluctuates based on changes in one-month LIBOR and changes in the earned rate on the money market funds in which the assets of the reinsurance trusts are invested. As the reinsurance premiums will vary based on changes in these rates, we have concluded that the ILN Transactions contain embedded derivatives that must be accounted for separately as freestanding derivatives. The total fair value of such derivatives at June 30, 2019 and December 31, 2018, and the change in fair value of the derivatives during the three and six months ended June 30, 2019 and 2018, were not material to our consolidated financial statements. Quota share reinsurance 2016 QSR Transaction Effective September 1, 2016, NMIC entered into a quota-share reinsurance (QSR) transaction (the 2016 QSR Transaction) with a panel of third-party reinsurers. Each of the third-party reinsurers has an insurer financial strength rating of A- or better by Standard and Poor’s Rating Services (S&P), A.M. Best or both. Under the 2016 QSR Transaction, NMIC ceded premiums written related to:
The 2016 QSR Transaction is scheduled to terminate on December 31, 2027, except with respect to the ceded pool risk, which is scheduled to terminate on August 31, 2023. However, NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2020, or at the end of any calendar quarter thereafter, which would result in NMIC reassuming the related risk. 2018 QSR Transaction Effective January 1, 2018, NMIC entered into a second quota share reinsurance treaty with a panel of third-party reinsurers (the 2018 QSR Transaction, together with the 2016 QSR Transaction, the QSR Transactions). Each of the third-party reinsurers has an insurer financial strength rating of A- or better by S&P, AM Best or both. Under the 2018 QSR Transaction, NMIC cedes premiums earned related to 25% of risk on eligible policies written in 2018 and 20% of risk on eligible policies written in 2019. The 2018 QSR Transaction is scheduled to terminate on December 31, 2029. However, NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2022, or at the end of any calendar quarter thereafter, which would result in NMIC reassuming the related risk. NMIC may terminate either or both of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the risk-in-force (RIF) ceded under the respective agreements. Additionally, under the terms of the QSR Transactions, NMIC may elect to selectively terminate its engagement with individual reinsurers on a run-off basis (i.e., reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis (i.e., the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement. Effective April 1, 2019, NMIC elected to terminate its engagement with one reinsurer under the 2016 QSR Transaction on a cut-off basis. In connection with the termination, NMIC recaptured approximately $500 million of previously ceded primary RIF and stopped ceding new premiums earned or written with respect to the recaptured risk. With this termination, ceded premiums written under the 2016 QSR Transaction decreased from 25% to 20.5% on eligible policies. The termination has no effect on the cession of pool risk under the 2016 QSR Transaction. The following table shows the amounts related to the QSR Transactions:
Ceded premiums written under the 2016 QSR Transaction are recorded on the balance sheet as prepaid reinsurance premiums and amortized to ceded premiums earned in a manner consistent with the recognition of revenue on direct premiums. Under the 2018 QSR Transaction, premiums are ceded on an earned basis as defined in the agreement. NMIC receives a 20% ceding commission for premiums ceded under the QSR Transactions. NMIC also receives a profit commission, provided that the loss ratio on the loans covered under the 2016 QSR Transaction and 2018 QSR Transaction generally remains below 60% and 61%, respectively, as measured annually. Ceded claims and claim expenses under the QSR Transactions reduce NMIC's profit commission on a dollar-for-dollar basis. In accordance with the terms of the 2016 QSR Transaction, rather than making a cash payment or transferring investments for ceded premiums written, NMIC established a funds withheld liability, which also includes amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC will be realized from this account until exhausted. NMIC's reinsurance recoverable balance is further supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The reinsurance recoverable on loss reserves related to our 2016 QSR Transaction was $2.7 million as of June 30, 2019. In accordance with the terms of the 2018 QSR Transaction, cash payments for ceded premiums earned are settled on a quarterly basis, offset by amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC are also settled quarterly. NMIC's reinsurance recoverable balance is supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The reinsurance recoverable on loss reserves related to our 2018 QSR Transaction was $1.1 million as of June 30, 2019.
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Reserves for Insurance Claims and Claim Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserves for Insurance Claims and Claim Expenses | Reserves for Insurance Claims and Claim Expenses We establish reserves to recognize the estimated liability for insurance claims and claim expenses related to defaults on insured mortgage loans. Consistent with industry practice, we establish reserves for loans that have been reported to us by servicers as having been in default for at least 60 days, referred to as case reserves, and additional loans that we estimate (based on actuarial review) have been in default for at least 60 days that have not yet been reported to us by servicers, referred to as incurred but not reported (IBNR) reserves. We also establish claim expense reserves, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claims settlement process. As of June 30, 2019, we had reserves for insurance claims and claim expenses of $18.4 million for 1,028 primary loans in default. During the six months ended June 30, 2019, we paid 62 claims totaling $1.7 million, including 58 claims covered under the QSR Transactions representing $0.3 million of ceded claims and claim expenses. In 2013, we entered into a pool insurance transaction with Fannie Mae. The pool transaction includes a deductible, which represents the amount of claims to be absorbed by Fannie Mae before we are obligated to pay any claims. We only establish reserves for pool risk if we expect claims to exceed this deductible. At June 30, 2019, 54 loans in the pool were past due by 60 days or more. These 54 loans represented approximately $3.4 million of RIF. Due to the size of the remaining deductible, the low level of notices of default (NODs) reported on loans in the pool through June 30, 2019 and the expected severity (all loans in the pool have loan-to-value ratios (LTV) ratios under 80%), we did not establish any case or IBNR reserves for pool risk at June 30, 2019. In connection with the settlement of pool claims, we applied $0.7 million to the pool deductible through June 30, 2019. At June 30, 2019, the remaining pool deductible was $9.6 million. We have not paid any pool claims to date. 100% of our pool RIF is reinsured under the 2016 QSR Transaction. The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim expenses:
The "claims incurred" section of the table above shows claims and claim expenses incurred on NODs for current and prior years, including IBNR reserves and is presented net of reinsurance. The amount of claims incurred relating to current year NODs represents the estimated amount of claims and claim expenses to be ultimately paid on such loans in default. We recognized $1.7 million and $0.9 million of favorable prior year development during the six months ended June 30, 2019 and 2018, respectively, due to NOD cures and ongoing analysis of recent loss development trends. We may increase or decrease our original estimates as we learn additional information about individual defaults and claims and continue to observe and analyze loss development trends in our portfolio. Gross reserves of $8.9 million related to prior year defaults remained as of June 30, 2019.
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Earnings per Share (EPS) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share (EPS) | Earnings per Share (EPS) Basic earnings per share is based on the weighted average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the vesting of service based and performance and service based restricted stock units (RSUs), and the exercise of vested and unvested stock options and outstanding warrants. The number of shares issuable for RSUs subject to performance and service based vesting requirements are only included in diluted shares if the relevant performance measurement period has commenced and results during such period meet the necessary performance criteria. The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings per share of common stock.
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Warrants |
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Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Warrants | Warrants We issued 992 thousand warrants in connection with a private placement of our common stock in April 2012. Each warrant gives the holder thereof the right to purchase one share of common stock at an exercise price equal to $10.00. The warrants were issued with an aggregate fair value of $5.1 million. During the six months ended June 30, 2019, 260 thousand warrants were exercised resulting in the issuance of 168 thousand common shares. Upon exercise, we reclassified approximately $4.8 million of warrant fair value from warrant liability to additional paid-in capital, of which $2.3 million related to changes in fair value during the six months ended June 30, 2019. During the six months ended June 30, 2018, 63 thousand warrants were exercised resulting in the issuance of 29 thousand common shares. Upon exercise, we reclassified approximately $0.6 million of warrant fair value from warrant liability to additional paid-in capital, of which $42 thousand related to changes in fair value during the six months ended June 30, 2018. We account for these warrants to purchase our common shares in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 21%. NMIH files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries. Our effective tax rate on our pre-tax income was 23.3% and 19.9% for the three and six months ended June 30, 2019, respectively, compared to 21.9% and 19.2% for the three and six months ended June 30, 2018, respectively. Our provision for income taxes for interim reporting periods is established based on our estimated annual effective tax rate for a given year. Our effective tax rate may fluctuate between interim periods due to the impact of discrete items not included in our estimated annual effective tax rate, including the tax effects associated with the vesting of RSUs and exercise of options, and the change in fair value of our warrant liability. Such items are treated on a discrete basis in the reporting period in which they occur. As a mortgage guaranty insurance company, we are eligible to claim a tax deduction for our statutory contingency reserve balance, subject to certain limitations outlined under IRC Section 832(e), and only to the extent we acquire tax and loss bonds in an amount equal to the tax benefit derived from the claimed deduction, which is our intent. As a result, our interim provision for income taxes for the three and six months ended June 30, 2019 represents a change in our net deferred tax liability.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We have two operating lease agreements related to our corporate headquarters and a data center facility for which we recognized operating right-of-use (ROU) assets and lease liabilities of $7.3 million and $8.4 million, respectively, as of June 30, 2019. As of June 30, 2019, we did not have any finance leases. We recognize ROU assets and lease liabilities in connection with the adoption of ASU 2016-02, Leases (Topic 842). ROU assets and lease liabilities are established based on the estimated present value of lease payments over the relevant lease term. We estimate a discount rate for each lease based on our estimated incremental borrowing rate at the commencement date of the relevant lease. Right-of-use assets obtained in exchange for new operating lease liabilities for the six months ended June 30, 2019 were $8.1 million. The following table provides a summary of our ROU asset and lease liability assumptions as of June 30, 2019:
Cash paid on our operating lease liabilities for the three and six months ended June 30, 2019 was $0.6 million and $1.2 million, respectively. Lease expenses recognized on our operating lease liabilities for the three and six months ended June 30, 2019 were $0.6 million and $1.1 million, respectively. Future payments due under our existing operating leases as of June 30, 2019 are as follows:
Lease expense is recorded in underwriting and operating expenses on the consolidated statements of operations. Our existing operating leases have terms that range from three to five years. The lease for our corporate headquarters includes an option to renew for an additional five years at prevailing market rates at time of renewal. We have not included this renewal option in our calculation of minimum lease payments as it is not reasonably certain to be exercised. As of December 31, 2018, the future minimum lease payments as accounted for prior to our adoption of ASU 2016-02, Leases (Topic 842) are as follows:
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Regulatory Information |
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Regulatory Information | Regulatory Information Statutory Requirements Our insurance subsidiaries, NMIC and Re One, file financial statements in conformity with statutory accounting principles (SAP) prescribed or permitted by the Wisconsin OCI, NMIC's principal regulator. Prescribed SAP includes state laws, regulations and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners. The Wisconsin OCI recognizes only statutory accounting practices prescribed or permitted by the state of Wisconsin for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under Wisconsin insurance laws. NMIC and Re One's combined statutory net income (loss) was as follows:
NMIC and Re One's combined statutory surplus, contingency reserve and risk-to-capital (RTC) ratios were as follows:
NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware corporate law provides that dividends are only payable out of a corporation's capital surplus or, subject to certain limitations, recent net profits. NMIC and Re One's ability to pay dividends to NMIH is subject to Wisconsin OCI notice or approval. Certain other states in which NMIC is licensed also have statutes or regulations that restrict its ability to pay dividends. Since inception, NMIC and Re One have not paid any dividends to NMIH.
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Subsequent Event |
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Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event On July 30, 2019, NMIC entered into a reinsurance agreement with Oaktown Re III Ltd. (Oaktown Re III), a Bermuda domiciled special purpose reinsurer, that provides for up to $326.9 million of aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existing portfolio of mortgage insurance policies written between June 1, 2018 and June 30, 2019. For the reinsurance coverage period, NMIC will retain the first layer of $123.4 million of aggregate losses and Oaktown Re III will then provide second layer coverage up to the outstanding reinsurance coverage amount. NMIC will then retain losses in excess of the outstanding reinsurance coverage amount. Oaktown Re III financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $326.9 million to unaffiliated investors (the 2019 Notes). The 2019 Notes mature on July 25, 2029. All of the proceeds paid to Oaktown Re III from the sale of the 2019 Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re III to NMIC under the reinsurance agreement. Funds in the reinsurance trust account are required to be invested in high credit quality money market funds at all times. We refer collectively to NMIC's reinsurance agreement with Oaktown Re III and the issuance of the 2019 Notes by Oaktown Re III as the 2019 ILN Transaction. Under the terms of the 2019 ILN Transaction, NMIC makes risk premium payments for the applicable outstanding reinsurance coverage amount and pays Oaktown Re III for anticipated operating expenses (capped at $250,000 per year).
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Organization, Basis of Presentation and Summary of Accounting Principles (Policies) |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2018, included in our 2018 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to our previously reported financial information have been made to conform to current period presentation. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2019.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements - Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). This update requires that businesses recognize rights and obligations associated with certain leases as assets and liabilities on the balance sheet. The standard also requires additional disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. We adopted this ASU on January 1, 2019 using the modified-retrospective method and applied it prospectively as of the effective date, without adjusting comparative periods presented as permitted by ASU 2018-11, Leases (Topic 842), Targeted Improvements. Adoption of this new standard increased our assets and liabilities by $7.6 million in connection with the recognition of right-of-use assets and lease liabilities, primarily related to the operating lease on our corporate headquarters. Adoption of this standard did not impact our consolidated statements of operations or cash flows. See Note 10, "Leases" for additional information related to our leases. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815). This update is intended to simplify the accounting for certain equity-linked financial instruments. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This update expands the scope of Topic 718 to include share-based payments made to non-employees in connection with the acquisition of goods and services. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our financial results at this time as we have not made any share-based grants to non-employees as defined in ASC 718-10-20. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and in April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which includes codification improvements to Topic 326. These updates will require companies to measure and establish reserves for lifetime expected credit losses on many financial assets held at a given reporting date. Under the guidance, the methodology for measuring lifetime credit losses will generally shift from an incurred loss model, whereby losses are only recognized once probable and estimable, to a current expected credit loss (CECL) model, whereby losses are recognized upfront based on a future economic forecast. Credit losses relating to available-for-sale fixed maturity securities will be recorded through an allowance for credit losses, rather than a write-down of the asset as is currently required, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. The length of time an available-for sale fixed maturity security has been held in an unrealized loss position will no longer impact its credit loss determination. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. While we are still finalizing our analysis of this guidance, we do not expect it to have a material impact on our consolidated financial statements. This standard will not impact our accounting for insurance claims and claim expenses as these items are not in the scope of this ASU. In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts. This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This update modifies the fair value measurement disclosure requirements of ASC 820. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Adoption of this ASU will not have an impact on our Consolidated Balance Sheet, Statements of Operations and Comprehensive Income, Changes in Shareholders Equity or Cash Flows. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This update applies to cloud computing arrangements hosted by a vendor and provides companies with guidance on the criteria for capitalizing implementation, set-up and other up-front costs incurred in association with these arrangements. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements.
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Earnings Per Share | Basic earnings per share is based on the weighted average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the vesting of service based and performance and service based restricted stock units (RSUs), and the exercise of vested and unvested stock options and outstanding warrants. The number of shares issuable for RSUs subject to performance and service based vesting requirements are only included in diluted shares if the relevant performance measurement period has commenced and results during such period meet the necessary performance criteria. |
Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values and Gross Unrealized Gains and Losses | Fair Values and Gross Unrealized Gains and Losses on Investments
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Schedule of Investments by Industry Group | The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of June 30, 2019 and December 31, 2018:
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Schedule of Investments by Maturity | The amortized cost and fair values of available-for-sale securities as of June 30, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category.
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Schedule of Aging Unrealized Losses | or those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:
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Schedule of Components of Net Investment Income | The following table presents the components of net investment income:
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Schedule of Net Realized Investment Gains (Losses) | The following table presents the components of net realized investment losses:
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurements of Financial Instruments | The following tables present the level within the fair value hierarchy at which our financial instruments were measured:
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Roll-Forward of Level 3 Liabilities Measured at Fair Value | The following is a roll-forward of Level 3 liabilities measured at fair value:
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Schedule of Key Inputs and Assumptions in Option-Pricing Model | The following table outlines the key inputs and assumptions used to calculate the fair value of the warrant liability in the Black-Scholes option-pricing model as of the dates indicated.
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Debt (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Principal Payments | Future principal payments due under the 2018 Term Loan as of June 30, 2019 are as follows:
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Reinsurance (Tables) |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effects of Reinsurance | The effect of our reinsurance agreements on premiums written and earned is as follows:
(1) Net of profit commissionThe following table shows the amounts related to the QSR Transactions:
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Reserves for Insurance Claims and Claim Expenses (Tables) |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Liability for Insurance Claims and Claim Expenses | The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim expenses:
(4) Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016 QSR Transaction on a cut-off basis. See Note 5, "Reinsurance" for additional information.
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Earnings per Share (EPS) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings per Share, Basic and Diluted | The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings per share of common stock.
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Summary of Right-of-Use Asset and Lease Liability Activity and Assumptions | The following table provides a summary of our ROU asset and lease liability assumptions as of June 30, 2019:
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Schedule of Future Payments Due Under Operating Leases | Future payments due under our existing operating leases as of June 30, 2019 are as follows:
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Schedule of Future Minimum Lease Payments as Accounted For Prior to Adoption of ASU 2016-02 | As of December 31, 2018, the future minimum lease payments as accounted for prior to our adoption of ASU 2016-02, Leases (Topic 842) are as follows:
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Regulatory Information (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Statutory Net Income (Loss), Surplus, Contingency Reserve and Risk-to-Capital Ratio | NMIC and Re One's combined statutory net income (loss) was as follows:
NMIC and Re One's combined statutory surplus, contingency reserve and risk-to-capital (RTC) ratios were as follows:
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Organization, Basis of Presentation and Summary of Accounting Principles - Narrative (Details) |
Jun. 30, 2019
state
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of states in which the entity operates | 50 |
Organization, Basis of Presentation and Summary of Accounting Principles - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
New Accounting Pronouncements [Line Items] | ||
Right-of-use assets | $ 7,300 | |
Lease liabilities | $ 8,393 | |
ASU No. 2016-02 | ||
New Accounting Pronouncements [Line Items] | ||
Right-of-use assets | $ 7,600 | |
Lease liabilities | $ 7,600 |
Investments - Fair Values and Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 994,543 | $ 924,987 |
Gross Unrealized Gains | 24,074 | 1,987 |
Gross Unrealized Losses | (1,010) | (15,484) |
Fair value of securities | 1,017,607 | 911,490 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 48,193 | 48,171 |
Gross Unrealized Gains | 688 | 35 |
Gross Unrealized Losses | (116) | (1,376) |
Fair value of securities | 48,765 | 46,830 |
Municipal debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 91,650 | 92,014 |
Gross Unrealized Gains | 1,497 | 206 |
Gross Unrealized Losses | (73) | (963) |
Fair value of securities | 93,074 | 91,257 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 634,188 | 554,079 |
Gross Unrealized Gains | 18,569 | 847 |
Gross Unrealized Losses | (785) | (11,688) |
Fair value of securities | 651,972 | 543,238 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 168,251 | 171,990 |
Gross Unrealized Gains | 3,216 | 792 |
Gross Unrealized Losses | (36) | (1,457) |
Fair value of securities | 171,431 | 171,325 |
Total bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 942,282 | 866,254 |
Gross Unrealized Gains | 23,970 | 1,880 |
Gross Unrealized Losses | (1,010) | (15,484) |
Fair value of securities | 965,242 | 852,650 |
Short-term investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 52,261 | 58,733 |
Gross Unrealized Gains | 104 | 107 |
Gross Unrealized Losses | 0 | 0 |
Fair value of securities | $ 52,365 | $ 58,840 |
Investments - Corporate Debt Securities by Industry Group (Details) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 100.00% | 100.00% |
Financial | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 38.00% | 38.00% |
Consumer | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 27.00% | 27.00% |
Communications | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 10.00% | 12.00% |
Utilities | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 9.00% | 7.00% |
Industrial | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 8.00% | 7.00% |
Technology | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 6.00% | 6.00% |
Energy | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 1.00% | 2.00% |
Other | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 1.00% | 1.00% |
Investments - Scheduled Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 99,314 | $ 76,087 |
Due after one through five years | 412,820 | 352,282 |
Due after five through ten years | 300,990 | 318,728 |
Due after ten years | 13,168 | 5,900 |
Asset-backed securities | 168,251 | 171,990 |
Amortized Cost | 994,543 | 924,987 |
Fair Value | ||
Due in one year or less | 99,375 | 76,104 |
Due after one through five years | 420,131 | 347,701 |
Due after five through ten years | 312,792 | 310,633 |
Due after ten years | 13,878 | 5,727 |
Asset-backed securities | 171,431 | 171,325 |
Fair Value | $ 1,017,607 | $ 911,490 |
Investments - Aging of Unrealized Losses (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
security
|
Dec. 31, 2018
USD ($)
security
|
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 16 | 147 |
Fair value, less than 12 months | $ 35,523 | $ 269,903 |
Unrealized losses, less than 12 months | $ (232) | $ (5,099) |
Number of securities,12 months or greater | security | 54 | 198 |
Fair value, 12 months or greater | $ 81,827 | $ 356,138 |
Unrealized losses, 12 months or greater | $ (778) | $ (10,385) |
Number of securities, total | security | 70 | 345 |
Fair value | $ 117,350 | $ 626,041 |
Unrealized Losses | $ (1,010) | $ (15,484) |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 0 | 0 |
Fair value, less than 12 months | $ 0 | $ 0 |
Unrealized losses, less than 12 months | $ 0 | $ 0 |
Number of securities,12 months or greater | security | 5 | 19 |
Fair value, 12 months or greater | $ 13,750 | $ 41,817 |
Unrealized losses, 12 months or greater | $ (116) | $ (1,376) |
Number of securities, total | security | 5 | 19 |
Fair value | $ 13,750 | $ 41,817 |
Unrealized Losses | $ (116) | $ (1,376) |
Municipal debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 1 | 4 |
Fair value, less than 12 months | $ 2,000 | $ 7,409 |
Unrealized losses, less than 12 months | $ 0 | $ (11) |
Number of securities,12 months or greater | security | 10 | 31 |
Fair value, 12 months or greater | $ 15,025 | $ 58,658 |
Unrealized losses, 12 months or greater | $ (73) | $ (952) |
Number of securities, total | security | 11 | 35 |
Fair value | $ 17,025 | $ 66,067 |
Unrealized Losses | $ (73) | $ (963) |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 13 | 118 |
Fair value, less than 12 months | $ 24,737 | $ 226,477 |
Unrealized losses, less than 12 months | $ (199) | $ (3,952) |
Number of securities,12 months or greater | security | 33 | 126 |
Fair value, 12 months or greater | $ 51,099 | $ 221,675 |
Unrealized losses, 12 months or greater | $ (586) | $ (7,736) |
Number of securities, total | security | 46 | 244 |
Fair value | $ 75,836 | $ 448,152 |
Unrealized Losses | $ (785) | $ (11,688) |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 2 | 25 |
Fair value, less than 12 months | $ 8,786 | $ 36,017 |
Unrealized losses, less than 12 months | $ (33) | $ (1,136) |
Number of securities,12 months or greater | security | 6 | 22 |
Fair value, 12 months or greater | $ 1,953 | $ 33,988 |
Unrealized losses, 12 months or greater | $ (3) | $ (321) |
Number of securities, total | security | 8 | 47 |
Fair value | $ 10,739 | $ 70,005 |
Unrealized Losses | $ (36) | $ (1,457) |
Investments - Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Investment Income, Net [Abstract] | ||||
Investment income | $ 7,741 | $ 5,937 | $ 15,237 | $ 10,719 |
Investment expenses | (112) | (202) | (225) | (410) |
Net investment income | $ 7,629 | $ 5,735 | $ 15,012 | $ 10,309 |
Investments - Net Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Gross realized investment gains | $ 22 | $ 59 | $ 217 | $ 59 |
Gross realized investment losses | (135) | 0 | (517) | 0 |
Net realized investment losses | $ (113) | $ 59 | $ (300) | $ 59 |
Investments - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Debt Securities, Available-for-sale [Line Items] | |||||
Unrealized loss position, accumulated loss | $ 1,010,000 | $ 1,010,000 | $ 15,484,000 | ||
Unrealized loss position, 12 months or greater | 778,000 | 778,000 | 10,385,000 | ||
Other-than-temporary impairment | 0 | $ 0 | 400,000 | $ 0 | |
U.S. Treasury securities and obligations of U.S. government agencies | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Cash and investments held with various state insurance departments | 5,500,000 | 5,500,000 | 5,300,000 | ||
Unrealized loss position, accumulated loss | 116,000 | 116,000 | 1,376,000 | ||
Unrealized loss position, 12 months or greater | $ 116,000 | $ 116,000 | $ 1,376,000 |
Fair Value of Financial Instruments - Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | $ 1,017,607 | $ 911,490 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 48,765 | 46,830 |
Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 93,074 | 91,257 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 651,972 | 543,238 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 171,431 | 171,325 |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 88,100 | 84,134 |
Total assets | 1,053,342 | 936,784 |
Warrant liability | 9,679 | 7,296 |
Total liabilities | 9,679 | 7,296 |
Recurring | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 48,765 | 46,830 |
Recurring | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 93,074 | 91,257 |
Recurring | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 651,972 | 543,238 |
Recurring | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 171,431 | 171,325 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 88,100 | 84,134 |
Total assets | 136,865 | 130,964 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 48,765 | 46,830 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 0 | 0 |
Total assets | 916,477 | 805,820 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 93,074 | 91,257 |
Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 651,972 | 543,238 |
Recurring | Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 171,431 | 171,325 |
Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 0 | 0 |
Total assets | 0 | 0 |
Warrant liability | 9,679 | 7,296 |
Total liabilities | 9,679 | 7,296 |
Recurring | Significant Unobservable Inputs (Level 3) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | $ 0 | $ 0 |
Fair Value of Financial Instruments - Rollforward of Level 3 Liabilities (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Roll-forward of Level 3 liabilities: | ||
Issuance of common stock on warrant exercise | $ (4,781) | |
Significant Unobservable Inputs (Level 3) | Warrant Liability | ||
Roll-forward of Level 3 liabilities: | ||
Beginning balance | 7,296 | $ 7,472 |
Change in fair value of warrant liability included in earnings | 7,164 | (529) |
Issuance of common stock on warrant exercise | (552) | |
Ending balance | $ 9,679 | $ 6,391 |
Fair Value of Financial Instruments - Valuation Assumptions for Warrant Liabilities (Details) - Significant Unobservable Inputs (Level 3) - Valuation Technique, Option Pricing Model |
Jun. 30, 2019
$ / shares
|
Jun. 30, 2018
$ / shares
|
---|---|---|
Common stock price | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 28.39 | 16.30 |
Risk free interest rate | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.0260 | |
Risk free interest rate | Minimum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.0172 | |
Risk free interest rate | Maximum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.0195 | |
Expected life | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, expected life (in years) | 2 years 5 months 27 days | |
Expected life | Minimum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, expected life (in years) | 11 months 1 day | |
Expected life | Maximum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, expected life (in years) | 2 years 9 months 22 days | |
Expected volatility | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.327 | |
Expected volatility | Minimum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.338 | |
Expected volatility | Maximum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.400 | |
Dividend yield | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.00 | 0.00 |
Debt - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
May 24, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Debt Instrument [Line Items] | |||||
Term loan | $ 148,500,000 | $ 148,500,000 | |||
Interest expense | 3,071,000 | $ 5,560,000 | $ 6,132,000 | $ 8,979,000 | |
Secured Debt | 2018 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument face amount | $ 150,000,000 | ||||
Debt instrument term (years) | 5 years | ||||
Interest rate during period (percent) | 6.95% | ||||
Frequency of periodic payment | Quarterly | ||||
Periodic payment of principal | $ 375,000 | ||||
Interest expense | 2,800,000 | 5,700,000 | |||
Unamortized issuance costs | 2,200,000 | $ 2,200,000 | |||
Debt instrument covenant, maximum debt-to-total capitalization ratio | 35.00% | ||||
Secured Debt | 2018 Term Loan | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor (percent) | 1.00% | ||||
Basis spread on variable rate (percent) | 4.75% | ||||
Senior Secured Debt | 2015 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument face amount | $ 150,000,000 | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Debt instrument term (years) | 3 years | ||||
Credit facility borrowing capacity | $ 85,000,000 | ||||
Borrowings outstanding | 0 | $ 0 | |||
Commitment fee (percent) | 0.40% | ||||
Commitment fees in interest expense | 100,000 | $ 200,000 | |||
Debt issuance costs | $ 1,500,000 | ||||
Interest expense from amortization of debt issuance costs | 100,000 | 300,000 | |||
Remaining deferred issuance costs, net of accumulated amortization | $ 1,000,000.0 | $ 1,000,000.0 | |||
Debt instrument covenant, maximum debt-to-total capitalization ratio | 35.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Minimum | |||||
Debt Instrument [Line Items] | |||||
Commitment fee (percent) | 0.30% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Commitment fee (percent) | 0.60% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor (percent) | 1.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 1.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.50% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor (percent) | 0.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Eurodollar | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Eurodollar | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 3.50% |
Debt - Schedule of Future Principal Payments (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Future Principal Payments [Abstract] | |
2019 | $ 750 |
2020 | 1,500 |
2021 | 1,500 |
2022 | 1,500 |
2023 | 143,250 |
Total | $ 148,500 |
Reinsurance - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Apr. 01, 2019 |
Jul. 31, 2018 |
May 31, 2017 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Ceded Credit Risk [Line Items] | ||||||||||
Restricted cash | $ 1,430 | $ 1,430 | $ 1,414 | |||||||
Reinsurance recoverable on unpaid claims | $ 3,775 | $ 2,382 | $ 3,775 | $ 2,382 | $ 3,001 | $ 1,902 | ||||
ILN Transactions | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Optional termination right, percent of reinsurance coverage threshold | 10.00% | 10.00% | ||||||||
Mortgage-linked Debt | 2017 ILN Notes | Oaktown Re Ltd | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Proceeds from issuance of notes | $ 211,300 | |||||||||
Mortgage-linked Debt | 2018 ILN Notes | Oaktown Re Ltd | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Proceeds from issuance of notes | $ 264,500 | |||||||||
Third-Party Reinsurers | 2017 ILN Transaction | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Aggregate excess of loss reinsurance coverage | $ 91,500 | |||||||||
Aggregate excess of loss reinsurance retained by company | 126,800 | 124,400 | ||||||||
Risk premiums paid | $ 1,300 | $ 1,600 | 2,600 | $ 3,300 | ||||||
Third-Party Reinsurers | 2017 ILN Transaction | Maximum | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Aggregate excess of loss reinsurance coverage | $ 211,300 | |||||||||
Reinsurance coverage, term of underlying mortgage amortization (in years) | 10 years | |||||||||
Anticipated payment related to annual operating expenses | 300 | |||||||||
Third-Party Reinsurers | 2018 ILN Transaction | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Aggregate excess of loss reinsurance coverage | 258,200 | |||||||||
Aggregate excess of loss reinsurance retained by company | 125,300 | 125,200 | ||||||||
Risk premiums paid | 1,600 | $ 3,300 | ||||||||
Third-Party Reinsurers | 2018 ILN Transaction | Maximum | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Aggregate excess of loss reinsurance coverage | $ 264,500 | |||||||||
Reinsurance coverage, term of underlying mortgage amortization (in years) | 10 years | |||||||||
Anticipated payment related to annual operating expenses | $ 250 | |||||||||
Third-Party Reinsurers | QSR Transactions | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Ceding commissions under 2016 QSR Transaction | 20.00% | |||||||||
Third-Party Reinsurers | 2018 QSR Transaction | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Threshold for loss ratio on loans to qualify for profit commission | 61.00% | |||||||||
Reinsurance recoverable on unpaid claims | $ 1,100 | $ 1,100 | ||||||||
Third-Party Reinsurers | Risk Written Policies in 2018 | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Percent of premiums earned under 2018 QSR Transaction | 25.00% | |||||||||
Third-Party Reinsurers | Risk Written Policies in 2019 | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Percent of premiums ceded under QSR Transaction | 20.00% | |||||||||
Third-Party Reinsurers | 2016 QSR Transaction | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Percent of premiums ceded under QSR Transaction | 20.50% | 25.00% | ||||||||
Previously ceded primary RIF recaptured | $ 500,000 | |||||||||
Threshold for loss ratio on loans to qualify for profit commission | 60.00% | |||||||||
Reinsurance recoverable on unpaid claims | $ 2,700 | $ 2,700 | ||||||||
Third-Party Reinsurers | Existing Risk Written Policies | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Percent of premiums ceded under QSR Transaction | 25.00% | |||||||||
Third-Party Reinsurers | Fannie Mae | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Percent of premiums ceded under QSR Transaction | 100.00% | |||||||||
Third-Party Reinsurers | Risk Written Policies from September 1, 2016 through December 31, 2017 | ||||||||||
Ceded Credit Risk [Line Items] | ||||||||||
Percent of premiums ceded under QSR Transaction | 25.00% |
Reinsurance - Effect of Reinsurance Agreements on Premiums Written and Earned (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Net premiums written | ||||
Direct | $ 92,213 | $ 70,677 | $ 173,943 | $ 136,704 |
Ceded | (9,604) | (6,234) | (19,411) | (13,231) |
Net premiums written | 82,609 | 64,443 | 154,532 | 123,473 |
Net premiums earned | ||||
Direct | 95,180 | 70,609 | 181,478 | 134,212 |
Ceded | (11,931) | (8,994) | (24,360) | (17,683) |
Net premiums earned | $ 83,249 | $ 61,615 | $ 157,118 | $ 116,529 |
Reinsurance - Amounts Ceded Related to QSR Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Ceded Credit Risk [Line Items] | ||||
Ceded premiums written | $ (9,604) | $ (6,234) | $ (19,411) | $ (13,231) |
Ceded premiums earned | (11,931) | (8,994) | (24,360) | (17,683) |
Third-Party Reinsurers | ||||
Ceded Credit Risk [Line Items] | ||||
Ceded risk-in-force | 4,558,862 | 3,606,928 | 4,558,862 | 3,606,928 |
Ceded premiums written | (18,592) | (15,318) | (37,437) | (29,843) |
Ceded premiums earned | (20,919) | (18,077) | (42,387) | (34,295) |
Ceded claims and claim expenses | 770 | 173 | 1,669 | 716 |
Ceding commission written | 3,717 | 3,064 | 7,488 | 5,969 |
Ceding commission earned | 4,171 | 3,536 | 8,377 | 6,687 |
Profit commission | $ 11,884 | $ 10,707 | $ 23,945 | $ 19,908 |
Reserves for Insurance Claims and Claim Expenses - Narrative (Details) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019
USD ($)
loan
claim
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
IBNR, default period (at least) | 60 days | |||
Total gross liability for unpaid claims and claim adjustment expenses | $ 18,432 | $ 10,601 | $ 12,811 | $ 8,761 |
Primary loans in default | loan | 1,028 | |||
Number of claims paid | claim | 62 | |||
Claims paid, including amounts covered by insurance | $ 1,700 | |||
Favorable prior year development | 1,735 | $ 940 | ||
Reserve for prior year insurance claims and claim expenses | $ 8,900 | |||
Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of loans in pool past due 60 days or more | loan | 54 | |||
Risk-in-Force of loans in pool past due 60 days or more | $ 3,400 | |||
Loan-to-value ratio (less than) | 0.80 | |||
Claims applied to pool deductible | $ 700 | |||
Deductible on policy | $ 9,600 | |||
QSR Transactions | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of covered claims included in number of claims paid | claim | 58 | |||
Component of claims paid covered under QSR Transaction | $ 300 | |||
2016 QSR Transaction | Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Percent of pool RIF reinsured | 100.00% |
Reserves for Insurance Claims and Claim Expenses - Reconciliation of Reserve Balances for Insurance Claims and Claim Expense (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | $ 12,811 | $ 8,761 |
Less reinsurance recoverables | 3,001 | 1,902 |
Beginning balance, net of reinsurance recoverables | 9,810 | 6,859 |
Claims incurred: | ||
Current year | 7,401 | 3,152 |
Prior years | (1,735) | (940) |
Total claims and claim expenses incurred | 5,666 | 2,212 |
Claims and claim expenses paid: | ||
Current year | 0 | 0 |
Prior years | 1,368 | 852 |
Reinsurance terminations | (549) | 0 |
Total claims and claim expenses paid | 819 | 852 |
Ending balance, net of reinsurance recoverables | 14,657 | 8,219 |
Add reinsurance recoverables | 3,775 | 2,382 |
Ending balance | $ 18,432 | $ 10,601 |
Earnings per Share (EPS) - Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Earnings per Share, Basic [Abstract] | ||||||
Net income | $ 39,100 | $ 32,899 | $ 25,241 | $ 22,355 | $ 71,999 | $ 47,596 |
Basic weighted average shares outstanding (in shares) | 67,590 | 65,664 | 67,143 | 63,891 | ||
Basic earnings per share (in dollars per share) | $ 0.58 | $ 0.38 | $ 1.07 | $ 0.74 | ||
Earnings per Share, Diluted [Abstract] | ||||||
Net income | $ 39,100 | $ 32,899 | $ 25,241 | $ 22,355 | $ 71,999 | $ 47,596 |
Warrant gain, net of tax | 0 | (86) | 0 | (418) | ||
Diluted net income | $ 39,100 | $ 25,155 | $ 71,999 | $ 47,178 | ||
Basic weighted average shares outstanding (in shares) | 67,590 | 65,664 | 67,143 | 63,891 | ||
Dilutive effect of issuable shares (in shares) | 2,000 | 2,952 | 2,205 | 3,280 | ||
Dilutive weighted average shares outstanding (in shares) | 69,590 | 68,616 | 69,348 | 67,171 | ||
Diluted earnings per share (in dollars per share) | $ 0.56 | $ 0.37 | $ 1.04 | $ 0.70 | ||
Antidilutive securities excluded from EPS calculation (in shares) | 705 | 308 | 748 | 231 |
Warrants - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Apr. 30, 2012 |
|
Debt Disclosure [Abstract] | |||||||
Warrants issued (in shares) | 992,000 | ||||||
Right to purchase, number of shares per warrant (in shares) | 1 | ||||||
Exercise price of warrants (in dollars per warrant) | $ 10.00 | ||||||
Warrant liability, at fair value | $ 9,679 | $ 7,296 | $ 5,100 | ||||
Warrants exercised (in shares) | 260,000 | 63,000 | |||||
Stock issued upon exercise of warrants (in shares) | 39,195 | 3,751 | 25,686 | 168,000 | 29,000 | ||
Fair value of warrant liability reclassified to additional paid in capital upon exercise | $ 4,800 | $ 600 | |||||
Change in fair value of warrant liability in current period | $ 2,300 | $ 42 |
Income Taxes - Narrative (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate on pre-tax income or loss | 23.30% | 21.90% | 19.90% | 19.20% |
Leases - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019
USD ($)
lease_agreement
|
Jun. 30, 2019
USD ($)
lease_agreement
|
|
Lessee, Lease, Description [Line Items] | ||
Number of operating leases related to corporate headquarters and data center facility | lease_agreement | 2 | 2 |
Right-of-use assets | $ 7,300 | $ 7,300 |
Lease liabilities | 8,393 | 8,393 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 8,100 | |
Cash paid for amounts included in the measurement of operating lease liabilities | 600 | 1,200 |
Operating lease expense | $ 600 | $ 1,100 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease terms | 3 years | 3 years |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease terms | 5 years | 5 years |
Corporate Headquarters | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease option to renew, term | 5 years | 5 years |
Leases - Right-of-Use Asset and Lease Liability Assumptions (Details) |
Jun. 30, 2019 |
---|---|
Leases [Abstract] | |
Weighted-average remaining lease term (in years) | 3 years 8 months 12 days |
Weighted-average discount rate (percent) | 6.21% |
Leases - Future Payment Due Under Operating Leases (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Future Payment Due Under Operating Leases | |
2019 | $ 1,239 |
2020 | 2,537 |
2021 | 2,609 |
2022 | 2,574 |
2023 | 462 |
Total undiscounted lease payments | 9,421 |
Less effects of discounting | (1,028) |
Present value of lease payments | $ 8,393 |
Leases - Future Minimum Lease Payments as Accounted for Prior to Adoption of ASU 2016-02 (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Future Minimum Lease Payments as Accounted for Prior to Adoption of ASU 2016-02 | |
2019 | $ 2,346 |
2020 | 2,417 |
2021 | 2,489 |
2022 | 2,564 |
2023 | 463 |
Totals | $ 10,279 |
Regulatory Information - Statutory Net Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Combined | ||||
Statutory Accounting Practices [Line Items] | ||||
Statutory net income (loss) | $ 6,466 | $ 2,066 | $ 5,539 | $ (4,748) |
Regulatory Information - Schedule of Statutory Surplus, Contingency Reserve and RTC Ratio (Details) - Combined $ in Thousands |
Jun. 30, 2019
USD ($)
|
Mar. 31, 2019 |
Dec. 31, 2018
USD ($)
|
---|---|---|---|
Statutory Accounting Practices [Line Items] | |||
Statutory surplus | $ 438,397 | $ 430,785 | |
Contingency reserve | $ 423,413 | $ 332,702 | |
RTC Ratio | 15.8 | 13.1 |
Subsequent Event - Narrative (Details) - Subsequent Event |
Jul. 30, 2019
USD ($)
|
---|---|
Oaktown Re III Ltd [Member] | 2019 ILN Notes | Mortgage-linked Debt | |
Subsequent Event [Line Items] | |
Proceeds from issuance of notes | $ 326,900,000 |
Third-Party Reinsurers | 2019 ILN Transaction | |
Subsequent Event [Line Items] | |
Aggregate excess of loss reinsurance retained by company | 123,400,000 |
Third-Party Reinsurers | 2019 ILN Transaction | Maximum | |
Subsequent Event [Line Items] | |
Aggregate excess of loss reinsurance coverage | 326,900,000 |
Anticipated payment related to annual operating expenses | $ 250,000 |
Label | Element | Value |
---|---|---|
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (282,000) |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 282,000 |
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