Note 4 - Segment Reporting Level 3 (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Summarized operating results for our segments as of and for the periods indicated, are as follows:



	December 31, 2016 (1)
(In thousands)	Mortgage Insurance		Services			Total
Net premiums written—insurance (2)	$	733,834	$	—		$	733,834
Decrease (increase) in unearned premiums	187,935		—			187,935
Net premiums earned—insurance	921,769		—			921,769
Services revenue	—		177,249			177,249
Net investment income	113,466		—			113,466
Other income	3,572		—			3,572
Total (3) (4)	1,038,807		177,249			1,216,056

Provision for losses	204,175		—			204,175
Policy acquisition costs	23,480		—			23,480
Cost of services	—		115,369			115,369
Other operating expenses before corporate allocations	140,624		55,815			196,439
Total (4)	368,279		171,184			539,463
Adjusted pretax operating income (loss) before corporate allocations	670,528		6,065			676,593
Allocation of corporate operating expenses	45,178		8,533			53,711
Allocation of interest expense	63,439		17,693			81,132
Adjusted pretax operating income (loss)	$	561,911	$	(20,161	)	$	541,750

Total assets	$	5,506,338	$	356,836		$	5,863,174

NIW (in millions)	$	50,530

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(1)

Reflects changes to align our segment reporting structure with recent changes in personnel reporting lines and management oversight related to contract underwriting performed on behalf of third parties. Revenue and expenses for this business are now reflected in the Services segment. As a result, for all periods presented, Services revenue, cost of services and other operating expenses have increased, with offsetting reductions in Mortgage Insurance other income and other operating expenses.


(2)	Net of ceded premiums written under the QSR Transactions and the Single Premium QSR Transaction. See Note 8 for additional information.


(3)	Excludes net gains on investments and other financial instruments of $30.8 million, not included in adjusted pretax operating income.


(4)	Includes inter-segment revenues and expenses as follows:



	December 31, 2016
(In thousands)	Mortgage Insurance		Services
Inter-segment revenues included in Services segment	$	—	$	8,355
Inter-segment expenses included in Mortgage Insurance segment	8,355		—



	December 31, 2015 (1)
(In thousands)	Mortgage Insurance			Services			Total
Net premiums written—insurance (2)	$	968,505		$	—		$	968,505
Decrease (increase) in unearned premiums	(52,597		)	—			(52,597		)
Net premiums earned—insurance	915,908			—			915,908
Services revenue	—			163,140			163,140
Net investment income	81,537			—			81,537
Other income	2,899			—			2,899
Total (3) (4)	1,000,344			163,140			1,163,484

Provision for losses	198,433			—			198,433
Policy acquisition costs	22,424			—			22,424
Cost of services	—			97,256			97,256
Other operating expenses before corporate allocations	148,619			43,515			192,134
Total (4)	369,476			140,771			510,247
Adjusted pretax operating income (loss) before corporate allocations	630,868			22,369			653,237
Allocation of corporate operating expenses	46,418			4,823			51,241
Allocation of interest expense	73,402			17,700			91,102
Adjusted pretax operating income (loss)	$	511,048		$	(154	)	$	510,894

Total assets	$	5,290,422		$	351,678		$	5,642,100

NIW (in millions)	$	41,411

______________________

(1)


(2)	Net of ceded premiums written under the QSR Transactions. See Note 8 for additional information.


(3)	Excludes net gains on investments and other financial instruments of $35.7 million, not included in adjusted pretax operating income.


(4)	Includes inter-segment revenues and expenses as follows:



	December 31, 2015
(In thousands)	Mortgage Insurance		Services
Inter-segment revenues included in Services segment	$	—	$	5,924
Inter-segment expenses included in Mortgage Insurance segment	5,924		—



	December 31, 2014 (1)
	Mortgage Insurance			Services (2)			Total
(In thousands)
Net premiums written—insurance (3)	$	925,181		$	—		$	925,181
Decrease (increase) in unearned premiums	(80,653		)	—			(80,653		)
Net premiums earned—insurance	844,528			—			844,528
Services revenue	—			78,908			78,908
Net investment income	65,655			—			65,655
Other income	4,063			1,265			5,328
Total (4) (5)	914,246			80,173			994,419

Provision for losses	246,865			—			246,865
Change in expected economic loss or recovery for consolidated VIEs	113			—			113
Policy acquisition costs	24,446			—			24,446
Cost of services	—			44,679			44,679
Other operating expenses before corporate allocations	158,228			30,944			189,172
Total (5)	429,652			75,623			505,275
Adjusted pretax operating income (loss) before corporate allocations	484,594			4,550			489,144
Allocation of corporate operating expenses	55,154			1,144			56,298
Allocation of interest expense	81,600			8,864			90,464
Adjusted pretax operating income (loss)	$	347,840		$	(5,458	)	$	342,382

Assets held for sale (6)	$	—		$	—		$	1,736,444
Total assets	4,779,917			325,975			6,842,336

NIW (in millions)	$	37,349

______________________

(1)


(2)	Includes the acquisition of Clayton, effective June 30, 2014.


(3)	Net of ceded premiums written under the QSR Transactions. See Note 8 for additional information.


(4)	Excludes net gains on investments and other financial instruments of $80.1 million, not included in adjusted pretax operating income.


(5)	Includes inter-segment revenues and expenses as follows:



	December 31, 2014
(In thousands)	Mortgage Insurance		Services
Inter-segment revenues included in Services segment	$	—	$	1,723
Inter-segment expenses included in Mortgage Insurance segment	1,723		—


(6)	Assets held for sale are not part of the Mortgage Insurance or Services segments.

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

The reconciliation of adjusted pretax operating income (loss) to consolidated pretax income from continuing operations is as follows:



	December 31,
(In thousands)	2016			2015			2014
Adjusted pretax operating income (loss):
Mortgage insurance (1)	$	561,911		$	511,048		$	347,840
Services (1)	(20,161		)	(154		)	(5,458		)
Total adjusted pretax operating income	$	541,750		$	510,894		$	342,382

Net gains (losses) on investments and other financial instruments (2)	30,751			35,693			80,102
Loss on induced conversion and debt extinguishment	(75,075		)	(94,207		)	—
Acquisition-related expenses (3)	(519		)	(1,565		)	(6,680		)
Amortization and impairment of intangible assets	(13,221		)	(12,986		)	(8,648		)
Consolidated pretax income from continuing operations	$	483,686		$	437,829		$	407,156

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(1)	Includes inter-segment expenses and revenues as listed in the notes to the preceding tables.

(2)

The change in expected economic loss or recovery associated with our previously owned VIEs is included in adjusted pretax operating income above, although it represents amounts that are not included in net income. Therefore, for purposes of this reconciliation, net gains (losses) on investments and other financial instruments has been adjusted by income of $0.1 million for the year ended December 31, 2014 to reverse this item.


(3)	Acquisition-related expenses represent expenses incurred to effect the acquisition of a business, net of adjustments to accruals previously recorded for acquisition expenses.