10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-14667

WMIH Corp.

(Exact name of registrant as specified in its charter)

Delaware	91-1653725
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)
800 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON	98104
(Address of principal executive offices)	(Zip Code)

(206) 922-2957

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock $0.00001 par value	206,714,132
(Class)	(Outstanding at November 1, 2017)

Forward-Looking Statements

Certain information included in this Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q that address activities, events, conditions or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business and these statements are not guarantees of future performance. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “strategy,” “future,” “opportunity,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. Some of these risks are identified and discussed under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016. These risk factors will be important to consider in determining future results and should be reviewed in their entirety. These forward-looking statements are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and we do not undertake to update any forward-looking statement, except as required by law.

* * * * *

As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, (i) the terms “Company,”  “we,” “us,” or “our” refer to WMIH Corp. (formerly WMI Holdings Corp.) and its subsidiaries on a consolidated basis; (ii) “WMIH” refers only to WMIH Corp., without regard to its subsidiaries; (iii) “WMIHC” refers only to WMI Holdings Corp., without regard to its subsidiaries; (iv)  “WMMRC” means WM Mortgage Reinsurance Company, Inc. (a wholly-owned subsidiary of WMIH); and (v)  “WMIIC” means WMI Investment Corp. (a wholly-owned subsidiary of WMIH).

1

WMIH CORP.

FORM 10-Q

INDEX

	Page
PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures about Market Risk	45
Item 4. Controls and Procedures.	45
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	46
Item 1A. Risk Factors.	46
Item 6. Exhibits.	47
SIGNATURES	48

2

PART I

FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

WMIH CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)

	September 30, 2017		December 31, 2016 (1)
ASSETS:
Investments held in trust:
Fixed-maturity securities	$	9,022	$	29,206
Cash equivalents held in trust		6,804		2,176
Total investments held in trust		15,826		31,382
Cash and cash equivalents		25,542		2,491
Fixed-maturity securities		1,400		47,625
Restricted cash		577,220		573,347
Derivative asset - embedded conversion feature		111,877		80,651
Accrued investment income		109		187
Other assets		764		507
Total assets	$	732,738	$	736,190
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Liabilities:
Notes payable - principal	$	—	$	18,774
Notes payable - interest		—		203
Losses and loss adjustment reserves		705		811
Losses payable		29		53
Unearned premiums		33		270
Accrued ceding commissions		57		22
Loss contract reserve		—		5,645
Other liabilities		13,774		14,063
Total liabilities		14,598		39,841
Commitments and contingencies
Redeemable convertible series B preferred stock, $0.00001 par value; 600,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016; aggregate liquidation preference of $600,000,000 as of September 30, 2017 and December 31, 2016		502,213		502,213
Stockholders’ equity:
Convertible series A preferred stock, $0.00001 par value; 1,000,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016; aggregate liquidation preference of $10 as of September 30, 2017 and December 31, 2016		—		—
Common stock, $0.00001 par value; 3,500,000,000 authorized; 206,714,132 and 206,380,800 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		2		2
Additional paid-in capital		108,830		108,415
Retained earnings		107,095		85,719
Total stockholders’ equity		215,927		194,136
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	732,738	$	736,190

The accompanying notes are an integral part of the condensed consolidated financial statements.

⁽¹⁾ Balances derived from audited financial statements as of December 31, 2016.

3

WMIH CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts and share data)

(Unaudited)

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Revenues:
Premiums earned	$	344		$	786		$	1,103		$	2,426
Net investment income		1,943			498			4,826			1,747
Total revenues		2,287			1,284			5,929			4,173
Operating expenses:
Losses and loss adjustment expense		48			183			207			702
Ceding commission expense		44			75			137			234
General and administrative expense		2,117			1,357			5,915			4,878
Loss contract reserve reduction		(210	)		(565	)		(5,645	)		(2,362	)
Interest expense		579			636			1,788			1,994
Total operating expenses		2,578			1,686			2,402			5,446
Net operating (loss) income		(291	)		(402	)		3,527			(1,273	)
Other (income) expense:
Other (income)		(123	)		—			(123	)		—
Unrealized (gain) loss on change in fair value of derivative embedded conversion feature		(38,579	)		16,243			(31,226	)		(62,587	)
Total other (income) expense		(38,702	)		16,243			(31,349	)		(62,587	)
Income (loss) before income taxes		38,411			(16,645	)		34,876			61,314
Income tax expense (benefit)		—			—			—			—
Net income (loss)		38,411			(16,645	)		34,876			61,314
Redeemable convertible series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Net income (loss) attributable to common and participating stockholders	$	33,911		$	(21,145	)	$	21,376		$	47,814
Basic net income (loss) per share attributable to common stockholders (Note 12)	$	0.06		$	(0.10	)	$	0.04		$	0.10
Shares used in computing basic net income (loss) per share		202,660,492			202,341,209			202,573,315			202,247,275
Diluted net income (loss) per share attributable to common stockholders (Note 12)	$	0.06		$	(0.10	)	$	0.04		$	0.09
Shares used in computing diluted net income (loss) per share		212,726,121			202,341,209			212,638,944			237,575,014

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

WMIH CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

	Series B Redeemable Convertible Preferred Stock				Series A Convertible Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Additional paid-in capital		(Accumulated deficit) retained earnings			Total stockholders’ equity
Balance at January 1, 2016		600,000		502,213		1,000,000		—		206,168,035		2		107,757		(97,981	)		9,778
Net income		—		—		—		—		—		—		—		201,700			201,700
Redeemable convertible series B preferred stock dividends		—		—		—		—		—		—		—		(18,000	)		(18,000	)
Issuance of common stock under restricted stock compensation arrangement		—		—		—		—		212,765		—		—		—			—
Equity-based compensation		—		—		—		—		—		—		658		—			658
Balance at December 31, 2016		600,000		502,213		1,000,000		—		206,380,800		2		108,415		85,719			194,136
Net income		—		—		—		—		—		—		—		34,876			34,876
Redeemable convertible series B preferred stock dividends		—		—		—		—		—		—		—		(13,500	)		(13,500	)
Issuance of common stock under restricted stock compensation arrangement		—		—		—		—		333,332		—		—		—			—
Equity-based compensation		—		—		—		—		—		—		415		—			415
Balance at September 30, 2017		600,000	$	502,213		1,000,000	$	—		206,714,132	$	2	$	108,830	$	107,095		$	215,927

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

WMIH CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Nine months ended September 30, 2017			Nine months ended September 30, 2016
Cash flows from operating activities:
Net income	$	34,876		$	61,314
Adjustments to reconcile net income to net cash (used in) operating activities:
Amortization of premium or discount on fixed maturity securities		108			247
Net realized loss (gain) on sale of investments		63			(19	)
Unrealized (gain) on trading securities		(67	)		(83	)
Unrealized (gain) on derivative embedded conversion feature		(31,226	)		(62,587	)
Equity-based compensation		415			484
Changes in assets and liabilities:
Accrued investment income		78			(18	)
Other assets		(257	)		(270	)
Cash equivalents held in trust		(4,628	)		1,358
Restricted cash		(3,873	)		(1,476	)
Losses and loss adjustment reserves		(106	)		(2,733	)
Losses payable		(24	)		(395	)
Unearned premiums		(237	)		(463	)
Accrued ceding commission expense		35			(8	)
Accrued interest on notes payable		(203	)		(24	)
Loss contract reserve		(5,645	)		(2,362	)
Other liabilities		(289	)		(626	)
Total adjustments		(45,856	)		(68,975	)
Net cash used in operating activities		(10,980	)		(7,661	)
Cash flows from investing activities:
Purchase of investments		(19,973	)		(130,469	)
Proceeds from sales and maturities of investments		86,278			146,920
Net cash provided by investing activities		66,305			16,451
Cash flows from financing activities:
Redeemable convertible series B preferred stock dividends		(13,500	)		(13,500	)
Notes payable – principal repayments		(18,774	)		(2,185	)
Net cash used in financing activities		(32,274	)		(15,685	)
Increase (decrease) in cash and cash equivalents		23,051			(6,895	)
Cash and cash equivalents, beginning of period		2,491			9,924
Cash and cash equivalents, end of period	$	25,542		$	3,029
Supplementary disclosure of cash flow information:
Cash paid during the period:
Interest	$	1,991		$	2,008

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

WMIH CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unless otherwise indicated, financial information, including dollar values stated in the text of the notes to financial statements, is expressed in thousands.

References herein, unless the context requires otherwise, to (i) the terms “Company,” “we,” “us” or “our” generally are intended to refer to WMIH Corp. (formerly WMI Holdings Corp.) and its subsidiaries on a consolidated basis; (ii) “WMIH” refers only to WMIH Corp. without regard to its subsidiaries; (iii) “WMIHC” refers only to WMI Holdings Corp. without regard to its subsidiaries; (iv) “WMMRC” means WM Mortgage Reinsurance Company, Inc. (a wholly-owned subsidiary of WMIH); and (v) “WMIIC” means WMI Investment Corp. (a wholly-owned subsidiary of WMIH).

Note 1: The Company and its Subsidiaries

WMIH Corp.

WMIH Corp. (“WMIH”) is a corporation duly organized and existing under the laws of the State of Delaware.  On May 11, 2015, WMIH merged with its parent corporation, WMI Holdings Corp., a Washington corporation (“WMIHC”), with WMIH as the surviving corporation in the merger (the “Merger”).   The Merger occurred as part of the reincorporation of WMIHC from the State of Washington to the State of Delaware effective May 11, 2015 (the “Reincorporation Date”).

WMIH, formerly known as WMIHC and Washington Mutual, Inc. (“WMI”), is the direct parent of WM Mortgage Reinsurance Company, Inc., a Hawaii corporation (“WMMRC”), and WMI Investment Corp., a Delaware corporation (“WMIIC”). Since the emergence from bankruptcy on March 19, 2012, our business activities consist of operating WMMRC’s legacy reinsurance business in runoff mode. In addition, we are actively seeking acquisition opportunities across a broad array of industries with a specific focus in the financial services industry, including targets with consumer finance, specialty finance, leasing and insurance operations.

As of September 30, 2017, WMIH was authorized to issue up to 3,500,000,000 shares of common stock, and up to 10,000,000 shares of preferred stock (in one or more series), in each case with a par value of $0.00001 per share.  As of September 30, 2017 and December 31, 2016, 206,714,132 and 206,380,800 shares, respectively, of WMIH’s common stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 1,000,000 shares of WMIH’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) were issued and outstanding.  As of September 30, 2017 and December 31, 2016, 600,000 shares of WMIH’s 3% Series B Convertible Preferred Stock (the “Series B Preferred Stock”) were issued and outstanding.

While we remain committed to consummating an acquisition, we also are mindful that the Company’s Series B Preferred Stock is redeemable on January 5, 2018 if we have not consummated a Qualified Acquisition, as more fully described in Note 6: Service Agreements and Related Party Transactions, or executed a definitive agreement to consummate an Acquisition (as such term is defined in Article VI of WMIH’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”)), prior to that date.  Accordingly, as previously disclosed, we formed the Finance Committee of the Company’s Board of Directors (the “Finance Committee”), comprised solely of independent directors, to explore potential financing and refinancing alternatives, including the potential restructuring or refinancing of the Series B Preferred Stock. The Finance Committee has retained financial advisors to provide certain financial advisory services in connection with the Finance Committee’s mandate to review the Company’s capital structure and potential financing alternatives. There can be no assurance that any transaction, including a refinancing of the Series B Preferred Stock, will occur or if so on what terms.

WMMRC

WMMRC is a wholly-owned subsidiary of WMIH. Prior to August 2008 (at which time WMMRC became a direct subsidiary of WMI), WMMRC was a wholly-owned subsidiary of FA Out-of-State Holdings, Inc., a second-tier subsidiary of Washington Mutual Bank (“WMB”) and third-tier subsidiary of WMI. WMMRC is a pure captive insurance company domiciled in the State of Hawaii. WMMRC was incorporated on February 25, 2000, and received a Certificate of Authority, dated March 2, 2000, from the Insurance Division of the State of Hawaii.

WMMRC was originally organized to reinsure private mortgage insurance risk for seven primary mortgage insurers then offering private mortgage insurance on loans originated or purchased by former subsidiaries of WMI. The seven primary mortgage insurers are United Guaranty Residential Insurance Company (“UGRIC”), Genworth Mortgage Insurance Corporation (“GMIC”), Mortgage Guaranty Insurance Corporation (“MGIC”), PMI Mortgage Insurance Company (“PMI”), Radian Guaranty Incorporated (“Radian”), Republic Mortgage Insurance Company (“RMIC”) and Triad Guaranty Insurance Company (“Triad”).

7

Due to the then deteriorating performance in the mortgage guarantee markets and the closure and receivership of WMB, the reinsurance agreements with each of the primary mortgage insurers were terminated or placed into runoff during 2008. The agreements with UGRIC and Triad were placed into runoff effective May 31, 2008. The agreements with all other primary mortgage insurers were placed into runoff effective September 26, 2008. As a result, effective September 26, 2008, WMMRC’s continuing operations consisted solely of the runoff of coverage associated with mortgages placed with the primary mortgage carriers prior to September 26, 2008. In runoff, an insurer generally writes no new business but continues to service its obligations under in force policies and otherwise continues as a licensed insurer. The reinsurance agreements with Triad, PMI and UGRIC were commuted on August 31, 2009, October 2, 2012 and April 3, 2014, respectively, and the related trust assets were distributed in accordance with the commutation agreements.  On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC.  On September 13, 2017, the Insurance Division of the State of Hawaii approved this commutation and a related distribution of up to $10.7 million to WMIH, which distribution has not been completed as of the date of the filing of this Form 10-Q.   For more information see Note 14: Subsequent Events. As a result, WMMRC’s current continuing operations, subsequent to the Radian commutation, consist solely of the runoff of coverage associated with mortgages placed with the following three remaining carriers, GMIC, MGIC and RMIC.

WMIIC

WMIIC does not currently have any operations and is fully eliminated upon consolidation.

Note 2: Significant Accounting Policies

Basis of Presentation

WMIH resumed timely filing of all periodic reports for a reporting company under the Exchange Act for all periods after emergence from bankruptcy on March 19, 2012 (the “Effective Date”).  

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reporting. Certain information and footnote disclosures normally included in the financial statements and prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures included are appropriate. The condensed consolidated balance sheet as of December 31, 2016, included herein, was derived from the audited consolidated financial statements as of that date.

These interim unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto filed in the Company’s Annual Report on Form 10-K, filed with the SEC on March 14, 2017. Interim information presented in the unaudited condensed consolidated financial statements has been prepared by management. In the opinion of management, the financial statements include all adjustments necessary for a fair presentation and that all such adjustments are of a normal, recurring nature and necessary for the fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with GAAP. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.

All significant intercompany transactions and balances have been eliminated in preparing the condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Management has made significant estimates in certain areas, including valuing certain financial instruments, other assets and liabilities, the determination of the contingent risk liabilities, and in determining appropriate insurance reserves. Actual results could differ substantially from those estimates.

8

Fair Value of Certain Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Generally, for assets that are reported at fair value, the Company uses quoted market prices or valuation models to estimate their fair value. These models incorporate inputs such as forward yield curves, market volatilities and pricing spreads, utilizing market-based inputs where readily available. The degree of management judgment involved in estimating the fair value of a financial instrument or other asset is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are actively traded in the marketplace or whose values are based on readily available market value data, little judgment is necessary when estimating the instrument’s fair value. When observable market prices and data are not readily available, significant management judgment often is necessary to estimate fair value. In those cases, different assumptions could result in significant changes in valuation.

The Company classifies fixed-maturity investments as trading securities, which are recorded at fair value. As such, changes in unrealized gains and losses on investments held at the balance sheet date are recognized and reported as a component of net investment income on the condensed consolidated statement of operations. The Company believes fair value provides better matching of investment earnings to potential cash flow generated from the investment portfolio and reduces subjectivity related to evaluating other-than-temporary impairment on the Company’s investment portfolio.

The carrying value of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their respective fair values because of their short-term nature.

The carrying value of the loss contract reserve approximates its fair value and is based on valuation methodologies using discounted cash flows at interest rates which approximate the Company’s weighted-average cost of capital.

The carrying value of the derivative embedded conversion feature of the Series B Preferred Stock is adjusted to its fair value as determined using Level 3 inputs described below under fair value measurement.  

The carrying value of notes payable approximates fair value based on time to maturity, underlying collateral, and prevailing interest rates.

Fair Value Measurement

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the Financial Accounting Standards Board Fair Value Measurements and Disclosures accounting guidance. The framework is based on the inputs used in valuation and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.

The three levels of the hierarchy are as follows:

Level 1–Inputs to the valuation methodology are quoted prices for identical assets or liabilities traded in active markets.

Level 2–Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market corroborated inputs.

Level 3–Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Fair values are based on quoted prices in active markets when available (Level 1). The Company receives the quoted prices from a third party, nationally recognized pricing service. When quoted prices are not available, the Company utilizes a pricing service to determine an estimate of fair value. The fair value is generally estimated using current market inputs for similar financial instruments with comparable terms and credit quality, commonly referred to as matrix pricing (Level 2). These valuation techniques involve some level of management estimation and judgment. The Company recognizes transfers between levels in the fair value hierarchy at the end of the reporting period.

9

Fixed-Maturity Securities

Fixed-maturity securities consist of U.S. Treasury securities, obligations of U.S. government sponsored agencies and domestic and foreign corporate debt securities. Fixed-maturity securities held in trust are for the benefit of the primary insurers as more fully described in Note 3: Insurance Activity. Investments in fixed-maturity securities are reported at their estimated fair values and are classified as trading securities in accordance with applicable accounting guidance. Realized gains and losses on the sale of fixed-maturity securities are determined using the specific identification method and are reported as a component of net investment income within the condensed consolidated statement of operations.

Investments Held in Trust

Investments held in trust consist of cash equivalents, which include highly liquid overnight money market instruments, and fixed-maturity securities which are held in trust for the benefit of the primary insurers, as more fully described in Note 3: Insurance Activity and Note 4: Investment Securities, and are subject to the restrictions on distribution of net assets of subsidiaries as described below.

Third Party Restrictions on Distribution of Net Assets of Wholly-Owned Subsidiaries

The net assets of WMMRC are subject to restrictions on distribution from multiple sources, including the primary insurers who have approval control of distributions from the trust, and the Insurance Division of the State of Hawaii who has approval authority over distributions or intercompany advances.  As more fully described in Note 14: Subsequent Events, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

Premium Recognition

Premiums assumed are earned on a daily pro-rata basis over the underlying policy terms. Premiums assumed relating to the unexpired portion of policies in force at the balance sheet date are recorded as unearned premiums. Unearned premiums also include a reserve for post default premium reserves. Post default premium reserves occur when a loan is in a default position and the servicer continues to advance the premiums. If the loan ultimately goes to claim, the premiums advanced during the period of default are subject to recapture. The Company records a default premium reserve based on information provided by the underlying mortgage insurers when they provide information on the default premium reserve separately from other reserves. The change in the post default premium reserve is reflected as a reduction or increase, as the case may be, in premiums assumed. The Company has recorded unearned premiums totaling $33 thousand and $0.3 million as of September 30, 2017 and December 31, 2016, respectively.

The Company recognizes premium deficiencies when there is a probable loss on an insurance contract. Premium deficiencies are recognized if the sum of the present value of expected losses and loss adjustment expenses, unamortized deferred acquisition costs, and maintenance costs, excluding intercompany charges, exceed expected future unearned premiums and anticipated investment income. Premium deficiency reserves have been recorded totaling $0.5 million and $0.3 million as of September 30, 2017 and December 31, 2016, respectively. Intercompany administrative costs are excluded from the computation of premium deficiencies.

The Company’s premium deficiency analysis was performed on a single book basis and includes all book years and reinsurance treaties aggregated together using assumptions based on the actuarial best estimates at the balance sheet date. The calculation for premium deficiency requires significant judgment and includes estimates of future expected premiums, claims, loss adjustment expenses and investment income as of the balance sheet date. To the extent ultimate losses are higher or premiums are lower than estimated, additional premium deficiency reserves may be required in the future.

10

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks, U.S. Treasury bills and overnight investments. Except as described above in Investments Held in Trust, the Company considers all amounts that are invested in highly liquid overnight money market instruments to be cash equivalents. The Federal Deposit Insurance Corporation (“FDIC”) insures amounts on deposit with each financial institution up to limits as prescribed by law. The Company may hold funds with financial institutions in excess of the FDIC insured amount, however, the Company has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash

Restricted cash includes (i) amounts held for the express purposes of paying principal, interest and related fees on the Runoff Notes (as defined in Note 7: Notes Payable) pursuant to the terms of the Indentures (as defined in Note 7: Notes Payable) and (ii) proceeds of the Series B Preferred Stock offering held in escrow.

Ceding Commission Expense

The Company is required to pay a ceding commission to certain primary insurers pursuant to certain reinsurance agreements.

Losses and Loss Adjustment Reserves

The losses and loss adjustment reserves include case basis estimates of reported losses and supplemental amounts for incurred but not reported (“IBNR”) losses. A default is considered the incident (e.g., the failure to make timely payment of mortgage payments) that may give rise to a claim for mortgage insurance. In establishing the losses and loss adjustment reserve, the Company based its estimates primarily on the ceded loss and loss adjustment reserves as provided by the primary mortgage guaranty carriers.

WMMRC has recorded reserves at the ceded case reserves and IBNR loss levels established and reported by the primary mortgage guaranty carriers as of September 30, 2017 and December 31, 2016, respectively. Management believes that the recorded aggregate liability for unpaid losses and loss adjustment expenses at period end represents the Company’s best estimate, based upon the available data, of the amount necessary to cover the current cost of losses. However, due to the inherent uncertainty arising from fluctuations in the persistency rate of mortgage insurance claims, the Company’s size and lack of prior operating history, external factors such as future changes in regional or national economic conditions, judicial decisions, federal and state legislation related to mortgage restructuring and foreclosure restrictions, claims denials and coverage rescissions by primary carriers and other factors beyond the Company’s control, it is not presently possible to determine whether actual loss experience will conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Accordingly, the ultimate liability could be significantly higher or lower, as the case may be, than the amount indicated in the financial statements and there can be no assurance that the reserve amounts recorded will be sufficient. As adjustments to these estimates become necessary, such adjustments are reflected in current operations.

Loss Contract Reserve

A loss contract reserve relating to contractual obligations of WMMRC was established at March 19, 2012 as a result of applying fresh start accounting and in compliance with Accounting Standards Codification (“ASC”) 805-10-55-21 (b) (1) which defines a loss contract as “a contract in which the unavoidable costs of meeting the obligation under the contract exceed the economic benefits expected to be received under it.”  The value of this reserve is analyzed quarterly and is adjusted accordingly.  The adjustment (if any) to the reserve produces an expense or contra-expense in the condensed consolidated statements of operations.

Derivative Embedded Conversion Feature

The Company has recorded a derivative embedded conversion feature of the Series B Preferred Stock which is adjusted to its fair value as determined using Level 3 inputs described above under Fair Value Measurement.  The change in fair value of the derivative embedded conversion feature is calculated at each reporting date and recorded as other income or other expense on the condensed consolidated statement of operations.

Other Liabilities

11

At September 30, 2017, the total balance of $13.8 million of other liabilities is comprised of $12.3 million of accrued fees relating to the Series B Preferred Stock offering, an accrual for professional fees and recurring business expenses currently payable of approximately $0.8 million and $0.7 million of accrued dividends relating to the Series B Preferred Stock. The accrued fees would be paid in the event of a Qualified Acquisition, as more fully described in Note 6: Service Agreements and Related Party Transactions.

Comprehensive Income

The Company has no comprehensive income other than the net income disclosed in the condensed consolidated statement of operations.

Net Income Per Common Share

In calculating earnings per share, the Company follows the two-class method, which distinguishes between the classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Series A Preferred Stock and the Series B Preferred Stock are treated as one class for purposes of applying the two-class method, because they have substantially equal rights and share equally on an as converted basis with respect to income available to WMIH common stockholders.

Basic net income per WMIH common share is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding for the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these are subject to repurchase.  Basic net income attributable to common stockholders is computed by deducting preferred dividends and the basic calculation of undistributed earnings attributable to participating securities from net income.

Diluted net income per WMIH common share is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding during the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these are subject to repurchase, and adding any potentially dilutive WMIH common stock equivalents outstanding during the period. Diluted net income attributable to common stockholders is computed by deducting preferred dividends and the diluted calculation of undistributed earnings attributable to participating securities from net income.

If common stock equivalents exist, in periods where there is a net loss, diluted net loss per common share would be equal to or less than basic net loss per common share, since the effect of including any common stock equivalents would be antidilutive.

Equity-Based Compensation

On May 22, 2012, WMIH’s Board of Directors (the “Board” or “Board of Directors”) approved the Company’s 2012 Long-Term Incentive Plan (the “2012 Plan”) so that awards of restricted stock could be made to its non-employee directors and to have a plan in place for awards of equity based compensation to executives and others in connection with the Company’s operations and future strategic plans. A total of 2.0 million shares of WMIH’s common stock were initially reserved for future issuance under the 2012 Plan, which became effective upon the Board approval on May 22, 2012. On February 10, 2014, the Board approved and adopted a First Amendment to the 2012 Plan, pursuant to which the number of shares of WMIH’s common stock reserved and available for grants under the 2012 Plan was increased from 2.0 million shares to 3.0 million shares, and the terms of the 2012 Plan were modified to permit such an increase through action of the Board, except when stockholder approval is necessary to comply with any applicable law, regulation or rule of any stock exchange on which WMIH’s shares are listed, quoted or traded. On February 25, 2015, the number of shares authorized and available for awards under the 2012 Plan was increased from 3.0 million to 12.0 million shares of WMIH’s common stock, subject to approval of stockholders of WMIH.  This approval was received at the Company’s Annual Meeting of Stockholders on April 28, 2015. The 2012 Plan provides for the granting of restricted shares and other cash and share based awards. The value of restricted stock is generally determined using the fair market value determined to be the trading price at the close of business on the respective date the awards were granted.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the carrying amounts and tax bases of assets and liabilities and losses carried forward and tax credits. Deferred tax assets and liabilities are measured using enacted tax rates and laws applicable to the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized.

12

The Company recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Penalties and interest, of which there are none, would be reflected in income tax expense. Tax years are open to the extent the Company has net operating loss (“NOL”) carry-forwards available to be utilized currently.

Dividend Policy

WMIH has paid no dividends on its common stock on or after the Effective Date and currently has no plans to pay a dividend on its common stock.

WMIH has declared and paid $13.5 million and $18.0 million of dividends on its Series B Preferred Stock for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. Additionally, WMIH has accrued unpaid and undeclared dividends of $0.7 million, based on the Series B Preferred Stock 3% interest rate, as of both September 30, 2017 and December 31, 2016.

New Accounting Pronouncements

The Company has reviewed new accounting pronouncements issued between August 9, 2017, the filing date of our most recent prior Form 10-Q, and the filing date of this Form 10-Q and has determined that no pronouncements issued are relevant to the Company, and/or have a material impact on the Company’s consolidated financial position, results of operations or disclosure requirements. 

13

Note 3: Insurance Activity

The Company, through WMMRC, reinsures mortgage guaranty risks of mortgage loans originated by affiliates of the Company during the period from 1997 through 2008. WMMRC is (or was) a party to reinsurance agreements with UGRIC, GMIC, MGIC, PMI, Radian, RMIC and Triad. The agreements with UGRIC and Triad were placed into runoff effective May 31, 2008. The agreements with all other primary mortgage insurers were placed into runoff effective September 26, 2008. The reinsurance agreements with Triad, PMI and UGRIC were commuted on August 31, 2009, October 2, 2012 and April 3, 2014, respectively. On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC.  For more information see Note 14: Subsequent Events.

All agreements between WMMRC and the primary mortgage insurers are on an excess of loss basis, except for a reinsurance treaty with GMIC during 2008, which is reinsured on a 50% quota share basis. Pursuant to the excess of loss reinsurance treaties, WMMRC reinsures a second loss layer which ranges from 5% to 10% of the risk in force in excess of the primary mortgage insurer’s first loss percentage which range from 4% to 5%. Each calendar year, or book year, is treated separately from other years when calculating losses. In return for accepting a portion of the risk, WMMRC receives, net of ceding commission, a percentage of the premium that ranges from 25% to 40%.

As security for the ceding insurers, WMMRC has entered into separate trust agreements with each of the primary mortgage insurance companies whereby a portion of the funds from premiums assumed are held in trust accounts for the benefit of each separate insurer. Pursuant to the terms of the reinsurance agreements, WMMRC is required to keep such assets in trust for a minimum of five years and is subject to claims for up to ten years from termination of obligations arising from the last year in which insurance business was written prior to runoff. Release of funds from the trust by WMMRC requires approval from the primary mortgage insurance companies.

Premiums assumed and earned are as follows for the periods ended September 30, 2017 and 2016, respectively:

	Three months ended September 30, 2017		Three months ended September 30, 2016		Nine months ended September 30, 2017		Nine months ended September 30, 2016
Premiums assumed	$	342	$	739	$	866	$	1,963
Change in unearned premiums		2		47		237		463
Premiums earned	$	344	$	786	$	1,103	$	2,426

The components of the liability for losses and loss adjustment reserves are as follows as of September 30, 2017 and December 31, 2016, respectively:

	September 30, 2017		December 31, 2016
Case-basis reserves	$	174	$	553
IBNR reserves		1		—
Premium deficiency reserves		530		258
Total losses and loss adjustment reserves	$	705	$	811

Losses and loss adjustment reserve activity are as follows for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively:

	Nine months ended September 30, 2017			Year ended December 31, 2016
Balance at beginning of period	$	811		$	5,063
Incurred (released) - prior periods		207			(669	)
Paid or terminated - prior periods		(313	)		(3,583	)
Total losses and loss adjustment reserves	$	705		$	811

The loss contract reserve balance is analyzed and adjusted quarterly. The balance in the reserve was zero and $5.6 million as of September 30, 2017 and December 31, 2016, respectively. The value of this reserve decreased by $5.6 million during the nine months ended September 30, 2017 and decreased by $2.3 million during the nine months ended September 30, 2016. In periods during which a reduction in the loss contract reserve occurs, a corresponding decrease in expense is reflected in the condensed consolidated statement of operations for the respective period.  

14

Note 4: Investment Securities

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of total fixed-maturity securities and total fixed-maturity securities held in trust at September 30, 2017, are as follows:

	September 30, 2017
Class of securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government treasury securities	$	250	$	—	$	—		$	250
Obligations of U.S. government sponsored enterprises		2,749		—		(7	)		2,742
Corporate debt securities		3,683		—		(2	)		3,681
Foreign corporate debt securities		3,750		—		(1	)		3,749
Total fixed-maturity securities		10,432		—		(10	)		10,422
Less total unrestricted fixed-maturity securities		1,402		—		(2	)		1,400
Total fixed-maturity securities held in trust	$	9,030	$	—	$	(8	)	$	9,022

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of total fixed-maturity securities and total fixed-maturity securities held in trust at December 31, 2016, are as follows:

	December 31, 2016
Class of securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government treasury securities	$	249	$	—	$	—		$	249
Obligations of U.S. government sponsored enterprises		59,450		1		(80	)		59,371
Corporate debt securities		11,415		9		(9	)		11,415
Foreign corporate debt securities		5,798		5		(7	)		5,796
Total fixed-maturity securities		76,912		15		(96	)		76,831
Less total unrestricted fixed-maturity securities		47,635		—		(10	)		47,625
Total fixed-maturity securities held in trust	$	29,277	$	15	$	(86	)	$	29,206

Amortized cost and estimated fair value of fixed-maturity securities at September 30, 2017 by contractual maturity are as follows:

	Amortized Cost		Estimated Fair Value
Maturity in:
2017	$	6,750	$	6,749
2018		3,682		3,673
Total fixed-maturity securities	$	10,432	$	10,422

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Net investment income for the three and nine months ended September 30, 2017 and 2016, respectively, is summarized as follows:

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Investment income:
Amortization of premium or discount on fixed-maturity securities	$	(32	)	$	(74	)	$	(108	)	$	(247	)
Investment income on fixed-maturity securities		72			233			403			792
Interest income on cash and cash equivalents		1,895			405			4,527			1,100
Realized net (loss) gain from sale of investments		(36	)		18			(63	)		19
Unrealized gain (loss) on trading securities held at period end		44			(84	)		67			83
Net investment income	$	1,943		$	498		$	4,826		$	1,747

15

The following table shows how the Company’s investments are categorized in accordance with fair value measurement, as of

September 30, 2017:

	September 30, 2017
	Level 1		Level 2		Level 3		Total
Class of securities:
U.S. government treasury securities	$	250	$	—	$	—	$	250
Obligations of U.S. government sponsored enterprises		1,497		1,245		—		2,742
Corporate debt securities		3,151		530		—		3,681
Foreign corporate debt securities		3,749		—		—		3,749
Total fixed-maturity securities		8,647		1,775		—		10,422
Money market funds		32,007		—		—		32,007
Total	$	40,654	$	1,775	$	—	$	42,429

The following table shows how the Company’s investments are categorized in accordance with fair value measurement, as of December 31, 2016:

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Class of securities:
U.S. government treasury securities	$	249	$	—	$	—	$	249
Obligations of U.S. government sponsored enterprises		47,489		11,882		—		59,371
Corporate debt securities		7,033		4,382		—		11,415
Foreign corporate debt securities		5,796		—		—		5,796
Total fixed-maturity securities		60,567		16,264		—		76,831
Money market funds		4,548		—		—		4,548
Total	$	65,115	$	16,264	$	—	$	81,379

A review of the fair value hierarchy classifications of the Company’s investments is conducted quarterly. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications are reported as transfers in or transfers out of the applicable Level at the end of the calendar quarter in which the reclassifications occur. During the nine months ended September 30, 2017 and the year ended December 31, 2016, $0.9 million and $11.0 million, respectively, of investments were transferred from Level 2 to Level 1 as a result of improving market conditions for short-term and investment grade corporate securities.

	January 1, 2017 to September 30, 2017				January 1, 2016 to  December 31, 2016
	Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1			Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1
Class of securities:
Corporate debt securities	$	—	$	901		$	—	$	5,737
Foreign corporate debt securities		—		—			—		5,295
Total transfers	$	—	$	901		$	—	$	11,032

16

Note 5: Income Taxes

For the nine months ended September 30, 2017, the Company recorded net income attributable to common and participating stockholders of approximately $21.4 million. The Company projects tax losses for the year ending December 31, 2017.  Due to this projected tax loss and the existence of NOL carry-forwards which have a 100% valuation allowance recorded to reduce them to zero, the Company has not recorded an income tax expense or benefit for the nine months ended September 30, 2017. The Company recorded no income tax expense or benefit for the year ended December 31, 2016 due to tax losses in that period.

The Company files a consolidated federal income tax return. Pursuant to a tax sharing agreement, WMMRC’s federal income tax liability is calculated on a separate return basis determined by applying 35% to taxable income, in accordance with the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), that apply to property and casualty insurance companies. WMIH, as WMMRC’s parent, pays federal income taxes on behalf of WMMRC and settles the federal income tax obligation on a current basis in accordance with the tax sharing agreement. WMMRC made no tax payments to WMIH during the nine months ended September 30, 2017 or the year ended December 31, 2016 associated with the Company’s tax liability from the preceding year.

Deferred federal income taxes arise from temporary differences between the valuation of assets and liabilities as determined for financial reporting purposes and income tax purposes. Temporary differences principally relate to discounting of loss reserves, accruals, derivate instruments, net operating losses and unrealized gains and losses on investments. As of September 30, 2017 and December 31, 2016, the Company recorded a valuation allowance equal to 100% of the net deferred federal income tax asset due to uncertainty regarding the Company’s ability to realize these benefits in the future.

On March 19, 2012, WMIH emerged from bankruptcy. Prior to emergence, WMI abandoned the stock of WMB, thereby generating a worthless stock deduction of approximately $8.37 billion which gave rise to a NOL for the year ended December 31, 2012. Under Section 382 of the Code (“Section 382”), and based on the Company’s analysis, we believe that the Company experienced an “ownership change” (generally defined as a greater than 50% change (by value) in our equity ownership over a three-year period) on March 19, 2012, and our ability to use our pre-change of control NOLs and other pre-change tax attributes against our post-change income was limited. The Section 382 limitation is applied annually so as to limit the use of our pre-change NOLs to an amount that generally equals the value of our stock immediately before the ownership change multiplied by a designated federal long-term tax-exempt rate. Due to applicable limitations under Section 382 and a reduction of tax attributes due to cancellation of indebtedness, a portion of these NOLs were limited and will expire unused. We believe that the total available and utilizable NOL carry-forward at December 31, 2016 was approximately $6.0 billion. At September 30, 2017, there was no limitation on the use of these NOLs. These NOLs will begin to expire in 2031. The Company’s ability to utilize the NOLs or realize any benefits related to the NOLs is subject to a number of risks. (See Part I-Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016).

The Company accounts for uncertain tax positions in accordance with the income tax accounting guidance. The Company has analyzed filing positions in the federal and state jurisdictions where it is required to file tax returns, as well as the open tax years in these jurisdictions. Tax years 2011 to present are subject to examination by the Internal Revenue Service. The Company believes that its federal income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain federal income tax positions have been recorded. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for federal income taxes. The Company did not incur any federal income tax related interest income, interest expense or penalties for the nine months ended September 30, 2017 or for the year ended December 31, 2016.

Note 6: Service Agreements and Related Party Transactions

WMMRC has engaged a Hawaii-based service provider, Marsh Management Services, Inc., to provide accounting and related management services for its operations. In exchange for performing these services, WMMRC pays such service provider a management fee.

WMIH entered into an Investment Management Agreement and an Administrative Services Agreement with WMMRC on March 19, 2012. Each of these agreements was approved by WMMRC’s primary regulator, the Insurance Division of the State of Hawaii. Total amounts incurred under these agreements totaled $1.0 million and $1.0 million for the nine months ended September 30, 2017 and 2016, respectively. The expense and related income eliminate on consolidation. These agreements are described below.

Under the terms of such Investment Management Agreement, WMIH receives from WMMRC a fee equal to the product of (x) the ending dollar amount of assets under management during the calendar month in question and (y) .002 divided by 12. WMIH is responsible for investing the funds of WMMRC based on applicable investment criteria and subject to rules and regulations to which WMMRC is subject.

17

Under the terms of such Administrative Services Agreement, WMIH receives from WMMRC a fee of $110 thousand per month. WMIH is responsible for providing administrative services to support, among other things, supervision, governance, financial administration and reporting, risk management and claims management as may be necessary, together with such other general or specific administrative services that may be reasonably required or requested by WMMRC in the ordinary course of its business.

On March 22, 2012, WMIH and the WMI Liquidating Trust (the “Trust”) entered into a Transition Services Agreement (the “TSA”). Pursuant to the TSA, the Trust makes available certain services and employees. The TSA provides the Company with basic infrastructure and support services to facilitate the Company’s operations. The TSA, as amended, extends the term of the agreement through January 31, 2019, with automatic renewals thereafter for successive additional three-month terms, subject to non-renewal at the end of any additional term upon written notice by either party at least 30 days prior to the expiration of the additional term.

In connection with implementing the Company’s Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code (as modified, the “Plan”), certain holders of specified “Allowed Claims” had the right to elect to receive such holder’s “Pro Rata Share of the Common Stock Allotment.” Essentially, the Plan defines the “Pro Rata Share of the Common Stock Allotment” as a pro rata share of ten million (10,000,000) shares of WMIH’s common stock (i.e. five percent (5%)) issued and outstanding on the Effective Date. Holders exercising the foregoing election did so in lieu of receiving (i) 50% of such holder’s interest in and to certain litigation proceeds that could be realized by the Trust on account of certain claims and causes of action asserted by the Trust as contemplated by the Plan (“Litigation Proceeds”), and (ii) some or all of the Runoff Notes to which such holder may be entitled (if such holder elected to receive Runoff Notes in accordance with the terms of the Plan).

If a holder exercised the election described above and, as a result of such election, received shares of WMIH’s common stock, then such holder’s share of Runoff Notes to which the election was effective (i.e., One Dollar ($1.00) of original principal amount of Runoff Notes for each share of WMIH’s common stock) were not issued. In addition, as a result of making the aforementioned election, such holders conveyed to WMIH, and WMIH retained an economic interest in Litigation Proceeds, if any, recovered by the Trust in connection with certain litigation brought by the Trust as contemplated by the Plan. Distributions, if any, to WMIH on account of the foregoing will be effected in accordance with the Plan and the court order confirming the Plan.

On or about October 14, 2014, the Trust filed a lawsuit in King County Superior Court in the State of Washington against 16 former directors and officers of WMI (the “D&O Litigation”). The Trust’s complaint alleged, among other things, that the defendants named therein breached their fiduciary duties to WMI and committed corporate waste and fraud by squandering WMI’s financial resources.  In connection with the settlement of the D&O Litigation, during the year ended December 31, 2015, among the Trust, certain former directors and officers of WMI and certain insurance carriers that underwrote director and officer liability insurance policies for the benefit of WMI and its affiliates (including such former directors and officers), such insurance carriers agreed to pay the Trust $37.0 million, of which $3.0 million would be placed into a segregated reserve account (the “RSA Reserve”) to be administered by a third party pursuant to the terms of a Reserve Settlement Agreement (the “RSA”).

During the years ended December 31, 2016 and 2015, WMIH had other income of $123 thousand and $7.8 million, respectively, as a result of its receipt of net Litigation Proceeds related to the D&O Litigation.  As of September 30, 2017, $1.5 million remained in the RSA Reserve.  Under the RSA, funds are released from the RSA Reserve to the Trust if and when certain designated conditions are satisfied.  If and when these funds are released to the Trust, and to the extent WMIH is entitled to receive such funds in accordance with the Plan, it is anticipated the Trust will make payments to WMIH in an amount equal to WMIH’s share of Litigation Proceeds as provided under the Plan.  Due to the contingent nature of future distributions from the RSA Reserve, there can be no assurance that WMIH will receive any distributions from the remaining balance in the RSA Reserve in the future. During the nine months ended September 30, 2017, WMIH has recorded income from Litigation Proceeds of $123 thousand.  As of September 30, 2017, WMIH has not received any Litigation Proceeds, other than as described above.  

In preparation for the offering of the Series B Preferred Stock, WMIH engaged KKR Capital Markets LLC (“KCM”), an affiliate of KKR & Co. L.P., to act as a joint book-running manager for the Series B Preferred Stock offering.  KCM also acted as an initial purchaser of the Series B Preferred Stock.   During the year ended December 31, 2015, as a result of satisfying a post-closing covenant to reincorporate in the State of Delaware within 180 days following the closing of the Series B Preferred Stock offering, we paid $8.25 million to KCM.  Upon consummation of a “Qualified Acquisition” (as such term is defined in Article VI of the Certificate of Incorporation), we will pay KCM an additional fee (the “KCM Deferred Fee”) of $8.25 million.  We have recorded the KCM Deferred Fee in “other liabilities” on our condensed consolidated balance sheet and this amount was included in “accrued fees relating to Series B Preferred Stock issuance” on our condensed consolidated statements of cash flows.

18

Note 7: Notes Payable

On the Effective Date, WMIH issued $110.0 million aggregate principal amount of its 13% Senior First Lien Notes due 2030 (the “First Lien Notes”) under an indenture, dated as of March 19, 2012 (the “First Lien Indenture”), between WMIH and Wilmington Trust, National Association, as Trustee. Additionally, WMIH issued $20.0 million aggregate principal amount of its 13% Senior Second Lien Notes due 2030 (the “Second Lien Notes” and, together with the First Lien Notes, the “Runoff Notes”) under an indenture, dated as of March 19, 2012 (the “Second Lien Indenture” and, together with the First Lien Indenture, the “Indentures”), between WMIH and Law Debenture Trust Company of New York, as Trustee. On January 5, 2017, The Law Debenture Trust Company of New York notified WMIH that it had completed the transfer of substantially all of its corporate trust business to Delaware Trust Company, and that Delaware Trust Company had become the successor trustee under the Second Lien Indenture. The Runoff Notes were scheduled to mature on March 19, 2030 and pay interest quarterly.

The Runoff Notes were secured by, and had a specified priority in right of payment in, a securities or deposit account into which WMIH was required to deposit distributions it received of Runoff Proceeds (as defined in the Indentures) (the “Collateral Account”). WMIH agreed to cause WMMRC, while the Runoff Notes were outstanding, to deposit all distributions, dividends or other receipts in respect of Runoff Proceeds Distributions (as defined in the Indentures) on the date paid to WMIH in the Collateral Account established in accordance with the terms of the Indentures. On any interest payment date, payments were made from the Collateral Account and from any other Runoff Proceeds Distributions in the priority set forth in the Indentures. In connection with certain interest payments due and payable in respect of the First and Second Lien Notes, WMIH elected, consistent with the terms of the Indentures, to issue payment-in-kind notes in lieu of making such interest payments in cash when no cash was available.

As of April 15, 2015, the First Lien Notes were fully redeemed by the Company, and on April 27, 2015, the First Lien Indenture was satisfied and discharged.

Second Lien Note principal outstanding totaled zero and approximately $18.8 million as of September 30, 2017 and December 31, 2016, respectively. Approximately $18.8 million of Second Lien Note principal was paid during the nine months ended September 30, 2017, and $2.9 million of Second Lien Note principal was paid during the year ended December 31, 2016. Interest on Second Lien Notes paid in cash totaled approximately $2.0 million during each of the nine months ended September 30, 2017 and 2016. As of September 29, 2017, the Second Lien Notes were fully redeemed by the Company, and on October 2, 2017, the Second Lien Indenture was satisfied and discharged. As a result of the satisfaction and discharge of the Second Lien Indenture the Collateral Account was subsequently closed and remaining funds transferred to cash and cash equivalents to be used for general corporate purposes.  For more information see Note 14: Subsequent Events.

Note 8: Financing Arrangements

As of September 30, 2017, the Company had no debt financing arrangements in place.  As of December 31, 2016, the Company had no debt financing arrangements in place other than the Second Lien Notes which are described in Note 7: Notes Payable.

Note 9: Capital Stock and Derivative Instruments

On the Effective Date, all shares of common and preferred equity securities previously issued by WMI were cancelled and extinguished. As of the Effective Date, and pursuant to WMIHC’s Amended and Restated Articles of Incorporation (the “Articles”), WMIHC was authorized to issue up to 500,000,000 shares of common stock and up to 5,000,000 shares of blank check preferred stock, in one or more series, each with a par value of $0.00001 per share. 200,000,000 shares of common stock were issued by WMIHC pursuant to the Plan and in reliance on Section 1145 of the United States Bankruptcy Code on the Effective Date.

On the Reincorporation Date all shares of common and preferred equity securities previously issued by WMIHC automatically were converted into one share of the substantially similar common stock, Series A Preferred Stock or Series B Preferred Stock, as applicable, of WMIH. At the same time, each outstanding option, right or warrant to acquire shares of WMIH’s common stock was converted into an option, right or warrant to acquire an equal number of shares of WMIH’s common stock under the same terms and conditions as the original options, rights or warrants. As of the Reincorporation Date, and pursuant to the Certificate of Incorporation, WMIH is authorized to issue up to 3,500,000,000 shares of common stock and up to 10,000,000 shares of blank check preferred stock, in one or more series, each with a par value of $0.00001 per share.

All of the terms of the agreements described below and attributed to WMIH are also attributable to WMIHC relative to the various agreements and instruments prior to the Reincorporation Date.  The references to WMIH are based on the date this Form 10-Q has been filed.  The references would have been to WMIHC prior to the Reincorporation Date.

19

On January 30, 2014, WMIH entered into (i) an investment agreement, dated as of January 30, 2014 (the “Investment Agreement”), with KKR Fund Holdings L.P. (“KKR Fund”) and, for limited purposes, KKR Management Holdings L.P., and (ii) an investor rights agreement, dated as of January 30, 2014 (the “Investor Rights Agreement”), with KKR Fund. On January 30, 2014, pursuant to the Investment Agreement, WMIH issued 1,000,000 shares of its Series A Preferred Stock having the terms, rights, obligations and preferences contained in the Articles of Amendment of WMIH dated January 30, 2014 for a purchase price equal to $11.1 million and has issued to KKR Fund warrants to purchase, in the aggregate, 61.4 million shares of WMIH’s common stock, 30.7 million of which have an exercise price of $1.32 per share and 30.7 million of which have an exercise price of $1.43 per share (together, the “Warrants”).  

The Series A Preferred Stock has rights substantially similar to those associated with WMIH’s common stock, with the exception of a liquidation preference, conversion rights and customary anti-dilution protections. The Series A Preferred Stock has a liquidation preference equal to the greater of (i) $10.00 per one million shares of Series A Preferred Stock plus declared but unpaid dividends on such shares and (ii) the amount that the holder would be entitled to in a relevant transaction had the Series A Preferred Stock been converted to common stock of WMIH.  The Series A Preferred Stock is convertible at a conversion price of $1.10 per share into shares of common stock of WMIH either at the option of the holder or automatically upon transfer by KKR Fund to a non-affiliated party. As a result of the calculation of a beneficial conversion feature as required by ASC topic 470 - Debt a preferred deemed dividend of $9.5 million was recorded in conjunction with the issuance of the Series A Preferred Stock. This preferred deemed dividend resulted in an increase to our accumulated deficit, and an increase in additional paid in capital. Further, KKR Fund, as the holder of the Series A Preferred Stock and the Warrants, has received other rights pursuant to the Investor Rights Agreement as described below.

The Warrants have a five-year term from the date of issuance and are subject to customary structural adjustment provisions for stock splits, combinations, recapitalizations and other similar transactions. KKR Fund’s rights as a holder of the Series A Preferred Stock and the Warrants, and the rights of any subsequent holder that is an affiliate of KKR Fund (together with KKR Fund, the “Series A Holders”) are governed by the Investor Rights Agreement.  

In accordance with the Investor Rights Agreement, except for the issuance of WMIH’s common stock in respect of the Warrants and the Series A Preferred Stock, KKR Fund and its affiliates shall not purchase or acquire any equity securities of WMIH or its subsidiaries without WMIH’s prior written consent, subject to certain exceptions.

The Investor Rights Agreement also provides the Series A Holders with registration rights, including three long form demand registration rights, unlimited short form demand registration rights and customary piggyback registration rights with respect to WMIH’s common stock (and WMIH’s common stock underlying the Series A Preferred Stock and the Warrants), subject to certain minimum thresholds, customary blackout periods and lockups of 180 days. On July 1, 2015, WMIH filed a shelf registration statement (the “Initial Registration Statement”) covering resales of Series B Preferred Stock and WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock.  On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding (as amended, the “Registration Statement”). The Registration Statement was declared effective under the Securities Act on November 25, 2015.

For as long as the Series A Holders beneficially own any shares of common stock of WMIH or Series A Preferred Stock or any of the Warrants, WMIH has agreed to provide customary Rule 144A information rights, to provide the Series A Holders with regular audited and unaudited financial statements and to allow the Series A Holders or their representatives to inspect WMIH’s books and records.

The foregoing description of (i) the Investor Rights Agreement is qualified in its entirety by reference to the Investor Rights Agreement, which was filed with the SEC as Exhibit 4.2 on Form 8-K on January 31, 2014, and incorporated by reference, (ii) the Warrants are qualified in their entirety by reference to the Form of Tranche A Warrant and Form of Tranche B Warrant, which were filed with the SEC as Exhibits 4.3 and 4.4, respectively, on Form 8-K on January 31, 2014, and incorporated by reference, (iii) the Series A Preferred Stock is qualified in its entirety by reference to the Articles of Amendment of WMIH dated January 30, 2014, which were filed with the SEC as Exhibit 4.5 on Form 8-K on January 31, 2014, and incorporated by reference, the Form of Series A Convertible Preferred Stock Certificate, which was filed with the SEC as Exhibit 4.6 on Form 8-K on January 31, 2014, and incorporated by reference, and the Certificate of Incorporation, which was filed with the SEC as Exhibit 3.1 on Form 8-K12G3 on May 13, 2015, and incorporated by reference, and (iv) the Investment Agreement is qualified in its entirety by reference to the Investment Agreement, which was filed with the SEC as Exhibit 10.1 on Form 8-K on January 31, 2014, and incorporated by reference.

On January 5, 2015, WMIH, in connection with an offering of 600,000 shares of its Series B Preferred Stock, filed with the Secretary of State of Washington Articles of Amendment of Articles of Incorporation (the “Articles of Amendment”) containing the Designation of Rights and Preferences of the 3% Series B Convertible Preferred Stock (the “Certificate of Designation”) creating the Series B Preferred Stock and designating the rights and preferences of the Series B Preferred Stock.

20

The foregoing descriptions of the Articles of Amendment and the Certificate of Designation are qualified in their entirety by the provisions of the Articles of Amendment and the Certificate of Designation, filed as Exhibits 3.1 and 4.1 to a Form 8-K on January 5, 2015, respectively, and incorporated by reference herein, and the Certificate of Incorporation, which was filed with the SEC as Exhibit 3.1 on Form 8-K12G3 on May 13, 2015, and incorporated by reference.

On January 5, 2015, in connection with the offering and pursuant to that certain Purchase Agreement, dated December 19, 2014 (the “Purchase Agreement”), by and among WMIH, Citigroup Global Markets Inc. (“Citi”) and KCM (KCM and Citi together, the “Initial Purchasers”), WMIH entered into a Registration Rights Agreement with the Initial Purchasers (the “Registration Rights Agreement”), pursuant to which WMIH has agreed that, subject to certain conditions, WMIH will use its reasonable efforts to (i) file a shelf registration statement covering resales of WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock no later than six months after January 5, 2015 (the “Issue Date”); (ii) file a shelf registration statement covering resales of the Series B Preferred Stock no later than one year after the Issue Date; and (iii) cause each of these shelf registration statements to be declared effective under the Securities Act. On July 1, 2015, WMIH filed the Initial Registration Statement covering resales of Series B Preferred Stock and shares of WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock. On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding. The Registration Statement was declared effective under the Securities Act on November 25, 2015.

The foregoing description of the Registration Rights Agreement is qualified in its entirety by the provisions of the Registration Rights Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.1 and incorporated by reference herein.

On January 5, 2015, in connection with the offering and pursuant to the Purchase Agreement, WMIH entered into an Escrow Agreement (the “Escrow Agreement”) with Citibank, N.A., as Escrow Agent (the “Escrow Agent”), pursuant to which WMIH caused to be deposited with the Escrow Agent the amount of $598.5 million, representing the proceeds of the offering of Series B Preferred Stock less offering fees payable on the Issue Date but before payment of other offering fees and expenses (including fees contingent upon future events). These net proceeds have been, and will be, released from escrow from time to time to WMIH as instructed by WMIH in amounts necessary to (i) pay certain fees related to the offering that may become payable to the Initial Purchasers, (ii) finance WMIH’s efforts to explore and/or fund, in whole or in part, acquisitions, whether completed or not, including reasonable attorney fees and expenses related thereto, accounting expenses, due diligence and financial advisor fees and expenses, (iii) pay certain amounts that may become payable to the holders of the Series B Preferred Stock upon the occurrence of certain put events, (iv) pay certain amounts that would become payable to the holders of the Series B Preferred Stock upon a mandatory redemption of the Series B Preferred Stock, and (v) pay certain expenses related to the offering. The entire net proceeds will be released from escrow as instructed by WMIH upon consummation of a Qualified Acquisition (as defined in Article VI of the Certificate of Incorporation). If a Qualified Acquisition is not consummated by January 5, 2018, and no Acquisitions (as defined in Article VI of the Certificate of Incorporation) have been consummated such that all of the Series B Preferred Stock remains outstanding and has not been converted to WMIH’s common stock, the outstanding Series B Preferred Stock becomes redeemable. The aggregate redemption costs, assuming all 600,000 shares remain outstanding, of all of the Series B Preferred Stock is $600.0 million, plus accrued and unpaid dividends, if any, whether or not declared. As of September 30, 2017 and December 31, 2016, the balance remaining in the escrow account totaled approximately $577.2 million and $572.9 million, respectively. The foregoing description of the Escrow Agreement is qualified in its entirety by the provisions of the Escrow Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.2 and incorporated by reference herein.

If the Series B Preferred Stock is redeemed or determined likely to be redeemed, the Company would be required to record a charge to earnings of approximately $97.8 million to accrete the value of the Series B Preferred Stock to the $600 million redemption value. The Company continues to pursue its business strategy of consummating an acquisition, and to explore potential financing and refinancing alternatives, and as of September 30, 2017, the Company has determined that recording for accretion to the Series B Preferred Stock’s redemption value is not required.

21

The Series B Preferred Stock are hybrid financial instruments that blend characteristics of both equity and debt securities.  The terms of the Series B Preferred Stock provide for either redemption of the principal and interest for cash at maturity or in the event of certain predetermined circumstances (“Forward Component”) or mandatory conversion into WMIH’s common stock (“Embedded Conversion Feature” or “ECF”).  The Series B Preferred Stock also embody contingent equity-linked share price protections on the ECF in the form of a variable conversion price based on a 20 trading day average of volume weighted-average price.  Upon any conversion of Series B Preferred Stock in accordance with its terms, the Series B Preferred Stock shall convert based on the outstanding principal and accrued interest, subject to a floor of $1.75 per share of WMIH’s common stock and a maximum of $2.25 per share.  As a result, the Company determined that the Series B Preferred Stock contain certain embedded derivative features.  Management’s evaluation resulted in the conclusion that the compound derivative financial instrument required bifurcation and separately accounted for the embedded conversion feature option as a derivative.  A derivative liability results primarily when the Company average stock price (as defined in the Certificate of Incorporation) exceeds the conversion price, including the ceiling conversion price of $2.25, as defined by the Certificate of Incorporation. A derivative asset results primarily when the Company’s average stock price is less than the conversion price, including the floor price of $1.75. The aggregate fair value of the embedded conversion feature was a liability of $66.2 million on the date of issuance of the Series B Preferred Stock.  At September 30, 2017, September 30, 2016 and December 31, 2016, the fair value of the embedded conversion feature was an asset of $111.9 million, a liability of $58.3 million and an asset of $80.7 million, respectively. Any change in the fair value of the embedded conversion feature will constitute other income or expense, as the case may be, in the applicable reporting period.  Upon conversion or redemption of the Series B Preferred Stock, any asset or liability related to the embedded conversion feature would be eliminated.During the year ended December 31, 2016, the fair value of the embedded conversion feature changed by $201.5 million and this change is included as other income in the condensed consolidated statement of operations for the year ended December 31, 2016. During the three and nine months ended September 30, 2017, the fair value of the derivative asset increased by $38.6 million and $31.2 million, respectively.   During the three and nine months ended September 30, 2016, the fair value of the derivative liability increased by $16.2 million and decreased by $62.6 million, respectively.  The change in fair value is included as other income or expense, as the case may be, in the condensed consolidated statement of operations for the respective periods.

On June 1, 2017 and on June 1, 2016, WMIH issued restricted stock grants to members of the Board totaling $0.4 million and $0.5 million, respectively, of aggregate fair value.  The restricted shares noted above vest over a three-year period.

On May 15, 2015, WMIH issued restricted stock grants to our Chief Executive Officer, William C. Gallagher, and our Chief Operating Officer, Thomas L. Fairfield, in conjunction with employment agreements totaling $9.8 million of aggregate fair value (the “Exec Grants”) based on the $2.76 trading price of WMIH shares at the close of business on the date issued.  WMIH may be required to issue additional shares if the conversion price applicable to the Series B Preferred Stock is less than $2.25 per share. The Exec Grants will vest in full and will be recognized as compensation expense upon the consummation of a Qualified Acquisition, subject to the executives continued employment with the Company until such time. The foregoing description of the restricted stock agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Gallagher Restricted Stock Agreement and the Fairfield Restricted Stock Agreement (the “Executive Agreements”), which were filed as Exhibit 10.3 and Exhibit 10.5, respectively, of Form 8-K12G3 filed on May 13, 2015 and incorporated herein by reference.  The fair market value of the Exec Grants as of September 30, 2017 approximates $4.3 million as a result of the terms of the Executive Agreements which would result in additional share issuances if the value is below $2.25 per share limited to a maximum of shares based on a minimum conversion price of $1.75 per share.  The stock price was $0.95 per share at the close of the market on September 30, 2017 and if the Exec Grants had vested then the minimum conversion price of $1.75 per share would have been utilized, therefore, a total of 1,015,874 additional shares (the “Exec Additional Shares”) would have been required to be issued, 507,937 additional shares each to both Mr. Gallagher and Mr. Fairfield.

22

The unamortized value related to the unvested restricted share grants totals $5.0 million and $7.7 million at September 30, 2017 and December 31, 2016, respectively.

The unamortized value of $5.0 million at September 30, 2017, if all are ultimately vested, would be amortized according to the following schedule.  The fair value of the Exec Grants will vest and be recognized on the date of the consummation of a Qualified Acquisition.  Additionally, any Exec Additional Shares required to be issued, would be issued and immediately vest on the date of the consummation of a Qualified Acquisition.  

Amortization Schedule (in thousands)	September 30, 2017 unamortized dollar value
4th quarter 2017	$	103
1st quarter 2018		98
2nd quarter 2018		71
3rd quarter 2018		71
4th quarter 2018		71
1st quarter 2019		66
2nd quarter 2019		36
3rd quarter 2019		36
4th quarter 2019		36
1st quarter 2020		31
Unamortized fair-value - subject to vesting schedule		619
Unamortized fair-value - event dependent		4,343
Total unamortized dollar value		4,962

Equity-based compensation totaled $0.4 million and $0.5 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. The restricted stock awards were issued at the fair market value determined to be the trading price at the close of business on the respective date the awards were granted.

A summary of WMIH’s restricted stock award activity for the nine months ended September 30, 2017 and year ended December 31, 2016 is presented below:

	Number of restricted stock awards outstanding		Weighted-average grant date fair value		Aggregate fair value (in thousands)
Outstanding—January 1, 2016		6,168,035		2.1230		13,095
Restricted stock awards granted during 2016		212,765		2.3500		500
Restricted stock awards released or forfeited during 2016		—		—		—
Outstanding—December 31, 2016		6,380,800	$	2.1306	$	13,595
Restricted stock awards granted during 2017		333,332		1.2000		400
Restricted stock awards released or forfeited during 2017		—		—		—
Outstanding—September 30, 2017		6,714,132	$	2.0844	$	13,995

23

WMIH has issued the total number of shares subject to the restricted stock grants, however, until vested they are subject to repurchase. Shares subject to repurchase totaled 4,053,640 on September 30, 2017 and 4,039,591 on December 31, 2016. The Exec Grants vest upon future events, and are not time specific, and for this reason we have used 1st quarter 2018 as the vesting date in the following table as this date corresponds with the Series B Preferred Stock potential redemption date.  The shares subject to repurchase at September 30, 2017 will vest, assuming circumstances remain unchanged, according to the following schedule:

Vesting schedule of shares subject to repurchase	September 30, 2017 unvested shares
4th quarter 2017		—
1st quarter 2018		3,774,684
2nd quarter 2018		—
3rd quarter 2018		—
4th quarter 2018		—
1st quarter 2019		167,848
2nd quarter 2019		—
3rd quarter 2019		—
4th quarter 2019		—
1st quarter 2020		111,108
Total unvested shares		4,053,640

Pursuant to a restricted stock agreement, WMIH has the right, but not the obligation, to repurchase any unvested (but issued) shares of common stock subject to the restricted stock agreement at $0.0001 per share upon the termination of service in the case of a director, or in the case of the Exec Grants, on January 5, 2018 if the Series B Preferred Stock are redeemed or as a result of certain circumstances as defined by the terms of the Exec Grants.

A summary of WMIH’s restricted shares issued and subject to repurchase as of September 30, 2017 and December 31, 2016 is presented below:

Vesting schedule of shares subject to repurchase	Unvested shares
Shares subject to repurchase—January 1, 2016		4,197,396
Shares issued subject to vesting during 2016		212,765
Unvested shares repurchased during 2016		—
Shares vested during 2016		(370,570	)
Shares subject to repurchase—December 31, 2016		4,039,591
Shares issued subject to vesting during 2017		333,332
Unvested shares repurchased during 2017		—
Shares vested during 2017		(319,283	)
Shares subject to repurchase—September 30, 2017		4,053,640

On June 1, 2017 and June 1, 2016, WMIH issued 333,332 and 212,765 restricted stock grants, respectively, to members of the Board totaling $0.4 million and $0.5 million, respectively, of aggregate fair value.  The share price was determined based on the closing sales price of $1.20 and $2.35 on the respective dates of the awards.

As of September 30, 2017 and December 31, 2016, 206,714,132 and 206,380,800, respectively, of WMIH’s common stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 1,000,000 shares of the Series A Preferred Stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 600,000 shares of the Series B Preferred Stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 61,400,000 warrants to purchase WMIH’s common stock were issued and outstanding.

See Note 12: Net Income Per Common Share for further information on shares used for EPS calculations.

Note 10: Pending Litigation

As of September 30, 2017, the Company was not a party to, or aware of, any pending legal proceedings or investigations requiring disclosure at this time.

24

Note 11: Restriction on Distribution of Net Assets from Subsidiary

WMMRC has net assets totaling $17.7 million and $33.8 million as of September 30, 2017 and December 31, 2016, respectively. These net assets are not immediately available for distribution to WMIH due to restrictions imposed by trust agreements, and the requirement that the Insurance Division of the State of Hawaii must approve dividends from WMMRC. Prior to September 29, 2017, when the Second Lien Notes were fully redeemed by the Company and October 2, 2017 when the Second Lien Indenture was satisfied and discharged, distributions from WMMRC to WMIH were further restricted by the terms of the Runoff Notes and Indentures described in Note 7: Notes Payable.  As more fully described in Note 14: Subsequent Events, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

Note 12: Net Income (Loss) Per Common Share

In calculating earnings per share, the Company follows the two-class method, which distinguishes between the classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Series A Preferred Stock and the Series B Preferred Stock are treated as one class for purposes of applying the two-class method, because they have substantially equal rights and share equally on an as converted basis with respect to income available to WMIH common stockholders.

Basic net income per WMIH share attributable to common stockholders is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding for the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these shares are subject to repurchase.  Basic net income attributable to common stockholders is computed by deducting preferred dividends and the basic calculation of undistributed earnings attributable to participating securities from net income.

Diluted net income per WMIH share is computed by dividing net income attributable to WMIH’s common stockholders for the period by the weighted-average number of common shares outstanding after subtracting the weighted-average of any incremental unvested restricted shares outstanding and adding any potentially dilutive common equivalent shares outstanding during the period, if dilutive. Potentially dilutive common equivalent shares are comprised of the incremental common shares issuable upon the exercise of warrants for WMIH’s common stock and the potential conversion of preferred shares to common shares and the dilutive effect of unvested restricted stock. Diluted net income attributable to common stockholders is computed by deducting preferred dividends and the diluted calculation of undistributed earnings attributable to participating securities from net income.

The dilutive effect of outstanding warrants and restricted stock subject to repurchase is reflected in diluted earnings per share by application of the treasury stock method. There would be no dilutive effects from any equity instruments for periods presented reflecting a net loss, therefore diluted net loss per share would be the same as basic net loss for periods that reflect a net loss attributable to common stockholders. Certain unvested restricted shares and convertible preferred stock are excluded from the calculation of diluted earnings per share until the non-market based contingency occurs.

The following table presents the calculation of basic net (loss) income per share for periods presented:

(in thousands, except per share data):

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Numerator for basic net income (loss) per share:
Net income (loss)	$	38,411		$	(16,645	)	$	34,876		$	61,314
Less: Series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Less: undistributed earnings attributed to participating securities (basic calculation)		(21,541	)		—			(13,581	)		(27,625	)
Basic net income (loss) attributable to common stockholders	$	12,370		$	(21,145	)	$	7,795		$	20,189
Denominator for basic net income (loss) per share:
Weighted-average shares outstanding		206,714,132			206,380,800			206,529,762			206,261,993
Weighted-average unvested restricted shares outstanding		(4,053,640	)		(4,039,591	)		(3,956,447	)		(4,014,718	)
Denominator for basic net income (loss) per share		202,660,492			202,341,209			202,573,315			202,247,275
Basic net income (loss) per share attributable to common stockholders	$	0.06		$	(0.10	)	$	0.04		$	0.10

25

The following table presents the calculation of diluted net (loss) income per share for periods presented:

(in thousands, except per share data):

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Numerator for diluted net income (loss) per share:
Net income (loss)	$	38,411		$	(16,645	)	$	34,876		$	61,314
Less: Series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Less: undistributed earnings attributed to participating securities (diluted calculation)		(21,541	)		—			(13,581	)		(26,241	)
Diluted net income (loss) attributable to common stockholders	$	12,370		$	(21,145	)	$	7,795		$	21,573
Denominator for diluted net income (loss) per share:
Weighted-average shares outstanding		206,714,132			206,380,800			206,529,762			206,261,993
Weighted-average unvested restricted shares outstanding		(4,053,640	)		(4,039,591	)		(3,956,447	)		(4,014,718	)
Effect of dilutive potential shares		10,065,629			—			10,065,629			35,327,739
Denominator for diluted net income (loss) per share		212,726,121			202,341,209			212,638,944			237,575,014
Diluted net income (loss) per share attributable to common stockholders	$	0.06		$	(0.10	)	$	0.04		$	0.09

The following table summarizes shares subject to exercise or vesting conditions as more fully described in Note 9: Capital Stock and Derivative Instruments.  These shares could potentially be dilutive in future periods if we realize net income attributable to common and participating stockholders and the contingent or unvested stock is converted to WMIH common stock.  The cash payment of $84.4 million, which would be received upon exercise of the warrants, has not been considered as an offset to the dilutive shares under warrants outstanding below.

	Potential dilution to common stock
	Minimum shares		Maximum shares
Restricted shares subject to vesting		4,053,640		4,053,640
Series A Preferred Stock		10,065,629		10,065,629
Warrants outstanding		61,400,000		61,400,000
Dilutive shares to be issued if Series B Preferred Stock conversion is below $2.25		—		1,015,872
Series B Preferred Stock		266,666,667		342,857,143
Potential dilutive shares if converted to common stock		342,185,936		419,392,284

26

Note 13: Fair Value Measurement

We use a fair-value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We use a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

• Level 1 — Inputs to the valuation methodology are quoted prices for identical assets or liabilities traded in active markets;

• Level 2 — Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market corroborated inputs; and

• Level 3 — Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Determining which category an asset or liability falls within the fair value accounting guidance hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter. Assets and liabilities measured at fair value on a recurring basis are summarized as follows:

The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of September 30, 2017:

	(in thousands)
Assets	Level 1		Level 2		Level 3		September 30, 2017
Derivative embedded conversion feature	$	—	$	—	$	111,877	$	111,877

The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of December 31, 2016:

	(in thousands)
Assets	Level 1		Level 2		Level 3		December 31, 2016
Derivative embedded conversion feature	$	—	$	—	$	80,651	$	80,651

The following table shows the change in Level 3 assets and liabilities measured at fair value on a recurring basis for the year ended December 31, 2016 and the nine months ended September 30, 2017:

	Derivative asset (liability) embedded conversion feature (in thousands)
Balance, January 1, 2016	$	(120,848	)
Unrealized gain on change in fair value		201,499
Balance, December 31, 2016		80,651
Unrealized gain on change in fair value		31,226
Balance, September 30, 2017	$	111,877

On January 5, 2015, WMIH raised $600.0 million of capital (less transaction costs) through the issuance of 600,000 shares of Series B Preferred Stock. The shares carry a liquidation preference of $1,000 per share, equal to the purchase price, and a mandatory redemption right three years from issuance date at a price equal to the purchase price, plus accrued dividends at 3% per annum.

The proceeds from the issuance of the Series B Preferred Stock are to be used to pursue strategic acquisitions. If one or more acquisitions are made on or prior to January 5, 2018 (or such later time as may be permitted pursuant to the terms governing the Series B Preferred Stock), then some or all of such Series B Preferred Stock shall be mandatorily converted into common stock of WMIH at a conversion price that is the lesser of:

i) $2.25 per share of WMIH common stock; and

ii) the arithmetic average of daily volume weighted-average prices of WMIH’s common stock during the 20 trading day period ending on the trading day immediately preceding the public announcement by WMIH of its entry into a definitive agreement for such acquisition, subject to a floor of $1.75 per share of WMIH common stock.

27

The mandatory conversion feature of the Series B Preferred Stock is subject to fair value accounting and, in connection therewith, since the time of issuance, the Company has used a binomial lattice option model to determine fair value of the Series B Preferred Stock. The fair value of the Series B Preferred Stock embedded conversion feature is revalued each balance sheet date utilizing the binomial lattice option model. The fair value computations are reported in the condensed consolidated statement of operations as unrealized gain or (loss) on change in fair value of derivative embedded conversion feature, respectively.

Such binomial lattice option model utilizes several inputs to determine such fair value. Such inputs include WMIH’s common stock price as of each reporting date, as well as variable assumptions including, but not limited to, volatility of our stock price, the risk free interest rate, the probability that the Company consummates a Qualified Acquisition and the time of completing any such Qualified Acquisition.

As of September 30, 2017 the following variable assumptions were included in the binomial option model: expected stock price volatility over the term of the convertible preferred securities was estimated at 60%, as compared to 40% as of December 31, 2016; the risk-free interest rate was estimated at 1.1% as compared to 0.6% as of December 31, 2016; the probability of the Company consummating a Qualified Acquisition was estimated at 50% as compared with 90% as of December 31, 2016; and the anticipated timing of the Company consummating a Qualified Acquisition was estimated at 6 months from both September 30, 2017 and December 31, 2016.

The foregoing assumptions were adopted by the Company’s management in order to determine the market value of the embedded conversion feature applicable to the Series B Preferred Stock. Such assumptions necessarily involved and continue to involve the exercise of management’s judgement, as well as the judgement of the third party the Company uses in connection with the embedded derivative valuation process and for no other purpose. Such assumptions are monitored and adjusted from time to time.  As assumptions and circumstances change, results may differ and past assumptions and valuations are not indicative of future assumptions or results.

Our reported net income attributable to common and participating stockholders (“Year to Date Net Income” or “Year to Date Net Loss”) was approximately $21.4 million for the nine months ended September 30, 2017. The change to our net income attributable to common and participating stockholders resulting from the calculation of the fair value of the embedded conversion feature is analyzed at the end of each reporting period to assess the impact of a 10% change to the various inputs and the result of each change to Year to Date Net Income is highlighted in the following scenarios. If the closing stock price of our common stock had been 10% lower, our Year to Date Net Income would have been approximately $17.7 million higher ($39.1 million). If the closing stock price of our common stock had been 10% higher, our Year to Date Net Income would have been approximately $17.6 million less ($3.8 million). If our volatility assumption on September 30, 2017 had been 10% lower, our Year to Date Net Income would have been approximately $3.0 million higher ($24.4 million). If our volatility assumption had been 10% higher, our Year to Date Net Income would have been approximately $3.3 million less ($18.1 million). If our probability of a transaction occurring assumption on September 30, 2017 had been 10% lower, our Year to Date Net Income would have been approximately $22.4 million less resulting in Year to Date Net Loss of $1.0 million. If our probability of a transaction occurring assumption had been 10% higher, our Year to Date Net Income would have been approximately $22.4 million higher ($43.8 million).

Note 14: Subsequent Events

On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC.  On September 13, 2017, the Insurance Division of the State of Hawaii approved this commutation.

On September 13, 2017, the Insurance Division of the State of Hawaii approved a transfer of up to $10.7 million from funds which were held in trust at WMMRC as of September 30, 2017.  As of the date of the filing of this Form 10-Q, these funds have not been transferred to WMIH; however, they are no longer held in trust and are available for general corporate purposes.

On October 2, 2017, the Second Lien Indenture was satisfied and discharged. As a result of the satisfaction and discharge of the Second Lien Indenture the Collateral Account was subsequently closed and remaining funds transferred to cash and cash equivalents to be used for general corporate purposes. For more information see Note 7: Notes Payable.

28

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our financial statements and the related notes, included in Item 1 of Part I of this Quarterly Report on Form 10-Q. The following is a discussion and analysis of our results of operations for the three and nine months ended September 30, 2017 and 2016 and financial condition as of September 30, 2017 and December 31, 2016 (dollars in thousands, except share and per share data and as otherwise indicated).

References as used herein, unless the context requires otherwise, to (i) the “Company,” “we,” “us,” or “our” refer to WMIH Corp. (formerly WMI Holdings Corp.) and its subsidiaries on a consolidated basis; (ii) “WMIH” refers only to WMIH Corp., without regard to its subsidiaries; (iii) “WMIHC” refers only to WMI Holdings Corp., without regard to its subsidiaries; (iv) “WMMRC” refers to WM Mortgage Reinsurance Company, Inc. (a wholly-owned subsidiary of WMIH); and (v) “WMIIC” refers to WMI Investment Corp. (a wholly-owned subsidiary of WMIH).

FORWARD-LOOKING STATEMENTS AND INFORMATION

This quarterly report includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact included in this report that address activities, events, conditions or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business and these statements are not guarantees of future performance. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “strategy,” “future,” “opportunity,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks are identified and discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 under Risk Factors in Part I, Item 1A. These risk factors will be important to consider in determining future results and should be reviewed in their entirety. These forward-looking statements are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and we do not undertake to update any forward-looking statement, except as required by law. Therefore, you should not rely on these statements being current as of any time other than the time at which this document was filed with the Securities and Exchange Commission.

OVERVIEW

Our Business Strategy and Operating Environment

WMIH Corp. (“WMIH”) is a corporation duly organized and existing under the laws of the State of Delaware.  On May 11, 2015, WMIH merged with its parent corporation, WMI Holdings Corp., a Washington corporation (“WMIHC”), with WMIH as the surviving corporation in the merger (the “Merger”).  The Merger occurred as part of the reincorporation of WMIHC from the State of Washington to the State of Delaware effective May 11, 2015 (the “Reincorporation Date”).

WMIH, formerly known as WMIHC and Washington Mutual, Inc. (“WMI”), is the direct parent of WM Mortgage Reinsurance Company, Inc. (“WMMRC”) and WMI Investment Corp.(“WMIIC”), which has no assets or liabilities.  Since emergence from bankruptcy on March 19, 2012 (the “Effective Date”), we have had limited operations other than WMMRC’s legacy reinsurance business, which is being operated in runoff mode. We continue to operate WMMRC’s business in runoff mode and our primary strategic objective is to consummate one or more acquisitions of an operating business, either through a merger, purchase, business combination or other form of acquisition, and grow our business.

We continue to seek, identify and evaluate acquisition opportunities of varying sizes across an array of industries for the purpose of facilitating an acquisition by WMIH of one or more operating businesses. Our management team meets regularly with our Board of Directors (the “Board” or “Board of Directors”), the Finance Committee of the Board (the “Finance Committee”) and the Corporate Strategy and Development Committee of the Board (the “CS&D Committee”), as the case may be, to discuss and evaluate potential acquisition targets. During the nine months ended September 30, 2017 and the year ended December 31, 2016, the Finance Committee, the CS&D Committee and the Board of Directors met formally and informally numerous times to assess various opportunities. We have focused primarily on acquisition targets in the financial services industry, including targets with consumer finance, commercial finance, specialty finance, leasing and insurance operations. We also may review potential targets in other industries, such as information technology, industrials, business services, healthcare and other sectors.

29

On January 5, 2015, we announced that WMIH had completed an offering (the “Series B Preferred Stock Financing”) of 600,000 shares of its 3% Series B Convertible Preferred Stock, par value $0.00001, liquidation preference $1,000 per share (the “Series B Preferred Stock”) in the amount of aggregate gross proceeds equal to $600 million. Net proceeds of $598.5 million were deposited into an escrow account and have been, and will be, released from escrow to us from time to time in amounts needed to finance our efforts to explore and fund, in whole or in part, certain acquisitions, whether completed or not, including reasonable attorney fees and expenses, accounting expenses, due diligence and financial advisor fees and expenses. For further information on the Series B Preferred Stock Financing, see Note 9: Capital Stock and Derivative Instruments, to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

WMIH continues to evaluate acquisition opportunities and work with our strategic partner, an affiliate of KKR & CO. L.P. (together with its affiliates, “KKR”), to identify, consider and evaluate potential mergers, acquisitions, business combinations and other strategic opportunities. As of September 30, 2017, and through the date of the filing of this Form 10-Q, we had not entered into definitive documentation relating to an acquisition or consummated an acquisition. If we have not entered into definitive documentation relating to an Acquisition (as defined below), or consummated a Qualified Acquisition (as defined below), on or prior to January 5, 2018, we will be required to redeem all of the outstanding Series B Preferred Stock on January 5, 2018 (the “Series B Redemption Date”). A “Qualified Acquisition” means an Acquisition (as defined below) that, taken together, with prior Acquisitions (if any), collectively utilizes aggregate net proceeds of the Series B Preferred Stock Financing of $450 million. “Acquisition” means any acquisition by the Company (or any of its direct or indirect wholly-owned subsidiaries), in a single transaction or a series of transactions, whether by purchase, merger or otherwise, of all or substantially all of the assets of, or equity interests in, or a business line, unit or division of, any person.

Assuming all 600,000 shares are outstanding on the Series B Redemption Date, the aggregate redemption cost will be $600.0 million, plus accrued and unpaid dividends, if any, whether or not declared. If, prior to the Series B Redemption Date, we publicly announce that we have entered into a definitive agreement for an Acquisition, the Series B Redemption Date will be extended to the earlier to occur of (i) July 5, 2018, and (ii) the day immediately following (x) the date such definitive agreement is terminated or (y) the date such Acquisition is closed. The consummation of an Acquisition would result in the mandatory conversion of some or all of the Series B Preferred Stock into common stock in accordance with provisions set forth in Article VI of the Certificate of Incorporation.

While we remain focused on identifying an Acquisition and executing definitive documentation relating to or consummating an Acquisition on or prior to the Series B Redemption Date we can provide no assurance that we will be able to do so and, if so, on what terms. In the event we are required to redeem the Series B Preferred Stock, our available cash, absent a new financing, will be substantially depleted and our ability to (i) utilize our net operating loss (“NOL”) carry-forward, (ii) access significant alternative uses of capital and (iii) to continue business operations would likely be significantly and adversely impaired.

As previously disclosed, the Finance Committee is authorized, among other things, (i) to review the long-term financial structure, objectives and policies of the Company, and to make recommendations to the Board regarding such structure, objectives and policies, if appropriate, (ii) to evaluate the financing requirements of the Company and management’s proposed financing and refinancing plans and to recommend to the Board those actions, authorizations, filings and applications necessary and appropriate to enable management to execute such plans and (iii) to consider and make recommendations to the Board regarding the terms, timing, amount and other material factors (e.g., potential dilution of existing shareholders and the impact of any financing or restructuring on the Company’s tax attributes under Section 382 of the Code), related to the possible restructuring or amendment of the Company’s outstanding equity securities, issuance of new equity securities in one or more private or public transactions, redemption of outstanding securities, or other transactions related to the Company’s outstanding securities, capital structure or fundraising to meet the Company’s future liquidity and capital resources needs, in each case as the Finance Committee deems appropriate.

In connection with the foregoing, and as has previously been disclosed, the Finance Committee has retained financial advisors to help the Company assess its overall capital structure and liquidity requirements and to develop potential financing alternatives. As part of these efforts, as of the date of this report, the Finance Committee and its advisers are engaged in discussions relating to, among other things, a possible restructuring or amendment of the Series B Preferred Stock. We can provide no assurance we will be able to restructure, amend or refinance the Series B Preferred Stock and, if so, on what terms.

With respect to our current operations, the Company currently operates a single business through its subsidiary, WMMRC, whose sole activity is the reinsurance of mortgage insurance policies.  WMMRC has been operated in runoff mode since September 26, 2008. Since that date, WMMRC has not underwritten any new policies (and by extension any new risk). WMMRC, through predecessor companies, began reinsuring risks in 1997 and continued reinsuring risks through September 25, 2008.

30

All of WMMRC’s reinsurance agreements are on an excess of loss basis, except for a reinsurance treaty with Genworth Mortgage Insurance Corporation during 2008, which is reinsured on a 50% quota share basis. Pursuant to the excess of loss reinsurance treaties, WMMRC reinsures a second loss layer which ranges from 5% to 10% of the risk in force in excess of the primary mortgage insurer’s first loss percentages which range from 4% to 5%. Each calendar year, or book year, is treated separately from other years when calculating losses. In return for accepting a portion of the risk, WMMRC receives, net of ceding commission, a percentage of the premium that ranges from 25% to 40%.

WMMRC previously commuted three reinsurance agreements, one each, in 2009, 2012 and 2014, respectively, and the related trust assets were distributed in accordance with the commutation agreements.  On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC.  On September 13, 2017, the Insurance Division of the State of Hawaii approved this commutation and a distribution of up to $10.7 million to WMIH. As of the date of the filing of this Form 10-Q, this distribution has not yet been completed.   For more information see Note 14: Subsequent Eventsto the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. We also may seek opportunities to extract excess capital through commutation of one or more of WMMRC’s remaining reinsurance agreements or otherwise, with a view toward accelerating the distribution of trust assets in excess of the amounts needed to pay claims.

Beginning in 2006, the U.S. housing market and related credit markets experienced a multi-year downturn. During that period, housing prices declined materially, credit guidelines tightened, delays in mortgage servicing and foreclosure activities occurred, and deterioration in the credit performance of mortgage loans occurred. In addition, the macro-economic environment during that period demonstrated limited economic growth, stubbornly high unemployment, and limited median wage gains. Beginning in 2012, home prices began to rise again.  The current outlook for the housing market is optimistic with low interest rates, steady employment growth, increased household formation rates and less restrictive credit conditions. Nevertheless, WMMRC’s operating environment remains somewhat uncertain as much of its results over the next two years will be directly affected by the inventory of pending defaulted mortgages at its ceding companies arising primarily from mortgages originated in calendar years 2007 and 2008. However, its financial exposure to that environment has been materially reduced as the remaining net aggregate risk exposure has decreased due to the runoff nature of its operations.

Our Financial Information

The financial information in this Quarterly Report on Form 10-Q has been derived from our condensed consolidated financial statements.

Critical Accounting Policies

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which requires management to make estimates and assumptions that affect reported and disclosed amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. We believe that the critical accounting policies set forth in the accompanying condensed consolidated financial statements describe the more significant judgments and estimates used in the preparation of our condensed consolidated financial statements. These accounting policies pertain to premium revenues and risk transfer, valuation of investments, loss and loss adjustment expense reserves, our values under fresh start accounting, the resulting loss contract reserve and the valuation of the derivative instrument relating to the embedded conversion feature of the Series B Preferred Stock. If actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting policies, there could be a material effect on our results of operations and financial condition.

Recently issued accounting standards and their impact on the Company have been presented under “New Accounting Pronouncements” in Note 2: Significant Accounting Policies to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Segments

The Company manages its business on the basis of one operating segment, mortgage reinsurance, in accordance with GAAP. Within the mortgage reinsurance segment, our current risks arise solely from the reinsurance of mortgage insurance policies that were placed on certain residential mortgage loans prior to the bankruptcy of WMI. The majority of these policies were required by mortgage lenders as a stipulation to approve the mortgage loans. The mortgage insurance policies protect the beneficiaries of the policy from all or a portion of default-related losses.

Overview of Revenues and Expenses

Because WMIH has no current significant operations of its own, its cash flow is derived almost entirely from earnings on its investment portfolio, and payments it receives from, and dividends paid by, WMMRC. All dividends received by WMIH from

31

WMMRC that constituted Runoff Proceeds, historically, were required to be distributed to holders of WMIH’s Second Lien Notes in accordance with the terms of the Second Lien Indenture as described below in this Item 2 under “Notes Payable.”  As of September 29, 2017, the Second Lien Notes were fully redeemed by the Company and the Second Lien Indenture was satisfied and discharged, therefore future distributions from WMMRC to WMIH will be available for general corporate purposes. 

WMMRC’s revenues consist primarily of the following:

• net premiums earned on reinsurance contracts;

• positive changes to (and corresponding releases from) loss reserves; and

• net investment income and net gains (losses) on WMMRC’s investment portfolio.

WMMRC’s expenses consist primarily of the following:

• underwriting expenses; and

• general and administrative expenses.

32

Results of Operations for the three and nine months ended September 30, 2017 and September 30, 2016  

For the three and nine months ended September 30, 2017, we reported a net operating loss of $0.3 million and net operating income of $3.5 million, respectively.  This compares to net operating losses of $0.4 million and $1.3 million for the three and nine months ended September 30, 2016, respectively. The components that gave rise to a net operating loss for the three months and net operating income for the nine months ended September 30, 2017 and net operating losses for the three and nine months ended September 30, 2016 are summarized in the tables below under the Net Income (Loss) section.  The most significant variances between the comparative three month periods ended September 30, 2017 and September 30, 2016 include (i) increased revenue of approximately $1.0 million, (ii) an increase in general and administrative expense of $0.8 million, (iii) a minimal change in interest expense of $0.1 million, (iv) a net decrease in underwriting expense of $0.2 million and (v) a reduction of the loss contract reserve of $0.2 million during the three months ended September 30, 2017 versus a reduction of $0.5 million during the same period in 2016. The loss contract reserve decrease, during the three and nine months ended September 30, 2017, is attributed primarily to changes in the expected timing of assets being released from trust accounts held at WMMRC which are discounted to present value. When assets are expected to be released from trust earlier than anticipated, a smaller present value discount is applied to the loss contract reserve, thus reducing the reserve.  For more information see Note 14: Subsequent Events to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The most significant variances between the comparative nine month periods ended September 30, 2017 and September 30, 2016 include (i) an increase in revenue of approximately $1.7 million, (ii) an increase in general and administrative expense of $1.0 million (iii) a reduction in interest expense of $0.2 million, (iv) a net decrease in underwriting expense of $0.6 million and (v) a reduction of the loss contract reserve of $5.6 million during the nine months ended September 30, 2017 versus a reduction of $2.3 million during the same period in 2016.

For the three months ended September 30, 2017, we reported net income attributable to common and participating stockholders of $33.9 million compared to a net loss attributable to common and participating stockholders of $21.1 million for the three months ended September 30, 2016. This $55.0 million reduction in net loss attributable to common and participating stockholders, when comparing the three months ended September 30, 2017 to the three months ended September 30, 2016, is primarily the result of the change in fair value of an embedded derivative.  This embedded derivative was recorded as a result of the variable conversion feature in our Series B Preferred Stock and the change in fair value is reflected on our condensed consolidated statements of operations as the other income or expense item, “change in fair value of derivative - embedded conversion feature” which resulted in $38.6 million of other income for the three months ended September 30, 2017, compared to other expense of $16.2 million for the three months ended September 30, 2016. This item is solely attributable to a change in fair value of the derivative–embedded conversion feature and is a non-cash item. Fluctuations in the price of WMIH’s common stock directly impact the fair value of the derivative instrument. The fair value of this derivative instrument is analyzed each period and should not be relied upon to produce changes of this magnitude on an on-going basis as it could also result in a non-cash expense or benefit in future periods.  The fair value of the embedded conversion feature will become equity upon conversion of the Series B Preferred Stock, or be reduced to zero upon redemption of the Series B Preferred Stock, as the case may be. For additional details on the derivative–embedded conversion feature, see Note 9: Capital Stock and Derivative Instruments and Note 13: Fair Value Measurement to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.In addition to this change, several other items had a favorable impact on earnings for the three months ended September 30, 2017, including net revenues and decreased interest expense. Our revenues increased primarily due to improved earnings on our investment portfolio including the restricted cash equivalents. Interest expense decreased as a result of the reduction in our Runoff Note balances discussed further below.  The loss contract reserve decreased by $0.2 million in the three months ended September 30, 2017, as compared to $0.5 million in the three months ended September 30, 2016, resulting in a positive improvement to operating income.  Underwriting expenses were lower on a comparative basis, primarily due to smaller increases in premium deficiency reserves in the three months ended September 30, 2017 as compared to increases in premium deficiency reserves during the three months ended September 30, 2016 as further described below in this Item 2 of Part I, under “Losses or Benefits Incurred and Losses and Loss Adjustment Expenses.”

For the nine months ended September 30, 2017, we reported net income attributable to common and participating stockholders of $21.4 million compared to net income attributable to common and participating stockholders of $47.8 million for the nine months ended September 30, 2016. This $26.4 million decline in net income attributable to common and participating stockholders, when comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016, is primarily the result of the change in fair value of an embedded derivative. This embedded derivative was recorded as a result of the variable conversion feature in our Series B Preferred Stock and the change in fair value is reflected on our condensed consolidated statements of operations as the other income or expense item “change in fair value of derivative embedded conversion feature” which resulted in $31.2 million of other income for the nine months ended September 30, 2017, compared to other income of $62.6 million for the nine months ended September 30, 2016. This item is solely attributable to a change in fair value of the derivative embedded conversion feature, which is further described above. In addition to this change, the other large variance was the positive impact from the loss contract reserve decreasing by $5.6 million for the nine months ended September 30, 2017, as compared to $2.3 million in the same period in 2016.

33

The total revenue for the three and nine months ended September 30, 2017 was $2.3 million and $5.9 million, respectively, compared to revenue of $1.3 million and $4.2 million, respectively, for the three and nine months ended September 30, 2016. The increase in revenue is attributable to improved earnings on our investment portfolio including the restricted cash equivalents, however, WMMRC continues to experience decreasing premium revenue due to operating in runoff mode. In addition, because WMMRC is operating in runoff mode, we expect premiums-earned revenue to continue to decrease, as no new business is being undertaken.

Underwriting expenses (defined as losses and loss adjustment expenses and ceding commission expenses) decreased by $0.2 million to a $0.1 million expense for the three months ended September 30, 2017 compared to an expense of $0.3 million for the three months ended September 30, 2016. Underwriting expenses decreased by $0.6 million to a $0.3 million expense for the nine months ended September 30, 2017 compared to an expense of $0.9 million for the nine months ended September 30, 2016. This decrease was primarily the result of the $0.5 million and $1.0 million additional premium deficiency reserves which were recorded during the three and nine months ended September 30, 2016, respectively, compared to a minimal change and a $0.2 million increase in the premium deficiency reserve during the three and nine months ended September 30, 2017, respectively.  These changes in expense are related to the operation of WMMRC in runoff mode and the corresponding decrease in revenues and the change in premium deficiency reserves as further described below in this Item 2 of Part I under “Losses or Benefits Incurred and Losses and Loss Adjustment Expenses.” As more fully described in Note 2: Significant Accounting Policies to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, due to the current condition of the mortgage insurance market, WMMRC has recorded reserves based on ceded case reserves and incurred but not recorded (“IBNR”) loss levels established and reported by the primary mortgage guaranty carriers as of each reporting period. Management believes that its estimate of aggregate liability for unpaid losses and loss adjustment expenses as of September 30, 2017 represents its best estimate, based upon the available data, of the amount necessary to cover the current cost of losses.

As of September 30, 2017, the loss contract reserve was analyzed and determined to have a value of zero compared to $5.6 million at December 31, 2016.  The value of the loss contract reserve decreased by $0.2 million and $5.6 million, respectively, during the three and nine months ended September 30, 2017 and decreased by $0.5 million and $2.3 million during the three and nine months ended September 30, 2016, respectively.  Consequently, there was a related reduction of expenses due to the change in value of the loss contract reserve for the three and nine months ended September 30, 2017.  The loss contract reserve was established at a value of $63.1 million on March 19, 2012 as a result of our reorganization. The loss contract reserve decrease during the three and nine months ended September 30, 2017 is attributed primarily to changes in the expected timing of assets being released from trust accounts held at WMMRC.  For more information see Note 14: Subsequent Events to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.   

For the three and nine months ended September 30, 2017, our investment portfolio reported net investment income of $1.9 million and $4.8 million, respectively, as compared to net investment income of $0.5 million and $1.7 million, respectively, for the three and nine months ended September 30, 2016. The increase in investment income is primarily the result of higher short term interest rates during 2017 compared to 2016. The components of the investment income are more fully described below in this Item 2 of Part I, under “Net Investment Income.”

General and Administrative Expenses

For the three and nine months ended September 30, 2017 our general and administrative expenses totaled $2.1 million and $5.9 million, respectively, compared to $1.4 million and $4.9 million for the three and nine months ended September 30, 2016. General and administrative expenses primarily increased due to expenses related to assistance with transaction sourcing and debt and equity restructuring activities.

Interest Expense

For the three and nine months ended September 30, 2017, we incurred $0.6 million and $1.8 million, respectively, of interest expense on the Second Lien Notes, which is further described below in this Item 2 of Part I, under “Notes Payable.” This compares to $0.6 million and $2.0 million of interest expense, all of which related to the Second Lien Notes, which was incurred during the three and nine months ended September 30, 2016, respectively.  The interest related to Second Lien Notes decreased primarily due to the reduction of Second Lien Note principal balances by $18.8 million during the nine months ended September 30, 2017 and by $2.9 million during the year ended December 31, 2016.  Because sufficient Runoff Proceeds have not always been available to pay accrued interest on the Runoff Notes, a portion of our obligation to pay interest on the Runoff Notes has been satisfied using the “pay-in-kind” or “PIK” feature available under the Indentures. The accrued interest is converted to PIK Notes at the next payment date if there is not sufficient cash available to satisfy the required interest payment. For the nine months ended September 30, 2017 and 2016, no PIK Notes were issued in satisfaction of our obligation to pay interest on the Second Lien Notes.  For the nine months ended September 30, 2017 and September 30, 2016, respectively, $2.0 million and $2.0 million, of interest was paid in cash.

34

Unrealized Gain (Loss) on Change in Fair Value of Derivative

The fair value of the derivative embedded conversion feature is revalued each reportable balance sheet date with the decrease or increase in fair value being reported in the consolidated statements of operations as unrealized gain or (loss) on change in fair value of derivative embedded conversion feature, respectively. The primary factors affecting the fair value of the embedded conversion feature are the probability of occurrence and timing of a Qualified Acquisition, our stock price and our stock price volatility. During the three and nine months ended September 30, 2017, the fair value of the asset increased by $38.6 million and $31.2 million, respectively, and unrealized income was recorded.  During the three and nine months ended September 30, 2016, the fair value of the liability increased by $16.2 million and decreased by $62.6 million, respectively, resulting in the recognition of a respective unrealized loss and gain.

Net Income (Loss)

The net operating (loss) income for the three and nine months ended September 30, 2017 totaled an operating loss of $0.3 million and operating income of $3.5 million, respectively, compared to net operating losses of $0.4 million and $1.3 million, respectively, for the three and nine months ended September 30, 2016.

For the three and nine months ended September 30, 2017, we reported net income attributable to common and participating stockholders of $33.9 million and $21.4 million, respectively.  This result compares to net loss attributable to common and participating stockholders of $21.1 million and net income attributable to common and participating stockholders $47.8 million, for the three and nine months ended September 30, 2016, respectively.

The primary factors impacting the change in net operating (loss) income and the change in net income (loss) attributable to common and participating stockholders for the three and nine months ended September 30, 2017 compared to the results for the three and nine months ended September 30, 2016, are summarized in the tables below.

Three months ended September 30, 2017 versus three months ended September 30, 2016 summary of change in net operating (loss) income and net income (loss) attributable to common and participating stockholders (in thousands):

	Three months ended September 30, 2017			Three months ended September 30, 2016			Percentage change favorable (unfavorable)			Dollar value change favorable (unfavorable)
Net revenues	$	2,287		$	1,284			78	%	$	1,003
Underwriting expense (net)		92			258			64	%		166
General and administrative expenses		2,117			1,357			(56	%)		(760	)
Loss contract reserve reduction		(210	)		(565	)		(63	%)		(355	)
Interest expense		579			636			9	%		57
Net operating (loss)		(291	)		(402	)		28	%		111
Other income		123			—		N/A				123
Unrealized gain (loss) on change in value of derivative embedded conversion feature		38,579			(16,243	)		338	%		54,822
Redeemable convertible series B preferred stock dividends		(4,500	)		(4,500	)		0	%		—
Net income (loss) attributable to common and participating stockholders	$	33,911		$	(21,145	)		260	%	$	55,056

35

Nine months ended September 30, 2017 versus nine months ended September 30, 2016 summary of change in net operating (loss) and net income attributable to common and participating stockholders (in thousands):

	Nine months ended September 30, 2017			Nine months ended September 30, 2016			Percentage change favorable (unfavorable)			Dollar value change favorable (unfavorable)
Net revenues	$	5,929		$	4,173			42	%	$	1,756
Underwriting expenses (net)		344			936			63	%		592
General and administrative expenses		5,915			4,878			(21	%)		(1,037	)
Loss contract reserve reduction		(5,645	)		(2,362	)		139	%		3,283
Interest expense		1,788			1,994			10	%		206
Net operating income (loss)		3,527			(1,273	)		377	%		4,800
Other income		123			—		N/A				123
Unrealized gain on change in fair value of derivative liability - embedded conversion feature		31,226			62,587			(50	%)		(31,361	)
Redeemable convertible series B preferred stock dividends		(13,500	)		(13,500	)		0	%		—
Net income attributable to common and participating stockholders	$	21,376		$	47,814			(55	%)	$	(26,438	)

 Comprehensive Income

The Company has no comprehensive income other than the net income disclosed in the condensed consolidated statement of operations.

Premiums Earned

The majority of WMMRC’s reinsurance contracts require premiums to be written and earned monthly. In a few cases, the premiums earned reflect the pro rata inclusion into income of premiums written over the life of the reinsurance contracts. Details of premiums earned are provided in the following table:

	Three months ended September 30, 2017		Three months ended September 30, 2016		Nine months ended September 30, 2017		Nine months ended September 30, 2016
Premiums assumed	$	342	$	739	$	866	$	1,963
Change in unearned premiums		2		47		237		463
Premiums earned	$	344	$	786	$	1,103	$	2,426

For the three and nine months ended September 30, 2017, premiums earned totaled $0.3 million and $1.1 million, respectively, a decrease of $0.5 million and $1.3 million, respectively, when compared to premiums earned of $0.8 million and $2.4 million, respectively, for the three and nine months ended September 30, 2016. The Company’s premiums earned are expected to continue to decrease due to WMMRC operating in runoff mode.

Losses or Benefits Incurred and Losses and Loss Adjustment Expenses

Losses incurred include losses paid and changes in loss reserves, including reserves for IBNR losses, premium deficiency reserves net of actual and estimated loss recoverable amounts. Details of net losses or benefits incurred for the three and nine months ended September 30, 2017 and September 30, 2016, respectively, are provided in the following table:

	Three months ended September 30, 2017		Three months ended September 30, 2016		Nine months ended September 30, 2017		Nine months ended September 30, 2016
Losses and loss adjustment expense	$	48	$	183	$	207	$	702

36

We establish reserves for each contract based on estimates of the ultimate cost of all losses including losses incurred but not reported. These estimated reserves are based on reports received from ceding companies, industry data and historical experience as well as our own actuarial estimates. Quarterly, we review these estimates on a contract by contract basis and adjust the estimates as we deem necessary based on updated information and our internal actuarial estimates.

For the three and nine months ended September 30, 2017, the loss ratios were 14% and 19%, respectively, compared to loss ratios of 23% and 29%, respectively, for the three and nine months ended September 30, 2016. The loss or benefit ratio is calculated by dividing incurred benefit or losses for the period by earned premiums. The ratio provides a measure of underwriting profit or loss. Loss reinsurance contracts (which represent the significant majority of our loss exposure) are generally structured with limits set on the aggregate amount of losses that can be incurred over the life of such contract. Upon reaching such limits, no additional losses may be realized under the terms of the contract. Nevertheless, even when applicable contract limits are reached, revenues from premiums collected continue to be ceded for the remaining life of the contract. Beginning in 2013, a majority of WMMRC’s reinsurance arrangements for the 2006 through 2008 book years reached their respective loss limits. As a result, WMMRC does not expect to incur any additional losses for those book years; however, WMMRC may continue to realize revenues from those book years, to the extent premiums are ceded therefrom.

The components of the liability for losses and loss adjustment reserves are as follows at September 30, 2017 and December 31, 2016, respectively:

	September 30, 2017		December 31, 2016
Case-basis reserves	$	174	$	553
IBNR reserves		1		—
Premium deficiency reserves		530		258
Total losses and loss adjustment reserves	$	705	$	811

Losses and loss adjustment reserve activity are as follows for the periods ended September 30, 2017 and December 31, 2016, respectively:

	Nine months ended September 30, 2017			Year ended December 31, 2016
Balance at beginning of period	$	811		$	5,063
Incurred (released) - prior periods		207			(669	)
Paid or terminated - prior periods		(313	)		(3,583	)
Total losses and loss adjustment reserves	$	705		$	811

Net Investment Income

The increase in investment income during the three and nine months ended September 30, 2017 compared to the same periods in 2016 is primarily the result of higher short term interest rates during 2017 as compared to 2016. A summary of our net investment income for the periods ended September 30, 2017 and 2016, respectively, is as follows:

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Investment income:
Amortization of premium or discount on fixed-maturity securities	$	(32	)	$	(74	)	$	(108	)	$	(247	)
Investment income on fixed-maturity securities		72			233			403			792
Interest income on cash and cash equivalents		1,895			405			4,527			1,100
Realized net (loss) gain from sale of investments		(36	)		18			(63	)		19
Unrealized gain (loss) on trading securities held at period end		44			(84	)		67			83
Net investment income	$	1,943		$	498		$	4,826		$	1,747

37

Federal Income Taxes

The Company has no current tax expense or liability due as a result of its tax loss position for periods ended September 30, 2017, September 30, 2016 and December 31, 2016. More detailed information regarding the Company’s tax position including NOL carry-forwards is provided in Note 6: Income Taxes to the consolidated financial statements in Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2016 and in Note 5: Income Taxes to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The Company files a consolidated federal income tax return. Pursuant to a tax sharing agreement, WMMRC’s federal income tax liability is calculated on a separate return basis determined by applying 35% to taxable income, in accordance with the provisions of the Internal Revenue Code (the “Code”) that apply to mortgage insurance companies. WMIH, as WMMRC’s parent, pays federal income taxes on behalf of WMMRC and settles the federal income tax obligation on a current basis in accordance with the tax sharing agreement. WMMRC made no tax payments to WMIH during the periods ended September 30, 2017 and December 31, 2016 associated with the Company’s tax liability from the current or preceding periods.

Deferred federal income taxes arise from temporary differences between the valuation of assets and liabilities as determined for financial reporting purposes and income tax purposes. Temporary differences principally relate to discounting of loss reserves, recognition of unearned premiums, changes in value of loss contract reserves and embedded derivatives, net operating losses and unrealized gains and losses on investments.

We believe WMIH experienced an ownership change under Section 382 of the Code in connection with its bankruptcy plan becoming effective. Prior to emergence from bankruptcy, WMI abandoned the stock of Washington Mutual Bank, thereby generating a worthless stock deduction of approximately $8.37 billion, which gave rise to a NOL carry-forward for the year ended December 31, 2012. We believe that the total available and utilizable NOL carry-forward at December 31, 2016 was approximately $6.0 billion and at September 30, 2017 we believe that there was no limit under Section 382 of the Code on the use of these NOLs. As of September 30, 2017 and December 31, 2016, the Company recorded a valuation allowance equal to 100% of the net deferred federal income tax asset due to uncertainty regarding the Company’s ability to realize these benefits in the future.

On November 2, 2017, the Ways and Means Committee of the U.S. House of Representatives introduced a bill containing various amendments to the Internal Revenue Code, including, among other things changes to corporate income tax rates and certain provisions governing NOLs. There can be no assurance that the bill will be approved in its current form or at all and the final form of any tax legislation that is enacted could contain provisions that adversely affect the utility or potential value of the Company’s NOLs.

Investments

General

We hold investments at both WMIH and WMMRC and the two portfolios consist entirely of fixed income instruments, excluding funds in overnight money market funds, totaling $10.4 million and $76.8 million as of September 30, 2017 and December 31, 2016, respectively. The Company held $577.2 million and $572.9 million of restricted cash from the Series B Preferred Stock Financing in its escrow account at September 30, 2017 and December 31, 2016, respectively.

The value of the consolidated Company’s total cash and investments decreased during the nine months ended September 30, 2017. Cash and investments, which excludes restricted cash of $577.2 million and $573.3 million at September 30, 2017 and December 31, 2016, respectively, totaled $42.8 million and $81.5 million at September 30, 2017 and December 31, 2016, respectively. The primary factors that contributed to this decrease in investments were (i) the payment of a total of $13.5 million in Series B Preferred Stock cash dividends during the nine months ended September 30, 2017; and (ii) the redemption in full of the $18.8 million of Second Lien Notes which were outstanding at December 31, 2016, and the payment of related interest of approximately $2.0 million.

We work with investment broker dealers and, in the case of WMMRC, collateral trustees, in determining whether a market for a financial instrument is active or inactive. We regularly obtain indicative pricing from market makers and from multiple dealers and compare the level of pricing variances as a way to observe market liquidity for certain investment securities. We also obtain trade history and live market quotations from publicly quoted sources, such as Bloomberg, for trade volume and frequency observation. While we obtain market pricing information from broker dealers, the ultimate fair value of our investments is based on portfolio statements provided by financial institutions that hold our accounts.

During the nine months ended September 30, 2017 and the year ended December 31, 2016, we transferred $0.9 million and $11.0 million, respectively, of corporate securities that mature within 12 months from Level 2 to Level 1, due to improved liquidity in capital markets for those securities. Please refer to Note 4: Investment Securities to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, for additional information regarding our investment securities.

38

WMIH

WMIH’s investments are valued at fair value and any unrealized gains or losses are reflected in net investment income in the condensed consolidated statements of income.  At September 30, 2017 and at December 31, 2016, WMIH had zero and $45.0 million, respectively, of investments in obligations of U.S. government sponsored enterprises, all of which will mature within the respective next 12 months.  WMIH also had $25.0 million and $2.1 million in cash and cash equivalents at September 30, 2017 and December 31, 2016, respectively.

WMMRC

WMMRC’s investments are valued at fair value and any unrealized gains or losses are reflected in net investment income in the condensed consolidated statements of operations. At September 30, 2017, approximately 89% of WMMRC’s cash and investments were held in four trusts for the benefit of primary mortgage insurers with whom WMMRC established agreements to reinsure private mortgage insurance risk. The total portfolio, excluding funds in overnight money market instruments, was valued at approximately $10.4 million and $31.9 million at September 30, 2017 and December 31, 2016, respectively. At September 30, 2017, approximately 90% of the portfolio consisted of securities that will mature within the next 12 months and the remainder of the securities will mature between one and two years from September 30, 2017. WMMRC also had $7.3 million in cash and cash equivalents at September 30, 2017.

Liquidity and Capital Resources

General

WMIH is organized as a holding company and has limited operations of its own. With respect to its own operations, WMIH’s continuing cash needs are limited to the payment of general and administrative expenses, costs related to possible acquisitions, dividends on the Series B Preferred Stock and, prior to the redemption thereof, principal and interest payments on the Second Lien Notes described below in this Item 2 of Part I, under “Notes Payable.” As of September 29, 2017, the Second Lien Notes were fully redeemed by the Company and, as of October 2, 2017, the Second Lien Indenture was satisfied and discharged.

Our significant business operations are conducted through our wholly-owned reinsurance subsidiary, WMMRC, which formerly underwrote risks associated with our mortgage reinsurance programs, but has been operated in runoff and has not written any new business since September 26, 2008. There are restrictions on WMMRC’s ability to pay dividends which are described in more detail below. WMIH does not currently expect to pay dividends on its common shares.

WMMRC may seek opportunities to commute one or more of its remaining reinsurance agreements, with a view toward accelerating the distribution of trust assets in excess of the amount needed to pay claims.  Any such distributions would be available for general corporate purposes.  There can be no assurance that any such commutations will be consummated, or if so, on what terms.

In regard to the Series B Preferred Stock, we are required (if and when declared by our Board and until the Series B Preferred Stock is converted, redeemed or repurchased) to pay cumulative regular dividends out of funds legally available therefor at an annual rate of 3% per share of the liquidation preference of $1,000 per share of Series B Preferred Stock. WMIH has declared and paid $13.5 million, $13.5 million and $18.0 million of dividends on its Series B Preferred Stock during the nine months ended September 30, 2017 and 2016 and the year ended December 31, 2016, respectively, and has accrued an additional $0.7 million of dividends based on the 3% interest rate during each of the periods ended September 30, 2017 and 2016 and the year ended December 31, 2016, respectively.

The repayment of $18.8 million of Second Lien Notes and the $13.5 million in dividends on our Series B Preferred Stock were our largest uses of cash during the nine months ended September 30, 2017. The Second Lien Notes have been paid in full, however, the dividend obligation is likely to continue to be a significant financial obligation of the Company until we either consummate a Qualified Acquisition or redeem or repurchase the Series B Preferred Stock.

Unless we consummate a Qualified Acquisition, or enter into a definitive agreement to consummate an Acquisition (or the Series B Redemption Date is extended in accordance with the terms of the Series B Preferred Stock), we will be required to redeem the Series B Preferred Stock on the Series B Redemption Date. Consummation of an Acquisition would cause the conversion into common stock of shares of Series B Preferred Stock having an aggregate liquidation preference equal to the cash proceeds utilized in the Acquisition (unless the Acquisition is a Qualified Acquisition, in which case all of the Series B Preferred Stock would be converted into common stock). The redemption of the Series B Preferred Stock would substantially deplete our available cash for acquisitions and business operations; could have a material adverse effect on our financial condition; and could adversely impact our ability to continue business operations. While we continue to work diligently to identify and consummate an Acquisition, there can be no assurance that we will consummate, or enter into a definitive agreement to consummate, an Acquisition prior to the Series B Redemption Date.

39

In connection with the foregoing, and because we are mindful of the adverse consequences that could result upon a redemption of the Series B Preferred Stock, our Finance Committee and management have been working with financial advisors in an effort to amend and extend the terms of the Series B Preferred Stock. We can provide no assurance we will be able to restructure, amend or refinance the Series B Preferred Stock and, if so, on what terms. For additional information regarding the foregoing, please see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Our Business Strategy and Operating Environment”.

Liquidity Management

The objective of liquidity management is to ensure the Company has the continuing ability to maintain cash flows that are adequate to fund operations and meet obligations and other commitments on a timely and cost-effective basis. The Company establishes and maintains liquidity guidelines for WMIH as well as for WMMRC, its principal operating subsidiary. Funds held by WMMRC are not available to WMIH to satisfy its liquidity needs. Any dividend or payment by WMMRC to WMIH must be approved by the Insurance Division of the State of Hawaii. In light of the restrictions on dividends applicable to WMMRC, WMIH’s principal sources of liquidity are its unrestricted investments, investment income derived from these investments and fees paid to WMIH by WMMRC with respect to services provided pursuant to the two services agreements approved by the Insurance Division of the State of Hawaii. Additionally, WMIH also has approximately $577.2 million of restricted cash held in escrow, which was received by WMIH in connection with the Series B Preferred Stock Financing. Because of the runoff nature of WMMRC’s business, as discussed above, all cash available to WMMRC is primarily used to pay reinsurance losses and loss adjustment expenses, ceding commissions, dividends to WMIH to pay interest and principal obligations on the Runoff Notes (prior to the full redemption which occurred on September 29, 2017), and general and administrative expenses.

The Company monitors operating activities, forecasts liquidity needs and adjusts composition of investment securities in order to address liquidity needs. The Company currently has negative monthly cash flows primarily due to loss expenses at WMMRC, general and administrative costs and dividend payments on the Series B Preferred Stock. As a result, the Company maintains a very high quality and short duration investment portfolio in order to match its liability profile at both levels of the consolidated organization.

WMMRC has net assets totaling $17.7 million and $33.8 million as of September 30, 2017 and December 31, 2016, respectively. These net assets are not immediately available for distribution to WMIH due to restrictions imposed by the trust arrangements referenced above, and the requirement that the Insurance Division of the State of Hawaii must approve dividends from WMMRC. Distributions from WMMRC to WMIH were, prior to full redemption on September 29, 2017, further restricted by the terms of the Runoff Notes described in Note 7: Notes Payable to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. Additionally, as more fully described in Note 14: Subsequent Events to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

Capital Structure and Management

WMIH’s capital structure consists of stockholders’ equity, Series B Preferred Stock proceeds held in escrow which is classified as mezzanine and no term debt as of September 30, 2017.  We issued term debt of $130.0 million represented by the Runoff Notes on the Effective Date. The First Lien Notes were redeemed in their entirety on April 15, 2015 and the First Lien Indenture was satisfied and discharged on April 27, 2015.  The Second Lien Notes were redeemed in their entirety on September 29, 2017 and the Second Lien Indenture was satisfied and discharged on October 2, 2017

On the Effective Date, all shares of common and preferred equity securities previously issued by WMI were cancelled and extinguished. Prior to reincorporation, WMIH was authorized to issue up to 500,000,000 shares of common stock and up to 5,000,000 shares of preferred stock, each with a par value of $0.00001 per share.  Upon reincorporation in Delaware, which is more fully described in Note 1: The Company and its Subsidiaries to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, and pursuant to WMIH’s Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”), WMIH is authorized to issue up to 3,500,000,000 shares of common stock and up to 10,000,000 shares of preferred stock, each with a par value of $0.00001 per share. As of September 30, 2017, 206,714,132 shares of WMIH’s common stock were issued and outstanding, and 1,600,000 shares of its preferred stock were issued and outstanding.

40

On January 30, 2014, pursuant to an Investment Agreement, WMIH issued 1,000,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) for a purchase price of $11.1 million and warrants to purchase 61,400,000 shares of WMIH’s common stock, 30,700,000 of which have an exercise price of $1.32 per share and 30,700,000 of which have an exercise price of $1.43 per share. The Series A Preferred Stock has rights substantially similar to those associated with WMIH’s common stock, with the exception of a liquidation preference, conversion rights and customary anti-dilution protections. The Series A Preferred Stock has a liquidation preference equal to the greater of (i) $10.00 per one million shares of Series A Preferred Stock plus declared but unpaid dividends on such shares and (ii) the amount that the holder would be entitled to in a relevant transaction had the Series A Preferred Stock been converted to common stock of WMIH. The Series A Preferred Stock is convertible at a conversion price of $1.10 per share into shares of common stock of WMIH, either at the option of the holder or automatically upon transfer by KKR Fund Holdings L.P. (“KKR Fund”) to a non-affiliated party. As a result of the calculation of a beneficial conversion feature as required by Accounting Standards Codification 470, a preferred deemed dividend of $9.5 million was recorded in conjunction with the issuance of the Series A Preferred Stock. This preferred deemed dividend resulted in an increase to our accumulated deficit and an increase in additional paid in capital. Further, KKR Fund, as the holder of the Series A Preferred Stock and the warrants, has received other rights pursuant to the Investor Rights Agreement as more fully described in Note 9: Capital Stock and Derivative Instruments to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On January 5, 2015, WMIH announced that it had completed the Series B Preferred Stock Financing and issued 600,000 shares of Series B Preferred Stock for aggregate gross proceeds of $600.0 million, pursuant to the Purchase Agreement with Citigroup Global Markets Inc. and KKR Capital Markets LLC (together the “Initial Purchasers”). In connection with the Series B Preferred Stock Financing, WMIH entered into an Escrow Agreement (the “Escrow Agreement”) with Citibank, N.A., as Escrow Agent, pursuant to which WMIH caused to be deposited with the Escrow Agent the amount of $598.5 million representing the net proceeds of the Series B Preferred Stock Financing less offering fees payable on January 5, 2015 but before payment of other offering fees and expenses (including fees contingent upon future events). These net proceeds will be released from escrow from time to time to WMIH as instructed by WMIH in amounts necessary to, among other things, explore and/or fund, in whole or in part, acquisitions, whether completed or not. The entire net proceeds will be released from escrow as instructed by WMIH as needed to consummate a Qualified Acquisition.

In connection with the Series B Preferred Stock Financing, WMIH filed with the Secretary of State of Washington Articles of Amendment of Articles of Incorporation (the “Articles of Amendment”) containing the Certificate of Designation creating the Series B Preferred Stock and designating the rights and preferences of the Series B Preferred Stock. Holders of shares of the Series B Preferred Stock are entitled to receive, when, as and if declared, cumulative regular dividends at an annual rate of 3% per share of the liquidation preference of $1,000 per share of Series B Preferred Stock, payable in cash. On each date that WMIH closes any Acquisition, outstanding shares of Series B Preferred Stock having an aggregate liquidation preference equal to the net proceeds of the offering utilized in such Acquisition (as defined below), on a pro rata basis, will automatically convert into shares of WMIH’s common stock. In addition, on the date WMIH closes a Qualified Acquisition, all outstanding shares of Series B Preferred Stock will automatically convert into shares of WMIH’s common stock. Each date that WMIH closes an Acquisition (including a Qualified Acquisition) will be a “Mandatory Conversion Date.” Unless the Series B Preferred Stock has been previously repurchased at the option of a holder upon the occurrence of certain put events or mandatorily converted, WMIH will redeem all outstanding shares of Series B Preferred Stock, if any, on the Series B Redemption Date, which is the third anniversary of January 5, 2015 (or January 5, 2018). The reincorporation of WMIH from the State of Washington to the State of Delaware resulted in the increase of the size of its Board of Directors from 7 to up to 11 members and increased WMIH’s authorized number of shares of common stock in an amount sufficient to permit the conversion of all shares of Series B Preferred Stock (collectively, the “Reincorporation”).  

The foregoing transactions pertaining to the Series A Preferred Stock and Series B Preferred Stock are more fully described in Note 9: Capital Stock and Derivative Instruments to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

WMIH may, subject to market conditions, determine to incur additional indebtedness or raise additional equity capital in connection with undertaking one or more acquisitions.

While WMIH is not subject to regulatory capital requirements, WMMRC is required to comply with various solvency and liquidity requirements pursuant to the insurance laws of the State of Hawaii. WMMRC is required to maintain minimum capital and surplus requirements of an amount established under applicable Hawaii law and deemed appropriate by the Insurance Division of the State of Hawaii. As of September 30, 2017, management believes that WMMRC is compliant with applicable statutory solvency, liquidity and minimum capital and surplus requirements. The payment of dividends by WMMRC is subject to statutory restrictions imposed by Hawaii insurance laws and regulations and requires approval from the Insurance Division of the State of Hawaii. In addition, the Second Lien Indenture, prior to the discharge and release on September 29, 2017, imposed restrictions on WMMRC business activities. During the nine months ended September 30, 2017 and the year ended December 31, 2016, WMMRC paid $16.0 million and $5.7 million, respectively, in dividends to WMIH.

41

On the Effective Date, WMI and WMIIC (together, the “Debtors”) (and now the WMI Liquidating Trust (the “Trust”) on behalf of the Debtors) continued to dispute whether the interests of certain former holders of “Equity Interests” or “Claims” (in each case as those terms are defined in the Company’s Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code (as modified, the “Plan”)) against the Debtors should be allowed. As a result, pursuant to the Plan, on the Effective Date, a “Disputed Equity Escrow” (as defined in the Plan) was created for the benefit of each holder of a “Disputed Equity Interest” (as defined in the Plan). Such Disputed Equity Escrow was created to hold shares of WMIH’s common stock (as well as any dividends, gains or income attributable in respect of such common stock) allocable, on a pro rata basis, to each holder of such a Disputed Equity Interest if and when such Disputed Equity Interest becomes an “Allowed Equity Interest” (as such term is defined in the Plan). All such Equity Interests will constitute Disputed Equity Interests pursuant to the Plan until such time, or from time to time, as each Disputed Equity Interest has been compromised and settled or allowed or disallowed by a final order of the bankruptcy court.

The liquidating trustee of the Trust, William Kosturos (the “Liquidating Trustee”), acts as escrow agent with respect to the Disputed Equity Escrow. As of December 31, 2016, 1,546,294 shares of WMIH’s common stock were held in the Disputed Equity Escrow.  Until such time as all of WMIH’s common stock has been distributed from the Disputed Equity Escrow in accordance with the Plan (e.g., as a result of all “Disputed Equity Claims” (as such term is defined in the Plan) becoming Allowed Equity Interests or all Disputed Equity Claims being disallowed), the Liquidating Trustee is vested with the authority to exercise voting or consent rights with respect to such stock; provided, however, that the Liquidating Trustee is obligated to vote or consent, as the case may be, as to such stock in the same proportion as all other holders of WMIH’s common stock have voted or consented, in each case on an issue-by-issue basis. The Trust has no right to or entitlement in any shares of WMIH’s common stock held in the Disputed Equity Escrow. Additionally, WMIH does not have any right to, or interest in, any shares of its common stock held by the Disputed Equity Escrow.

Notes Payable

On the Effective Date, WMIH issued $110.0 million aggregate principal amount of its 13% Senior First Lien Notes due 2030 (the “First Lien Notes”) under an Indenture, dated as of March 19, 2012 (the “First Lien Indenture”), between WMIH and Wilmington Trust, National Association, as Trustee. In addition, WMIH issued $20.0 million aggregate principal amount of its 13% Senior Second Lien Notes due 2030 (the “Second Lien Notes” and, together with the First Lien Notes, the “Runoff Notes”) under an Indenture, dated as of March 19, 2012 (the “Second Lien Indenture” and, together with the First Lien Indenture, the “Indentures”), between WMIH and Law Debenture Trust Company of New York, as Trustee. On January 5, 2017, we were notified by The Law Debenture Company of New York that it had completed the transfer of substantially all of its corporate trust business to Delaware Trust Company, and that Delaware Trust Company had become the successor trustee under the Second Lien Indenture. The First Lien Notes were redeemed in their entirety on April 15, 2015, and the First Lien Indenture was satisfied and discharged on April 27, 2015. The Second Lien Notes were redeemed in their entirety on September 29, 2017, and the Second Lien Indenture was satisfied and discharged on October 2, 2017.

Contractual Obligations, Commitments and Contingencies

WMMRC has engaged a Hawaii-based service provider, Marsh Management Services Inc., to provide accounting and related management services for its operations. In exchange for performing these services, WMMRC pays such service provider a management fee.

On March 19, 2012, WMIH entered into an Investment Management Agreement with WMMRC. Under the terms of this agreement, WMIH receives a fee from WMMRC equal to the product of (x) the ending dollar amount of assets under management during the calendar month in question and (y) .002 divided by 12. WMIH is responsible for investing the funds of WMMRC based on applicable investment criteria and subject to rules and regulations to which WMMRC is subject. The Investment Management Agreement has been approved by the Insurance Division of the State of Hawaii.

On March 19, 2012, WMIH entered into an Administrative Services Agreement with WMMRC. Under the terms of this agreement, WMIH receives from WMMRC a fee of $110 thousand per month. WMIH is responsible for providing administrative services to support, among other things, supervision, governance, financial administration and reporting, risk management and claims management as may be necessary, together with such other general or specific administrative services that may be reasonably required or requested by WMMRC in the ordinary course of its business. The Administrative Services Agreement has been approved by the Insurance Division of the State of Hawaii.

Total amounts incurred under the Investment Management Agreement and Administrative Services Agreement totaled $1.0 million and $1.0 million for the nine months ended September 30, 2017 and 2016, respectively. The expense and related income eliminate on consolidation.

42

On March 22, 2012, WMIH and the WMI Liquidating Trust (the “Trust”) entered into a Transition Services Agreement (the “TSA”). Pursuant to the TSA, the Trust makes available certain services and employees to the Company. The TSA provided the Company with office space (prior to the Company entering into its own lease) for its current employees and continues to provide basic infrastructure and support services to facilitate the Company’s operations. The TSA as amended, extends the term of the agreement through January 31, 2018, with automatic renewals thereafter for successive additional three-month terms, subject to non-renewal at the end of any additional term upon written notice by either party at least 30 days prior to the expiration of the additional term.

In connection with implementing the Plan, certain holders of specified “Allowed Claims” had the right to elect to receive such holder’s “Pro Rata Share of the Common Stock Allotment.” Essentially, the Plan defines the “Pro Rata Share of the Common Stock Allotment” as a pro rata share of ten million (10,000,000) shares of WMIH’s common stock (i.e. five percent (5%)) issued and outstanding on the Effective Date. Holders exercising the foregoing election did so in lieu of receiving (i) 50% of such holder’s interest in and to certain litigation proceeds that could be realized by the Trust on account of certain claims and causes of action asserted by the Trust as contemplated by the Plan (“Litigation Proceeds”), and (ii) some or all of the Runoff Notes to which such holder may be entitled (if such holder elected to receive Runoff Notes in accordance with the terms of the Plan).

If a holder exercised the election described above and, as a result of such election, received shares of WMIH’s common stock, then such holder’s share of Runoff Notes to which the election was effective (i.e., One Dollar ($1.00) of original principal amount of Runoff Notes for each share of WMIH’s common stock) were not issued. In addition, as a result of making the aforementioned election, such holders conveyed to WMIH, and WMIH retained an economic interest in Litigation Proceeds, if any, recovered by the Trust in connection with certain litigation brought by the Trust as contemplated by the Plan. Distributions, if any, to WMIH on account of the foregoing will be effected in accordance with the Plan and the court order confirming the Plan.

On or about October 14, 2014, the Trust filed a lawsuit in King County Superior Court in the State of Washington against 16 former directors and officers of WMI (the “D&O Litigation”). The Trust’s complaint alleged, among other things, that the defendants named therein breached their fiduciary duties to WMI and committed corporate waste and fraud by squandering WMI’s financial resources.  In connection with the settlement of the D&O Litigation, during the year ended December 31, 2015, among the Trust, certain former directors and officers of WMI and certain insurance carriers that underwrote director and officer liability insurance policies for the benefit of WMI and its affiliates (including such former directors and officers), such insurance carriers agreed to pay the Trust $37.0 million, of which $3.0 million was placed into a segregated reserve account (the “RSA Reserve”) to be administered by a third party pursuant to the terms of a Reserve Settlement Agreement (the “RSA”).

During the year ended December 31, 2016 and 2015, WMIH had other income of $123 thousand and $7.8 million, respectively, as a result of its receipt of its share of net Litigation Proceeds related to the D&O Litigation.  As of September 30, 2017, $1.5 million remained in the RSA Reserve.  Under the RSA, funds are released from the RSA Reserve to the Trust if and when certain designated conditions are satisfied.  If and when these funds are released to the Trust, and to the extent WMIH is entitled to receive such funds in accordance with the Plan, it is anticipated the Trust will make payments to WMIH in an amount equal to WMIH’s share of Litigation Proceeds as provided under the Plan.  Due to the contingent nature of future distributions from the RSA Reserve, there can be no assurance that WMIH will receive any distributions from the remaining balance in the RSA Reserve in the future.  During the nine months ended September 30, 2017, WMIH has recorded income from Litigation Proceeds of $123 thousand.  As of September 30, 2017, WMIH had not received any Litigation Proceeds, other than as described above.

As a member of the Litigation Subcommittee of the Trust, Mr. Willingham, who serves as a WMIH Board member and Chairman of the WMIH Audit Committee, participates in overseeing the prosecution of recovery claims by the Trust.

As a result of the Company’s reorganization in bankruptcy, an intangible asset was identified related to reinsurance contracts which were held by WMMRC. The contracts were evaluated to determine whether the value attributable to such contracts was either above market or in a loss contract position. After taking such evaluation into consideration, a loss contract reserve totaling $63.1 million was recorded on the Effective Date. The reserve will be evaluated at each reporting date for changes to its value. As of September 30, 2017 and December 31, 2016, the loss contract reserve was analyzed and determined to have a value of zero and $5.6 million, respectively.  The value of this reserve decreased by $5.6 million during the nine months ended September 30, 2017 and decreased by $2.3 million during the nine months ended September 30, 2016. The value of this reserve has been reduced to zero, primarily due to the extraction of cash proceeds from WMMRC occurring earlier than initially projected and the elimination of the higher cost of capital associated with the Runoff Notes which have now been paid in their entirety. For additional information see Note 2: Significant Accounting Policies in Item 1 of Part I of this Quarterly Report on Form 10-Q.

43

As of January 30, 2014, pursuant to the terms and conditions of the Investment Agreement, WMIH sold to KKR Fund 1,000,000 shares of Series A Preferred Stock, having the terms, rights, obligations and preferences contained in the Certificate of Incorporation, for a purchase price equal to $11.1 million and issued to KKR Fund warrants to purchase, in the aggregate, 61.4 million shares of WMIH’s common stock, 30.7 million of which have an exercise price of $1.32 per share and 30.7 million of which have an exercise price of $1.43 per share (together, the “Warrants”). KKR Fund’s rights as a holder of the Series A Preferred Stock and the Warrants, and the rights of any subsequent holder that is an affiliate of KKR Fund (together with KKR Fund, the “Holders”) are governed by the Investor Rights Agreement. The Investor Rights Agreement provides the Holders with registration rights, including three long form demand registration rights, unlimited short form demand registration rights and customary piggyback registration rights with respect to WMIH’s common stock (and WMIH’s common stock underlying the Series A Preferred Stock and the Warrants), subject to certain minimum thresholds, customary blackout periods and lockups of 180 days. On July 1, 2015, WMIH filed a shelf registration statement (the “Initial Registration Statement”) covering resales of Series B Preferred Stock and WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock.  On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding (as amended, the “Registration Statement”). The Registration Statement was declared effective under the Securities Act on November 25, 2015. Moreover, for as long as the Holders beneficially own any shares of common stock of WMIH or Series A Preferred Stock or any of the Warrants, WMIH has agreed to provide customary Rule 144A information rights, to provide the Holders with regular audited and unaudited financial statements and to allow the Holders or their representatives to inspect WMIH’s books and records. For further information on the Investment Agreement and the Investor Rights Agreement, see Note 8: Financing Arrangements and Note 9: Capital Stock and Derivative Instruments, to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

In conjunction with the Series B Preferred Stock Financing, the Company is contractually committed to make certain fee payments if future events occur.  These fees are recorded and presented on our condensed consolidated balance sheets as other liabilities. At September 30, 2017, the total balance of $13.8 million of other liabilities is comprised of $12.3 million of accrued fees relating to the Series B Preferred Stock Financing, an accrual for professional fees currently payable of approximately $0.8 million, $0.7 million of accrued dividends relating to the Series B Preferred Stock and several small accruals for recurring business expenses.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

44

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are principally exposed to three types of market risk:

• interest rate risk;

• credit risk; and

• liquidity risk.

There have been no material changes to our market risks as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures.

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer, and Interim Chief Financial Officer, the effectiveness of the disclosure controls and procedures of the Company as of September 30, 2017. Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of September 30, 2017, the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective in ensuring that information required to be disclosed by the Company in reports the Company files or submits under the Exchange Act:

(1) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and

(2) is accumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in the Company’s internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

45

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

As of September 30, 2017, the Company was not a party to, or aware of, any pending legal proceedings or investigations requiring disclosure at this time.

Item 1A. Risk Factors.

In addition to the information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Part I-Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.  There have been no material changes in our risk factors from those disclosed in such Annual Report.

46

Item 6. Exhibits.

The following exhibits are filed or incorporated by reference as part of this Quarterly Report on Form 10-Q.

		Incorporated by reference
Exhibit Number	Exhibit Description	Form		Exhibit		Filing Date		Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of WMIH Corp.		8-K12G3		3.1		5/13/15
3.2	Amended and Restated Bylaws of WMIH Corp.		8-K12G3		3.2		5/13/15
12.1	Statement Regarding Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends								X
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.								X
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.								X
32.1	Certifications of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.								X
101.INS	XBRL Instance Document.								X
101.SCH	XBRL Taxonomy Extension Schema Document.								X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.								X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.								X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.								X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.								X

47

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WMIH CORP.
	(Registrant)
Dated: November 9, 2017	By:	/s/ William C. Gallagher
	Name:	William C. Gallagher
	Title:	Chief Executive Officer
Dated: November 9, 2017	By:	/s/ Timothy F. Jaeger
	Name:	Timothy F. Jaeger
	Title:	Interim Chief Financial Officer

48

EX-12.1

Exhibit 12.1

STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES

AND PREFERRED DIVIDENDS

	(dollars in thousands)
	Nine months ended September 30, 2017			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2014			Year ended December 31, 2013
Net income (loss)	$	34,876		$	201,700		$	(61,833	)	$	3,070		$	338
Preferred deemed dividends		—			—			—			(9,455	)		—
Series B preferred stock dividends		(13,500	)		(18,000	)		(17,748	)		—			—
Net income (loss) attributable to common and participating stockholders	$	21,376		$	183,700		$	(79,581	)	$	(6,385	)	$	338
Interest on runoff notes	$	1,788		$	2,616		$	3,702		$	8,993		$	14,897
Interest charges due to debt facility termination		—			—			—			13,232			—
Total fixed charges		1,788			2,616			3,702			22,225			14,897
Preferred dividends		13,500			18,000			17,748			9,455			—
Total fixed charges and preferred dividends	$	15,288		$	20,616		$	21,450		$	31,680		$	14,897
Ratio of net income (loss) to combined fixed charges and preferred dividends		228	%		978	%		(288	%)		10	%		2	%
Ratio of net income (loss) attributable to common and participating stockholders to combined fixed charges and preferred dividends		140	%		891	%		(371	%)		(20	%)		2	%

EX-31.1

Exhibit 31.1

WMIH CORP.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William C. Gallagher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of WMIH Corp.;

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 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 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 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 controls 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.

Date: November 9, 2017	By:	/s/ William C. Gallagher
		William C. Gallagher,
		Chief Executive Officer

EX-31.2

Exhibit 31.2

WMIH CORP.

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy F. Jaeger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of WMIH Corp.;

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 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 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 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 controls 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.

Date: November 9, 2017	By:	/s/ Timothy F. Jaeger
		Timothy F. Jaeger,
		Interim Chief Financial Officer

EX-32.1

Exhibit 32.1

WMIH CORP.

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (the “Report”) of WMIH Corp. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof, the undersigned, in the capacities and on the dates indicated below, each certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge (1) the Report fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2017	By:	/s/ William C. Gallagher
		William C. Gallagher,
		Chief Executive Officer
Date: November 9, 2017	By:	/s/ Timothy F. Jaeger
		Timothy F. Jaeger,
		Interim Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 01, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	WMIH
Entity Registrant Name	WMIH CORP.
Entity Central Index Key	0000933136
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		206,714,132

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Investments held in trust:
Fixed-maturity securities		$ 10,422	$ 76,831
Cash equivalents held in trust		6,804	2,176	[1]
Total investments held in trust		15,826	31,382	[1]
Cash and cash equivalents		25,542	2,491	[1]
Restricted cash		577,220	573,347	[1]
Derivative asset - embedded conversion feature		111,877	80,651	[1]
Accrued investment income		109	187	[1]
Other assets		764	507	[1]
Total assets		732,738	736,190	[1]
Liabilities:
Notes payable - principal	[1]		18,774
Notes payable - interest	[1]		203
Losses and loss adjustment reserves		705	811	[1]
Losses payable		29	53	[1]
Unearned premiums		33	270	[1]
Accrued ceding commissions		57	22	[1]
Loss contract reserve	[1]		5,645
Other liabilities		13,774	14,063	[1]
Total liabilities		14,598	39,841	[1]
Commitments and contingencies				[1]
Redeemable convertible series B preferred stock, $0.00001 par value; 600,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016; aggregate liquidation preference of $600,000,000 as of September 30, 2017 and December 31, 2016		502,213	502,213	[1]
Stockholders’ equity:
Common stock, $0.00001 par value; 3,500,000,000 authorized; 206,714,132 and 206,380,800 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		2	2	[1]
Additional paid-in capital		108,830	108,415	[1]
Retained earnings		107,095	85,719	[1]
Total stockholders’ equity		215,927	194,136	[1]
Total liabilities, redeemable convertible preferred stock and stockholders’ equity		732,738	736,190	[1]
Convertible Series A Preferred Stock [Member]
Stockholders’ equity:
Convertible preferred stock value				[1]
Fixed-Maturity Securities Held in Trust [Member]
Investments held in trust:
Fixed-maturity securities		9,022	29,206	[1]
Unrestricted Fixed-Maturity Securities [Member]
Investments held in trust:
Fixed-maturity securities		$ 1,400	$ 47,625	[1]

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Convertible preferred stock, par value	$ 0.00001
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	3,500,000,000	3,500,000,000
Common stock, shares issued	206,714,132	206,380,800
Common stock, shares outstanding	206,714,132	206,380,800
Redeemable Convertible Series B Preferred Stock [Member]
Redeemable Convertible preferred stock, par value	$ 0.00001	$ 0.00001
Redeemable Convertible preferred stock, shares issued	600,000	600,000
Redeemable Convertible preferred stock, shares outstanding	600,000	600,000
Redeemable Convertible preferred stock, liquidation value	$ 600,000,000	$ 600,000,000
Convertible Series A Preferred Stock [Member]
Convertible preferred stock, par value	$ 0.00001	$ 0.00001
Convertible preferred stock, shares issued	1,000,000	1,000,000
Convertible preferred stock, shares outstanding	1,000,000	1,000,000
Convertible preferred stock, liquidation value	$ 10	$ 10

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Premiums earned	$ 344	$ 786	$ 1,103	$ 2,426
Net investment income	1,943	498	4,826	1,747
Total revenues	2,287	1,284	5,929	4,173
Operating expenses:
Losses and loss adjustment expense	48	183	207	702
Ceding commission expense	44	75	137	234
General and administrative expense	2,117	1,357	5,915	4,878
Loss contract reserve reduction	(210)	(565)	(5,645)	(2,362)
Interest expense	579	636	1,788	1,994
Total operating expenses	2,578	1,686	2,402	5,446
Net operating (loss) income	(291)	(402)	3,527	(1,273)
Other (income) expense:
Other (income)	(123)		(123)
Unrealized (gain) loss on change in fair value of derivative embedded conversion feature	(38,579)	16,243	(31,226)	(62,587)
Total other (income) expense	(38,702)	16,243	(31,349)	(62,587)
Income (loss) before income taxes	38,411	(16,645)	34,876	61,314
Net income (loss)	38,411	(16,645)	34,876	61,314
Redeemable convertible series B preferred stock dividends	(4,500)	(4,500)	(13,500)	(13,500)
Net income (loss) attributable to common and participating stockholders	$ 33,911	$ (21,145)	$ 21,376	$ 47,814
Basic net income (loss) per share attributable to common stockholders (Note 12)	$ 0.06	$ (0.10)	$ 0.04	$ 0.10
Shares used in computing basic net income (loss) per share	202,660,492	202,341,209	202,573,315	202,247,275
Diluted net income (loss) per share attributable to common stockholders (Note 12)	$ 0.06	$ (0.10)	$ 0.04	$ 0.09
Shares used in computing diluted net income (loss) per share	212,726,121	202,341,209	212,638,944	237,575,014

XML

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total		Convertible Series A Preferred Stock [Member]	Series B Redeemable Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	(Accumulated deficit) retained earnings [Member]
Beginning Balance at Dec. 31, 2015	$ 9,778				$ 2	$ 107,757	$ (97,981)
Beginning Balance, Shares at Dec. 31, 2015			1,000,000		206,168,035
Preferred Stock Beginning Balance, Shares at Dec. 31, 2015				600,000
Preferred Stock Value, Beginning Balance at Dec. 31, 2015				$ 502,213
Net income	201,700						201,700
Redeemable convertible series B preferred stock dividends	(18,000)			$ (18,000)			(18,000)
Issuance of common stock under restricted stock compensation arrangement, Shares					212,765
Equity-based compensation	658					658
Ending Balance at Dec. 31, 2016	194,136	[1]			$ 2	108,415	85,719
Ending Balance, Shares at Dec. 31, 2016			1,000,000		206,380,800
Preferred Stock Ending Balance ,Shares at Dec. 31, 2016				600,000
Preferred Stock Value, Ending Balance at Dec. 31, 2016				$ 502,213
Net income	34,876						34,876
Redeemable convertible series B preferred stock dividends	(13,500)			$ (13,500)			(13,500)
Issuance of common stock under restricted stock compensation arrangement, Shares					333,332
Equity-based compensation	415					415
Ending Balance at Sep. 30, 2017	$ 215,927				$ 2	$ 108,830	$ 107,095
Ending Balance, Shares at Sep. 30, 2017			1,000,000		206,714,132
Preferred Stock Ending Balance ,Shares at Sep. 30, 2017				600,000
Preferred Stock Value, Ending Balance at Sep. 30, 2017				$ 502,213

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017		Sep. 30, 2016
Cash flows from operating activities:
Net income	$ 34,876		$ 61,314
Adjustments to reconcile net income to net cash (used in) operating activities:
Amortization of premium or discount on fixed maturity securities	108		247
Net realized loss (gain) on sale of investments	63		(19)
Unrealized (gain) on trading securities	(67)		(83)
Unrealized (gain) on derivative embedded conversion feature	(31,226)		(62,587)
Equity-based compensation	415		484
Changes in assets and liabilities:
Accrued investment income	78		(18)
Other assets	(257)		(270)
Cash equivalents held in trust	(4,628)		1,358
Restricted cash	(3,873)		(1,476)
Losses and loss adjustment reserves	(106)		(2,733)
Losses payable	(24)		(395)
Unearned premiums	(237)		(463)
Accrued ceding commission expense	35		(8)
Accrued interest on notes payable	(203)		(24)
Loss contract reserve	(5,645)		(2,362)
Other liabilities	(289)		(626)
Total adjustments	(45,856)		(68,975)
Net cash used in operating activities	(10,980)		(7,661)
Cash flows from investing activities:
Purchase of investments	(19,973)		(130,469)
Proceeds from sales and maturities of investments	86,278		146,920
Net cash provided by investing activities	66,305		16,451
Cash flows from financing activities:
Redeemable convertible series B preferred stock dividends	(13,500)		(13,500)
Notes payable – principal repayments	(18,774)		(2,185)
Net cash used in financing activities	(32,274)		(15,685)
Increase (decrease) in cash and cash equivalents	23,051		(6,895)
Cash and cash equivalents, beginning of period	2,491	[1]	9,924
Cash and cash equivalents, end of period	25,542		3,029
Supplementary disclosure of cash flow information:
Cash paid during the period, Interest	$ 1,991		$ 2,008

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

The Company and its Subsidiaries

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

The Company and its Subsidiaries

Note 1: The Company and its Subsidiaries

WMIH Corp.

WMIH Corp. (“WMIH”) is a corporation duly organized and existing under the laws of the State of Delaware.  On May 11, 2015, WMIH merged with its parent corporation, WMI Holdings Corp., a Washington corporation (“WMIHC”), with WMIH as the surviving corporation in the merger (the “Merger”).   The Merger occurred as part of the reincorporation of WMIHC from the State of Washington to the State of Delaware effective May 11, 2015 (the “Reincorporation Date”).

WMIH, formerly known as WMIHC and Washington Mutual, Inc. (“WMI”), is the direct parent of WM Mortgage Reinsurance Company, Inc., a Hawaii corporation (“WMMRC”), and WMI Investment Corp., a Delaware corporation (“WMIIC”). Since the emergence from bankruptcy on March 19, 2012, our business activities consist of operating WMMRC’s legacy reinsurance business in runoff mode. In addition, we are actively seeking acquisition opportunities across a broad array of industries with a specific focus in the financial services industry, including targets with consumer finance, specialty finance, leasing and insurance operations.

As of September 30, 2017, WMIH was authorized to issue up to 3,500,000,000 shares of common stock, and up to 10,000,000 shares of preferred stock (in one or more series), in each case with a par value of $0.00001 per share.  As of September 30, 2017 and December 31, 2016, 206,714,132 and 206,380,800 shares, respectively, of WMIH’s common stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 1,000,000 shares of WMIH’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) were issued and outstanding.  As of September 30, 2017 and December 31, 2016, 600,000 shares of WMIH’s 3% Series B Convertible Preferred Stock (the “Series B Preferred Stock”) were issued and outstanding.

While we remain committed to consummating an acquisition, we also are mindful that the Company’s Series B Preferred Stock is redeemable on January 5, 2018 if we have not consummated a Qualified Acquisition, as more fully described in Note 6: Service Agreements and Related Party Transactions, or executed a definitive agreement to consummate an Acquisition (as such term is defined in Article VI of WMIH’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”)), prior to that date.  Accordingly, as previously disclosed, we formed the Finance Committee of the Company’s Board of Directors (the “Finance Committee”), comprised solely of independent directors, to explore potential financing and refinancing alternatives, including the potential restructuring or refinancing of the Series B Preferred Stock. The Finance Committee has retained financial advisors to provide certain financial advisory services in connection with the Finance Committee’s mandate to review the Company’s capital structure and potential financing alternatives. There can be no assurance that any transaction, including a refinancing of the Series B Preferred Stock, will occur or if so on what terms.

WMMRC

WMMRC is a wholly-owned subsidiary of WMIH. Prior to August 2008 (at which time WMMRC became a direct subsidiary of WMI), WMMRC was a wholly-owned subsidiary of FA Out-of-State Holdings, Inc., a second-tier subsidiary of Washington Mutual Bank (“WMB”) and third-tier subsidiary of WMI. WMMRC is a pure captive insurance company domiciled in the State of Hawaii. WMMRC was incorporated on February 25, 2000, and received a Certificate of Authority, dated March 2, 2000, from the Insurance Division of the State of Hawaii.

WMMRC was originally organized to reinsure private mortgage insurance risk for seven primary mortgage insurers then offering private mortgage insurance on loans originated or purchased by former subsidiaries of WMI. The seven primary mortgage insurers are United Guaranty Residential Insurance Company (“UGRIC”), Genworth Mortgage Insurance Corporation (“GMIC”), Mortgage Guaranty Insurance Corporation (“MGIC”), PMI Mortgage Insurance Company (“PMI”), Radian Guaranty Incorporated (“Radian”), Republic Mortgage Insurance Company (“RMIC”) and Triad Guaranty Insurance Company (“Triad”).

Due to the then deteriorating performance in the mortgage guarantee markets and the closure and receivership of WMB, the reinsurance agreements with each of the primary mortgage insurers were terminated or placed into runoff during 2008. The agreements with UGRIC and Triad were placed into runoff effective May 31, 2008. The agreements with all other primary mortgage insurers were placed into runoff effective September 26, 2008. As a result, effective September 26, 2008, WMMRC’s continuing operations consisted solely of the runoff of coverage associated with mortgages placed with the primary mortgage carriers prior to September 26, 2008. In runoff, an insurer generally writes no new business but continues to service its obligations under in force policies and otherwise continues as a licensed insurer. The reinsurance agreements with Triad, PMI and UGRIC were commuted on August 31, 2009, October 2, 2012 and April 3, 2014, respectively, and the related trust assets were distributed in accordance with the commutation agreements.  On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC.  On September 13, 2017, the Insurance Division of the State of Hawaii approved this commutation and a related distribution of up to $10.7 million to WMIH, which distribution has not been completed as of the date of the filing of this Form 10-Q.   For more information see Note 14: Subsequent Events. As a result, WMMRC’s current continuing operations, subsequent to the Radian commutation, consist solely of the runoff of coverage associated with mortgages placed with the following three remaining carriers, GMIC, MGIC and RMIC.

WMIIC

WMIIC does not currently have any operations and is fully eliminated upon consolidation.

XML

Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Significant Accounting Policies

Note 2: Significant Accounting Policies

Basis of Presentation

WMIH resumed timely filing of all periodic reports for a reporting company under the Exchange Act for all periods after emergence from bankruptcy on March 19, 2012 (the “Effective Date”).

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reporting. Certain information and footnote disclosures normally included in the financial statements and prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures included are appropriate. The condensed consolidated balance sheet as of December 31, 2016, included herein, was derived from the audited consolidated financial statements as of that date.

These interim unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto filed in the Company’s Annual Report on Form 10-K, filed with the SEC on March 14, 2017. Interim information presented in the unaudited condensed consolidated financial statements has been prepared by management. In the opinion of management, the financial statements include all adjustments necessary for a fair presentation and that all such adjustments are of a normal, recurring nature and necessary for the fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with GAAP. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.

All significant intercompany transactions and balances have been eliminated in preparing the condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Management has made significant estimates in certain areas, including valuing certain financial instruments, other assets and liabilities, the determination of the contingent risk liabilities, and in determining appropriate insurance reserves. Actual results could differ substantially from those estimates.

Fair Value of Certain Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Generally, for assets that are reported at fair value, the Company uses quoted market prices or valuation models to estimate their fair value. These models incorporate inputs such as forward yield curves, market volatilities and pricing spreads, utilizing market-based inputs where readily available. The degree of management judgment involved in estimating the fair value of a financial instrument or other asset is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are actively traded in the marketplace or whose values are based on readily available market value data, little judgment is necessary when estimating the instrument’s fair value. When observable market prices and data are not readily available, significant management judgment often is necessary to estimate fair value. In those cases, different assumptions could result in significant changes in valuation.

The Company classifies fixed-maturity investments as trading securities, which are recorded at fair value. As such, changes in unrealized gains and losses on investments held at the balance sheet date are recognized and reported as a component of net investment income on the condensed consolidated statement of operations. The Company believes fair value provides better matching of investment earnings to potential cash flow generated from the investment portfolio and reduces subjectivity related to evaluating other-than-temporary impairment on the Company’s investment portfolio.

The carrying value of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their respective fair values because of their short-term nature.

The carrying value of the loss contract reserve approximates its fair value and is based on valuation methodologies using discounted cash flows at interest rates which approximate the Company’s weighted-average cost of capital.

The carrying value of the derivative embedded conversion feature of the Series B Preferred Stock is adjusted to its fair value as determined using Level 3 inputs described below under fair value measurement.  

The carrying value of notes payable approximates fair value based on time to maturity, underlying collateral, and prevailing interest rates.

Fair Value Measurement

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the Financial Accounting Standards Board Fair Value Measurements and Disclosures accounting guidance. The framework is based on the inputs used in valuation and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.

The three levels of the hierarchy are as follows:

Level 1–Inputs to the valuation methodology are quoted prices for identical assets or liabilities traded in active markets.

Level 2–Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market corroborated inputs.

Level 3–Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Fair values are based on quoted prices in active markets when available (Level 1). The Company receives the quoted prices from a third party, nationally recognized pricing service. When quoted prices are not available, the Company utilizes a pricing service to determine an estimate of fair value. The fair value is generally estimated using current market inputs for similar financial instruments with comparable terms and credit quality, commonly referred to as matrix pricing (Level 2). These valuation techniques involve some level of management estimation and judgment. The Company recognizes transfers between levels in the fair value hierarchy at the end of the reporting period.

Fixed-Maturity Securities

Fixed-maturity securities consist of U.S. Treasury securities, obligations of U.S. government sponsored agencies and domestic and foreign corporate debt securities. Fixed-maturity securities held in trust are for the benefit of the primary insurers as more fully described in Note 3: Insurance Activity. Investments in fixed-maturity securities are reported at their estimated fair values and are classified as trading securities in accordance with applicable accounting guidance. Realized gains and losses on the sale of fixed-maturity securities are determined using the specific identification method and are reported as a component of net investment income within the condensed consolidated statement of operations.

Investments Held in Trust

Investments held in trust consist of cash equivalents, which include highly liquid overnight money market instruments, and fixed-maturity securities which are held in trust for the benefit of the primary insurers, as more fully described in Note 3: Insurance Activity and Note 4: Investment Securities, and are subject to the restrictions on distribution of net assets of subsidiaries as described below.

Third Party Restrictions on Distribution of Net Assets of Wholly-Owned Subsidiaries

The net assets of WMMRC are subject to restrictions on distribution from multiple sources, including the primary insurers who have approval control of distributions from the trust, and the Insurance Division of the State of Hawaii who has approval authority over distributions or intercompany advances.  As more fully described in Note 14: Subsequent Events, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

Premium Recognition

Premiums assumed are earned on a daily pro-rata basis over the underlying policy terms. Premiums assumed relating to the unexpired portion of policies in force at the balance sheet date are recorded as unearned premiums. Unearned premiums also include a reserve for post default premium reserves. Post default premium reserves occur when a loan is in a default position and the servicer continues to advance the premiums. If the loan ultimately goes to claim, the premiums advanced during the period of default are subject to recapture. The Company records a default premium reserve based on information provided by the underlying mortgage insurers when they provide information on the default premium reserve separately from other reserves. The change in the post default premium reserve is reflected as a reduction or increase, as the case may be, in premiums assumed. The Company has recorded unearned premiums totaling $33 thousand and $0.3 million as of September 30, 2017 and December 31, 2016, respectively.

The Company recognizes premium deficiencies when there is a probable loss on an insurance contract. Premium deficiencies are recognized if the sum of the present value of expected losses and loss adjustment expenses, unamortized deferred acquisition costs, and maintenance costs, excluding intercompany charges, exceed expected future unearned premiums and anticipated investment income. Premium deficiency reserves have been recorded totaling $0.5 million and $0.3 million as of September 30, 2017 and December 31, 2016, respectively. Intercompany administrative costs are excluded from the computation of premium deficiencies.

The Company’s premium deficiency analysis was performed on a single book basis and includes all book years and reinsurance treaties aggregated together using assumptions based on the actuarial best estimates at the balance sheet date. The calculation for premium deficiency requires significant judgment and includes estimates of future expected premiums, claims, loss adjustment expenses and investment income as of the balance sheet date. To the extent ultimate losses are higher or premiums are lower than estimated, additional premium deficiency reserves may be required in the future.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks, U.S. Treasury bills and overnight investments. Except as described above in Investments Held in Trust, the Company considers all amounts that are invested in highly liquid overnight money market instruments to be cash equivalents. The Federal Deposit Insurance Corporation (“FDIC”) insures amounts on deposit with each financial institution up to limits as prescribed by law. The Company may hold funds with financial institutions in excess of the FDIC insured amount, however, the Company has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash

Restricted cash includes (i) amounts held for the express purposes of paying principal, interest and related fees on the Runoff Notes (as defined in Note 7: Notes Payable) pursuant to the terms of the Indentures (as defined in Note 7: Notes Payable) and (ii) proceeds of the Series B Preferred Stock offering held in escrow.

Ceding Commission Expense

The Company is required to pay a ceding commission to certain primary insurers pursuant to certain reinsurance agreements.

Losses and Loss Adjustment Reserves

The losses and loss adjustment reserves include case basis estimates of reported losses and supplemental amounts for incurred but not reported (“IBNR”) losses. A default is considered the incident (e.g., the failure to make timely payment of mortgage payments) that may give rise to a claim for mortgage insurance. In establishing the losses and loss adjustment reserve, the Company based its estimates primarily on the ceded loss and loss adjustment reserves as provided by the primary mortgage guaranty carriers.

WMMRC has recorded reserves at the ceded case reserves and IBNR loss levels established and reported by the primary mortgage guaranty carriers as of September 30, 2017 and December 31, 2016, respectively. Management believes that the recorded aggregate liability for unpaid losses and loss adjustment expenses at period end represents the Company’s best estimate, based upon the available data, of the amount necessary to cover the current cost of losses. However, due to the inherent uncertainty arising from fluctuations in the persistency rate of mortgage insurance claims, the Company’s size and lack of prior operating history, external factors such as future changes in regional or national economic conditions, judicial decisions, federal and state legislation related to mortgage restructuring and foreclosure restrictions, claims denials and coverage rescissions by primary carriers and other factors beyond the Company’s control, it is not presently possible to determine whether actual loss experience will conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Accordingly, the ultimate liability could be significantly higher or lower, as the case may be, than the amount indicated in the financial statements and there can be no assurance that the reserve amounts recorded will be sufficient. As adjustments to these estimates become necessary, such adjustments are reflected in current operations.

Loss Contract Reserve

A loss contract reserve relating to contractual obligations of WMMRC was established at March 19, 2012 as a result of applying fresh start accounting and in compliance with Accounting Standards Codification (“ASC”) 805-10-55-21 (b) (1) which defines a loss contract as “a contract in which the unavoidable costs of meeting the obligation under the contract exceed the economic benefits expected to be received under it.”  The value of this reserve is analyzed quarterly and is adjusted accordingly.  The adjustment (if any) to the reserve produces an expense or contra-expense in the condensed consolidated statements of operations.

Derivative Embedded Conversion Feature

The Company has recorded a derivative embedded conversion feature of the Series B Preferred Stock which is adjusted to its fair value as determined using Level 3 inputs described above under Fair Value Measurement.  The change in fair value of the derivative embedded conversion feature is calculated at each reporting date and recorded as other income or other expense on the condensed consolidated statement of operations.

Other Liabilities

At September 30, 2017, the total balance of $13.8 million of other liabilities is comprised of $12.3 million of accrued fees relating to the Series B Preferred Stock offering, an accrual for professional fees and recurring business expenses currently payable of approximately $0.8 million and $0.7 million of accrued dividends relating to the Series B Preferred Stock. The accrued fees would be paid in the event of a Qualified Acquisition, as more fully described in Note 6: Service Agreements and Related Party Transactions.

Comprehensive Income

The Company has no comprehensive income other than the net income disclosed in the condensed consolidated statement of operations.

Net Income Per Common Share

In calculating earnings per share, the Company follows the two-class method, which distinguishes between the classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Series A Preferred Stock and the Series B Preferred Stock are treated as one class for purposes of applying the two-class method, because they have substantially equal rights and share equally on an as converted basis with respect to income available to WMIH common stockholders.

Basic net income per WMIH common share is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding for the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these are subject to repurchase.  Basic net income attributable to common stockholders is computed by deducting preferred dividends and the basic calculation of undistributed earnings attributable to participating securities from net income.

Diluted net income per WMIH common share is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding during the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these are subject to repurchase, and adding any potentially dilutive WMIH common stock equivalents outstanding during the period. Diluted net income attributable to common stockholders is computed by deducting preferred dividends and the diluted calculation of undistributed earnings attributable to participating securities from net income.

If common stock equivalents exist, in periods where there is a net loss, diluted net loss per common share would be equal to or less than basic net loss per common share, since the effect of including any common stock equivalents would be antidilutive.

Equity-Based Compensation

On May 22, 2012, WMIH’s Board of Directors (the “Board” or “Board of Directors”) approved the Company’s 2012 Long-Term Incentive Plan (the “2012 Plan”) so that awards of restricted stock could be made to its non-employee directors and to have a plan in place for awards of equity based compensation to executives and others in connection with the Company’s operations and future strategic plans. A total of 2.0 million shares of WMIH’s common stock were initially reserved for future issuance under the 2012 Plan, which became effective upon the Board approval on May 22, 2012. On February 10, 2014, the Board approved and adopted a First Amendment to the 2012 Plan, pursuant to which the number of shares of WMIH’s common stock reserved and available for grants under the 2012 Plan was increased from 2.0 million shares to 3.0 million shares, and the terms of the 2012 Plan were modified to permit such an increase through action of the Board, except when stockholder approval is necessary to comply with any applicable law, regulation or rule of any stock exchange on which WMIH’s shares are listed, quoted or traded. On February 25, 2015, the number of shares authorized and available for awards under the 2012 Plan was increased from 3.0 million to 12.0 million shares of WMIH’s common stock, subject to approval of stockholders of WMIH.  This approval was received at the Company’s Annual Meeting of Stockholders on April 28, 2015. The 2012 Plan provides for the granting of restricted shares and other cash and share based awards. The value of restricted stock is generally determined using the fair market value determined to be the trading price at the close of business on the respective date the awards were granted.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the carrying amounts and tax bases of assets and liabilities and losses carried forward and tax credits. Deferred tax assets and liabilities are measured using enacted tax rates and laws applicable to the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized.

The Company recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Penalties and interest, of which there are none, would be reflected in income tax expense. Tax years are open to the extent the Company has net operating loss (“NOL”) carry-forwards available to be utilized currently.

Dividend Policy

WMIH has paid no dividends on its common stock on or after the Effective Date and currently has no plans to pay a dividend on its common stock.

WMIH has declared and paid $13.5 million and $18.0 million of dividends on its Series B Preferred Stock for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. Additionally, WMIH has accrued unpaid and undeclared dividends of $0.7 million, based on the Series B Preferred Stock 3% interest rate, as of both September 30, 2017 and December 31, 2016.

New Accounting Pronouncements

The Company has reviewed new accounting pronouncements issued between August 9, 2017, the filing date of our most recent prior Form 10-Q, and the filing date of this Form 10-Q and has determined that no pronouncements issued are relevant to the Company, and/or have a material impact on the Company’s consolidated financial position, results of operations or disclosure requirements. 

XML

Insurance Activity

9 Months Ended

Sep. 30, 2017

Insurance [Abstract]

Insurance Activity

Note 3: Insurance Activity

The Company, through WMMRC, reinsures mortgage guaranty risks of mortgage loans originated by affiliates of the Company during the period from 1997 through 2008. WMMRC is (or was) a party to reinsurance agreements with UGRIC, GMIC, MGIC, PMI, Radian, RMIC and Triad. The agreements with UGRIC and Triad were placed into runoff effective May 31, 2008. The agreements with all other primary mortgage insurers were placed into runoff effective September 26, 2008. The reinsurance agreements with Triad, PMI and UGRIC were commuted on August 31, 2009, October 2, 2012 and April 3, 2014, respectively. On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC.  For more information see Note 14: Subsequent Events.

All agreements between WMMRC and the primary mortgage insurers are on an excess of loss basis, except for a reinsurance treaty with GMIC during 2008, which is reinsured on a 50% quota share basis. Pursuant to the excess of loss reinsurance treaties, WMMRC reinsures a second loss layer which ranges from 5% to 10% of the risk in force in excess of the primary mortgage insurer’s first loss percentage which range from 4% to 5%. Each calendar year, or book year, is treated separately from other years when calculating losses. In return for accepting a portion of the risk, WMMRC receives, net of ceding commission, a percentage of the premium that ranges from 25% to 40%.

As security for the ceding insurers, WMMRC has entered into separate trust agreements with each of the primary mortgage insurance companies whereby a portion of the funds from premiums assumed are held in trust accounts for the benefit of each separate insurer. Pursuant to the terms of the reinsurance agreements, WMMRC is required to keep such assets in trust for a minimum of five years and is subject to claims for up to ten years from termination of obligations arising from the last year in which insurance business was written prior to runoff. Release of funds from the trust by WMMRC requires approval from the primary mortgage insurance companies.

Premiums assumed and earned are as follows for the periods ended September 30, 2017 and 2016, respectively:

	Three months ended September 30, 2017		Three months ended September 30, 2016		Nine months ended September 30, 2017		Nine months ended September 30, 2016
Premiums assumed	$	342	$	739	$	866	$	1,963
Change in unearned premiums		2		47		237		463
Premiums earned	$	344	$	786	$	1,103	$	2,426

The components of the liability for losses and loss adjustment reserves are as follows as of September 30, 2017 and December 31, 2016, respectively:

	September 30, 2017		December 31, 2016
Case-basis reserves	$	174	$	553
IBNR reserves		1		—
Premium deficiency reserves		530		258
Total losses and loss adjustment reserves	$	705	$	811

Losses and loss adjustment reserve activity are as follows for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively:

	Nine months ended September 30, 2017			Year ended December 31, 2016
Balance at beginning of period	$	811		$	5,063
Incurred (released) - prior periods		207			(669	)
Paid or terminated - prior periods		(313	)		(3,583	)
Total losses and loss adjustment reserves	$	705		$	811

The loss contract reserve balance is analyzed and adjusted quarterly. The balance in the reserve was zero and $5.6 million as of September 30, 2017 and December 31, 2016, respectively. The value of this reserve decreased by $5.6 million during the nine months ended September 30, 2017 and decreased by $2.3 million during the nine months ended September 30, 2016. In periods during which a reduction in the loss contract reserve occurs, a corresponding decrease in expense is reflected in the condensed consolidated statement of operations for the respective period.  

XML

Investment Securities

9 Months Ended

Sep. 30, 2017

Investments Debt And Equity Securities [Abstract]

Investment Securities

Note 4: Investment Securities

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of total fixed-maturity securities and total fixed-maturity securities held in trust at September 30, 2017, are as follows:

	September 30, 2017
Class of securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government treasury securities	$	250	$	—	$	—		$	250
Obligations of U.S. government sponsored enterprises		2,749		—		(7	)		2,742
Corporate debt securities		3,683		—		(2	)		3,681
Foreign corporate debt securities		3,750		—		(1	)		3,749
Total fixed-maturity securities		10,432		—		(10	)		10,422
Less total unrestricted fixed-maturity securities		1,402		—		(2	)		1,400
Total fixed-maturity securities held in trust	$	9,030	$	—	$	(8	)	$	9,022

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of total fixed-maturity securities and total fixed-maturity securities held in trust at December 31, 2016, are as follows:

	December 31, 2016
Class of securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government treasury securities	$	249	$	—	$	—		$	249
Obligations of U.S. government sponsored enterprises		59,450		1		(80	)		59,371
Corporate debt securities		11,415		9		(9	)		11,415
Foreign corporate debt securities		5,798		5		(7	)		5,796
Total fixed-maturity securities		76,912		15		(96	)		76,831
Less total unrestricted fixed-maturity securities		47,635		—		(10	)		47,625
Total fixed-maturity securities held in trust	$	29,277	$	15	$	(86	)	$	29,206

Amortized cost and estimated fair value of fixed-maturity securities at September 30, 2017 by contractual maturity are as follows:

	Amortized Cost		Estimated Fair Value
Maturity in:
2017	$	6,750	$	6,749
2018		3,682		3,673
Total fixed-maturity securities	$	10,432	$	10,422

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Net investment income for the three and nine months ended September 30, 2017 and 2016, respectively, is summarized as follows:

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Investment income:
Amortization of premium or discount on fixed-maturity securities	$	(32	)	$	(74	)	$	(108	)	$	(247	)
Investment income on fixed-maturity securities		72			233			403			792
Interest income on cash and cash equivalents		1,895			405			4,527			1,100
Realized net (loss) gain from sale of investments		(36	)		18			(63	)		19
Unrealized gain (loss) on trading securities held at period end		44			(84	)		67			83
Net investment income	$	1,943		$	498		$	4,826		$	1,747

The following table shows how the Company’s investments are categorized in accordance with fair value measurement, as of

September 30, 2017:

	September 30, 2017
	Level 1		Level 2		Level 3		Total
Class of securities:
U.S. government treasury securities	$	250	$	—	$	—	$	250
Obligations of U.S. government sponsored enterprises		1,497		1,245		—		2,742
Corporate debt securities		3,151		530		—		3,681
Foreign corporate debt securities		3,749		—		—		3,749
Total fixed-maturity securities		8,647		1,775		—		10,422
Money market funds		32,007		—		—		32,007
Total	$	40,654	$	1,775	$	—	$	42,429

The following table shows how the Company’s investments are categorized in accordance with fair value measurement, as of December 31, 2016:

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Class of securities:
U.S. government treasury securities	$	249	$	—	$	—	$	249
Obligations of U.S. government sponsored enterprises		47,489		11,882		—		59,371
Corporate debt securities		7,033		4,382		—		11,415
Foreign corporate debt securities		5,796		—		—		5,796
Total fixed-maturity securities		60,567		16,264		—		76,831
Money market funds		4,548		—		—		4,548
Total	$	65,115	$	16,264	$	—	$	81,379

A review of the fair value hierarchy classifications of the Company’s investments is conducted quarterly. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications are reported as transfers in or transfers out of the applicable Level at the end of the calendar quarter in which the reclassifications occur. During the nine months ended September 30, 2017 and the year ended December 31, 2016, $0.9 million and $11.0 million, respectively, of investments were transferred from Level 2 to Level 1 as a result of improving market conditions for short-term and investment grade corporate securities.

	January 1, 2017 to September 30, 2017				January 1, 2016 to  December 31, 2016
	Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1			Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1
Class of securities:
Corporate debt securities	$	—	$	901		$	—	$	5,737
Foreign corporate debt securities		—		—			—		5,295
Total transfers	$	—	$	901		$	—	$	11,032

XML

Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Note 5: Income Taxes

For the nine months ended September 30, 2017, the Company recorded net income attributable to common and participating stockholders of approximately $21.4 million. The Company projects tax losses for the year ending December 31, 2017.  Due to this projected tax loss and the existence of NOL carry-forwards which have a 100% valuation allowance recorded to reduce them to zero, the Company has not recorded an income tax expense or benefit for the nine months ended September 30, 2017. The Company recorded no income tax expense or benefit for the year ended December 31, 2016 due to tax losses in that period.

The Company files a consolidated federal income tax return. Pursuant to a tax sharing agreement, WMMRC’s federal income tax liability is calculated on a separate return basis determined by applying 35% to taxable income, in accordance with the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), that apply to property and casualty insurance companies. WMIH, as WMMRC’s parent, pays federal income taxes on behalf of WMMRC and settles the federal income tax obligation on a current basis in accordance with the tax sharing agreement. WMMRC made no tax payments to WMIH during the nine months ended September 30, 2017 or the year ended December 31, 2016 associated with the Company’s tax liability from the preceding year.

Deferred federal income taxes arise from temporary differences between the valuation of assets and liabilities as determined for financial reporting purposes and income tax purposes. Temporary differences principally relate to discounting of loss reserves, accruals, derivate instruments, net operating losses and unrealized gains and losses on investments. As of September 30, 2017 and December 31, 2016, the Company recorded a valuation allowance equal to 100% of the net deferred federal income tax asset due to uncertainty regarding the Company’s ability to realize these benefits in the future.

On March 19, 2012, WMIH emerged from bankruptcy. Prior to emergence, WMI abandoned the stock of WMB, thereby generating a worthless stock deduction of approximately $8.37 billion which gave rise to a NOL for the year ended December 31, 2012. Under Section 382 of the Code (“Section 382”), and based on the Company’s analysis, we believe that the Company experienced an “ownership change” (generally defined as a greater than 50% change (by value) in our equity ownership over a three-year period) on March 19, 2012, and our ability to use our pre-change of control NOLs and other pre-change tax attributes against our post-change income was limited. The Section 382 limitation is applied annually so as to limit the use of our pre-change NOLs to an amount that generally equals the value of our stock immediately before the ownership change multiplied by a designated federal long-term tax-exempt rate. Due to applicable limitations under Section 382 and a reduction of tax attributes due to cancellation of indebtedness, a portion of these NOLs were limited and will expire unused. We believe that the total available and utilizable NOL carry-forward at December 31, 2016 was approximately $6.0 billion. At September 30, 2017, there was no limitation on the use of these NOLs. These NOLs will begin to expire in 2031. The Company’s ability to utilize the NOLs or realize any benefits related to the NOLs is subject to a number of risks. (See Part I-Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016).

The Company accounts for uncertain tax positions in accordance with the income tax accounting guidance. The Company has analyzed filing positions in the federal and state jurisdictions where it is required to file tax returns, as well as the open tax years in these jurisdictions. Tax years 2011 to present are subject to examination by the Internal Revenue Service. The Company believes that its federal income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain federal income tax positions have been recorded. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for federal income taxes. The Company did not incur any federal income tax related interest income, interest expense or penalties for the nine months ended September 30, 2017 or for the year ended December 31, 2016.

XML

Service Agreements and Related Party Transactions

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Service Agreements and Related Party Transactions

Note 6: Service Agreements and Related Party Transactions

WMMRC has engaged a Hawaii-based service provider, Marsh Management Services, Inc., to provide accounting and related management services for its operations. In exchange for performing these services, WMMRC pays such service provider a management fee.

WMIH entered into an Investment Management Agreement and an Administrative Services Agreement with WMMRC on March 19, 2012. Each of these agreements was approved by WMMRC’s primary regulator, the Insurance Division of the State of Hawaii. Total amounts incurred under these agreements totaled $1.0 million and $1.0 million for the nine months ended September 30, 2017 and 2016, respectively. The expense and related income eliminate on consolidation. These agreements are described below.

Under the terms of such Investment Management Agreement, WMIH receives from WMMRC a fee equal to the product of (x) the ending dollar amount of assets under management during the calendar month in question and (y) .002 divided by 12. WMIH is responsible for investing the funds of WMMRC based on applicable investment criteria and subject to rules and regulations to which WMMRC is subject.

Under the terms of such Administrative Services Agreement, WMIH receives from WMMRC a fee of $110 thousand per month. WMIH is responsible for providing administrative services to support, among other things, supervision, governance, financial administration and reporting, risk management and claims management as may be necessary, together with such other general or specific administrative services that may be reasonably required or requested by WMMRC in the ordinary course of its business.

On March 22, 2012, WMIH and the WMI Liquidating Trust (the “Trust”) entered into a Transition Services Agreement (the “TSA”). Pursuant to the TSA, the Trust makes available certain services and employees. The TSA provides the Company with basic infrastructure and support services to facilitate the Company’s operations. The TSA, as amended, extends the term of the agreement through January 31, 2019, with automatic renewals thereafter for successive additional three-month terms, subject to non-renewal at the end of any additional term upon written notice by either party at least 30 days prior to the expiration of the additional term.

In connection with implementing the Company’s Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code (as modified, the “Plan”), certain holders of specified “Allowed Claims” had the right to elect to receive such holder’s “Pro Rata Share of the Common Stock Allotment.” Essentially, the Plan defines the “Pro Rata Share of the Common Stock Allotment” as a pro rata share of ten million (10,000,000) shares of WMIH’s common stock (i.e. five percent (5%)) issued and outstanding on the Effective Date. Holders exercising the foregoing election did so in lieu of receiving (i) 50% of such holder’s interest in and to certain litigation proceeds that could be realized by the Trust on account of certain claims and causes of action asserted by the Trust as contemplated by the Plan (“Litigation Proceeds”), and (ii) some or all of the Runoff Notes to which such holder may be entitled (if such holder elected to receive Runoff Notes in accordance with the terms of the Plan).

If a holder exercised the election described above and, as a result of such election, received shares of WMIH’s common stock, then such holder’s share of Runoff Notes to which the election was effective (i.e., One Dollar ($1.00) of original principal amount of Runoff Notes for each share of WMIH’s common stock) were not issued. In addition, as a result of making the aforementioned election, such holders conveyed to WMIH, and WMIH retained an economic interest in Litigation Proceeds, if any, recovered by the Trust in connection with certain litigation brought by the Trust as contemplated by the Plan. Distributions, if any, to WMIH on account of the foregoing will be effected in accordance with the Plan and the court order confirming the Plan.

On or about October 14, 2014, the Trust filed a lawsuit in King County Superior Court in the State of Washington against 16 former directors and officers of WMI (the “D&O Litigation”). The Trust’s complaint alleged, among other things, that the defendants named therein breached their fiduciary duties to WMI and committed corporate waste and fraud by squandering WMI’s financial resources.  In connection with the settlement of the D&O Litigation, during the year ended December 31, 2015, among the Trust, certain former directors and officers of WMI and certain insurance carriers that underwrote director and officer liability insurance policies for the benefit of WMI and its affiliates (including such former directors and officers), such insurance carriers agreed to pay the Trust $37.0 million, of which $3.0 million would be placed into a segregated reserve account (the “RSA Reserve”) to be administered by a third party pursuant to the terms of a Reserve Settlement Agreement (the “RSA”).

During the years ended December 31, 2016 and 2015, WMIH had other income of $123 thousand and $7.8 million, respectively, as a result of its receipt of net Litigation Proceeds related to the D&O Litigation.  As of September 30, 2017, $1.5 million remained in the RSA Reserve.  Under the RSA, funds are released from the RSA Reserve to the Trust if and when certain designated conditions are satisfied.  If and when these funds are released to the Trust, and to the extent WMIH is entitled to receive such funds in accordance with the Plan, it is anticipated the Trust will make payments to WMIH in an amount equal to WMIH’s share of Litigation Proceeds as provided under the Plan.  Due to the contingent nature of future distributions from the RSA Reserve, there can be no assurance that WMIH will receive any distributions from the remaining balance in the RSA Reserve in the future. During the nine months ended September 30, 2017, WMIH has recorded income from Litigation Proceeds of $123 thousand.  As of September 30, 2017, WMIH has not received any Litigation Proceeds, other than as described above.  

In preparation for the offering of the Series B Preferred Stock, WMIH engaged KKR Capital Markets LLC (“KCM”), an affiliate of KKR & Co. L.P., to act as a joint book-running manager for the Series B Preferred Stock offering.  KCM also acted as an initial purchaser of the Series B Preferred Stock.   During the year ended December 31, 2015, as a result of satisfying a post-closing covenant to reincorporate in the State of Delaware within 180 days following the closing of the Series B Preferred Stock offering, we paid $8.25 million to KCM.  Upon consummation of a “Qualified Acquisition” (as such term is defined in Article VI of the Certificate of Incorporation), we will pay KCM an additional fee (the “KCM Deferred Fee”) of $8.25 million.  We have recorded the KCM Deferred Fee in “other liabilities” on our condensed consolidated balance sheet and this amount was included in “accrued fees relating to Series B Preferred Stock issuance” on our condensed consolidated statements of cash flows.

XML

Notes Payable

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Notes Payable

Note 7: Notes Payable

On the Effective Date, WMIH issued $110.0 million aggregate principal amount of its 13% Senior First Lien Notes due 2030 (the “First Lien Notes”) under an indenture, dated as of March 19, 2012 (the “First Lien Indenture”), between WMIH and Wilmington Trust, National Association, as Trustee. Additionally, WMIH issued $20.0 million aggregate principal amount of its 13% Senior Second Lien Notes due 2030 (the “Second Lien Notes” and, together with the First Lien Notes, the “Runoff Notes”) under an indenture, dated as of March 19, 2012 (the “Second Lien Indenture” and, together with the First Lien Indenture, the “Indentures”), between WMIH and Law Debenture Trust Company of New York, as Trustee. On January 5, 2017, The Law Debenture Trust Company of New York notified WMIH that it had completed the transfer of substantially all of its corporate trust business to Delaware Trust Company, and that Delaware Trust Company had become the successor trustee under the Second Lien Indenture. The Runoff Notes were scheduled to mature on March 19, 2030 and pay interest quarterly.

The Runoff Notes were secured by, and had a specified priority in right of payment in, a securities or deposit account into which WMIH was required to deposit distributions it received of Runoff Proceeds (as defined in the Indentures) (the “Collateral Account”). WMIH agreed to cause WMMRC, while the Runoff Notes were outstanding, to deposit all distributions, dividends or other receipts in respect of Runoff Proceeds Distributions (as defined in the Indentures) on the date paid to WMIH in the Collateral Account established in accordance with the terms of the Indentures. On any interest payment date, payments were made from the Collateral Account and from any other Runoff Proceeds Distributions in the priority set forth in the Indentures. In connection with certain interest payments due and payable in respect of the First and Second Lien Notes, WMIH elected, consistent with the terms of the Indentures, to issue payment-in-kind notes in lieu of making such interest payments in cash when no cash was available.

As of April 15, 2015, the First Lien Notes were fully redeemed by the Company, and on April 27, 2015, the First Lien Indenture was satisfied and discharged.

Second Lien Note principal outstanding totaled zero and approximately $18.8 million as of September 30, 2017 and December 31, 2016, respectively. Approximately $18.8 million of Second Lien Note principal was paid during the nine months ended September 30, 2017, and $2.9 million of Second Lien Note principal was paid during the year ended December 31, 2016. Interest on Second Lien Notes paid in cash totaled approximately $2.0 million during each of the nine months ended September 30, 2017 and 2016. As of September 29, 2017, the Second Lien Notes were fully redeemed by the Company, and on October 2, 2017, the Second Lien Indenture was satisfied and discharged. As a result of the satisfaction and discharge of the Second Lien Indenture the Collateral Account was subsequently closed and remaining funds transferred to cash and cash equivalents to be used for general corporate purposes.  For more information see Note 14: Subsequent Events.

XML

Financing Arrangements

9 Months Ended

Sep. 30, 2017

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Financing Arrangements

Note 8: Financing Arrangements

As of September 30, 2017, the Company had no debt financing arrangements in place.  As of December 31, 2016, the Company had no debt financing arrangements in place other than the Second Lien Notes which are described in Note 7: Notes Payable.

XML

Capital Stock and Derivative Instruments

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Capital Stock and Derivative Instruments

Note 9: Capital Stock and Derivative Instruments

On the Effective Date, all shares of common and preferred equity securities previously issued by WMI were cancelled and extinguished. As of the Effective Date, and pursuant to WMIHC’s Amended and Restated Articles of Incorporation (the “Articles”), WMIHC was authorized to issue up to 500,000,000 shares of common stock and up to 5,000,000 shares of blank check preferred stock, in one or more series, each with a par value of $0.00001 per share. 200,000,000 shares of common stock were issued by WMIHC pursuant to the Plan and in reliance on Section 1145 of the United States Bankruptcy Code on the Effective Date.

On the Reincorporation Date all shares of common and preferred equity securities previously issued by WMIHC automatically were converted into one share of the substantially similar common stock, Series A Preferred Stock or Series B Preferred Stock, as applicable, of WMIH. At the same time, each outstanding option, right or warrant to acquire shares of WMIH’s common stock was converted into an option, right or warrant to acquire an equal number of shares of WMIH’s common stock under the same terms and conditions as the original options, rights or warrants. As of the Reincorporation Date, and pursuant to the Certificate of Incorporation, WMIH is authorized to issue up to 3,500,000,000 shares of common stock and up to 10,000,000 shares of blank check preferred stock, in one or more series, each with a par value of $0.00001 per share.

All of the terms of the agreements described below and attributed to WMIH are also attributable to WMIHC relative to the various agreements and instruments prior to the Reincorporation Date.  The references to WMIH are based on the date this Form 10-Q has been filed.  The references would have been to WMIHC prior to the Reincorporation Date.

On January 30, 2014, WMIH entered into (i) an investment agreement, dated as of January 30, 2014 (the “Investment Agreement”), with KKR Fund Holdings L.P. (“KKR Fund”) and, for limited purposes, KKR Management Holdings L.P., and (ii) an investor rights agreement, dated as of January 30, 2014 (the “Investor Rights Agreement”), with KKR Fund. On January 30, 2014, pursuant to the Investment Agreement, WMIH issued 1,000,000 shares of its Series A Preferred Stock having the terms, rights, obligations and preferences contained in the Articles of Amendment of WMIH dated January 30, 2014 for a purchase price equal to $11.1 million and has issued to KKR Fund warrants to purchase, in the aggregate, 61.4 million shares of WMIH’s common stock, 30.7 million of which have an exercise price of $1.32 per share and 30.7 million of which have an exercise price of $1.43 per share (together, the “Warrants”).  

The Series A Preferred Stock has rights substantially similar to those associated with WMIH’s common stock, with the exception of a liquidation preference, conversion rights and customary anti-dilution protections. The Series A Preferred Stock has a liquidation preference equal to the greater of (i) $10.00 per one million shares of Series A Preferred Stock plus declared but unpaid dividends on such shares and (ii) the amount that the holder would be entitled to in a relevant transaction had the Series A Preferred Stock been converted to common stock of WMIH. The Series A Preferred Stock is convertible at a conversion price of $1.10 per share into shares of common stock of WMIH either at the option of the holder or automatically upon transfer by KKR Fund to a non-affiliated party. As a result of the calculation of a beneficial conversion feature as required by ASC topic 470 - Debt a preferred deemed dividend of $9.5 million was recorded in conjunction with the issuance of the Series A Preferred Stock. This preferred deemed dividend resulted in an increase to our accumulated deficit, and an increase in additional paid in capital. Further, KKR Fund, as the holder of the Series A Preferred Stock and the Warrants, has received other rights pursuant to the Investor Rights Agreement as described below.

The Warrants have a five-year term from the date of issuance and are subject to customary structural adjustment provisions for stock splits, combinations, recapitalizations and other similar transactions. KKR Fund’s rights as a holder of the Series A Preferred Stock and the Warrants, and the rights of any subsequent holder that is an affiliate of KKR Fund (together with KKR Fund, the “Series A Holders”) are governed by the Investor Rights Agreement.  

In accordance with the Investor Rights Agreement, except for the issuance of WMIH’s common stock in respect of the Warrants and the Series A Preferred Stock, KKR Fund and its affiliates shall not purchase or acquire any equity securities of WMIH or its subsidiaries without WMIH’s prior written consent, subject to certain exceptions.

The Investor Rights Agreement also provides the Series A Holders with registration rights, including three long form demand registration rights, unlimited short form demand registration rights and customary piggyback registration rights with respect to WMIH’s common stock (and WMIH’s common stock underlying the Series A Preferred Stock and the Warrants), subject to certain minimum thresholds, customary blackout periods and lockups of 180 days. On July 1, 2015, WMIH filed a shelf registration statement (the “Initial Registration Statement”) covering resales of Series B Preferred Stock and WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock.  On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding (as amended, the “Registration Statement”). The Registration Statement was declared effective under the Securities Act on November 25, 2015.

For as long as the Series A Holders beneficially own any shares of common stock of WMIH or Series A Preferred Stock or any of the Warrants, WMIH has agreed to provide customary Rule 144A information rights, to provide the Series A Holders with regular audited and unaudited financial statements and to allow the Series A Holders or their representatives to inspect WMIH’s books and records.

The foregoing description of (i) the Investor Rights Agreement is qualified in its entirety by reference to the Investor Rights Agreement, which was filed with the SEC as Exhibit 4.2 on Form 8-K on January 31, 2014, and incorporated by reference, (ii) the Warrants are qualified in their entirety by reference to the Form of Tranche A Warrant and Form of Tranche B Warrant, which were filed with the SEC as Exhibits 4.3 and 4.4, respectively, on Form 8-K on January 31, 2014, and incorporated by reference, (iii) the Series A Preferred Stock is qualified in its entirety by reference to the Articles of Amendment of WMIH dated January 30, 2014, which were filed with the SEC as Exhibit 4.5 on Form 8-K on January 31, 2014, and incorporated by reference, the Form of Series A Convertible Preferred Stock Certificate, which was filed with the SEC as Exhibit 4.6 on Form 8-K on January 31, 2014, and incorporated by reference, and the Certificate of Incorporation, which was filed with the SEC as Exhibit 3.1 on Form 8-K12G3 on May 13, 2015, and incorporated by reference, and (iv) the Investment Agreement is qualified in its entirety by reference to the Investment Agreement, which was filed with the SEC as Exhibit 10.1 on Form 8-K on January 31, 2014, and incorporated by reference.

On January 5, 2015, WMIH, in connection with an offering of 600,000 shares of its Series B Preferred Stock, filed with the Secretary of State of Washington Articles of Amendment of Articles of Incorporation (the “Articles of Amendment”) containing the Designation of Rights and Preferences of the 3% Series B Convertible Preferred Stock (the “Certificate of Designation”) creating the Series B Preferred Stock and designating the rights and preferences of the Series B Preferred Stock.

The foregoing descriptions of the Articles of Amendment and the Certificate of Designation are qualified in their entirety by the provisions of the Articles of Amendment and the Certificate of Designation, filed as Exhibits 3.1 and 4.1 to a Form 8-K on January 5, 2015, respectively, and incorporated by reference herein, and the Certificate of Incorporation, which was filed with the SEC as Exhibit 3.1 on Form 8-K12G3 on May 13, 2015, and incorporated by reference.

On January 5, 2015, in connection with the offering and pursuant to that certain Purchase Agreement, dated December 19, 2014 (the “Purchase Agreement”), by and among WMIH, Citigroup Global Markets Inc. (“Citi”) and KCM (KCM and Citi together, the “Initial Purchasers”), WMIH entered into a Registration Rights Agreement with the Initial Purchasers (the “Registration Rights Agreement”), pursuant to which WMIH has agreed that, subject to certain conditions, WMIH will use its reasonable efforts to (i) file a shelf registration statement covering resales of WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock no later than six months after January 5, 2015 (the “Issue Date”); (ii) file a shelf registration statement covering resales of the Series B Preferred Stock no later than one year after the Issue Date; and (iii) cause each of these shelf registration statements to be declared effective under the Securities Act. On July 1, 2015, WMIH filed the Initial Registration Statement covering resales of Series B Preferred Stock and shares of WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock. On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding. The Registration Statement was declared effective under the Securities Act on November 25, 2015.

The foregoing description of the Registration Rights Agreement is qualified in its entirety by the provisions of the Registration Rights Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.1 and incorporated by reference herein.

On January 5, 2015, in connection with the offering and pursuant to the Purchase Agreement, WMIH entered into an Escrow Agreement (the “Escrow Agreement”) with Citibank, N.A., as Escrow Agent (the “Escrow Agent”), pursuant to which WMIH caused to be deposited with the Escrow Agent the amount of $598.5 million, representing the proceeds of the offering of Series B Preferred Stock less offering fees payable on the Issue Date but before payment of other offering fees and expenses (including fees contingent upon future events). These net proceeds have been, and will be, released from escrow from time to time to WMIH as instructed by WMIH in amounts necessary to (i) pay certain fees related to the offering that may become payable to the Initial Purchasers, (ii) finance WMIH’s efforts to explore and/or fund, in whole or in part, acquisitions, whether completed or not, including reasonable attorney fees and expenses related thereto, accounting expenses, due diligence and financial advisor fees and expenses, (iii) pay certain amounts that may become payable to the holders of the Series B Preferred Stock upon the occurrence of certain put events, (iv) pay certain amounts that would become payable to the holders of the Series B Preferred Stock upon a mandatory redemption of the Series B Preferred Stock, and (v) pay certain expenses related to the offering. The entire net proceeds will be released from escrow as instructed by WMIH upon consummation of a Qualified Acquisition (as defined in Article VI of the Certificate of Incorporation). If a Qualified Acquisition is not consummated by January 5, 2018, and no Acquisitions (as defined in Article VI of the Certificate of Incorporation) have been consummated such that all of the Series B Preferred Stock remains outstanding and has not been converted to WMIH’s common stock, the outstanding Series B Preferred Stock becomes redeemable. The aggregate redemption costs, assuming all 600,000 shares remain outstanding, of all of the Series B Preferred Stock is $600.0 million, plus accrued and unpaid dividends, if any, whether or not declared. As of September 30, 2017 and December 31, 2016, the balance remaining in the escrow account totaled approximately $577.2 million and $572.9 million, respectively. The foregoing description of the Escrow Agreement is qualified in its entirety by the provisions of the Escrow Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.2 and incorporated by reference herein.

If the Series B Preferred Stock is redeemed or determined likely to be redeemed, the Company would be required to record a charge to earnings of approximately $97.8 million to accrete the value of the Series B Preferred Stock to the $600 million redemption value. The Company continues to pursue its business strategy of consummating an acquisition, and to explore potential financing and refinancing alternatives, and as of September 30, 2017, the Company has determined that recording for accretion to the Series B Preferred Stock’s redemption value is not required.

The Series B Preferred Stock are hybrid financial instruments that blend characteristics of both equity and debt securities.  The terms of the Series B Preferred Stock provide for either redemption of the principal and interest for cash at maturity or in the event of certain predetermined circumstances (“Forward Component”) or mandatory conversion into WMIH’s common stock (“Embedded Conversion Feature” or “ECF”).  The Series B Preferred Stock also embody contingent equity-linked share price protections on the ECF in the form of a variable conversion price based on a 20 trading day average of volume weighted-average price.  Upon any conversion of Series B Preferred Stock in accordance with its terms, the Series B Preferred Stock shall convert based on the outstanding principal and accrued interest, subject to a floor of $1.75 per share of WMIH’s common stock and a maximum of $2.25 per share.  As a result, the Company determined that the Series B Preferred Stock contain certain embedded derivative features.  Management’s evaluation resulted in the conclusion that the compound derivative financial instrument required bifurcation and separately accounted for the embedded conversion feature option as a derivative.  A derivative liability results primarily when the Company average stock price (as defined in the Certificate of Incorporation) exceeds the conversion price, including the ceiling conversion price of $2.25, as defined by the Certificate of Incorporation. A derivative asset results primarily when the Company’s average stock price is less than the conversion price, including the floor price of $1.75. The aggregate fair value of the embedded conversion feature was a liability of $66.2 million on the date of issuance of the Series B Preferred Stock.  At September 30, 2017, September 30, 2016 and December 31, 2016, the fair value of the embedded conversion feature was an asset of $111.9 million, a liability of $58.3 million and an asset of $80.7 million, respectively. Any change in the fair value of the embedded conversion feature will constitute other income or expense, as the case may be, in the applicable reporting period.  Upon conversion or redemption of the Series B Preferred Stock, any asset or liability related to the embedded conversion feature would be eliminated. During the year ended December 31, 2016, the fair value of the embedded conversion feature changed by $201.5 million and this change is included as other income in the condensed consolidated statement of operations for the year ended December 31, 2016. During the three and nine months ended September 30, 2017, the fair value of the derivative asset increased by $38.6 million and $31.2 million, respectively.   During the three and nine months ended September 30, 2016, the fair value of the derivative liability increased by $16.2 million and decreased by $62.6 million, respectively.  The change in fair value is included as other income or expense, as the case may be, in the condensed consolidated statement of operations for the respective periods.

On June 1, 2017 and on June 1, 2016, WMIH issued restricted stock grants to members of the Board totaling $0.4 million and $0.5 million, respectively, of aggregate fair value.  The restricted shares noted above vest over a three-year period.

On May 15, 2015, WMIH issued restricted stock grants to our Chief Executive Officer, William C. Gallagher, and our Chief Operating Officer, Thomas L. Fairfield, in conjunction with employment agreements totaling $9.8 million of aggregate fair value (the “Exec Grants”) based on the $2.76 trading price of WMIH shares at the close of business on the date issued.  WMIH may be required to issue additional shares if the conversion price applicable to the Series B Preferred Stock is less than $2.25 per share. The Exec Grants will vest in full and will be recognized as compensation expense upon the consummation of a Qualified Acquisition, subject to the executives continued employment with the Company until such time. The foregoing description of the restricted stock agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Gallagher Restricted Stock Agreement and the Fairfield Restricted Stock Agreement (the “Executive Agreements”), which were filed as Exhibit 10.3 and Exhibit 10.5, respectively, of Form 8-K12G3 filed on May 13, 2015 and incorporated herein by reference.  The fair market value of the Exec Grants as of September 30, 2017 approximates $4.3 million as a result of the terms of the Executive Agreements which would result in additional share issuances if the value is below $2.25 per share limited to a maximum of shares based on a minimum conversion price of $1.75 per share.  The stock price was $0.95 per share at the close of the market on September 30, 2017 and if the Exec Grants had vested then the minimum conversion price of $1.75 per share would have been utilized, therefore, a total of 1,015,874 additional shares (the “Exec Additional Shares”) would have been required to be issued, 507,937 additional shares each to both Mr. Gallagher and Mr. Fairfield.

The unamortized value related to the unvested restricted share grants totals $5.0 million and $7.7 million at September 30, 2017 and December 31, 2016, respectively.

The unamortized value of $5.0 million at September 30, 2017, if all are ultimately vested, would be amortized according to the following schedule.  The fair value of the Exec Grants will vest and be recognized on the date of the consummation of a Qualified Acquisition.  Additionally, any Exec Additional Shares required to be issued, would be issued and immediately vest on the date of the consummation of a Qualified Acquisition.  

Amortization Schedule (in thousands)	September 30, 2017 unamortized dollar value
4th quarter 2017	$	103
1st quarter 2018		98
2nd quarter 2018		71
3rd quarter 2018		71
4th quarter 2018		71
1st quarter 2019		66
2nd quarter 2019		36
3rd quarter 2019		36
4th quarter 2019		36
1st quarter 2020		31
Unamortized fair-value - subject to vesting schedule		619
Unamortized fair-value - event dependent		4,343
Total unamortized dollar value		4,962

Equity-based compensation totaled $0.4 million and $0.5 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. The restricted stock awards were issued at the fair market value determined to be the trading price at the close of business on the respective date the awards were granted.

A summary of WMIH’s restricted stock award activity for the nine months ended September 30, 2017 and year ended December 31, 2016 is presented below:

	Number of restricted stock awards outstanding		Weighted-average grant date fair value		Aggregate fair value (in thousands)
Outstanding—January 1, 2016		6,168,035		2.1230		13,095
Restricted stock awards granted during 2016		212,765		2.3500		500
Restricted stock awards released or forfeited during 2016		—		—		—
Outstanding—December 31, 2016		6,380,800	$	2.1306	$	13,595
Restricted stock awards granted during 2017		333,332		1.2000		400
Restricted stock awards released or forfeited during 2017		—		—		—
Outstanding—September 30, 2017		6,714,132	$	2.0844	$	13,995

WMIH has issued the total number of shares subject to the restricted stock grants, however, until vested they are subject to repurchase. Shares subject to repurchase totaled 4,053,640 on September 30, 2017 and 4,039,591 on December 31, 2016. The Exec Grants vest upon future events, and are not time specific, and for this reason we have used 1st quarter 2018 as the vesting date in the following table as this date corresponds with the Series B Preferred Stock potential redemption date.  The shares subject to repurchase at September 30, 2017 will vest, assuming circumstances remain unchanged, according to the following schedule:

Vesting schedule of shares subject to repurchase	September 30, 2017 unvested shares
4th quarter 2017		—
1st quarter 2018		3,774,684
2nd quarter 2018		—
3rd quarter 2018		—
4th quarter 2018		—
1st quarter 2019		167,848
2nd quarter 2019		—
3rd quarter 2019		—
4th quarter 2019		—
1st quarter 2020		111,108
Total unvested shares		4,053,640

Pursuant to a restricted stock agreement, WMIH has the right, but not the obligation, to repurchase any unvested (but issued) shares of common stock subject to the restricted stock agreement at $0.0001 per share upon the termination of service in the case of a director, or in the case of the Exec Grants, on January 5, 2018 if the Series B Preferred Stock are redeemed or as a result of certain circumstances as defined by the terms of the Exec Grants.

A summary of WMIH’s restricted shares issued and subject to repurchase as of September 30, 2017 and December 31, 2016 is presented below:

Vesting schedule of shares subject to repurchase	Unvested shares
Shares subject to repurchase—January 1, 2016		4,197,396
Shares issued subject to vesting during 2016		212,765
Unvested shares repurchased during 2016		—
Shares vested during 2016		(370,570	)
Shares subject to repurchase—December 31, 2016		4,039,591
Shares issued subject to vesting during 2017		333,332
Unvested shares repurchased during 2017		—
Shares vested during 2017		(319,283	)
Shares subject to repurchase—September 30, 2017		4,053,640

On June 1, 2017 and June 1, 2016, WMIH issued 333,332 and 212,765 restricted stock grants, respectively, to members of the Board totaling $0.4 million and $0.5 million, respectively, of aggregate fair value.  The share price was determined based on the closing sales price of $1.20 and $2.35 on the respective dates of the awards.

As of September 30, 2017 and December 31, 2016, 206,714,132 and 206,380,800, respectively, of WMIH’s common stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 1,000,000 shares of the Series A Preferred Stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 600,000 shares of the Series B Preferred Stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 61,400,000 warrants to purchase WMIH’s common stock were issued and outstanding.

See Note 12: Net Income Per Common Share for further information on shares used for EPS calculations.

XML

Pending Litigation

9 Months Ended

Sep. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Pending Litigation

Note 10: Pending Litigation

As of September 30, 2017, the Company was not a party to, or aware of, any pending legal proceedings or investigations requiring disclosure at this time.

XML

Restriction on Distribution of Net Assets from Subsidiary

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Restriction on Distribution of Net Assets from Subsidiary

Note 11: Restriction on Distribution of Net Assets from Subsidiary

WMMRC has net assets totaling $17.7 million and $33.8 million as of September 30, 2017 and December 31, 2016, respectively. These net assets are not immediately available for distribution to WMIH due to restrictions imposed by trust agreements, and the requirement that the Insurance Division of the State of Hawaii must approve dividends from WMMRC. Prior to September 29, 2017, when the Second Lien Notes were fully redeemed by the Company and October 2, 2017 when the Second Lien Indenture was satisfied and discharged, distributions from WMMRC to WMIH were further restricted by the terms of the Runoff Notes and Indentures described in Note 7: Notes Payable.  As more fully described in Note 14: Subsequent Events, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

XML

Net Income (Loss) Per Common Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Net Income (Loss) Per Common Share

Note 12: Net Income (Loss) Per Common Share

In calculating earnings per share, the Company follows the two-class method, which distinguishes between the classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Series A Preferred Stock and the Series B Preferred Stock are treated as one class for purposes of applying the two-class method, because they have substantially equal rights and share equally on an as converted basis with respect to income available to WMIH common stockholders.

Basic net income per WMIH share attributable to common stockholders is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding for the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these shares are subject to repurchase.  Basic net income attributable to common stockholders is computed by deducting preferred dividends and the basic calculation of undistributed earnings attributable to participating securities from net income.

Diluted net income per WMIH share is computed by dividing net income attributable to WMIH’s common stockholders for the period by the weighted-average number of common shares outstanding after subtracting the weighted-average of any incremental unvested restricted shares outstanding and adding any potentially dilutive common equivalent shares outstanding during the period, if dilutive. Potentially dilutive common equivalent shares are comprised of the incremental common shares issuable upon the exercise of warrants for WMIH’s common stock and the potential conversion of preferred shares to common shares and the dilutive effect of unvested restricted stock. Diluted net income attributable to common stockholders is computed by deducting preferred dividends and the diluted calculation of undistributed earnings attributable to participating securities from net income.

The dilutive effect of outstanding warrants and restricted stock subject to repurchase is reflected in diluted earnings per share by application of the treasury stock method. There would be no dilutive effects from any equity instruments for periods presented reflecting a net loss, therefore diluted net loss per share would be the same as basic net loss for periods that reflect a net loss attributable to common stockholders. Certain unvested restricted shares and convertible preferred stock are excluded from the calculation of diluted earnings per share until the non-market based contingency occurs.

The following table presents the calculation of basic net (loss) income per share for periods presented:

(in thousands, except per share data):

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Numerator for basic net income (loss) per share:
Net income (loss)	$	38,411		$	(16,645	)	$	34,876		$	61,314
Less: Series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Less: undistributed earnings attributed to participating securities (basic calculation)		(21,541	)		—			(13,581	)		(27,625	)
Basic net income (loss) attributable to common stockholders	$	12,370		$	(21,145	)	$	7,795		$	20,189
Denominator for basic net income (loss) per share:
Weighted-average shares outstanding		206,714,132			206,380,800			206,529,762			206,261,993
Weighted-average unvested restricted shares outstanding		(4,053,640	)		(4,039,591	)		(3,956,447	)		(4,014,718	)
Denominator for basic net income (loss) per share		202,660,492			202,341,209			202,573,315			202,247,275
Basic net income (loss) per share attributable to common stockholders	$	0.06		$	(0.10	)	$	0.04		$	0.10

The following table presents the calculation of diluted net (loss) income per share for periods presented:

(in thousands, except per share data):

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Numerator for diluted net income (loss) per share:
Net income (loss)	$	38,411		$	(16,645	)	$	34,876		$	61,314
Less: Series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Less: undistributed earnings attributed to participating securities (diluted calculation)		(21,541	)		—			(13,581	)		(26,241	)
Diluted net income (loss) attributable to common stockholders	$	12,370		$	(21,145	)	$	7,795		$	21,573
Denominator for diluted net income (loss) per share:
Weighted-average shares outstanding		206,714,132			206,380,800			206,529,762			206,261,993
Weighted-average unvested restricted shares outstanding		(4,053,640	)		(4,039,591	)		(3,956,447	)		(4,014,718	)
Effect of dilutive potential shares		10,065,629			—			10,065,629			35,327,739
Denominator for diluted net income (loss) per share		212,726,121			202,341,209			212,638,944			237,575,014
Diluted net income (loss) per share attributable to common stockholders	$	0.06		$	(0.10	)	$	0.04		$	0.09

The following table summarizes shares subject to exercise or vesting conditions as more fully described in Note 9: Capital Stock and Derivative Instruments.  These shares could potentially be dilutive in future periods if we realize net income attributable to common and participating stockholders and the contingent or unvested stock is converted to WMIH common stock.  The cash payment of $84.4 million, which would be received upon exercise of the warrants, has not been considered as an offset to the dilutive shares under warrants outstanding below.

	Potential dilution to common stock
	Minimum shares		Maximum shares
Restricted shares subject to vesting		4,053,640		4,053,640
Series A Preferred Stock		10,065,629		10,065,629
Warrants outstanding		61,400,000		61,400,000
Dilutive shares to be issued if Series B Preferred Stock conversion is below $2.25		—		1,015,872
Series B Preferred Stock		266,666,667		342,857,143
Potential dilutive shares if converted to common stock		342,185,936		419,392,284

XML

Fair Value Measurement

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurement

Note 13: Fair Value Measurement

We use a fair-value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We use a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

• Level 1 — Inputs to the valuation methodology are quoted prices for identical assets or liabilities traded in active markets;

• Level 2 — Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market corroborated inputs; and

• Level 3 — Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Determining which category an asset or liability falls within the fair value accounting guidance hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter. Assets and liabilities measured at fair value on a recurring basis are summarized as follows:

The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of September 30, 2017:

	(in thousands)
Assets	Level 1		Level 2		Level 3		September 30, 2017
Derivative embedded conversion feature	$	—	$	—	$	111,877	$	111,877

The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of December 31, 2016:

	(in thousands)
Assets	Level 1		Level 2		Level 3		December 31, 2016
Derivative embedded conversion feature	$	—	$	—	$	80,651	$	80,651

The following table shows the change in Level 3 assets and liabilities measured at fair value on a recurring basis for the year ended December 31, 2016 and the nine months ended September 30, 2017:

	Derivative asset (liability) embedded conversion feature (in thousands)
Balance, January 1, 2016	$	(120,848	)
Unrealized gain on change in fair value		201,499
Balance, December 31, 2016		80,651
Unrealized gain on change in fair value		31,226
Balance, September 30, 2017	$	111,877

On January 5, 2015, WMIH raised $600.0 million of capital (less transaction costs) through the issuance of 600,000 shares of Series B Preferred Stock. The shares carry a liquidation preference of $1,000 per share, equal to the purchase price, and a mandatory redemption right three years from issuance date at a price equal to the purchase price, plus accrued dividends at 3% per annum.

The proceeds from the issuance of the Series B Preferred Stock are to be used to pursue strategic acquisitions. If one or more acquisitions are made on or prior to January 5, 2018 (or such later time as may be permitted pursuant to the terms governing the Series B Preferred Stock), then some or all of such Series B Preferred Stock shall be mandatorily converted into common stock of WMIH at a conversion price that is the lesser of:

i) $2.25 per share of WMIH common stock; and

ii) the arithmetic average of daily volume weighted-average prices of WMIH’s common stock during the 20 trading day period ending on the trading day immediately preceding the public announcement by WMIH of its entry into a definitive agreement for such acquisition, subject to a floor of $1.75 per share of WMIH common stock.

The mandatory conversion feature of the Series B Preferred Stock is subject to fair value accounting and, in connection therewith, since the time of issuance, the Company has used a binomial lattice option model to determine fair value of the Series B Preferred Stock. The fair value of the Series B Preferred Stock embedded conversion feature is revalued each balance sheet date utilizing the binomial lattice option model. The fair value computations are reported in the condensed consolidated statement of operations as unrealized gain or (loss) on change in fair value of derivative embedded conversion feature, respectively.

Such binomial lattice option model utilizes several inputs to determine such fair value. Such inputs include WMIH’s common stock price as of each reporting date, as well as variable assumptions including, but not limited to, volatility of our stock price, the risk free interest rate, the probability that the Company consummates a Qualified Acquisition and the time of completing any such Qualified Acquisition.

As of September 30, 2017 the following variable assumptions were included in the binomial option model: expected stock price volatility over the term of the convertible preferred securities was estimated at 60%, as compared to 40% as of December 31, 2016; the risk-free interest rate was estimated at 1.1% as compared to 0.6% as of December 31, 2016; the probability of the Company consummating a Qualified Acquisition was estimated at 50% as compared with 90% as of December 31, 2016; and the anticipated timing of the Company consummating a Qualified Acquisition was estimated at 6 months from both September 30, 2017 and December 31, 2016.

The foregoing assumptions were adopted by the Company’s management in order to determine the market value of the embedded conversion feature applicable to the Series B Preferred Stock. Such assumptions necessarily involved and continue to involve the exercise of management’s judgement, as well as the judgement of the third party the Company uses in connection with the embedded derivative valuation process and for no other purpose. Such assumptions are monitored and adjusted from time to time.  As assumptions and circumstances change, results may differ and past assumptions and valuations are not indicative of future assumptions or results.

Our reported net income attributable to common and participating stockholders (“Year to Date Net Income” or “Year to Date Net Loss”) was approximately $21.4 million for the nine months ended September 30, 2017. The change to our net income attributable to common and participating stockholders resulting from the calculation of the fair value of the embedded conversion feature is analyzed at the end of each reporting period to assess the impact of a 10% change to the various inputs and the result of each change to Year to Date Net Income is highlighted in the following scenarios. If the closing stock price of our common stock had been 10% lower, our Year to Date Net Income would have been approximately $17.7 million higher ($39.1 million). If the closing stock price of our common stock had been 10% higher, our Year to Date Net Income would have been approximately $17.6 million less ($3.8 million). If our volatility assumption on September 30, 2017 had been 10% lower, our Year to Date Net Income would have been approximately $3.0 million higher ($24.4 million). If our volatility assumption had been 10% higher, our Year to Date Net Income would have been approximately $3.3 million less ($18.1 million). If our probability of a transaction occurring assumption on September 30, 2017 had been 10% lower, our Year to Date Net Income would have been approximately $22.4 million less resulting in Year to Date Net Loss of $1.0 million. If our probability of a transaction occurring assumption had been 10% higher, our Year to Date Net Income would have been approximately $22.4 million higher ($43.8 million).

XML

Subsequent Events

9 Months Ended

Sep. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

Note 14: Subsequent Events

On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC.  On September 13, 2017, the Insurance Division of the State of Hawaii approved this commutation.

On September 13, 2017, the Insurance Division of the State of Hawaii approved a transfer of up to $10.7 million from funds which were held in trust at WMMRC as of September 30, 2017.  As of the date of the filing of this Form 10-Q, these funds have not been transferred to WMIH; however, they are no longer held in trust and are available for general corporate purposes.

On October 2, 2017, the Second Lien Indenture was satisfied and discharged. As a result of the satisfaction and discharge of the Second Lien Indenture the Collateral Account was subsequently closed and remaining funds transferred to cash and cash equivalents to be used for general corporate purposes. For more information see Note 7: Notes Payable.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Basis of Presentation

Basis of Presentation

WMIH resumed timely filing of all periodic reports for a reporting company under the Exchange Act for all periods after emergence from bankruptcy on March 19, 2012 (the “Effective Date”).

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reporting. Certain information and footnote disclosures normally included in the financial statements and prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures included are appropriate. The condensed consolidated balance sheet as of December 31, 2016, included herein, was derived from the audited consolidated financial statements as of that date.

These interim unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto filed in the Company’s Annual Report on Form 10-K, filed with the SEC on March 14, 2017. Interim information presented in the unaudited condensed consolidated financial statements has been prepared by management. In the opinion of management, the financial statements include all adjustments necessary for a fair presentation and that all such adjustments are of a normal, recurring nature and necessary for the fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with GAAP. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.

All significant intercompany transactions and balances have been eliminated in preparing the condensed consolidated financial statements.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Management has made significant estimates in certain areas, including valuing certain financial instruments, other assets and liabilities, the determination of the contingent risk liabilities, and in determining appropriate insurance reserves. Actual results could differ substantially from those estimates.

Fair Value of Certain Financial Instruments

Fair Value of Certain Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Generally, for assets that are reported at fair value, the Company uses quoted market prices or valuation models to estimate their fair value. These models incorporate inputs such as forward yield curves, market volatilities and pricing spreads, utilizing market-based inputs where readily available. The degree of management judgment involved in estimating the fair value of a financial instrument or other asset is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are actively traded in the marketplace or whose values are based on readily available market value data, little judgment is necessary when estimating the instrument’s fair value. When observable market prices and data are not readily available, significant management judgment often is necessary to estimate fair value. In those cases, different assumptions could result in significant changes in valuation.

The Company classifies fixed-maturity investments as trading securities, which are recorded at fair value. As such, changes in unrealized gains and losses on investments held at the balance sheet date are recognized and reported as a component of net investment income on the condensed consolidated statement of operations. The Company believes fair value provides better matching of investment earnings to potential cash flow generated from the investment portfolio and reduces subjectivity related to evaluating other-than-temporary impairment on the Company’s investment portfolio.

The carrying value of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their respective fair values because of their short-term nature.

The carrying value of the loss contract reserve approximates its fair value and is based on valuation methodologies using discounted cash flows at interest rates which approximate the Company’s weighted-average cost of capital.

The carrying value of the derivative embedded conversion feature of the Series B Preferred Stock is adjusted to its fair value as determined using Level 3 inputs described below under fair value measurement.  

The carrying value of notes payable approximates fair value based on time to maturity, underlying collateral, and prevailing interest rates.

Fair Value Measurement

Fair Value Measurement

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the Financial Accounting Standards Board Fair Value Measurements and Disclosures accounting guidance. The framework is based on the inputs used in valuation and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.

The three levels of the hierarchy are as follows:

Level 1–Inputs to the valuation methodology are quoted prices for identical assets or liabilities traded in active markets.

Level 2–Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market corroborated inputs.

Level 3–Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Fair values are based on quoted prices in active markets when available (Level 1). The Company receives the quoted prices from a third party, nationally recognized pricing service. When quoted prices are not available, the Company utilizes a pricing service to determine an estimate of fair value. The fair value is generally estimated using current market inputs for similar financial instruments with comparable terms and credit quality, commonly referred to as matrix pricing (Level 2). These valuation techniques involve some level of management estimation and judgment. The Company recognizes transfers between levels in the fair value hierarchy at the end of the reporting period.

Investments Held in Trust

Investments Held in Trust

Investments held in trust consist of cash equivalents, which include highly liquid overnight money market instruments, and fixed-maturity securities which are held in trust for the benefit of the primary insurers, as more fully described in Note 3: Insurance Activity and Note 4: Investment Securities, and are subject to the restrictions on distribution of net assets of subsidiaries as described below.

Third Party Restrictions on Distribution of Net Assets of Wholly-Owned Subsidiaries

Third Party Restrictions on Distribution of Net Assets of Wholly-Owned Subsidiaries

The net assets of WMMRC are subject to restrictions on distribution from multiple sources, including the primary insurers who have approval control of distributions from the trust, and the Insurance Division of the State of Hawaii who has approval authority over distributions or intercompany advances.  As more fully described in Note 14: Subsequent Events, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

Premium Recognition

Premium Recognition

Premiums assumed are earned on a daily pro-rata basis over the underlying policy terms. Premiums assumed relating to the unexpired portion of policies in force at the balance sheet date are recorded as unearned premiums. Unearned premiums also include a reserve for post default premium reserves. Post default premium reserves occur when a loan is in a default position and the servicer continues to advance the premiums. If the loan ultimately goes to claim, the premiums advanced during the period of default are subject to recapture. The Company records a default premium reserve based on information provided by the underlying mortgage insurers when they provide information on the default premium reserve separately from other reserves. The change in the post default premium reserve is reflected as a reduction or increase, as the case may be, in premiums assumed. The Company has recorded unearned premiums totaling $33 thousand and $0.3 million as of September 30, 2017 and December 31, 2016, respectively.

The Company recognizes premium deficiencies when there is a probable loss on an insurance contract. Premium deficiencies are recognized if the sum of the present value of expected losses and loss adjustment expenses, unamortized deferred acquisition costs, and maintenance costs, excluding intercompany charges, exceed expected future unearned premiums and anticipated investment income. Premium deficiency reserves have been recorded totaling $0.5 million and $0.3 million as of September 30, 2017 and December 31, 2016, respectively. Intercompany administrative costs are excluded from the computation of premium deficiencies.

The Company’s premium deficiency analysis was performed on a single book basis and includes all book years and reinsurance treaties aggregated together using assumptions based on the actuarial best estimates at the balance sheet date. The calculation for premium deficiency requires significant judgment and includes estimates of future expected premiums, claims, loss adjustment expenses and investment income as of the balance sheet date. To the extent ultimate losses are higher or premiums are lower than estimated, additional premium deficiency reserves may be required in the future.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks, U.S. Treasury bills and overnight investments. Except as described above in Investments Held in Trust, the Company considers all amounts that are invested in highly liquid overnight money market instruments to be cash equivalents. The Federal Deposit Insurance Corporation (“FDIC”) insures amounts on deposit with each financial institution up to limits as prescribed by law. The Company may hold funds with financial institutions in excess of the FDIC insured amount, however, the Company has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash

Restricted Cash

Restricted cash includes (i) amounts held for the express purposes of paying principal, interest and related fees on the Runoff Notes (as defined in Note 7: Notes Payable) pursuant to the terms of the Indentures (as defined in Note 7: Notes Payable) and (ii) proceeds of the Series B Preferred Stock offering held in escrow.

Ceding Commission Expense

Ceding Commission Expense

The Company is required to pay a ceding commission to certain primary insurers pursuant to certain reinsurance agreements.

Losses and Loss Adjustment Reserves

Losses and Loss Adjustment Reserves

The losses and loss adjustment reserves include case basis estimates of reported losses and supplemental amounts for incurred but not reported (“IBNR”) losses. A default is considered the incident (e.g., the failure to make timely payment of mortgage payments) that may give rise to a claim for mortgage insurance. In establishing the losses and loss adjustment reserve, the Company based its estimates primarily on the ceded loss and loss adjustment reserves as provided by the primary mortgage guaranty carriers.

WMMRC has recorded reserves at the ceded case reserves and IBNR loss levels established and reported by the primary mortgage guaranty carriers as of September 30, 2017 and December 31, 2016, respectively. Management believes that the recorded aggregate liability for unpaid losses and loss adjustment expenses at period end represents the Company’s best estimate, based upon the available data, of the amount necessary to cover the current cost of losses. However, due to the inherent uncertainty arising from fluctuations in the persistency rate of mortgage insurance claims, the Company’s size and lack of prior operating history, external factors such as future changes in regional or national economic conditions, judicial decisions, federal and state legislation related to mortgage restructuring and foreclosure restrictions, claims denials and coverage rescissions by primary carriers and other factors beyond the Company’s control, it is not presently possible to determine whether actual loss experience will conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Accordingly, the ultimate liability could be significantly higher or lower, as the case may be, than the amount indicated in the financial statements and there can be no assurance that the reserve amounts recorded will be sufficient. As adjustments to these estimates become necessary, such adjustments are reflected in current operations.

Loss Contract Reserve

Loss Contract Reserve

A loss contract reserve relating to contractual obligations of WMMRC was established at March 19, 2012 as a result of applying fresh start accounting and in compliance with Accounting Standards Codification (“ASC”) 805-10-55-21 (b) (1) which defines a loss contract as “a contract in which the unavoidable costs of meeting the obligation under the contract exceed the economic benefits expected to be received under it.”  The value of this reserve is analyzed quarterly and is adjusted accordingly.  The adjustment (if any) to the reserve produces an expense or contra-expense in the condensed consolidated statements of operations.

Derivative Embedded Conversion Feature

Derivative Embedded Conversion Feature

The Company has recorded a derivative embedded conversion feature of the Series B Preferred Stock which is adjusted to its fair value as determined using Level 3 inputs described above under Fair Value Measurement.  The change in fair value of the derivative embedded conversion feature is calculated at each reporting date and recorded as other income or other expense on the condensed consolidated statement of operations.

Other Liabilities

Other Liabilities

At September 30, 2017, the total balance of $13.8 million of other liabilities is comprised of $12.3 million of accrued fees relating to the Series B Preferred Stock offering, an accrual for professional fees and recurring business expenses currently payable of approximately $0.8 million and $0.7 million of accrued dividends relating to the Series B Preferred Stock. The accrued fees would be paid in the event of a Qualified Acquisition, as more fully described in Note 6: Service Agreements and Related Party Transactions.

Comprehensive Income

Comprehensive Income

The Company has no comprehensive income other than the net income disclosed in the condensed consolidated statement of operations.

Net Income Per Common Share

Net Income Per Common Share

In calculating earnings per share, the Company follows the two-class method, which distinguishes between the classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Series A Preferred Stock and the Series B Preferred Stock are treated as one class for purposes of applying the two-class method, because they have substantially equal rights and share equally on an as converted basis with respect to income available to WMIH common stockholders.

Basic net income per WMIH common share is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding for the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these are subject to repurchase.  Basic net income attributable to common stockholders is computed by deducting preferred dividends and the basic calculation of undistributed earnings attributable to participating securities from net income.

Diluted net income per WMIH common share is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding during the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these are subject to repurchase, and adding any potentially dilutive WMIH common stock equivalents outstanding during the period. Diluted net income attributable to common stockholders is computed by deducting preferred dividends and the diluted calculation of undistributed earnings attributable to participating securities from net income.

If common stock equivalents exist, in periods where there is a net loss, diluted net loss per common share would be equal to or less than basic net loss per common share, since the effect of including any common stock equivalents would be antidilutive.

Equity Based Compensation

Equity-Based Compensation

On May 22, 2012, WMIH’s Board of Directors (the “Board” or “Board of Directors”) approved the Company’s 2012 Long-Term Incentive Plan (the “2012 Plan”) so that awards of restricted stock could be made to its non-employee directors and to have a plan in place for awards of equity based compensation to executives and others in connection with the Company’s operations and future strategic plans. A total of 2.0 million shares of WMIH’s common stock were initially reserved for future issuance under the 2012 Plan, which became effective upon the Board approval on May 22, 2012. On February 10, 2014, the Board approved and adopted a First Amendment to the 2012 Plan, pursuant to which the number of shares of WMIH’s common stock reserved and available for grants under the 2012 Plan was increased from 2.0 million shares to 3.0 million shares, and the terms of the 2012 Plan were modified to permit such an increase through action of the Board, except when stockholder approval is necessary to comply with any applicable law, regulation or rule of any stock exchange on which WMIH’s shares are listed, quoted or traded. On February 25, 2015, the number of shares authorized and available for awards under the 2012 Plan was increased from 3.0 million to 12.0 million shares of WMIH’s common stock, subject to approval of stockholders of WMIH.  This approval was received at the Company’s Annual Meeting of Stockholders on April 28, 2015. The 2012 Plan provides for the granting of restricted shares and other cash and share based awards. The value of restricted stock is generally determined using the fair market value determined to be the trading price at the close of business on the respective date the awards were granted.

Income Taxes

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the carrying amounts and tax bases of assets and liabilities and losses carried forward and tax credits. Deferred tax assets and liabilities are measured using enacted tax rates and laws applicable to the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized.

The Company recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Penalties and interest, of which there are none, would be reflected in income tax expense. Tax years are open to the extent the Company has net operating loss (“NOL”) carry-forwards available to be utilized currently.

Dividend Policy

Dividend Policy

WMIH has paid no dividends on its common stock on or after the Effective Date and currently has no plans to pay a dividend on its common stock.

WMIH has declared and paid $13.5 million and $18.0 million of dividends on its Series B Preferred Stock for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. Additionally, WMIH has accrued unpaid and undeclared dividends of $0.7 million, based on the Series B Preferred Stock 3% interest rate, as of both September 30, 2017 and December 31, 2016.

New Accounting Pronouncements

New Accounting Pronouncements

The Company has reviewed new accounting pronouncements issued between August 9, 2017, the filing date of our most recent prior Form 10-Q, and the filing date of this Form 10-Q and has determined that no pronouncements issued are relevant to the Company, and/or have a material impact on the Company’s consolidated financial position, results of operations or disclosure requirements. 

Fixed Maturities [Member]

Fixed-Maturity Securities

Fixed-Maturity Securities

Fixed-maturity securities consist of U.S. Treasury securities, obligations of U.S. government sponsored agencies and domestic and foreign corporate debt securities. Fixed-maturity securities held in trust are for the benefit of the primary insurers as more fully described in Note 3: Insurance Activity. Investments in fixed-maturity securities are reported at their estimated fair values and are classified as trading securities in accordance with applicable accounting guidance. Realized gains and losses on the sale of fixed-maturity securities are determined using the specific identification method and are reported as a component of net investment income within the condensed consolidated statement of operations.

XML

Insurance Activity (Tables)

9 Months Ended

Sep. 30, 2017

Insurance [Abstract]

Schedule of Premiums Assumed and Earned

Premiums assumed and earned are as follows for the periods ended September 30, 2017 and 2016, respectively:

	Three months ended September 30, 2017		Three months ended September 30, 2016		Nine months ended September 30, 2017		Nine months ended September 30, 2016
Premiums assumed	$	342	$	739	$	866	$	1,963
Change in unearned premiums		2		47		237		463
Premiums earned	$	344	$	786	$	1,103	$	2,426

Components of Liability for Losses and Loss Adjustment Reserves

The components of the liability for losses and loss adjustment reserves are as follows as of September 30, 2017 and December 31, 2016, respectively:

	September 30, 2017		December 31, 2016
Case-basis reserves	$	174	$	553
IBNR reserves		1		—
Premium deficiency reserves		530		258
Total losses and loss adjustment reserves	$	705	$	811

Summary of Losses and Loss Adjustment Reserve Activity

Losses and loss adjustment reserve activity are as follows for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively:

	Nine months ended September 30, 2017			Year ended December 31, 2016
Balance at beginning of period	$	811		$	5,063
Incurred (released) - prior periods		207			(669	)
Paid or terminated - prior periods		(313	)		(3,583	)
Total losses and loss adjustment reserves	$	705		$	811

XML

Investment Securities (Tables)

9 Months Ended

Sep. 30, 2017

Investments Debt And Equity Securities [Abstract]

Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Estimated Fair Values of Fixed-Maturity Securities

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of total fixed-maturity securities and total fixed-maturity securities held in trust at September 30, 2017, are as follows:

	September 30, 2017
Class of securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government treasury securities	$	250	$	—	$	—		$	250
Obligations of U.S. government sponsored enterprises		2,749		—		(7	)		2,742
Corporate debt securities		3,683		—		(2	)		3,681
Foreign corporate debt securities		3,750		—		(1	)		3,749
Total fixed-maturity securities		10,432		—		(10	)		10,422
Less total unrestricted fixed-maturity securities		1,402		—		(2	)		1,400
Total fixed-maturity securities held in trust	$	9,030	$	—	$	(8	)	$	9,022

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of total fixed-maturity securities and total fixed-maturity securities held in trust at December 31, 2016, are as follows:

	December 31, 2016
Class of securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government treasury securities	$	249	$	—	$	—		$	249
Obligations of U.S. government sponsored enterprises		59,450		1		(80	)		59,371
Corporate debt securities		11,415		9		(9	)		11,415
Foreign corporate debt securities		5,798		5		(7	)		5,796
Total fixed-maturity securities		76,912		15		(96	)		76,831
Less total unrestricted fixed-maturity securities		47,635		—		(10	)		47,625
Total fixed-maturity securities held in trust	$	29,277	$	15	$	(86	)	$	29,206

Schedule of Amortized Cost and Estimated Fair Value of Fixed-Maturity Securities by Contractual Maturity

Amortized cost and estimated fair value of fixed-maturity securities at September 30, 2017 by contractual maturity are as follows:

	Amortized Cost		Estimated Fair Value
Maturity in:
2017	$	6,750	$	6,749
2018		3,682		3,673
Total fixed-maturity securities	$	10,432	$	10,422

Summary of Net Investment Income

Net investment income for the three and nine months ended September 30, 2017 and 2016, respectively, is summarized as follows:

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Investment income:
Amortization of premium or discount on fixed-maturity securities	$	(32	)	$	(74	)	$	(108	)	$	(247	)
Investment income on fixed-maturity securities		72			233			403			792
Interest income on cash and cash equivalents		1,895			405			4,527			1,100
Realized net (loss) gain from sale of investments		(36	)		18			(63	)		19
Unrealized gain (loss) on trading securities held at period end		44			(84	)		67			83
Net investment income	$	1,943		$	498		$	4,826		$	1,747

Schedule of Investments in Accordance with Fair Value Measurement

The following table shows how the Company’s investments are categorized in accordance with fair value measurement, as of

September 30, 2017:

	September 30, 2017
	Level 1		Level 2		Level 3		Total
Class of securities:
U.S. government treasury securities	$	250	$	—	$	—	$	250
Obligations of U.S. government sponsored enterprises		1,497		1,245		—		2,742
Corporate debt securities		3,151		530		—		3,681
Foreign corporate debt securities		3,749		—		—		3,749
Total fixed-maturity securities		8,647		1,775		—		10,422
Money market funds		32,007		—		—		32,007
Total	$	40,654	$	1,775	$	—	$	42,429

The following table shows how the Company’s investments are categorized in accordance with fair value measurement, as of December 31, 2016:

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Class of securities:
U.S. government treasury securities	$	249	$	—	$	—	$	249
Obligations of U.S. government sponsored enterprises		47,489		11,882		—		59,371
Corporate debt securities		7,033		4,382		—		11,415
Foreign corporate debt securities		5,796		—		—		5,796
Total fixed-maturity securities		60,567		16,264		—		76,831
Money market funds		4,548		—		—		4,548
Total	$	65,115	$	16,264	$	—	$	81,379

Summary of Transfers between Level 1 and Level 2

	January 1, 2017 to September 30, 2017				January 1, 2016 to  December 31, 2016
	Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1			Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1
Class of securities:
Corporate debt securities	$	—	$	901		$	—	$	5,737
Foreign corporate debt securities		—		—			—		5,295
Total transfers	$	—	$	901		$	—	$	11,032

XML

Capital Stock and Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Schedule of Unamortized Value of Restricted Stock

The unamortized value of $5.0 million at September 30, 2017, if all are ultimately vested, would be amortized according to the following schedule.  The fair value of the Exec Grants will vest and be recognized on the date of the consummation of a Qualified Acquisition.  Additionally, any Exec Additional Shares required to be issued, would be issued and immediately vest on the date of the consummation of a Qualified Acquisition.  

Amortization Schedule (in thousands)	September 30, 2017 unamortized dollar value
4th quarter 2017	$	103
1st quarter 2018		98
2nd quarter 2018		71
3rd quarter 2018		71
4th quarter 2018		71
1st quarter 2019		66
2nd quarter 2019		36
3rd quarter 2019		36
4th quarter 2019		36
1st quarter 2020		31
Unamortized fair-value - subject to vesting schedule		619
Unamortized fair-value - event dependent		4,343
Total unamortized dollar value		4,962

Summary of Company's Restricted Stock Award Activity

A summary of WMIH’s restricted stock award activity for the nine months ended September 30, 2017 and year ended December 31, 2016 is presented below:

	Number of restricted stock awards outstanding		Weighted-average grant date fair value		Aggregate fair value (in thousands)
Outstanding—January 1, 2016		6,168,035		2.1230		13,095
Restricted stock awards granted during 2016		212,765		2.3500		500
Restricted stock awards released or forfeited during 2016		—		—		—
Outstanding—December 31, 2016		6,380,800	$	2.1306	$	13,595
Restricted stock awards granted during 2017		333,332		1.2000		400
Restricted stock awards released or forfeited during 2017		—		—		—
Outstanding—September 30, 2017		6,714,132	$	2.0844	$	13,995

Schedule of Vesting Shares Subject to Repurchase

The Exec Grants vest upon future events, and are not time specific, and for this reason we have used 1st quarter 2018 as the vesting date in the following table as this date corresponds with the Series B Preferred Stock potential redemption date.  The shares subject to repurchase at September 30, 2017 will vest, assuming circumstances remain unchanged, according to the following schedule:

Vesting schedule of shares subject to repurchase	September 30, 2017 unvested shares
4th quarter 2017		—
1st quarter 2018		3,774,684
2nd quarter 2018		—
3rd quarter 2018		—
4th quarter 2018		—
1st quarter 2019		167,848
2nd quarter 2019		—
3rd quarter 2019		—
4th quarter 2019		—
1st quarter 2020		111,108
Total unvested shares		4,053,640

Summary of WMIH's Restricted Shares Issued and Subject to Repurchase

A summary of WMIH’s restricted shares issued and subject to repurchase as of September 30, 2017 and December 31, 2016 is presented below:

Vesting schedule of shares subject to repurchase	Unvested shares
Shares subject to repurchase—January 1, 2016		4,197,396
Shares issued subject to vesting during 2016		212,765
Unvested shares repurchased during 2016		—
Shares vested during 2016		(370,570	)
Shares subject to repurchase—December 31, 2016		4,039,591
Shares issued subject to vesting during 2017		333,332
Unvested shares repurchased during 2017		—
Shares vested during 2017		(319,283	)
Shares subject to repurchase—September 30, 2017		4,053,640

XML

Net Income (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Calculation of Basic Net (Loss) Income Per Share

The following table presents the calculation of basic net (loss) income per share for periods presented:

(in thousands, except per share data):

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Numerator for basic net income (loss) per share:
Net income (loss)	$	38,411		$	(16,645	)	$	34,876		$	61,314
Less: Series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Less: undistributed earnings attributed to participating securities (basic calculation)		(21,541	)		—			(13,581	)		(27,625	)
Basic net income (loss) attributable to common stockholders	$	12,370		$	(21,145	)	$	7,795		$	20,189
Denominator for basic net income (loss) per share:
Weighted-average shares outstanding		206,714,132			206,380,800			206,529,762			206,261,993
Weighted-average unvested restricted shares outstanding		(4,053,640	)		(4,039,591	)		(3,956,447	)		(4,014,718	)
Denominator for basic net income (loss) per share		202,660,492			202,341,209			202,573,315			202,247,275
Basic net income (loss) per share attributable to common stockholders	$	0.06		$	(0.10	)	$	0.04		$	0.10

Calculation of Diluted Net (Loss) Income Per Share

The following table presents the calculation of diluted net (loss) income per share for periods presented:

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Numerator for diluted net income (loss) per share:
Net income (loss)	$	38,411		$	(16,645	)	$	34,876		$	61,314
Less: Series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Less: undistributed earnings attributed to participating securities (diluted calculation)		(21,541	)		—			(13,581	)		(26,241	)
Diluted net income (loss) attributable to common stockholders	$	12,370		$	(21,145	)	$	7,795		$	21,573
Denominator for diluted net income (loss) per share:
Weighted-average shares outstanding		206,714,132			206,380,800			206,529,762			206,261,993
Weighted-average unvested restricted shares outstanding		(4,053,640	)		(4,039,591	)		(3,956,447	)		(4,014,718	)
Effect of dilutive potential shares		10,065,629			—			10,065,629			35,327,739
Denominator for diluted net income (loss) per share		212,726,121			202,341,209			212,638,944			237,575,014
Diluted net income (loss) per share attributable to common stockholders	$	0.06		$	(0.10	)	$	0.04		$	0.09

Schedule of Potential Dilutive Common Shares

The following table summarizes shares subject to exercise or vesting conditions as more fully described in Note 9: Capital Stock and Derivative Instruments.  These shares could potentially be dilutive in future periods if we realize net income attributable to common and participating stockholders and the contingent or unvested stock is converted to WMIH common stock.  The cash payment of $84.4 million, which would be received upon exercise of the warrants, has not been considered as an offset to the dilutive shares under warrants outstanding below.

	Potential dilution to common stock
	Minimum shares		Maximum shares
Restricted shares subject to vesting		4,053,640		4,053,640
Series A Preferred Stock		10,065,629		10,065,629
Warrants outstanding		61,400,000		61,400,000
Dilutive shares to be issued if Series B Preferred Stock conversion is below $2.25		—		1,015,872
Series B Preferred Stock		266,666,667		342,857,143
Potential dilutive shares if converted to common stock		342,185,936		419,392,284

XML

Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Summary of Fair Value Measured on Recurring Basis

The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of September 30, 2017:

	(in thousands)
Assets	Level 1		Level 2		Level 3		September 30, 2017
Derivative embedded conversion feature	$	—	$	—	$	111,877	$	111,877

The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of December 31, 2016:

	(in thousands)
Assets	Level 1		Level 2		Level 3		December 31, 2016
Derivative embedded conversion feature	$	—	$	—	$	80,651	$	80,651

Summary of Change in Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table shows the change in Level 3 assets and liabilities measured at fair value on a recurring basis for the year ended December 31, 2016 and the nine months ended September 30, 2017:

	Derivative asset (liability) embedded conversion feature (in thousands)
Balance, January 1, 2016	$	(120,848	)
Unrealized gain on change in fair value		201,499
Balance, December 31, 2016		80,651
Unrealized gain on change in fair value		31,226
Balance, September 30, 2017	$	111,877

XML

The Company and its Subsidiaries - Additional Information (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2017 Insurers $ / shares shares	Dec. 31, 2016 $ / shares shares	Sep. 13, 2017 USD ($)	Dec. 31, 2015 shares	May 11, 2015 $ / shares shares	May 10, 2015 $ / shares shares	Jan. 05, 2015 shares	Jan. 30, 2014 shares
Related Party Transaction [Line Items]
Plan Effective Date	Mar. 19, 2012
Common stock, shares authorized	3,500,000,000	3,500,000,000			3,500,000,000	500,000,000
Preferred stock, shares authorized	10,000,000				10,000,000	5,000,000
Common stock, par value | $ / shares	$ 0.00001	$ 0.00001			$ 0.00001	$ 0.00001
Convertible preferred stock, par value | $ / shares	$ 0.00001				$ 0.00001	$ 0.00001
Common stock, shares issued	206,714,132	206,380,800
Common stock, shares outstanding	206,714,132	206,380,800
Distribution from WMMRC to WMIH Deposited in Collateral Account [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Approved amount for distribution | $			$ 10,700,000
WMMRC [Member]
Related Party Transaction [Line Items]
Number of primary mortgage insurers | Insurers	7
Convertible Series A Preferred Stock [Member]
Related Party Transaction [Line Items]
Convertible preferred stock, par value | $ / shares	$ 0.00001	$ 0.00001
Convertible preferred stock, shares issued	1,000,000	1,000,000						1,000,000
Convertible preferred stock, shares outstanding	1,000,000	1,000,000
Redeemable Convertible Series B Preferred Stock [Member]
Related Party Transaction [Line Items]
Preferred stock, shares issued	600,000	600,000					600,000
Preferred stock, shares outstanding	600,000	600,000		600,000
Preferred stock dividend rate	3.00%	3.00%

XML

Significant Accounting Policies - Additional Information (Detail) - USD ($) shares in Millions	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016		Sep. 13, 2017	Feb. 25, 2015	Feb. 10, 2014	May 22, 2012
Significant Accounting Policies [Line Items]
Plan Effective Date	Mar. 19, 2012
Unearned premiums	$ 33,000		$ 270,000	[1]
Premium deficiency reserves	500,000		300,000
Other liabilities	13,774,000		14,063,000	[1]
Accrued professional fees	800,000
Comprehensive income	0
Amount of dividends paid on or after Effective Date	0
Preferred stock dividends declared	13,500,000		18,000,000
Preferred stock dividends paid	13,500,000	$ 13,500,000
2012 Plan [Member]
Significant Accounting Policies [Line Items]
Common stock reserved for future issuance						12.0	3.0	2.0
Redeemable Convertible Series B Preferred Stock [Member]
Significant Accounting Policies [Line Items]
Accrued fees	12,300,000
Accrued dividends	700,000
Preferred stock dividends declared	13,500,000		18,000,000
Additional accrued preferred stock dividends	700,000		700,000
Preferred stock dividends paid	$ 13,500,000		$ 18,000,000
Preferred stock dividend rate	3.00%		3.00%
Distribution from WMMRC to WMIH Deposited in Collateral Account [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Approved amount for distribution					$ 10,700,000

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Insurance Activity - Additional Information (Detail) - USD ($) $ in Millions		9 Months Ended
	Aug. 31, 2009	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Effects of Reinsurance [Line Items]
Quoted percentage to share base	50.00%
Balances in loss contract reserve		$ 0.0		$ 5.6
Decreased value of loss contract reserve		$ 5.6	$ 2.3
WMMRC [Member]
Effects of Reinsurance [Line Items]
Second loss layer risk percentage of range minimum	5.00%
Second loss layer risk percentage of range maximum	10.00%
First loss layer risk percentage of range minimum	4.00%
First loss layer risk percentage of range maximum	5.00%
Minimum period of reinsurance agreements		5 years
Maximum period of reinsurance agreements		10 years
WMMRC [Member] | Minimum [Member] | Credit Concentration Risk | Liabilities, Total [Member]
Effects of Reinsurance [Line Items]
Net of ceding commission, percentage	25.00%
WMMRC [Member] | Maximum [Member] | Credit Concentration Risk | Liabilities, Total [Member]
Effects of Reinsurance [Line Items]
Net of ceding commission, percentage	40.00%

XML

Insurance Activity - Schedule of Premiums Assumed and Earned (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Insurance [Abstract]
Premiums assumed	$ 342	$ 739	$ 866	$ 1,963
Change in unearned premiums	2	47	237	463
Premiums earned	$ 344	$ 786	$ 1,103	$ 2,426

XML

Insurance Activity - Components of Liability for Losses and Loss Adjustment Reserves (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016		Dec. 31, 2015
Effects of Reinsurance [Line Items]
Total losses and loss adjustment reserves	$ 705	$ 811	[1]	$ 5,063
Case-basis reserves [Member]
Effects of Reinsurance [Line Items]
Total losses and loss adjustment reserves	174	553
IBNR reserves [Member]
Effects of Reinsurance [Line Items]
Total losses and loss adjustment reserves	1
Premium deficiency reserves [Member]
Effects of Reinsurance [Line Items]
Total losses and loss adjustment reserves	$ 530	$ 258

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Insurance Activity - Summary of Losses and Loss Adjustment Reserve Activity (Detail) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2017		Dec. 31, 2016
Liability For Unpaid Claims And Claims Adjustment Expense Net [Abstract]
Balance at beginning of period	$ 811	[1]	$ 5,063
Incurred (released) - prior periods	207		(669)
Paid or terminated - prior periods	(313)		(3,583)
Total losses and loss adjustment reserves	$ 705		$ 811	[1]

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Investment Securities - Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Estimated Fair Values of Fixed-Maturity Securities (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Schedule of Trading Securities and Other Trading Assets [Line Items]
Total fixed-maturity securities, Amortized Cost	$ 10,432	$ 76,912
Total fixed-maturity securities, Gross Unrealized Gains		15
Total fixed-maturity securities, Gross Unrealized Losses	(10)	(96)
Total fixed-maturity securities, Estimated Fair Value	10,422	76,831
Unrestricted Fixed-Maturity Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Total fixed-maturity securities, Amortized Cost	1,402	47,635
Total fixed-maturity securities, Gross Unrealized Losses	(2)	(10)
Total fixed-maturity securities, Estimated Fair Value	1,400	47,625	[1]
Fixed-Maturity Securities Held in Trust [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Total fixed-maturity securities, Amortized Cost	9,030	29,277
Total fixed-maturity securities, Gross Unrealized Gains		15
Total fixed-maturity securities, Gross Unrealized Losses	(8)	(86)
Total fixed-maturity securities, Estimated Fair Value	9,022	29,206	[1]
U.S. Government Treasury Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Total fixed-maturity securities, Amortized Cost	250	249
Total fixed-maturity securities, Estimated Fair Value	250	249
Obligations of U.S. Government Sponsored Enterprises [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Total fixed-maturity securities, Amortized Cost	2,749	59,450
Total fixed-maturity securities, Gross Unrealized Gains		1
Total fixed-maturity securities, Gross Unrealized Losses	(7)	(80)
Total fixed-maturity securities, Estimated Fair Value	2,742	59,371
Corporate Debt Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Total fixed-maturity securities, Amortized Cost	3,683	11,415
Total fixed-maturity securities, Gross Unrealized Gains		9
Total fixed-maturity securities, Gross Unrealized Losses	(2)	(9)
Total fixed-maturity securities, Estimated Fair Value	3,681	11,415
Foreign Corporate Debt Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Total fixed-maturity securities, Amortized Cost	3,750	5,798
Total fixed-maturity securities, Gross Unrealized Gains		5
Total fixed-maturity securities, Gross Unrealized Losses	(1)	(7)
Total fixed-maturity securities, Estimated Fair Value	$ 3,749	$ 5,796

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Investment Securities - Schedule of Amortized Cost and Estimated Fair Value of Fixed-Maturity Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Investments Debt And Equity Securities [Abstract]
Amortized Cost, 2017	$ 6,750
Amortized Cost, 2018	3,682
Total fixed-maturity securities, Amortized Cost	10,432	$ 76,912
Estimated Fair Value, 2017	6,749
Estimated Fair Value, 2018	3,673
Total fixed-maturity securities, Estimated Fair Value	$ 10,422	$ 76,831

XML

Investment Securities - Summary of Net Investment Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Investment income:
Amortization of premium or discount on fixed-maturity securities			$ (108)	$ (247)
Realized net (loss) gain from sale of investments	$ (36)	$ 18	(63)	19
Unrealized gain (loss) on trading securities held at period end	44	(84)	67	83
Net investment income	1,943	498	4,826	1,747
Fixed Maturities [Member]
Investment income:
Amortization of premium or discount on fixed-maturity securities	(32)	(74)	(108)	(247)
Investment income on fixed-maturity securities	72	233	403	792
Cash and Cash Equivalents [Member]
Investment income:
Interest income on cash and cash equivalents	$ 1,895	$ 405	$ 4,527	$ 1,100

XML

Investment Securities - Schedule of Investments in Accordance with Fair Value Measurement (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	$ 10,422	$ 76,831
Total investments fair value	42,429	81,379
Money Market Funds [Member]
Class of securities:
Money market funds	32,007	4,548
Level 1
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	8,647	60,567
Total investments fair value	40,654	65,115
Level 1 | Money Market Funds [Member]
Class of securities:
Money market funds	32,007	4,548
Level 2
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	1,775	16,264
Total investments fair value	1,775	16,264
U.S. Government Treasury Securities [Member]
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	250	249
U.S. Government Treasury Securities [Member] | Level 1
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	250	249
Obligations of U.S. Government Sponsored Enterprises [Member]
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	2,742	59,371
Obligations of U.S. Government Sponsored Enterprises [Member] | Level 1
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	1,497	47,489
Obligations of U.S. Government Sponsored Enterprises [Member] | Level 2
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	1,245	11,882
Corporate Debt Securities [Member]
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	3,681	11,415
Corporate Debt Securities [Member] | Level 1
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	3,151	7,033
Corporate Debt Securities [Member] | Level 2
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	530	4,382
Foreign Corporate Debt Securities [Member]
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	3,749	5,796
Foreign Corporate Debt Securities [Member] | Level 1
Class of securities:
Total fixed-maturity securities, Estimated Fair Value	$ 3,749	$ 5,796

XML

Investment Securities - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Transfers from Level 2 to Level 1	$ 901	$ 11,032

XML

Investment Securities - Summary of Transfers between Level 1 and Level 2 (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Transfers from Level 2 to Level 1	$ 901	$ 11,032
Corporate Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Transfers from Level 2 to Level 1	$ 901	5,737
Foreign Corporate Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Transfers from Level 2 to Level 1		$ 5,295

XML

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Mar. 19, 2012
Income Tax Disclosure [Abstract]
Net income attributable to common and participating stockholders	$ 33,911,000	$ (21,145,000)	$ 21,376,000	$ 47,814,000
Percentage of net operating loss carry forwards	100.00%		100.00%
Valuation allowance recorded to be reduce to	0.00%		0.00%
Income tax expense or benefit			$ 0		$ 0
Income tax at the federal statutory rate of 35%			35.00%
Income tax paid			$ 0		$ 0
Valuation allowance equal to net deferred federal income tax asset	100.00%		100.00%		100.00%
Abandoned stock						$ 8,370,000,000
Available and utilizable NOL carry forward					$ 6,000,000,000
NOLs expiration date			2031
Reserves for uncertain federal income tax positions	$ 0		$ 0
Income tax interest income, expense or penalties			$ 0		$ 0
Income tax examination, year under examination			2011

XML

Service Agreements and Related Party Transactions - Additional Information (Detail) $ / shares in Units, $ in Thousands		9 Months Ended		12 Months Ended
	Oct. 14, 2014 Directors	Sep. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
WMMRC [Member]
Related Party Transaction [Line Items]
Administrative services agreement fee		$ 110
Pro Rata Share of the Common Stock Allotment | shares		10,000,000
Percentage of Pro Rata Share of the Common Stock Election		5.00%
Percentage of interest in litigation proceeds		50.00%
Lawsuit against number of former directors | Directors	16
Litigation settlement amount					$ 37,000
Litigation settlement reserve for reimbursement of contingent fees and expenses					3,000
WMMRC [Member] | Runoff Notes [Member]
Related Party Transaction [Line Items]
Principal amount of Runoff Notes | $ / shares		$ 1.00
WMMRC [Member] | Investment Management Agreement And Administrative Services Agreement [Member]
Related Party Transaction [Line Items]
Expenses incurred under the agreements		$ 1,000	$ 1,000
WMMRC [Member] | Investment Management Agreement [Member]
Related Party Transaction [Line Items]
Description of fee		fee equal to the product of (x) the ending dollar amount of assets under management during the calendar month in question and (y) .002 divided by 12.
WMI Holdings Corp [Member]
Related Party Transaction [Line Items]
Litigation settlement reserve for reimbursement of contingent fees and expenses		$ 1,500
Other income				$ 123	7,800
Income from litigation proceeds		$ 123
KKR Capital Markets LLC [Member] | Redeemable Convertible Series B Preferred Stock [Member]
Related Party Transaction [Line Items]
Payment of stock offering fee					8,250
Payment of additional deferred Fee					$ 8,250

XML

Notes Payable - Additional Information (Detail) - USD ($) $ in Thousands		9 Months Ended		12 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Debt Instrument [Line Items]
Total outstanding amounts of notes	[1]			$ 18,774
Principal payments		$ 18,774	$ 2,185
Cash interest paid on Notes		1,991	2,008
13% Senior First Lien Notes [Member]
Debt Instrument [Line Items]
Issued aggregate principal amount		$ 110,000
Notes maturity date		Mar. 19, 2030
13% Senior Second Lien Notes [Member]
Debt Instrument [Line Items]
Issued aggregate principal amount		$ 20,000
Notes maturity date		Mar. 19, 2030
Total outstanding amounts of notes		$ 0		18,800
Principal payments		18,800		$ 2,900
Cash interest paid on Notes		$ 2,000	$ 2,000

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Financing Arrangements - Additional Information (Detail) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Number of debt financing arrangements in place	0
Number of debt financing arrangements in place other than second lien notes		0

XML

Capital Stock and Derivative Instruments - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands					3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 01, 2017	Jun. 01, 2016	Jan. 05, 2015	Mar. 19, 2012	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016		Dec. 31, 2015	May 15, 2015	May 11, 2015	May 10, 2015	Jan. 30, 2014
Capital Stock Distribution [Line Items]
Common stock, shares authorized					3,500,000,000		3,500,000,000		3,500,000,000				3,500,000,000	500,000,000
Preferred stock, shares authorized					10,000,000		10,000,000						10,000,000	5,000,000
Common stock, par value					$ 0.00001		$ 0.00001		$ 0.00001				$ 0.00001	$ 0.00001
Preferred stock, par value					$ 0.00001		$ 0.00001						$ 0.00001	$ 0.00001
Conversion of shares													1
Warrants to purchase in aggregate, shares															61,400,000
Warrants expiration period							5 years
Registration right period							180 days
Escrow deposit			$ 598,500		$ 577,200		$ 577,200		$ 572,900
Derivative asset - embedded conversion feature					111,877		111,877		80,651	[1]
Changes in fair value					38,579	$ (16,243)	$ 31,226	$ 62,587
Award vesting period							3 years
Number of additional Restricted Stock Awards Outstanding, Restricted stock awards granted							1,015,874
Unamortized value of unvested restricted share grants					$ 4,962		$ 4,962		$ 7,700
Equity-based compensation							$ 415	484
Per share of unvested shares of common stock							$ 0.0001
Common stock, shares issued					206,714,132		206,714,132		206,380,800
Common stock, shares outstanding					206,714,132		206,714,132		206,380,800
Warrants to purchase common stock, Issued					61,400,000		61,400,000		61,400,000
Warrants to purchase common stock, outstanding					61,400,000		61,400,000		61,400,000
Exec Grants [Member]
Capital Stock Distribution [Line Items]
Share price												$ 2.76
Restricted stock fair value							$ 4,300
Restricted stock price per share							$ 0.95
Chief Executive Officer [Member]
Capital Stock Distribution [Line Items]
Number of additional Restricted Stock Awards Outstanding, Restricted stock awards granted							507,937
Restricted stock award [Member]
Capital Stock Distribution [Line Items]
Amount of restricted stock grants	$ 400	$ 500
Share price	$ 1.20	$ 2.35
Unvested shares					6,714,132		6,714,132		6,380,800		6,168,035
Number of Restricted Stock Awards Outstanding, Restricted stock awards granted	333,332	212,765					333,332		212,765
Restricted stock award [Member] | Exec Grants [Member]
Capital Stock Distribution [Line Items]
Amount of restricted stock grants												$ 9,800
Restricted shares subject to repurchase [Member]
Capital Stock Distribution [Line Items]
Unvested shares					4,053,640		4,053,640		4,039,591		4,197,396
Number of Restricted Stock Awards Outstanding, Restricted stock awards granted							333,332		212,765
Minimum [Member]
Capital Stock Distribution [Line Items]
Preferred stock liquidation preference per share					$ 10.00		$ 10.00
Minimum [Member] | Exec Grants [Member]
Capital Stock Distribution [Line Items]
Preferred stock additional shares conversion price					1.75		1.75
Restricted stock price per share							1.75
Maximum [Member] | Exec Grants [Member]
Capital Stock Distribution [Line Items]
Preferred stock additional shares conversion price					2.25		2.25
Convertible Series A Preferred Stock [Member]
Capital Stock Distribution [Line Items]
Preferred stock, par value					$ 0.00001		$ 0.00001		$ 0.00001
Preferred stock, shares issued					1,000,000		1,000,000		1,000,000						1,000,000
Purchase price of convertible preferred stock maximum limit										[1]					$ 11,100
Preferred stock liquidation preference							The Series A Preferred Stock has rights substantially similar to those associated with WMIH’s common stock, with the exception of a liquidation preference, conversion rights and customary anti-dilution protections. The Series A Preferred Stock has a liquidation preference equal to the greater of (i) $10.00 per one million shares of Series A Preferred Stock plus declared but unpaid dividends on such shares and (ii) the amount that the holder would be entitled to in a relevant transaction had the Series A Preferred Stock been converted to common stock of WMIH.
Convertible preferred stock conversion price							$ 1.10
Preferred deemed dividend							$ 9,500
Preferred stock, shares outstanding					1,000,000		1,000,000		1,000,000
Redeemable Convertible Series B Preferred Stock [Member]
Capital Stock Distribution [Line Items]
Preferred stock liquidation preference							If the Series B Preferred Stock is redeemed or determined likely to be redeemed, the Company would be required to record a charge to earnings of approximately $97.8 million to accrete the value of the Series B Preferred Stock to the $600 million redemption value. The Company continues to pursue its business strategy of consummating an acquisition, and to explore potential financing and refinancing alternatives, and as of September 30, 2017, the Company has determined that recording for accretion to the Series B Preferred Stock’s redemption value is not required.
Preferred stock, shares issued			600,000		600,000		600,000		600,000
Preferred stock dividend rate calculated on interest rate			3.00%
Preferred stock, redemption date							Jan. 05, 2018
Preferred stock, shares outstanding					600,000		600,000		600,000		600,000
Preferred stock, redemption amount					$ 600,000		$ 600,000
Preferred stock, accretion to redemption value							$ 97,800
Number of trading periods							20 days
Conversion ceiling price of common stock					$ 2.25		$ 2.25
Conversion floor price of common stock					$ 1.75		$ 1.75
Derivative liability - embedded conversion feature			$ 66,200			58,300		58,300
Derivative asset - embedded conversion feature					$ 111,900		$ 111,900		$ 80,700
Changes in fair value					$ 38,600	$ 16,200	$ 31,200	$ (62,600)	$ 201,500
Share price												$ 2.25
Redeemable Convertible Series B Preferred Stock [Member] | Maximum [Member]
Capital Stock Distribution [Line Items]
Conversion ceiling price of common stock					$ 2.25		$ 2.25
Common Stock [Member]
Capital Stock Distribution [Line Items]
Issuance of common stock, Shares				200,000,000
Warrant One [Member]
Capital Stock Distribution [Line Items]
Warrants to purchase common stock															30,700,000
Warrants to purchase common stock, exercise price															$ 1.32
Warrant Two [Member]
Capital Stock Distribution [Line Items]
Warrants to purchase common stock															30,700,000
Warrants to purchase common stock, exercise price															$ 1.43

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Capital Stock and Derivative Instruments - Schedule of Unamortized Value of Restricted Stock (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	$ 619
Unamortized fair-value - event dependent	4,343
Total unamortized dollar value	4,962	$ 7,700
4th quarter 2017 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	103
1st quarter 2018 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	98
2nd quarter 2018 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	71
3rd quarter 2018 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	71
4th quarter 2018 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	71
1st quarter 2019 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	66
2nd quarter 2019 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	36
3rd quarter 2019 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	36
4th quarter 2019 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	36
1st quarter 2020 [Member]
Amortization Expense [Line Items]
Unamortized fair value subject to vesting schedule	$ 31

XML

Capital Stock and Derivative Instruments - Summary of Company's Restricted Stock Award Activity (Detail) - Restricted stock award [Member] - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended	12 Months Ended
	Jun. 01, 2017	Jun. 01, 2016	Sep. 30, 2017	Dec. 31, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Restricted Stock Awards Outstanding, Beginning balance			6,380,800	6,168,035
Number of Restricted Stock Awards Outstanding, Restricted stock awards granted	333,332	212,765	333,332	212,765
Number of Restricted Stock Awards Outstanding, Restricted stock awards released or forfeited			0	0
Number of Restricted Stock Awards Outstanding, Ending balance			6,714,132	6,380,800
Weighted Average Grant Date Fair Value, Beginning balance			$ 2.1306	$ 2.1230
Weighted Average Grant Date Fair Value, Restricted stock awards granted			1.2000	2.3500
Weighted Average Grant Date Fair Value, Restricted stock awards released or forfeited			0	0
Weighted Average Grant Date Fair Value, Ending balance			$ 2.0844	$ 2.1306
Aggregate Fair Value, Beginning balance			$ 13,595	$ 13,095
Aggregate Fair Value, Restricted stock awards granted			400	500
Aggregate Fair Value, Restricted stock awards released or forfeited			0	0
Aggregate Fair Value, Ending balance			$ 13,995	$ 13,595

XML

Capital Stock and Derivative Instruments - Schedule of Vesting Shares Subject to Repurchase (Detail) - Restricted shares subject to repurchase [Member] - shares	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Amortization Expense [Line Items]
Unvested shares	4,053,640	4,039,591	4,197,396
1st quarter 2018 [Member]
Amortization Expense [Line Items]
Unvested shares	3,774,684
1st quarter 2019 [Member]
Amortization Expense [Line Items]
Unvested shares	167,848
1st quarter 2020 [Member]
Amortization Expense [Line Items]
Unvested shares	111,108

XML

Capital Stock and Derivative Instruments - Summary of WMIH's Restricted Shares Issued and Subject to Repurchase (Detail) - Restricted shares subject to repurchase [Member] - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Restricted Stock Awards Outstanding, Beginning balance	4,039,591	4,197,396
Shares issued subject to vesting during the period	333,332	212,765
Shares vested during the period	(319,283)	(370,570)
Number of Restricted Stock Awards Outstanding, Ending balance	4,053,640	4,039,591

XML

Pending Litigation - Additional Information (Detail)	Sep. 30, 2017 Litigation
Loss Contingency [Abstract]
Pending legal proceedings or investigations	0

XML

Restriction on Distribution of Net Assets from Subsidiary - Additional Information (Detail) - USD ($)	Sep. 30, 2017	Sep. 13, 2017	Dec. 31, 2016
WMMRC [Member]
Financial Receivables Impaired Or Restructured [Line Items]
Total net assets	$ 17,700,000		$ 33,800,000
Maximum [Member] | Distribution from WMMRC to WMIH Deposited in Collateral Account [Member]
Financial Receivables Impaired Or Restructured [Line Items]
Approved amount for distribution		$ 10,700,000

XML

Net Income (Loss) Per Common Share - Additional Information (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2017 USD ($) shares
Earnings Per Share [Abstract]
Dilutive effects from equity instruments | shares	0
Cash would be received upon exercise of warrants | $	$ 84.4

XML

Net Income (Loss) Per Common Share - Calculation of Basic Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Numerator for basic net income (loss) per share:
Net income (loss)	$ 38,411	$ (16,645)	$ 34,876	$ 61,314	$ 201,700
Less: Series B preferred stock dividends	(4,500)	(4,500)	(13,500)	(13,500)
Less: undistributed earnings attributed to participating securities (basic calculation)	(21,541)		(13,581)	(27,625)
Basic net income (loss) attributable to common stockholders	$ 12,370	$ (21,145)	$ 7,795	$ 20,189
Denominator for basic net income (loss) per share:
Weighted-average shares outstanding	206,714,132	206,380,800	206,529,762	206,261,993
Weighted-average unvested restricted shares outstanding	(4,053,640)	(4,039,591)	(3,956,447)	(4,014,718)
Denominator for basic net income (loss) per share	202,660,492	202,341,209	202,573,315	202,247,275
Basic net income (loss) per share attributable to common stockholders	$ 0.06	$ (0.10)	$ 0.04	$ 0.10

XML

Net Income (Loss) Per Common Share - Calculation of Diluted Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Numerator for diluted net income (loss) per share:
Net income (loss)	$ 38,411	$ (16,645)	$ 34,876	$ 61,314	$ 201,700
Less: Series B preferred stock dividends	(4,500)	(4,500)	(13,500)	(13,500)
Less: undistributed earnings attributed to participating securities (diluted calculation)	(21,541)		(13,581)	(26,241)
Diluted net income (loss) attributable to common stockholders	$ 12,370	$ (21,145)	$ 7,795	$ 21,573
Denominator for diluted net income (loss) per share:
Weighted-average shares outstanding	206,714,132	206,380,800	206,529,762	206,261,993
Weighted-average unvested restricted shares outstanding	(4,053,640)	(4,039,591)	(3,956,447)	(4,014,718)
Effect of dilutive potential shares	10,065,629		10,065,629	35,327,739
Denominator for diluted net income (loss) per share	212,726,121	202,341,209	212,638,944	237,575,014
Diluted net income (loss) per share attributable to common stockholders	$ 0.06	$ (0.10)	$ 0.04	$ 0.09

XML

Net Income (Loss) Per Common Share - Schedule of Potential Dilutive Common Shares (Detail)	9 Months Ended
	Sep. 30, 2017 shares
Minimum [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	342,185,936
Minimum [Member] | Series A Preferred Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	10,065,629
Minimum [Member] | Series B Redeemable Convertible Preferred Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	266,666,667
Maximum [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	419,392,284
Maximum [Member] | Series A Preferred Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	10,065,629
Maximum [Member] | Series B Preferred Stock Conversion Per Share Below 2.25 [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	1,015,872
Maximum [Member] | Series B Redeemable Convertible Preferred Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	342,857,143
Restricted Shares Subject to Vesting [Member] | Minimum [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	4,053,640
Restricted Shares Subject to Vesting [Member] | Maximum [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	4,053,640
Warrants Outstanding [Member] | Minimum [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	61,400,000
Warrants Outstanding [Member] | Maximum [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive shares if converted to common stock	61,400,000

XML

Net Income (Loss) Per Common Share - Schedule of Potential Dilutive Common Shares (Parenthetical) (Detail)	Sep. 30, 2017 $ / shares
Series B Redeemable Convertible Preferred Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Conversion ceiling price of common stock	$ 2.25

XML

Fair Value Measurement - Summary of Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Derivative asset - embedded conversion feature	$ 111,877	$ 80,651	[1]
Fair Value Measurements Recurring [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Derivative asset - embedded conversion feature	111,877	80,651
Fair Value Measurements Recurring [Member] | Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Derivative asset - embedded conversion feature	$ 111,877	$ 80,651

[1] Balances derived from audited financial statements as of December 31, 2016.

XML

Fair Value Measurement - Summary of Change in Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Beginning Balance	$ 80,651	$ (120,848)
Unrealized gain on change in fair value	31,226	201,499
Ending Balance	$ 111,877	$ 80,651

XML

Fair Value Measurement - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 05, 2015	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Expected volatility rate				60.00%		40.00%
Risk free interest rate				1.10%		0.60%
Expected probability of qualified acquisition				50.00%		90.00%
Qualified acquisition, expected term				6 months		6 months
Net income attributable to common and participating stockholders		$ 33,911	$ (21,145)	$ 21,376	$ 47,814
Increase decrease in estimated net income (loss) if percentage of closing stock price ten percent lower				39,100
Increase decrease in estimated net income (loss) if percentage of closing stock price ten percent higher				3,800
Volatility Assumption [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Increase decrease in estimated net income (loss) if percentage of closing stock price ten percent lower				24,400
Increase decrease in estimated net income (loss) if percentage of closing stock price ten percent higher				18,100
Transaction Occurring Assumption [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Increase decrease in estimated net income (loss) if percentage of closing stock price ten percent lower				1,000
Increase decrease in estimated net income (loss) if percentage of closing stock price ten percent higher				$ 43,800
Maximum [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Percentage of closing stock price				10.00%
Estimated net income				$ 17,700
Maximum [Member] | Volatility Assumption [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Percentage of closing stock price				10.00%
Estimated net income				$ 3,000
Maximum [Member] | Transaction Occurring Assumption [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Percentage of closing stock price				10.00%
Estimated net income				$ 22,400
Minimum [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Percentage of closing stock price				10.00%
Estimated net income				$ 17,600
Minimum [Member] | Volatility Assumption [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Percentage of closing stock price				10.00%
Estimated net income				$ 3,300
Minimum [Member] | Transaction Occurring Assumption [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Percentage of closing stock price				10.00%
Estimated net income				$ 22,400
Redeemable Convertible Series B Preferred Stock [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Capital	$ 600,000
Redeemable Convertible preferred stock, shares issued	600,000	600,000		600,000		600,000
Preferred stock liquidation preference per share	$ 1,000
Preferred stock dividend rate calculated on interest rate	3.00%
Conversion ceiling price of common stock		$ 2.25		$ 2.25
Conversion floor price of common stock		1.75		1.75
Redeemable Convertible Series B Preferred Stock [Member] | Maximum [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Conversion ceiling price of common stock		$ 2.25		$ 2.25

XML

Subsequent Events - Additional Information (Detail)	Sep. 13, 2017 USD ($)
Distribution from WMMRC to WMIH Deposited in Collateral Account [Member] | Maximum [Member]
Subsequent Event [Line Items]
Approved amount for distribution	$ 10,700,000