Note 3 - Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2018

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



	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2018		2017			2018		2017
Mortgage Insurance
Net premiums written—insurance (1)	$	253,827	$	247,810		$	743,765	$	713,782
(Increase) decrease in unearned premiums	1,655		(11,108		)	3,235		(26,184		)
Net premiums earned—insurance	255,482		236,702			747,000		687,598
Net investment income	38,824		32,540			110,227		93,643
Other income	725		760			2,153		2,118
Total (2)	295,031		270,002			859,380		783,359

Provision for losses	20,715		35,980			77,468		100,926
Policy acquisition costs	5,667		5,554			18,780		18,406
Other operating expenses before corporate allocations	33,152		36,941			98,302		114,169
Total (3)	59,534		78,475			194,550		233,501
Adjusted pretax operating income before corporate allocations	235,497		191,527			664,830		549,858
Allocation of corporate operating expenses	19,794		11,737			58,507		41,817
Allocation of interest expense	11,083		11,282			32,552		34,539
Adjusted pretax operating income	$	204,620	$	168,508		$	573,771	$	473,502

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(1)	Net of ceded premiums written under the QSR Program and the Single Premium QSR Program. See Note 7 for additional information.


(2)	Excludes net losses on investments and other financial instruments of $4.5 million and $30.8 million for the three and nine months ended September 30, 2018, and net gains on investments and other financial instruments of $2.5 million and $5.0 million for the three and nine months ended September 30, 2017, not included in adjusted pretax operating income.

(3)Includes inter-segment expenses as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2018		2017		2018		2017
Inter-segment expenses	$	766	$	1,491	$	2,653	$	5,726



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2018			2017			2018			2017
Services
Net premiums earned—insurance (1)	$	2,949		$	—		$	5,325		$	—
Services revenue (2)	37,332			41,062			109,211			121,126
Net investment income (1)	171			—			197			—
Other income (1)	449			—			844			—
Total (2)	40,901			41,062			115,577			121,126

Provision for losses (1)	242			—			295			—
Cost of services	26,001			27,544			73,628			82,196
Other operating expenses before corporate allocations	14,772			12,781			39,531			38,188
Restructuring and other exit costs (3)	407			5,463			1,987			5,463
Total	41,422			45,788			115,441			125,847
Adjusted pretax operating income (loss) before corporate allocations	(521		)	(4,726		)	136			(4,721		)
Allocation of corporate operating expenses	2,948			3,730			8,742			10,852
Allocation of interest expense	4,452			4,433			13,354			13,293
Adjusted pretax operating income (loss)	$	(7,921	)	$	(12,889	)	$	(21,960	)	$	(28,866	)

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(1)	Results from inclusion of the operations of EnTitle Direct, a national title insurance and settlement services company, acquired in March 2018.

(2)Includes inter-segment revenues as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2018		2017		2018		2017
Inter-segment revenues	$	766	$	1,491	$	2,653	$	5,726


(3)	Does not include impairment of long-lived assets and loss from the sale of a business line, which are not components of adjusted pretax operating income.

Selected balance sheet information for our segments, as of the periods indicated, is as follows:

The reconciliation of adjusted pretax operating income to consolidated pretax income is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2018			2017			2018			2017
Adjusted pretax operating income (loss):
Mortgage Insurance (1)	$	204,620		$	168,508		$	573,771		$	473,502
Services (1)	(7,921		)	(12,889		)	(21,960		)	(28,866		)
Total adjusted pretax operating income	196,699			155,619			551,811			444,636

Net gains (losses) on investments and other financial instruments	(4,480		)	2,480			(30,771		)	4,960
Loss on induced conversion and debt extinguishment	—			(45,766		)	—			(51,469		)
Acquisition-related expenses (2)	(2		)	(54		)	(418		)	(126		)
Impairment of goodwill	—			—			—			(184,374		)
Amortization and impairment of other acquired intangible assets	(3,472		)	(2,890		)	(8,968		)	(25,042		)
Impairment of other long-lived assets and loss from the sale of a business line (3)	(4,057		)	(6,575		)	(3,953		)	(6,575		)
Consolidated pretax income	$	184,688		$	102,814		$	507,701		$	182,010

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


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

(3)

Included within restructuring and other exit costs. See Note 1.