Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 20, 2015 | Jun. 30, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | Essent Group Ltd. | ||
Entity Central Index Key | 1448893 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1,221,193,412 | ||
Entity Common Stock, Shares Outstanding | 92,662,850 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments available for sale, at fair value | ||
Total investments | $1,057,613 | $332,555 |
Cash | 24,411 | 477,655 |
Accrued investment income | 5,748 | 1,978 |
Accounts receivable | 15,810 | 10,006 |
Deferred policy acquisition costs | 9,597 | 6,173 |
Property and equipment (at cost, less accumulated depreciation of $ 39,260 in 2014 and 36,796 in 2013) | 5,841 | 4,411 |
Prepaid federal income tax | 59,673 | 8,000 |
Net deferred tax asset | 10,346 | |
Other assets | 2,768 | 2,846 |
Total assets | 1,181,461 | 853,970 |
Liabilities | ||
Reserve for losses and LAE | 8,427 | 3,070 |
Unearned premium reserve | 156,948 | 103,399 |
Amounts due under Asset Purchase Agreement | 4,949 | |
Accrued payroll and bonuses | 14,585 | 13,076 |
Net deferred tax liability | 37,092 | |
Other accrued liabilities | 8,671 | 7,335 |
Total liabilities | 225,723 | 131,829 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Common Shares, $0.015 par value: Authorized - 233,333 in 2014 and 2013; issued 92,546 shares in 2014 and 86,491 shares in 2013 | 1,388 | 1,297 |
Additional paid-in capital | 893,285 | 754,390 |
Accumulated other comprehensive income (loss) | 4,667 | -1,447 |
Retained earnings (accumulated deficit) | 56,398 | -32,099 |
Total stockholders' equity | 955,738 | 722,141 |
Total liabilities and stockholders' equity | 1,181,461 | 853,970 |
Fixed maturities | ||
Investments available for sale, at fair value | ||
Total investments | 846,925 | 318,476 |
Short-term investments | ||
Investments available for sale, at fair value | ||
Total investments | $210,688 | $14,079 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
Investments available for sale | ||
Amortized cost (in dollars) | $1,050,901 | $334,782 |
Property and equipment | ||
Accumulated depreciation (in dollars) | 39,260 | 36,796 |
Stockholders' Equity | ||
Common Shares, par value (in dollars per share) | $0.02 | $0.02 |
Common Shares, authorized | 233,333 | 233,333 |
Common Shares, issued | 92,546 | 86,491 |
Fixed maturities | ||
Investments available for sale | ||
Amortized cost (in dollars) | 840,213 | 320,703 |
Short-term investments | ||
Investments available for sale | ||
Amortized cost (in dollars) | $210,688 | $14,079 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||
Net premiums written | $276,778 | $186,200 | $72,668 |
Increase in unearned premiums | -53,549 | -62,829 | -30,875 |
Net premiums earned | 223,229 | 123,371 | 41,793 |
Net investment income | 12,285 | 4,110 | 2,269 |
Realized investment gains, net | 925 | 116 | 143 |
Other income | 3,028 | 3,806 | 4,511 |
Total revenues | 239,467 | 131,403 | 48,716 |
Losses and expenses: | |||
Provision for losses and LAE | 6,308 | 2,321 | 1,466 |
Other underwriting and operating expenses | 97,232 | 71,055 | 61,126 |
Total losses and expenses | 103,540 | 73,376 | 62,592 |
Income (loss) before income taxes | 135,927 | 58,027 | -13,876 |
Income Tax Expense (Benefit) | 47,430 | -7,386 | -333 |
Net income (loss) | 88,497 | 12,706 | |
Net income (loss) | 88,497 | 65,413 | -13,543 |
Earnings (loss) per share: | |||
Basic (in dollars per share) | $1.05 | $0.90 | |
Diluted (in dollars per share) | $1.03 | $0.70 | |
Weighted average common shares outstanding: | |||
Basic (in shares) | 83,986 | 14,044 | |
Diluted (in shares) | 85,602 | 18,103 | |
Comprehensive income | |||
Net income (loss) | 88,497 | 12,706 | |
Net income (loss) | 88,497 | 65,413 | -13,543 |
Other comprehensive income (loss) | |||
Change in unrealized appreciation (depreciation) of investments, net of tax expense (benefit) of $2,825 in 2014, ($2,080) in 2013 and $333 in 2012 | 6,114 | -3,861 | 618 |
Total other comprehensive income (loss) | 6,114 | -3,861 | 618 |
Comprehensive income (loss) | $94,611 | $61,552 | ($12,925) |
Class A | |||
Earnings (loss) per share: | |||
Basic (in dollars per share) | ($0.49) | ||
Diluted (in dollars per share) | ($0.49) | ||
Weighted average common shares outstanding: | |||
Basic (in shares) | 27,445 | ||
Diluted (in shares) | 27,445 | ||
Class B-2 | |||
Earnings (loss) per share: | |||
Basic (in dollars per share) | ($0.01) | ||
Diluted (in dollars per share) | ($0.01) | ||
Weighted average common shares outstanding: | |||
Basic (in shares) | 393 | ||
Diluted (in shares) | 393 |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Consolidated Statements of Comprehensive Income (Loss) | |||
Change in unrealized appreciation (depreciation) of investments, tax expense (benefit) | $2,825 | ($2,080) | $333 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Class A | Class A | Class B-2 | Common Shares | Common Shares | Common Shares | Additional Paid-In Capital | Additional Paid-In Capital | Additional Paid-In Capital | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock | Shareholders agreements, as amended | IPO | Public offering | Total |
In Thousands, unless otherwise specified | Common Shares | Common Shares | Common Shares | IPO | Public offering | Shareholders agreements, as amended | IPO | Public offering | |||||||||
Shareholders agreements, as amended | |||||||||||||||||
Balance at Dec. 31, 2011 | $291 | $89 | $291,080 | $1,796 | ($83,969) | ($33,226) | $176,061 | ||||||||||
Changes in Stockholders' Equity | |||||||||||||||||
Net income (loss) | -13,543 | -13,543 | |||||||||||||||
Other comprehensive income (loss) | 618 | 618 | |||||||||||||||
Issuance of common shares net of issuance cost of $6,761 in 2014 and $25,546 in 2013, Common Shares; $1,143 in 2013, Class A and Class B-2 common shares; and $503 in 2012, Class A common shares | 54 | 54,443 | 54,497 | ||||||||||||||
Issuance of management incentive shares | 3 | 3 | 474 | 480 | |||||||||||||
Forfeiture of management incentive shares | -1 | 1 | |||||||||||||||
Stock-based compensation expense | 1,926 | 1,926 | |||||||||||||||
Treasury stock acquired | -916 | -916 | |||||||||||||||
Balance at Dec. 31, 2012 | 348 | 91 | 347,924 | 2,414 | -97,512 | -34,142 | 219,123 | ||||||||||
Changes in Stockholders' Equity | |||||||||||||||||
Net income (loss) | 12,706 | ||||||||||||||||
Net income (loss) | 65,413 | 65,413 | |||||||||||||||
Other comprehensive income (loss) | -3,861 | -3,861 | |||||||||||||||
Issuance of common shares net of issuance cost of $6,761 in 2014 and $25,546 in 2013, Common Shares; $1,143 in 2013, Class A and Class B-2 common shares; and $503 in 2012, Class A common shares | 123 | 299 | 123,729 | 313,414 | 123,852 | 313,713 | |||||||||||
Conversion of Class A and Class B-2 common shares into Common Shares | -474 | -54 | 1,004 | -476 | |||||||||||||
Issuance of management incentive shares | 3 | 2 | 28 | 582 | 615 | ||||||||||||
Forfeiture of management incentive shares | -39 | 39 | |||||||||||||||
Stock-based compensation expense | 3,597 | 3,597 | |||||||||||||||
Treasury stock acquired | -311 | -311 | |||||||||||||||
Cancellation of treasury stock | -34 | -34,419 | 34,453 | ||||||||||||||
Balance at Dec. 31, 2013 | 1,297 | 754,390 | -1,447 | -32,099 | 722,141 | ||||||||||||
Changes in Stockholders' Equity | |||||||||||||||||
Net income (loss) | 88,497 | 88,497 | |||||||||||||||
Net income (loss) | 88,497 | ||||||||||||||||
Other comprehensive income (loss) | 6,114 | 6,114 | |||||||||||||||
Issuance of common shares net of issuance cost of $6,761 in 2014 and $25,546 in 2013, Common Shares; $1,143 in 2013, Class A and Class B-2 common shares; and $503 in 2012, Class A common shares | 90 | 126,649 | 126,739 | ||||||||||||||
Issuance of management incentive shares | 2 | 414 | 416 | ||||||||||||||
Stock-based compensation expense | 12,520 | 12,520 | |||||||||||||||
Excess tax benefits from stock-based compensation expense | 1,809 | 1,809 | |||||||||||||||
Treasury stock acquired | -2,498 | -2,498 | |||||||||||||||
Cancellation of treasury stock | -1 | -2,497 | 2,498 | ||||||||||||||
Balance at Dec. 31, 2014 | $1,388 | $893,285 | $4,667 | $56,398 | $955,738 |
Consolidated_Statements_of_Cha1
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 |
Shareholders agreements, as amended | Class A and Class B-2 Common Shares | |||
Common stock, issuance cost | $1,143 | ||
Shareholders agreements, as amended | Class A | |||
Common stock, issuance cost | 503 | ||
IPO | |||
Common stock, issuance cost | 25,546 | ||
Public offering | |||
Common stock, issuance cost | $6,761 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating Activities | |||
Net income (loss) | $88,497 | $12,706 | |
Net income (loss) | 88,497 | 65,413 | -13,543 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Gain on the sale of investments, net | -925 | -116 | -143 |
Depreciation and amortization | 2,464 | 2,252 | 15,156 |
Amortization of discount on payments due under Asset Purchase Agreement | 51 | 108 | 138 |
Stock-based compensation expense | 12,520 | 3,597 | 1,926 |
Amortization of premium on investment securities | 6,840 | 3,129 | 1,801 |
Deferred income tax provision | 44,614 | -8,267 | -333 |
Excess tax benefits from stock-based compensation | -1,809 | ||
Change in: | |||
Accrued investment income | -3,770 | -687 | -464 |
Accounts receivable | -3,803 | -5,112 | -3,300 |
Deferred policy acquisition costs | -3,424 | -3,970 | -1,784 |
Prepaid federal income tax | -51,673 | -8,000 | |
Other assets | 78 | -1,628 | -38 |
Reserve for losses and LAE | 5,357 | 1,571 | 1,442 |
Unearned premium reserve | 53,549 | 62,829 | 30,875 |
Accounts payable and accrued expenses | 5,138 | 7,889 | 4,906 |
Net cash provided by operating activities | 153,704 | 119,008 | 36,639 |
Investing Activities | |||
Net change in short-term investments | -196,609 | -6,982 | 7,363 |
Purchase of investments available for sale | -699,324 | -136,094 | -137,481 |
Proceeds from maturity of investments available for sale | 27,382 | 12,400 | 3,650 |
Proceeds from sales of investments available for sale | 144,744 | 36,582 | 49,438 |
Purchase of property and equipment, net | -3,893 | -2,666 | -2,699 |
Net cash used in investing activities | -727,700 | -96,760 | -79,729 |
Financing Activities | |||
Issuance of common shares net of costs | 126,441 | 438,403 | 54,497 |
Treasury stock acquired | -2,498 | -311 | -916 |
Excess tax benefits from stock-based compensation | 1,809 | ||
Payments under Asset Purchase Agreement | -5,000 | -5,000 | -5,000 |
Investor fee payment | -1,677 | ||
Net cash provided by financing activities | 120,752 | 433,092 | 46,904 |
Net (decrease) increase in cash | -453,244 | 455,340 | 3,814 |
Cash at beginning of year | 477,655 | 22,315 | 18,501 |
Cash at end of year | 24,411 | 477,655 | 22,315 |
Supplemental Disclosure of Cash Flow Information | |||
Income tax (payments) refunds | -1,000 | -1,076 | |
Noncash Transactions | |||
Issuance of management incentive shares (see Note 10) | $416 | $615 | $480 |
Nature_of_Operations_and_Basis
Nature of Operations and Basis of Presentation | 12 Months Ended |
Dec. 31, 2014 | |
Nature of Operations and Basis of Presentation | |
Nature of Operations and Basis of Presentation | Note 1. Nature of Operations and Basis of Presentation |
Essent Group Ltd. ("Essent Group") is a Bermuda-based holding company, which, through its wholly-owned subsidiaries, offers private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Mortgage insurance facilitates the sale of low down payment (generally less than 20%) mortgage loans into the secondary mortgage market, primarily to the government sponsored enterprises ("GSEs"), Fannie Mae and Freddie Mac. Essent Group was incorporated in Bermuda in July 2008. In March 2014, Essent Group formed Essent Irish Intermediate Holdings Limited ("Essent Irish Intermediate") as a wholly-owned subsidiary. In April 2014, Essent Group contributed all of the outstanding stock of Essent US Holdings, Inc. ("Essent Holdings") to Essent Irish Intermediate. The primary mortgage insurance operations are conducted through Essent Holdings' regulated and licensed wholly-owned subsidiaries, Essent Guaranty, Inc. ("Essent Guaranty") and Essent Guaranty of PA, Inc. ("Essent PA"). Essent Group also has a wholly-owned Bermuda-domiciled Class 3A Insurer licensed pursuant to Section 4 of the Bermuda Insurance Act 1978, Essent Reinsurance Ltd. ("Essent Re"), which offers mortgage-related insurance and reinsurance. | |
Essent Guaranty was formed in November 2008 and received its certificate of authority from the Pennsylvania Insurance Department on July 6, 2009. It commenced operations in 2010, issuing its first mortgage insurance policy in May 2010. Essent Guaranty is headquartered in Radnor, Pennsylvania and maintains operations centers in Winston-Salem, North Carolina and Irvine, California. Essent Guaranty is approved as a qualified mortgage insurer by the GSEs and is licensed to write mortgage insurance in all 50 states and the District of Columbia. | |
Essent PA received its certificate of authority from the Pennsylvania Insurance Department on March 15, 2010. Essent PA assumes that portion of the risk retained by Essent Guaranty that is in excess 25% of the balance of any mortgage loan insured by Essent Guaranty after consideration of other reinsurance agreements at Essent Guaranty, in accordance with certain state law requirements. | |
In June 2010, we formed Essent Solutions, LLC ("Essent Solutions"), a wholly-owned, non-insurer subsidiary of Essent Guaranty. Essent Solutions was formed to, among other things, function as an administrative services provider. Since April 2012, Essent Solutions has had minimal business activity. | |
In September 2011, we formed CUW Solutions, LLC ("CUW Solutions"), a wholly-owned subsidiary of Essent Holdings. CUW Solutions is a Delaware limited liability company that provides, among other things, mortgage contract underwriting services to lenders and mortgage insurance underwriting services to affiliates. Its headquarters are in Radnor, Pennsylvania and it maintains operations centers in Winston-Salem, North Carolina and Irvine, California that are subleased from Essent Guaranty. | |
Essent Re provides insurance and reinsurance coverage of mortgage credit risk. In 2014, Essent Re entered into insurance and reinsurance transactions with Freddie Mac and began to reinsure 25% of Essent Guaranty's GSE-eligible new insurance written effective July 1, 2014 under an affiliate quota share reinsurance agreement. | |
The Company operates as a single segment for reporting purposes as substantially all business operations, assets and liabilities relate to the private mortgage insurance business and management reviews operating results for the Company as a whole to make operating decisions and assess performance. | |
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and include the accounts of Essent Group and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | |
Certain amounts in prior years have been reclassified to conform to the current year presentation. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies | |||||||||||||
Use of Estimates | ||||||||||||||
The preparation of financial statements in accordance 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 and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. | ||||||||||||||
Investments Available for Sale | ||||||||||||||
Investments available for sale include securities that we sell from time to time to provide liquidity and in response to changes in the market. Debt and equity securities classified as available for sale are reported at fair value with unrealized gains and losses on these securities reported in other comprehensive income, net of deferred income taxes. See Note 16 for a description of the valuation methods for investments available for sale. | ||||||||||||||
We monitor our fixed maturities for unrealized losses that appear to be other than temporary. A fixed maturity security is considered to be other-than-temporarily impaired when the security's fair value is less than its amortized cost basis and 1) we intend to sell the security, 2) it is more likely than not that we will be required to sell the security before recovery of the security's amortized cost basis, or 3) we believe we will be unable to recover the entire amortized cost basis of the security (i.e., a credit loss has occurred). When we determine that a credit loss has been incurred, but we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery of the security's amortized cost basis, the portion of the other-than-temporary impairment that is credit related is recorded as a realized loss in the consolidated statements of comprehensive income (loss), and the portion of the other-than-temporary impairment that is not credit related is included in other comprehensive income (loss). For those fixed maturities for which an other-than-temporary impairment has occurred, we adjust the amortized cost basis of the security and record a realized loss in the consolidated statements of comprehensive income (loss). | ||||||||||||||
We recognize purchase premiums and discounts in interest income using the interest method over the term of the securities. Gains and losses on the sales of securities are recorded on the trade date and are determined using the specific identification method. | ||||||||||||||
Short-term investments are defined as short-term, highly liquid investments, both readily convertible to cash and having maturities at acquisition of twelve months or less. | ||||||||||||||
Long-Lived Assets | ||||||||||||||
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are charged to expense as incurred. Estimated useful lives are 5 years for furniture and fixtures and 2 to 3 years for equipment, computer hardware and purchased software. Certain costs associated with the acquisition or development of internal-use software are capitalized. Once the software is ready for its intended use, these costs are amortized on a straight-line basis over the software's expected useful life, which is generally 3 years. We amortize leasehold improvements over the shorter of the lives of the leases or estimated service lives of the leasehold improvements. The balances by type were as follows at December 31: | ||||||||||||||
2014 | 2013 | |||||||||||||
(In thousands) | Cost | Accumulated | Cost | Accumulated | ||||||||||
Depreciation/ | Depreciation/ | |||||||||||||
Amortization | Amortization | |||||||||||||
Furniture and fixtures | $ | 1,411 | $ | (713 | ) | $ | 1,055 | $ | (545 | ) | ||||
Office equipment | 472 | (178 | ) | 151 | (66 | ) | ||||||||
Computer hardware | 3,258 | (2,523 | ) | 2,769 | (1,942 | ) | ||||||||
Purchased software | 32,352 | (31,110 | ) | 31,416 | (30,557 | ) | ||||||||
Costs of internal-use software | 5,868 | (4,320 | ) | 5,182 | (3,326 | ) | ||||||||
Leasehold improvements | 1,740 | (416 | ) | 634 | (360 | ) | ||||||||
| | | | | | | | | | | | | | |
Total | $ | 45,101 | $ | (39,260 | ) | $ | 41,207 | $ | (36,796 | ) | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
In connection with the acquisition of the proprietary mortgage insurance information technology and operating platform of Triad Guaranty, Inc. and Triad Guaranty Insurance Corporation (collectively referred to as "Triad"), we recorded identifiable intangible assets associated with acquired technology and workforce-in-place. Amortization of these assets began on December 1, 2009 and was increased in April 2011 in connection with the additional purchase price recorded effective March 31, 2011. See additional discussion as to the terms of the Triad transaction and the related purchase accounting in Note 6. The amount of purchase price allocated to the acquired technology was amortized to expense on a straight-line basis over 36 months and was fully amortized as of November 30, 2012. The amount of purchase price allocated to workforce-in-place was amortized to expense on a straight-line basis over 48 months and was fully amortized as of November 30, 2013. We recognized amortization associated with the acquired technology of $12.0 million for the year ended December 31, 2012. We recognized amortization associated with the workforce-in-place of $0.4 million in each of the years ended December 31, 2013 and 2012. | ||||||||||||||
The cost of the acquired technology and related accumulated depreciation is included in property and equipment in the accompanying consolidated balance sheets. | ||||||||||||||
Deferred Policy Acquisition Costs | ||||||||||||||
We defer certain personnel costs and premium tax expense directly related to the successful acquisition of new insurance policies and amortize these costs over the period the related estimated gross profits are recognized in order to match costs and revenues. We do not defer any underwriting costs associated with our contract underwriting services. Costs related to the acquisition of mortgage insurance business are initially deferred and reported as deferred policy acquisition costs. Consistent with industry accounting practice, amortization of these costs for each underwriting year book of business is recognized in proportion to estimated gross profits. Estimated gross profits are composed of earned premium, interest income, losses and loss adjustment expenses. The deferred costs are adjusted as appropriate for policy cancellations to be consistent with our revenue recognition policy. We estimate the rate of amortization to reflect actual experience and any changes to persistency or loss development. Deferred policy acquisition costs are reviewed periodically to determine that they do not exceed recoverable amounts, after considering investment income. Policy acquisition costs deferred were $6.6 million, $5.7 million and $2.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. Amortization of deferred policy acquisition costs totaled $3.2 million, $1.7 million, and $0.5 million for the years ended December 31, 2014, 2013 and 2012, respectively, and is included in other underwriting and operating expenses on the consolidated statements of comprehensive income (loss). | ||||||||||||||
Insurance Premium Revenue Recognition | ||||||||||||||
Mortgage guaranty insurance policies are contracts that are generally non-cancelable by the insurer, are renewable at a fixed price, and provide for payment of premium on a monthly, annual or single basis. Upon renewal, we are not able to re-underwrite or re-price our policies. Consistent with industry accounting practices, premiums written on a monthly basis are earned as coverage is provided. Monthly policies accounted for 86% of earned premium in 2014. Premiums written on an annual basis are amortized on a pro rata basis over the year of coverage. Primary mortgage insurance written on policies covering more than one year are referred to as single premium policies. A portion of the revenue from single premium policies is recognized in earned premium in the current period, and the remaining portion is deferred as unearned premium and earned over the expected life of the policy. If single premium policies related to insured loans are cancelled due to repayment by the borrower, and the premium is non-refundable, then the remaining unearned premium related to each cancelled policy is recognized as earned premium upon notification of the cancellation. The Company recorded $8.2 million and $4.1 million of earned premium related to policy cancellations for the years ended December 31, 2014 and 2013, respectively. Unearned premium represents the portion of premium written that is applicable to the estimated unexpired risk of insured loans. Rates used to determine the earning of single premium policies are estimates based on an analysis of the expiration of risk. | ||||||||||||||
A significant portion of our premium revenue relates to master policies with certain lending institutions. For the year ended December 31, 2014 one lender represented 15% of our total revenue. The loss of this customer could have a significant impact on our revenues and results of operations. | ||||||||||||||
Reserve for Losses and Loss Adjustment Expenses | ||||||||||||||
We establish reserves for losses based on our best estimate of ultimate claim costs for defaulted loans using the general principles contained in ASC No. 944, in accordance with industry practice. However, consistent with industry standards for mortgage insurers, we do not establish loss reserves for future claims on insured loans which are not currently in default. Loans are classified as in default when the borrower has missed two consecutive payments. Once we are notified that a borrower has defaulted, we will consider internal and third-party information and models, including the status of the loan as reported by its servicer and the type of loan product to determine the likelihood that a default will reach claim status. In addition, we will project the amount that we will pay if a default becomes a claim (referred to as "claim severity"). Based on this information, at each reporting date we determine our best estimate of loss reserves at a given point in time. Included in loss reserves are reserves for incurred but not reported ("IBNR") claims. IBNR reserves represent our estimated unpaid losses on loans that are in default, but have not yet been reported to us as delinquent by our customers. We will also establish reserves for associated loss adjustment expenses, consisting of the estimated cost of the claims administration process, including legal and other fees and expenses associated with administering the claims process. Establishing reserves is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Our estimates of claim rates and claim sizes will be strongly influenced by prevailing economic conditions, such as the overall state of the economy, current rates or trends in unemployment, changes in housing values and/or interest rates, and our best judgments as to the future values or trends of these macroeconomic factors. Losses incurred are also generally affected by the characteristics of our insured loans, such as the loan amount, loan-to-value ratio, the percentage of coverage on the insured loan and the credit quality of the borrower. | ||||||||||||||
Premium Deficiency Reserve | ||||||||||||||
We are required to establish a premium deficiency reserve if the net present value of the expected future losses and expenses for a particular group of policies exceeds the net present value of expected future premium, anticipated investment income and existing reserves for that specified group of policies. We reassess our expectations for premium, losses and expenses of our mortgage insurance business periodically and update our premium deficiency analysis accordingly. As of December 31, 2014 and 2013, we concluded that no premium deficiency reserve was required to be recorded in the accompanying consolidated financial statements. | ||||||||||||||
Derivative Instruments | ||||||||||||||
In 2014, Essent Re issued insurance and reinsurance policies in connection with Freddie Mac's Agency Credit Insurance Structure ("ACIS") program. These policies are accounted for as a derivative under GAAP with the fair value of these policies reported as an asset or liability and changes in the fair value of these policies reported in earnings as a component of other income. | ||||||||||||||
Stock-Based Compensation | ||||||||||||||
We measure the cost of employee services received in exchange for awards of equity instruments at the grant date of the award using a fair value based method. Prior to our initial public offering, we estimated the fair value of each nonvested share grant on the date of grant based on management's best estimate using methods further described in Note 10 of our consolidated financial statements. Subsequent to our initial public offering, fair value is determined on the date of grant based on quoted market prices. We recognize compensation expense on nonvested shares over the vesting period of the award. | ||||||||||||||
Income Taxes | ||||||||||||||
Deferred income tax assets and liabilities are determined using the asset and liability (or balance sheet) method. Under this method, we determine the net deferred tax asset or liability based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and give current recognition to changes in tax rates and laws. Changes in tax laws, rates, regulations and policies, or the final determination of tax audits or examinations, could materially affect our tax estimates. We evaluate the realizability of the deferred tax asset and recognize a valuation allowance if, based on the weight of all available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. When evaluating the realizability of the deferred tax asset, we consider estimates of expected future taxable income, existing and projected book/tax differences, carryback and carryforward periods, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires management to forecast changes in the mortgage market, as well as the related impact on mortgage insurance, and the competitive and general economic environment in future periods. Changes in the estimate of deferred tax asset realizability, if applicable, are included in income tax expense on the consolidated statements of comprehensive income (loss). | ||||||||||||||
ASC No. 740 provides a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with ASC No. 740, before a tax benefit can be recognized, a tax position is evaluated using a threshold that it is more likely than not that the tax position will be sustained upon examination. When evaluating the more-likely-than-not recognition threshold, ASC No. 740 provides that a company should presume the tax position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. If the tax position meets the more-likely-than-not recognition threshold, it is initially and subsequently measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. | ||||||||||||||
As described in Note 12, we purchase non-interest-bearing United States Mortgage Guaranty Tax and Loss Bonds ("T&L Bonds") issued by the Treasury Department. These assets are carried at cost and are reported as prepaid federal income tax on the consolidated balance sheets. | ||||||||||||||
It is our policy to classify interest and penalties related to unrecognized tax benefits as income tax expense. | ||||||||||||||
Earnings per Share | ||||||||||||||
Basic earnings (loss) per common share amounts are calculated based on income available to common stockholders and the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per common share amounts are calculated based on income available to common stockholders and the weighted average number of common and potential common shares outstanding during the reporting period. Potential common shares, composed of the incremental common shares issuable upon vesting of unvested common shares, are included in the earnings per share calculation to the extent that they are dilutive. Prior to the completion of our initial public offering as more fully discussed in Note 3, basic and diluted earnings (loss) per common share were calculated using the "two-class" method since the cash dividends on our Class B-2 common shares could differ from the dividends on the Class A common shares. The two-class method is an earnings allocation formula that determines earnings (loss) per share for each class of common shares according to dividends declared and participation rights in undistributed earnings or losses. | ||||||||||||||
Recently Issued Accounting Standards | ||||||||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update is intended to provide a consistent approach in recognizing revenue. In accordance with the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The provisions of this update are effective for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the impact the adoption of this ASU will have on the consolidated financial statements. | ||||||||||||||
Equity_Transactions
Equity Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Equity Transactions | |
Equity Transactions | Note 3. Equity Transactions |
Prior to its initial public offering ("IPO"), Essent Group's initial investors executed several agreements which committed our initial investors, subject to certain conditions, to make equity contributions in the amount of approximately $600 million in return for Class A common shares of Essent Group. As of January 1, 2012, $258.3 million had been contributed by the investors to Essent Group in return for approximately 25.5 million Class A common shares. In 2012, investors made additional capital contributions to Essent Group totaling $55 million in return for approximately 5.4 million Class A shares and in 2013, investors made additional capital contributions to Essent Group totaling $125 million in return for approximately 12.3 million Class A shares. In total, $438.3 million of capital contributions were made by investors from inception through Essent Group's initial public offering. | |
In November 2013, Essent Group completed an initial public offering ("IPO") in which we issued and sold approximately 20.0 million Common Shares at a public offering price of $17.00 per share and certain selling shareholders sold approximately 2.7 million Common Shares. We did not receive any proceeds from the sale of shares by the selling shareholders. The total net proceeds from the IPO were $313.7 million after deducting underwriting discounts commissions and other offering expenses. | |
Upon the closing of our IPO, all shares of our then-outstanding Class A common shares and Class B-2 common shares, issued under the Company's 2009 Restricted Share Plan as more fully discussed in Note 10, automatically converted into an aggregate of approximately 64.7 million Common Shares. Under the terms of the Amended and Restated Class A Common Share Subscription Agreement (the "Amended Subscription Agreement"), the equity funding commitment terminated upon the completion of the initial public offering. | |
Macquarie Capital (USA) Inc. ("Macquarie") was due a fee equal to 1% of the gross proceeds from the sale of Class A common shares (not to exceed $5.2 million) issued to certain shareholders who were party to the Class A Common Share Subscription Agreement for services rendered in connection with the equity funding for Essent Group. As of December 31, 2013, a total of $4 million was earned by Macquarie and charged to additional paid-in capital. As a result of the termination of the Amended Subscription Agreement, no additional fees are due Macquarie related to the sale of Class A shares. | |
In November 2014, Essent Group completed the sale of 6.0 million Common Shares in a public offering at a price of $22.25 per share and certain selling shareholders sold 7.8 million Common Shares. We did not receive any proceeds from the sale of shares by the selling shareholders. The total net proceeds from this offering were approximately $126.7 million after deducting underwriting discounts, commissions and other offering expenses. | |
Investments_Available_for_Sale
Investments Available for Sale | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments Available for Sale | ||||||||||||||||||||
Investments Available for Sale | Note 4. Investments Available for Sale | |||||||||||||||||||
Investments available for sale consist of the following: | ||||||||||||||||||||
December 31, 2014 (In thousands) | Amortized | Unrealized | Unrealized | Fair Value | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
U.S. Treasury securities | $ | 73,432 | $ | 927 | $ | (143 | ) | $ | 74,216 | |||||||||||
U.S. agency securities | 4,491 | 29 | — | 4,520 | ||||||||||||||||
U.S. agency mortgage-backed securities | 82,190 | 1,564 | (214 | ) | 83,540 | |||||||||||||||
Municipal debt securities(1) | 191,723 | 4,147 | (324 | ) | 195,546 | |||||||||||||||
Corporate debt securities | 295,507 | 2,123 | (801 | ) | 296,829 | |||||||||||||||
Mortgage-backed securities | 66,396 | 574 | (884 | ) | 66,086 | |||||||||||||||
Asset-backed securities | 126,474 | 136 | (422 | ) | 126,188 | |||||||||||||||
Money market funds | 210,688 | — | — | 210,688 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total investments available for sale | $ | 1,050,901 | $ | 9,500 | $ | (2,788 | ) | $ | 1,057,613 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
December 31, 2013 (In thousands) | Amortized | Unrealized | Unrealized | Fair Value | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
U.S. Treasury securities | $ | 59,100 | $ | 977 | $ | (890 | ) | $ | 59,187 | |||||||||||
U.S. agency securities | 14,763 | 76 | — | 14,839 | ||||||||||||||||
U.S. agency mortgage-backed securities | 23,023 | 53 | (835 | ) | 22,241 | |||||||||||||||
Municipal debt securities(1) | 57,947 | 155 | (452 | ) | 57,650 | |||||||||||||||
Corporate debt securities | 126,311 | 378 | (1,096 | ) | 125,593 | |||||||||||||||
Mortgage-backed securities | 19,219 | — | (638 | ) | 18,581 | |||||||||||||||
Asset-backed securities | 20,340 | 81 | (36 | ) | 20,385 | |||||||||||||||
Money market funds | 14,079 | — | — | 14,079 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total investments available for sale | $ | 334,782 | $ | 1,720 | $ | (3,947 | ) | $ | 332,555 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
-1 | At December 31, 2014, approximately 59.7% of municipal debt securities were special revenue bonds, 37.5% were general obligation bonds, 1.5% were tax allocation bonds, 0.8% were certification of participation bonds and 0.5% were special assessment bonds. At December 31, 2013, all municipal debt securities were general obligation bonds. | |||||||||||||||||||
The amortized cost and fair value of available for sale securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most mortgage-backed securities and asset-backed securities provide for periodic payments throughout their lives, they are listed below in separate categories. | ||||||||||||||||||||
(In thousands) | Amortized Cost | Fair Value | ||||||||||||||||||
U.S. Treasury securities: | ||||||||||||||||||||
Due in 1 year | $ | 2,082 | $ | 2,088 | ||||||||||||||||
Due after 1 but within 5 years | 17,706 | 17,741 | ||||||||||||||||||
Due after 5 but within 10 years | 53,644 | 54,387 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 73,432 | 74,216 | ||||||||||||||||||
| | | | | | | | |||||||||||||
U.S. agency securities: | ||||||||||||||||||||
Due in 1 year | 2,050 | 2,061 | ||||||||||||||||||
Due after 1 but within 5 years | 2,441 | 2,459 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 4,491 | 4,520 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Municipal debt securities | ||||||||||||||||||||
Due in 1 year | — | — | ||||||||||||||||||
Due after 1 but within 5 years | 72,127 | 72,230 | ||||||||||||||||||
Due after 5 but within 10 years | 62,704 | 64,906 | ||||||||||||||||||
Due after 10 years | 56,892 | 58,410 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 191,723 | 195,546 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Corporate debt securities: | ||||||||||||||||||||
Due in 1 year | 13,504 | 13,536 | ||||||||||||||||||
Due after 1 but within 5 years | 185,063 | 184,964 | ||||||||||||||||||
Due after 5 but within 10 years | 95,490 | 96,861 | ||||||||||||||||||
Due after 10 years | 1,450 | 1,468 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 295,507 | 296,829 | ||||||||||||||||||
| | | | | | | | |||||||||||||
U.S. agency mortgage-backed securities | 82,190 | 83,540 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Mortgage-backed securities | 66,396 | 66,086 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Asset-backed securities | 126,474 | 126,188 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Money market funds | 210,688 | 210,688 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total investments available for sale | $ | 1,050,901 | $ | 1,057,613 | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Essent Group realized gross gains and losses on the sale of investments available for sale as follows: | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Realized gross gains | $ | 1,368 | $ | 116 | $ | 145 | ||||||||||||||
Realized gross losses | 443 | — | 2 | |||||||||||||||||
The fair value of investments in an unrealized loss position and the related unrealized losses were as follows: | ||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||
(In thousands) | Fair | Gross | Fair | Gross | Fair | Gross | ||||||||||||||
Value | Unrealized | Value | Unrealized | Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
At December 31, 2014 | ||||||||||||||||||||
U.S. Treasury securities | $ | 16,543 | $ | (34 | ) | $ | 5,155 | $ | (109 | ) | $ | 21,698 | $ | (143 | ) | |||||
U.S. agency mortgage-backed securities | 2,334 | — | 8,566 | (214 | ) | 10,900 | (214 | ) | ||||||||||||
Municipal debt securities | 39,902 | (229 | ) | 8,684 | (95 | ) | 48,586 | (324 | ) | |||||||||||
Corporate debt securities | 113,717 | (701 | ) | 12,659 | (100 | ) | 126,376 | (801 | ) | |||||||||||
Mortgage-backed securities | 28,091 | (264 | ) | 16,092 | (620 | ) | 44,183 | (884 | ) | |||||||||||
Asset-backed securities | 100,248 | (405 | ) | 2,201 | (17 | ) | 102,449 | (422 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 300,835 | $ | (1,633 | ) | $ | 53,357 | $ | (1,155 | ) | $ | 354,192 | $ | (2,788 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less than 12 months | 12 months or more | Total | ||||||||||||||||||
(In thousands) | Fair | Gross | Fair | Gross | Fair | Gross | ||||||||||||||
Value | Unrealized | Value | Unrealized | Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||
U.S. Treasury securities | $ | 16,474 | $ | (890 | ) | $ | — | $ | — | $ | 16,474 | $ | (890 | ) | ||||||
U.S. agency mortgage-backed securities | 13,484 | (452 | ) | 3,685 | (383 | ) | 17,169 | (835 | ) | |||||||||||
Municipal debt securities | 21,573 | (267 | ) | 13,074 | (185 | ) | 34,647 | (452 | ) | |||||||||||
Corporate debt securities | 75,364 | (1,038 | ) | 3,148 | (58 | ) | 78,512 | (1,096 | ) | |||||||||||
Mortgage-backed securities | 13,249 | (347 | ) | 5,333 | (291 | ) | 18,582 | (638 | ) | |||||||||||
Asset-backed securities | 6,024 | (36 | ) | — | — | 6,024 | (36 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 146,168 | $ | (3,030 | ) | $ | 25,240 | $ | (917 | ) | $ | 171,408 | $ | (3,947 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
The gross unrealized losses on these investment securities are principally associated with the changes in the interest rate environment subsequent to their purchase. Each issuer is current on its scheduled interest and principal payments. We assess our intent to sell these securities and whether we will be required to sell these securities before the recovery of their amortized cost basis when determining whether an impairment is other than temporary. There were no other-than-temporary impairments of investments in the years ended December 31, 2014, 2013 or 2012. | ||||||||||||||||||||
The fair value of investments deposited with insurance regulatory authorities to meet statutory requirements was $8.5 million at December 31, 2014 and $8.6 million at December 31, 2013. In connection with its insurance and reinsurance activities, Essent Re is required to maintain assets in trusts for the benefit of its contractual counterparties. The fair value of the required investments on deposit in these trusts was $51.2 million at December 31, 2014. | ||||||||||||||||||||
Net investment income consists of: | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Fixed maturities | $ | 13,356 | $ | 4,671 | $ | 2,632 | ||||||||||||||
Short-term investments | 56 | 26 | 14 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Gross investment income | 13,412 | 4,697 | 2,646 | |||||||||||||||||
Investment expenses | (1,127 | ) | (587 | ) | (377 | ) | ||||||||||||||
| | | | | | | | | | | ||||||||||
Net investment income | $ | 12,285 | $ | 4,110 | $ | 2,269 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Accounts_Receivable
Accounts Receivable | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Accounts Receivable | ||||||||
Accounts Receivable | Note 5. Accounts Receivable | |||||||
Accounts receivable consist of the following at December 31: | ||||||||
(In thousands) | 2014 | 2013 | ||||||
Premiums receivable | $ | 13,210 | $ | 9,488 | ||||
Other receivables | 2,600 | 518 | ||||||
| | | | | | | | |
Total accounts receivable | 15,810 | 10,006 | ||||||
Less: Allowance for doubtful accounts | — | — | ||||||
| | | | | | | | |
Accounts receivable, net | $ | 15,810 | $ | 10,006 | ||||
| | | | | | | | |
| | | | | | | | |
Premiums receivable consist of premiums due on our mortgage insurance policies. If mortgage insurance premiums are unpaid for more than 90 days, the receivable is written off against earned premium and the related insurance policy is cancelled. For all periods presented, no provision or allowance for doubtful accounts was required. | ||||||||
Triad_Transaction
Triad Transaction | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Triad Transaction | ||||||||||||||
Triad Transaction | Note 6. Triad Transaction | |||||||||||||
On December 1, 2009, under the terms of an asset purchase agreement dated October 7, 2009 between Essent Guaranty and Triad (the "Asset Purchase Agreement"), we acquired all of Triad's proprietary mortgage insurance information technology and operating platform, certain software and substantially all of the supporting hardware, as well as furniture and fixtures, in exchange for payments of up to $30 million in cash, subject to certain conditions outlined in the Asset Purchase Agreement, and the assumption of certain contractual obligations. In addition, pursuant to this transaction, 39 employees of Triad's information technology, operations and compliance departments were offered, and accepted, employment with Essent Guaranty. Effective with the completion of the transaction, Essent Guaranty began providing information systems maintenance and development services, customer service and policy administration support to Triad under the terms of a services agreement dated December 1, 2009 (the "Services Agreement"). Triad retains the obligation for all risks insured under its existing insurance contracts and will continue to directly manage loss mitigation and claim activity on its insured business. | ||||||||||||||
As the assets acquired and liabilities assumed did not constitute a business, the transaction was accounted for as an acquisition of assets. Under the Asset Purchase Agreement, fixed payments of $15 million were due and paid as follows: $10 million on the Closing Date of December 1, 2009, and $2.5 million each on the first and second anniversaries of the Closing Date. Contingent payments totaling $15 million are due commencing 30 months after the closing date, or June 1, 2012, in six equal semi-annual installments if Essent Guaranty or any affiliate US domestic insurance company have written mortgage insurance policies (other than mortgage reinsurance or other types of credit enhancement) on mortgage loans having an aggregate unpaid principal balance of not less than $500 million in the six months preceding such contingent payment. On December 1, 2009, $15.5 million was recorded as purchase price for these acquired assets, which included the net present value of the fixed payments. The depreciation for the fixed assets was recorded over three years from December 1, 2009 to November 30, 2012. In March 2011, based on Essent Guaranty's level of written mortgage insurance policies, management concluded that it was probable that the $15 million of contingent payments would be made. Accordingly, a liability was accrued effective March 31, 2011 for the net present value of the additional contingent payments due Triad, with an offsetting increase in the purchase price of the acquired assets allocated pro rata based on their relative fair value at the acquisition date. The depreciation of the fixed assets associated with the purchase for the contingent payments was recorded over the period from April 1, 2011 to November 30, 2012. Contingent payments totaling $5 million were made in each of the years ended December 31, 2014, 2013 and 2012. No further amounts are due to Triad under the Asset Purchase Agreement. | ||||||||||||||
The components of the purchase price for the assets acquired reflected in the accompanying consolidated balance sheets are as follows: | ||||||||||||||
(In thousands) | ||||||||||||||
Cash payment | $ | 9,123 | ||||||||||||
Triad's liabilities assumed at closing | 877 | |||||||||||||
Transaction costs | 484 | |||||||||||||
Net present value of fixed payments | 4,995 | |||||||||||||
Net present value of contingent payments | 14,595 | |||||||||||||
| | | | | ||||||||||
Total | $ | 30,074 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
The cost of the assets acquired was allocated based on their relative fair value as of the Closing Date (December 1, 2009) as follows: | ||||||||||||||
(In thousands) | 2009 | 2011 | Total | |||||||||||
Acquired technology | 94.2 | % | $ | 14,573 | $ | 13,741 | $ | 28,314 | ||||||
Workforce-in-place | 4.3 | 671 | 633 | 1,304 | ||||||||||
Software | 0.7 | 110 | 103 | 213 | ||||||||||
Hardware | 0.5 | 71 | 67 | 138 | ||||||||||
Other assets | 0.3 | 54 | 51 | 105 | ||||||||||
| | | | | | | | | | | | | | |
Total | 100.0 | % | $ | 15,479 | $ | 14,595 | $ | 30,074 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
We recorded interest expense associated with the liability due Triad of $0.1 million in each of the years ended December 31, 2014, 2013 and 2012. | ||||||||||||||
Under the terms of the Services Agreement, we provide the following services to Triad in exchange for fees: (i) maintain and support the licensed technology and equipment and provide to Triad certain information and technology services; (ii) access to the Triad technology platform in order to support Triad's business pursuant to the license grant outlined in the Services Agreement; (iii) customer support-related services; and (iv) technology development services. The fee earned by Essent Group during the first contract year from December 1, 2009 to November 30, 2010 was a fixed amount. Effective December 1, 2010, the fee is based principally on the number of Triad's insurance policies in force on a monthly basis. Accordingly, this fee is reduced as Triad's policies in force decline. We earned fees under the Services Agreement of $2.3 million, $3.0 million and $3.8 million for the years ended December 31, 2014, 2013 and 2012, respectively, which are included in other income in the accompanying consolidated statements of comprehensive income (loss). | ||||||||||||||
Reserve_for_Losses_and_Loss_Ad
Reserve for Losses and Loss Adjustment Expenses | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Reserve for Losses and Loss Adjustment Expenses | ||||||||
Reserve for Losses and Loss Adjustment Expenses | Note 7. Reserve for Losses and Loss Adjustment Expenses | |||||||
The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses ("LAE") for the years ended December 31: | ||||||||
($ in thousands) | 2014 | 2013 | ||||||
Reserve for losses and LAE at beginning of year | $ | 3,070 | $ | 1,499 | ||||
Less: Reinsurance recoverables | — | — | ||||||
| | | | | | | | |
Net reserve for losses and LAE at beginning of year | 3,070 | 1,499 | ||||||
Add provision for losses and LAE, net of reinsurance, occurring in: | ||||||||
Current year | 6,877 | 2,986 | ||||||
Prior years | (569 | ) | (665 | ) | ||||
| | | | | | | | |
Net incurred losses during the current year | 6,308 | 2,321 | ||||||
| | | | | | | | |
Deduct payments for losses and LAE, net of reinsurance, occurring in: | ||||||||
Current year | 138 | 239 | ||||||
Prior years | 813 | 511 | ||||||
| | | | | | | | |
Net loss and LAE payments during the current year | 951 | 750 | ||||||
| | | | | | | | |
Net reserve for losses and LAE at end of year | 8,427 | 3,070 | ||||||
Plus: Reinsurance recoverables | — | — | ||||||
| | | | | | | | |
Reserve for losses and LAE at end of year | $ | 8,427 | $ | 3,070 | ||||
| | | | | | | | |
| | | | | | | | |
Loans in default at end of year | 457 | 159 | ||||||
For the year ended December 31, 2014, $0.8 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There has been a $0.6 million favorable prior-year development during the year ended December 31, 2014. Reserves remaining as of December 31, 2014 for prior years are $1.7 million as a result of re-estimation of unpaid losses and loss adjustment expenses. For the year ended December 31, 2013, $0.5 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There was a $0.7 million favorable prior year development during the year ended December 31, 2013. Reserves remaining as of December 31, 2013 for prior years are $0.3 million as a result of re estimation of unpaid losses and loss adjustment expenses. The decreases in both years are generally the result of ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information becomes known regarding individual claims. | ||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies | |||||
Commitments and Contingencies | Note 8. Commitments and Contingencies | ||||
Obligations under Guarantees | |||||
Under the terms of CUW Solutions' contract underwriting agreements with lenders and subject to contractual limitations on liability, we agree to indemnify the lender against losses incurred in the event that we make an error in determining whether loans processed meet specified underwriting criteria, to the extent that such error materially restricts or impairs the salability of such loan, results in a material reduction in the value of such loan or results in the lender repurchasing the loan. The indemnification may be in the form of monetary or other remedies. For the years ended December 31, 2014 and 2013, we paid $12,420 and $5,359, respectively, related to remedies. As of December 31, 2014, management believes any potential claims for indemnifications related to contract underwriting services through December 31, 2014 are not material to our consolidated financial position or results of operations. | |||||
In addition to the indemnifications discussed above, in the normal course of business, we enter into agreements or other relationships with third parties pursuant to which we may be obligated under specified circumstances to indemnify the counterparties with respect to certain matters. Our contractual indemnification obligations typically arise in the context of agreements entered into by us to, among other things, purchase or sell services, finance our business and business transactions, lease real property and license intellectual property. The agreements we enter into in the normal course of business generally require us to pay certain amounts to the other party associated with claims or losses if they result from our breach of the agreement, including the inaccuracy of representations or warranties. The agreements we enter into may also contain other indemnification provisions that obligate us to pay amounts upon the occurrence of certain events, such as the negligence or willful misconduct of our employees, infringement of third-party intellectual property rights or claims that performance of the agreement constitutes a violation of law. Generally, payment by us under an indemnification provision is conditioned upon the other party making a claim, and typically we can challenge the other party's claims. Further, our indemnification obligations may be limited in time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us under an indemnification agreement or obligation. As of December 31, 2014, contingencies triggering material indemnification obligations or payments have not occurred historically and are not expected to occur. The nature of the indemnification provisions in the various types of agreements and relationships described above are believed to be low risk and pervasive, and we consider them to have a remote risk of loss or payment. We have not recorded any provisions on the consolidated balance sheets related to indemnifications. | |||||
Commitments | |||||
We lease office space for use in our operations under leases accounted for as operating leases. In May 2014, we amended our existing lease agreement for our office space in North Carolina and extended the lease term to 2025. Total rent expense was $1.6 million, $1.5 million and $1.0 million for the years ended December 31, 2014, 2013 and 2012, respectively. The future minimum lease payments of non-cancelable operating leases are as follows at December 31, 2014: | |||||
Year Ended December 31, (In thousands) | |||||
2015 | $ | 1,486 | |||
2016 | 2,117 | ||||
2017 | 2,022 | ||||
2018 | 1,940 | ||||
2019 | 1,984 | ||||
2020 and thereafter | 10,358 | ||||
| | | | | |
Total minimum payments required | $ | 19,907 | |||
| | | | | |
| | | | | |
Minimum lease payments shown above have not been reduced by minimum sublease rental income of $0.1 million due in 2015 under the non-cancelable sublease. | |||||
Capital_Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2014 | |
Capital Stock | |
Capital Stock | Note 9. Capital Stock |
Upon the closing of our IPO, our authorized share capital consists of 233.3 million shares of a single class of common shares (the "Common Shares"). All of our outstanding Class A common shares and Class B-2 common shares that were eligible for vesting under the 2009 Restricted Share Plan were converted into the Common Shares and the Common Shares were split 2 for 3. All of the remaining Class B-2 common shares that were not eligible for vesting under the 2009 Restricted Share Plan were forfeited. The Common Shares have no pre-emptive rights or other rights to subscribe for additional shares, and no rights of redemption, conversion or exchange. Under certain circumstances and subject to the provisions of Bermuda law and our bye-laws, we may be required to make an offer to repurchase shares held by members. The Common Shares rank pari passu with one another in all respects as to rights of payment and distribution. In general, holders of Common Shares will have one vote for each Common Share held by them and will be entitled to vote, on a non-cumulative basis, at all meetings of shareholders. In the event that a shareholder is considered a 9.5% Shareholder under our bye-laws, such shareholder's votes will be reduced by whatever amount is necessary so that after any such reduction the votes of such shareholder will not result in any other person being treated as a 9.5% Shareholder with respect to the vote on such matter. Under these provisions certain shareholders may have their voting rights limited to less than one vote per share, while other shareholders may have voting rights in excess of one vote per share. | |
The Class A common shares ranked senior to the Class B-1 common shares and the Class B-2 common shares in all respects as to rights of payment and distribution. The Class B-1 common shares and the Class B-2 common shares ranked junior to the Class A common shares and pari passu with one another in all respects as to rights of payment and distribution. The holders of Class A common shares were entitled to receive cumulative compounding dividends prior and in preference to any declaration or payment of any dividend on any other class of shares in the capital of Essent Group, at the rate of 10% of the Original Class A Issue Price per annum, compounded annually, on each outstanding Class A common share. Any dividend or other distribution declared or paid on any Class B common shares shall have been ratably declared and paid on all of the outstanding Class A common shares (based on "as-if-converted" to Class B-1 common share amounts) at the same time as such dividend is paid on such Class B common shares. | |
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||||
Stock-Based Compensation | Note 10. Stock-Based Compensation | |||||||||||||||||||
On February 6, 2009, Essent Group adopted the 2009 Restricted Share Plan. In connection with the IPO in 2013, Essent Group's Board of Directors amended and restated the 2009 Restricted Share Plan, effective immediately prior to the initial public offering. In addition, Essent Group's Board of Directors adopted, and Essent Group's shareholders approved, the Essent Group Ltd. 2013 Long-Term Incentive Plan (the "2013 Plan"), which was effective upon completion of the initial public offering. The types of awards available under the 2013 Plan include nonvested shares, nonvested share units, non-qualified share options, incentive stock options, share appreciation rights, and other share-based or cash-based awards. The 2013 Plan authorized a total of 14.7 million Common Shares, which will be increased on the first day of each of the Company's fiscal years beginning with fiscal year 2014, in an amount equal to the lesser of (i) 1.5 million Common Shares, (ii) 2% of the Company's outstanding Common Shares on the last day of the immediately preceding fiscal year, or (iii) such number of Common Shares as determined by the Company's Board of Directors. The maximum number of common shares that may be issued in respect of incentive share options is 14.7 million. As of December 31, 2014, there were 13.5 million Common Shares available for future grant under the 2013 Plan. | ||||||||||||||||||||
Class B-2 common share and per share data in all periods presented has been restated for the 2 for 3 share split and the 1 for 1 conversion rate to Common Shares that was effective immediately prior to the closing of the initial public offering. Class A common share and per share data has not been restated because the conversion to Common Shares in connection with the initial public offering was considered a value-for-value exchange of equity interests at the point of the transaction that resulted in a change in shareholder rights and rank before and after the transaction. There were no changes to the terms of these share grants. | ||||||||||||||||||||
In September 2013 and February 2014, certain members of senior management were granted nonvested Common Shares under the 2013 Plan that were subject to time-based and performance-based vesting. The time-based share awards granted in September 2013 vest in four equal installments on January 1, 2015, 2016, 2017 and 2018. The time-based share awards granted in February 2014 vest in three equal installments on March 1, 2015, 2016 and 2017. The performance-based share awards vest based upon our compounded annual book value per share growth percentage during a three-year performance period that commenced on January 1, 2014. The September 2013 performance-based share awards vest on the one-year anniversary of the completion of the performance period, and the February 2014 performance-based share awards vest on March 1, 2017. The portion of the nonvested Common Shares that will be earned based upon the achievement of compounded annual book value per share growth is as follows: | ||||||||||||||||||||
Performance level | Compounded | Nonvested | ||||||||||||||||||
Annual Book | Common Shares | |||||||||||||||||||
Value Per | Earned | |||||||||||||||||||
Share Growth | ||||||||||||||||||||
< 11 | % | 0 | % | |||||||||||||||||
Threshold | 11 | % | 10 | % | ||||||||||||||||
12 | % | 36 | % | |||||||||||||||||
13 | % | 61 | % | |||||||||||||||||
14 | % | 87 | % | |||||||||||||||||
Maximum | 15 | % | 100 | % | ||||||||||||||||
In the event that the compounded annual book value per share growth falls between the performance levels shown above, the nonvested Common Shares earned will be determined on a straight-line basis between the respective levels shown. | ||||||||||||||||||||
Certain of the Company's employees who were not granted nonvested Common Shares were granted nonvested share units in November 2013 that will be settled with Common Shares, subject to time-based vesting, and will vest and settle in equal annual installments during the three-year period commencing January 1, 2014. In connection with our incentive program covering bonus awards for performance year 2013, in February 2014 time-based share awards and share units were issued to certain employees that vest in three equal installments on January 1, 2015, 2016 and 2017. | ||||||||||||||||||||
In May 2014, time-based share units were issued to non-employee directors. The portion of the grant that relates to director compensation for the period from our initial public offering through April 2014 vested on November 1, 2014 and the portion of the grant that relates to director compensation from May 2014 through April 2015 vests one year from the date of grant. | ||||||||||||||||||||
The following tables summarize nonvested Common Share and nonvested Common Share unit activity for the year ended December 31: | ||||||||||||||||||||
2014 | ||||||||||||||||||||
Time and Performance- | Time-Based | Share Units | ||||||||||||||||||
Based Share Awards | Share Awards | |||||||||||||||||||
(Shares in thousands) | Number of | Weighted | Number of | Weighted | Number of | Weighted | ||||||||||||||
Shares | Average | Shares | Average | Share Units | Average | |||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding at beginning of year | 1,238 | $ | 14.5 | 2,839 | $ | 4.82 | 528 | $ | 17.03 | |||||||||||
Granted | 52 | 22.68 | 82 | 23.47 | 188 | 21.95 | ||||||||||||||
Vested | — | N/A | (1,434 | ) | 1.57 | (26 | ) | 19 | ||||||||||||
Forfeited | — | N/A | (15 | ) | 2.7 | (26 | ) | 17.83 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at end of year | 1,290 | $ | 14.83 | 1,472 | $ | 9.04 | 664 | $ | 18.32 | |||||||||||
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| | | | | | | | | | | | | | | | | | | | |
2013 | ||||||||||||||||||||
Time and Performance- | Time-Based | Share Units | ||||||||||||||||||
Based Share Awards | Share Awards | |||||||||||||||||||
(Shares in thousands) | Number of | Weighted | Number of | Weighted | Number of | Weighted | ||||||||||||||
Shares | Average | Shares | Average | Share Units | Average | |||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding at beginning of year | — | N/A | — | N/A | — | N/A | ||||||||||||||
Exchange of Class A and Class B-2 for Common Shares(1) | — | N/A | 2,298 | $ | 2.1 | — | N/A | |||||||||||||
Granted | 1,238 | $ | 14.5 | 613 | 14.5 | 531 | $ | 17.03 | ||||||||||||
Vested | — | N/A | (72 | ) | 0.22 | — | N/A | |||||||||||||
Forfeited | — | N/A | — | N/A | (3 | ) | 17 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at end of year | 1,238 | $ | 14.5 | 2,839 | $ | 4.82 | 528 | $ | 17.03 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
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-1 | Class A and Class B-2 shares exchanged for Common Shares reflect the 2 for 3 share split and the applicable conversion rates to Common Shares that were effective immediately prior to the closing of the initial public offering. | |||||||||||||||||||
Under the 2009 Restricted Share Plan, certain members of management were granted nonvested Class B-2 common shares upon their employment. The shares vest based on a formula that considers the amount of capital funded under the Amended Subscription Agreement and the period of employment of the respective employee. One-third of Class B-2 shares vest on the third, fourth and fifth anniversary of the employee's date of hire multiplied by the "Investment Percentage." The Investment Percentage is defined as the percentage equal to (i) the aggregate amount of equity capital actually invested in Essent Group pursuant to the Amended Subscription Agreement as of any applicable vesting date, divided by (ii) $750,000. The vesting period starts upon the respective employee's date of hire. | ||||||||||||||||||||
The following table summarizes nonvested Class B-2 common share activity for the years ended December 31: | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
(Shares in thousands) | Number of | Weighted | Number of | Weighted | ||||||||||||||||
Shares | Average | Shares | Average | |||||||||||||||||
Grant Date | Grant Date | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Outstanding at beginning of year | 5,461 | $ | 0.11 | 5,973 | $ | 0.11 | ||||||||||||||
Granted | 96 | 1.8 | 195 | 0.26 | ||||||||||||||||
Vested | (1,209 | ) | 0.1 | (645 | ) | 0.09 | ||||||||||||||
Forfeited | (2,614 | ) | 0.13 | (62 | ) | 0.19 | ||||||||||||||
Converted to Common Shares | (1,734 | ) | 0.17 | — | N/A | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding at end of year | — | N/A | 5,461 | 0.11 | ||||||||||||||||
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Under the terms of certain employment contracts and other agreements, a portion of certain employees' annual incentive bonus were paid in Class A common shares which vest over periods of up to 3 years. | ||||||||||||||||||||
The following table summarizes nonvested Class A common share activity for the years ended December 31: | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
(Shares in thousands) | Number of | Weighted | Number of | Weighted | ||||||||||||||||
Shares | Average | Shares | Average | |||||||||||||||||
Grant Date | Grant Date | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Outstanding at beginning of year | 199 | $ | 10.08 | 257 | $ | 10 | ||||||||||||||
Granted | 239 | 10.92 | 215 | 10.11 | ||||||||||||||||
Vested | — | N/A | (271 | ) | 10.03 | |||||||||||||||
Forfeited | (9 | ) | 10.59 | (2 | ) | 10 | ||||||||||||||
Converted to Common Shares | (429 | ) | 8.01 | — | N/A | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding at end of year | — | N/A | 199 | 10.08 | ||||||||||||||||
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In addition to the nonvested share activity above, 17,158 Common Shares were issued in 2014 under the 2013 Plan that vested upon issuance with a weighted average fair market value at date of grant of $24.71 per share. In 2013, 57,349 Class A common shares were issued that vested upon issuance with an estimated fair market value of $10.92 per share and in 2012, 47,500 Class A common shares were issued that vested upon issuance with an estimated fair market value of $10.11. | ||||||||||||||||||||
Prior to our IPO, independent appraisals were obtained in connection with the valuation of Class A and Class B-2 common shares. For nonvested Common Shares granted in September 2013, the valuation estimate was based on analysis provided by the underwriters regarding the estimated fair value of Essent and the estimated IPO price range. Factors considered in determining the IPO price range and Common Share valuation included prevailing market conditions, estimates of the Company's business potential and earnings prospects, the Company's historical operating results, market valuations of companies deemed comparable to the Company and an assessment of risks and opportunities. For nonvested Common Share units granted in October 2013, the initial public offering price of Common Shares was used. Subsequent to our initial public offering, quoted market prices were used for the valuation of Common Shares. | ||||||||||||||||||||
The total fair value of nonvested shares that vested was $32.7 million, $4.0 million and $3.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, there was $28.1 million of total unrecognized compensation expense related to nonvested shares outstanding at December 31, 2014 and we expect to recognize the expense over a weighted average period of 2.7 years. | ||||||||||||||||||||
In connection with our incentive program covering bonus awards for performance year 2014, in February 2015, 58,389 nonvested Common Shares and 70,670 nonvested Common Share units were issued to certain employees and are subject to time-based vesting. In February 2015, 60,818 nonvested Common Shares were granted to certain members of senior management and are subject to time-based and performance-based vesting. | ||||||||||||||||||||
Employees have the option to tender shares to Essent Group to pay the minimum employee statutory withholding taxes associated with shares upon vesting. Common Shares tendered by employees to pay employee withholding taxes totaled 105,317 and 3,846 in 2014 and 2013, respectively. Class A common shares tendered by employees to pay employee withholding taxes totaled 17,644 and 86,014 in 2013 and 2012, respectively. Class B-2 shares tendered by employees to pay employee withholding taxes totaled 1,714 in 2013. There were no Class B-2 common shares tendered in 2012. The tendered shares were recorded at cost and included in treasury stock. | ||||||||||||||||||||
In 2013, Essent Group exercised its right to purchase 1,135 vested Class A common shares at fair value of $10.92 per share and 4,990 vested Class B-2 common shares at fair value of $1.80 per share from former employees. In 2012, Essent Group exercised its right to purchase 710 vested Class A common shares from a former employee at fair value of $10.11 per share. The repurchased shares were recorded at cost and included in treasury stock. All treasury stock has been cancelled as of December 31, 2014 and 2013. | ||||||||||||||||||||
Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares were as follows for the years ended December 31: | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Compensation expense | $ | 12,520 | $ | 3,597 | $ | 1,926 | ||||||||||||||
Income tax benefit | 4,382 | 1,259 | 674 | |||||||||||||||||
Dividends_Restrictions
Dividends Restrictions | 12 Months Ended |
Dec. 31, 2014 | |
Dividends Restrictions | |
Dividends Restrictions | Note 11. Dividends Restrictions |
Our U.S. insurance subsidiaries are subject to certain capital and dividend rules and regulations as prescribed by jurisdictions in which they are authorized to operate. Under the insurance laws of the Commonwealth of Pennsylvania, Essent Guaranty and Essent PA may pay dividends during any 12-month period in an amount equal to the greater of (i) 10% of the preceding year-end statutory policyholders' surplus or (ii) the preceding year's statutory net income. The Pennsylvania statute also specifies that dividends and other distributions can be paid out of positive unassigned surplus without prior approval. Essent Guaranty currently has negative unassigned surplus and, therefore, would require prior approval by the Pennsylvania Insurance Commissioner to make any dividend payment or other distributions in 2015. Essent PA would be able to pay a dividend of $3.7 million in 2015. Essent Guaranty paid no dividends to Essent Group or any intermediate holding companies in the years ended December 31, 2014, 2013 or 2012. In March 2014, Essent PA paid a $200,000 dividend to its parent company, Essent Holdings and in December 2013, Essent PA paid a $5,000 dividend to Essent Holdings. | |
Essent Re is subject to certain dividend restrictions as prescribed by the Bermuda Monetary Authority and under certain agreements with counterparties. In connection with the quota share reinsurance agreement with Essent Guaranty, Essent Re had agreed to maintain a minimum total equity of $100 million. As of December 31, 2014, Essent Re had total equity of $155.1 million. | |
At December 31, 2014, our insurance subsidiaries were in compliance with these rules, regulations and agreements. | |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
Income Taxes | Note 12. Income Taxes | |||||||||||||||||||
As of December 31, 2014, the statutory income tax rates of the countries where the Company does business are 35% in the United States and 0.0% in Bermuda. The statutory income tax rate of each country is applied against the taxable income from each country to calculate the income tax expense (benefit). | ||||||||||||||||||||
Income tax expense (benefit) consists of the following components for the years ended December 31: | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Current | $ | 2,816 | $ | 881 | $ | — | ||||||||||||||
Deferred | 44,614 | (8,267 | ) | (333 | ) | |||||||||||||||
| | | | | | | | | | | ||||||||||
Total income tax expense (benefit) | $ | 47,430 | $ | (7,386 | ) | $ | (333 | ) | ||||||||||||
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Income tax expense (benefit) is different from that which would be obtained by applying the applicable statutory income tax rates to income before taxes by jurisdiction (i.e. U.S. 35%; Bermuda 0.0%). The reconciliation of the difference between income tax expense (benefit) and the expected tax provision at the weighted average tax rate is as follows for the years ended December 31: | ||||||||||||||||||||
(In thousands) | 2014 | % of pretax | 2013 | % of pretax | 2012 | % of pretax | ||||||||||||||
income | income | loss | ||||||||||||||||||
Tax provision (benefit) at weighted average statutory rates | $ | 47,930 | 35.3 | % | $ | 21,405 | 36.9 | % | $ | (4,394 | ) | 31.7 | % | |||||||
Non-deductible expenses | 398 | 0.3 | % | 276 | 0.5 | % | 199 | (1.4 | )% | |||||||||||
Tax exempt interest, net of proration | (961 | ) | (0.7 | )% | (159 | ) | (0.3 | )% | — | — | ||||||||||
Change in valuation allowance | — | — | (28,886 | ) | (49.8 | )% | 3,933 | (28.3 | )% | |||||||||||
Other | 63 | 0 | % | (22 | ) | 0 | % | (71 | ) | 0.4 | % | |||||||||
| | | | | | | | | | | | | | | | | | | | |
Total income tax provision (benefit) | $ | 47,430 | 34.9 | % | $ | (7,386 | ) | (12.7 | )% | $ | (333 | ) | 2.4 | % | ||||||
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| | | | | | | | | | | | | | | | | | | | |
We provide deferred taxes to reflect the estimated future tax effects of the differences between the financial statement and tax bases of assets and liabilities using currently enacted tax laws. The net deferred tax (liability) asset is comprised of the following at December 31: | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | ||||||||||||||||||
Deferred tax assets | $ | 31,729 | $ | 27,043 | ||||||||||||||||
Deferred tax liabilities | (68,821 | ) | (16,697 | ) | ||||||||||||||||
| | | | | | | | |||||||||||||
Net deferred tax (liability) asset | $ | (37,092 | ) | $ | 10,346 | |||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
The components of the net deferred tax (liability) asset were as follows at December 31: | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | ||||||||||||||||||
Contingency reserves | $ | (63,103 | ) | $ | (14,420 | ) | ||||||||||||||
Unearned premium reserve | 16,099 | 11,637 | ||||||||||||||||||
Fixed assets | 6,274 | 7,646 | ||||||||||||||||||
Start-up expenditures, net | 4,611 | 5,064 | ||||||||||||||||||
Nonvested shares | 4,140 | 965 | ||||||||||||||||||
Deferred policy acquisition costs | (3,359 | ) | (2,160 | ) | ||||||||||||||||
Unrealized (gain) loss on investments | (2,045 | ) | 779 | |||||||||||||||||
Alternative minimum tax credit carryforward | 490 | 877 | ||||||||||||||||||
Prepaid expenses | (159 | ) | (53 | ) | ||||||||||||||||
Accrued expenses | (155 | ) | (64 | ) | ||||||||||||||||
Loss reserves | 86 | 43 | ||||||||||||||||||
Organizational expenditures | 29 | 32 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Net deferred tax (liability) asset | $ | (37,092 | ) | $ | 10,346 | |||||||||||||||
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As a mortgage guaranty insurer, we are eligible for a tax deduction, subject to certain limitations, under Section 832(e) of the IRC for amounts required by state law or regulation to be set aside in statutory contingency reserves. The deduction is allowed only to the extent that we purchase non-interest-bearing United States Mortgage Guaranty Tax and Loss Bonds ("T&L Bonds") issued by the Treasury Department in an amount equal to the tax benefit derived from deducting any portion of our statutory contingency reserves. During the years ended December 31, 2014 and 2013, we had net purchases of T&L Bonds in the amount of $51.7 million and $8.0 million, respectively, and held $59.7 million of T&L Bonds as of December 31, 2014. | ||||||||||||||||||||
Alternative minimum tax carryforwards do not expire. | ||||||||||||||||||||
In evaluating our ability to realize the benefit of our deferred tax assets, we consider the relevant impact of all available positive and negative evidence including our past operating results and our forecasts of future taxable income. As of December 31, 2012, Essent had generated a cumulative net operating loss from inception through each annual reporting period. ASC No. 740 states that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years. Accordingly, we concluded that a valuation allowance was required in each reporting period from inception through December 31, 2012. As of December 31, 2012, the valuation allowance was $28.9 million. In the second quarter of 2013, based on actual results through June 30, 2013 as well as forecasted full year 2013 results, management anticipated that Essent would be in a cumulative GAAP net income position for the most recent three year period and expected that Essent would utilize our net operating loss carryforwards and would be in a cumulative net taxable income position since inception. At June 30, 2013, December 31, 2013 and December 31, 2014, after weighing all the evidence, management concluded that it was more likely than not that our deferred tax assets would be realized. In 2013, we released the valuation allowance on our deferred tax assets, and recognized a net deferred tax benefit of $8.3 million in the year ended December 31, 2013. | ||||||||||||||||||||
Under current Bermuda law, the parent company, Essent Group, and its Bermuda subsidiary, Essent Re, are not required to pay any taxes on income and capital gains. In the event that there is a change such that these taxes are imposed, these companies would be exempted from any such tax until March of 2035 pursuant to the Bermuda Exempt Undertakings Tax Protection Act of 1966, and the Exempt Undertakings Tax Protection Amendment Act of 2011. | ||||||||||||||||||||
Essent Holdings and its subsidiaries are subject to income taxes imposed by U.S. authorities and file a U.S. Consolidated Income Tax Return. Each subsidiary has executed a tax sharing agreement with its parent company, which provides that taxes are settled in cash between parent and subsidiary on a quarterly basis based on separate company pro-forma calculations. Should Essent Holdings pay a dividend to Essent Irish Intermediate, withholding taxes at a rate of 5% under the U.S./Ireland tax treaty would likely apply assuming the Company avails itself of Treaty benefits under the U.S./Ireland tax treaty. Absent treaty benefits, the withholding rate on outbound dividends would be 30%. Currently, however, no withholding taxes are accrued with respect to such un-remitted earnings as management has no intention of remitting these earnings. Similarly, no taxes have been provided on the un-remitted earnings of the Company's U.S. subsidiaries as management has no intention of remitting these earnings, and any Ireland tax would be expected to be fully offset by credit for taxes paid in the U.S. An estimate of the cumulative amount of U.S. earnings that would be subject to withholding tax, if distributed outside of the U.S., is approximately $105 million. The associated withholding tax liability under the U.S./Ireland tax treaty would be approximately $5 million. | ||||||||||||||||||||
Essent is not subject to income taxation other than as stated above. There can be no assurance that there will not be changes in applicable laws, regulations, or treaties which might require Essent to change the way it operates or becomes subject to taxation. | ||||||||||||||||||||
At December 31, 2014 and 2013, we had no unrecognized tax benefits. As of December 31, 2014, our U.S. federal income tax returns for the tax years 2009 through 2013 remain subject to examination. The Company has not recorded any uncertain tax positions as of December 31, 2014 or December 31, 2013. | ||||||||||||||||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions | |
Related Party Transactions | Note 13. Related Party Transactions |
The Company is a party to an investment advisory agreement with Goldman Sachs Asset Management, L.P., a subsidiary of The Goldman Sachs Group, Inc. ("Goldman Sachs"), one of Essent Group's investors. Through the date of our IPO, Goldman Sachs beneficially owned 11.35% of our outstanding shares. Subsequent to the IPO, Goldman Sachs directly held less than 10% of our outstanding shares. Investment expense incurred under the investment advisory agreement totaled $0.5, $0.4, and $0.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. The Company was also a party to underwriting agreements with Goldman Sachs in connection with the IPO and secondary offering of Common Shares. Amounts paid to Goldman Sachs in connection with the underwriting agreements totaled $3.5 million in 2014 and $6.9 million in 2013. | |
Earnings_Loss_per_Share_EPS
Earnings (Loss) per Share (EPS) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Earnings (Loss) per Share (EPS) | |||||||||||
Earnings (Loss) per Share (EPS) | Note 14. Earnings (Loss) per Share (EPS) | ||||||||||
The following table reconciles the net income (loss) and the weighted average common shares outstanding used in the computations of basic and diluted loss per common share for the years ended December 31: | |||||||||||
(In thousands, except per share amounts) | 2014 | 2013 | 2012 | ||||||||
Net income (loss) | $ | 88,497 | $ | 65,413 | $ | (13,543 | ) | ||||
Less: Common Shares dividends declared | — | — | — | ||||||||
Less: Class A dividends declared | — | — | — | ||||||||
Less: Class B-2 dividends declared | — | — | — | ||||||||
| | | | | | | | | | | |
Undistributed net income (loss) | $ | 88,497 | $ | 65,413 | $ | (13,543 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) allocable to Common | $ | 88,497 | $ | 12,706 | N/A | ||||||
Net income (loss) allocable to Class A | N/A | 52,707 | $ | (13,541 | ) | ||||||
Net income (loss) allocable to Class B-2 | N/A | N/A | (2 | ) | |||||||
Basic earnings (loss) per share: | |||||||||||
Common | $ | 1.05 | $ | 0.9 | N/A | ||||||
Class A | N/A | N/A | $ | (0.49 | ) | ||||||
Class B-2 | N/A | N/A | (0.01 | ) | |||||||
Diluted earnings (loss) per share: | |||||||||||
Common | $ | 1.03 | $ | 0.7 | N/A | ||||||
Class A | N/A | N/A | $ | (0.49 | ) | ||||||
Class B-2 | N/A | N/A | (0.01 | ) | |||||||
Basic weighted average common shares outstanding: | |||||||||||
Common | 83,986 | 14,044 | N/A | ||||||||
Class A | N/A | N/A | 27,445 | ||||||||
Class B-2 | N/A | N/A | 393 | ||||||||
Dilutive effect of nonvested shares: | |||||||||||
Common | 1,616 | 4,059 | N/A | ||||||||
Class A | N/A | N/A | — | ||||||||
Class B-2 | N/A | N/A | — | ||||||||
Diluted weighted average common shares outstanding: | |||||||||||
Common | 85,602 | 18,103 | N/A | ||||||||
Class A | N/A | N/A | 27,445 | ||||||||
Class B-2 | N/A | N/A | 393 | ||||||||
For the year ended December 31, 2014, 141,503 nonvested shares were antidilutive. Prior to the conversion to Common Shares upon completion of the IPO, all of the Class A shares were contingently issuable potential Common Shares, but they were antidilutive to the diluted earnings per Common Share calculation in 2013. There were no other antidilutive shares for 2013. For the year ended December 31, 2012, 343,448 nonvested Class A shares were antidilutive and 5,663,300 nonvested Class B-2 shares were antidilutive. | |||||||||||
The nonvested performance-based share awards are considered contingently issuable for purposes of the EPS calculation. Based on the compounded annual book value per share growth as of December 31, 2014, 100% of the performance-based share awards would be issuable under the terms of the arrangements if December 31, 2014 was the end of the contingency period. | |||||||||||
As indicated in Note 9, Class A common shares were entitled to receive cumulative compounding dividends prior and in preference to any declaration or payment of any dividend on the Class B-2 common shares. In periods of income, the undistributed net income was allocated to the Class A common shares to satisfy this requirement. In periods of loss, the undistributed net loss has been allocated pro rata to the Class A and Class B-2 shares in proportion to their percentage of vested equity capital. | |||||||||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Accumulated Other Comprehensive Income | |||||||||||
Accumulated Other Comprehensive Income | Note 15. Accumulated Other Comprehensive Income | ||||||||||
The following table shows the rollforward of accumulated other comprehensive income (loss) for the year ended December 31: | |||||||||||
2014 | |||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | ||||||||
Balance at beginning of period | $ | (2,227 | ) | $ | 780 | $ | (1,447 | ) | |||
Other comprehensive income: | |||||||||||
Unrealized holding gains arising during the period | 9,864 | (3,073 | ) | 6,791 | |||||||
Less: Reclassification adjustment for gains included in net income(1) | (925 | ) | 248 | (677 | ) | ||||||
| | | | | | | | | | | |
Net unrealized gains on investments | 8,939 | (2,825 | ) | 6,114 | |||||||
| | | | | | | | | | | |
Other comprehensive income | 8,939 | (2,825 | ) | 6,114 | |||||||
| | | | | | | | | | | |
Balance at end of period | $ | 6,712 | $ | (2,045 | ) | $ | 4,667 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
2013 | |||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | ||||||||
Balance at beginning of period | $ | 3,714 | $ | (1,300 | ) | $ | 2,414 | ||||
Other comprehensive loss: | |||||||||||
Unrealized holding losses arising during the period | (5,825 | ) | 2,039 | (3,786 | ) | ||||||
Less: Reclassification adjustment for gains included in net income(1) | (116 | ) | 41 | (75 | ) | ||||||
| | | | | | | | | | | |
Net unrealized losses on investments | (5,941 | ) | 2,080 | (3,861 | ) | ||||||
| | | | | | | | | | | |
Other comprehensive loss | (5,941 | ) | 2,080 | (3,861 | ) | ||||||
| | | | | | | | | | | |
Balance at end of period | $ | (2,227 | ) | $ | 780 | $ | (1,447 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | Included in net realized investments gains on our consolidated statement of operations | ||||||||||
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||||||||||||||
Fair Value of Financial Instruments | Note 16. Fair Value of Financial Instruments | |||||||||||||||||||||||||
The estimated fair values and related carrying amounts of our financial instruments were as follows: | ||||||||||||||||||||||||||
December 31, 2014 (In thousands) | Carrying | Fair | ||||||||||||||||||||||||
Amount | Value | |||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 74,216 | $ | 74,216 | ||||||||||||||||||||||
U.S. agency securities | 4,520 | 4,520 | ||||||||||||||||||||||||
U.S. agency mortgage-backed securities | 83,540 | 83,540 | ||||||||||||||||||||||||
Municipal debt securities | 195,546 | 195,546 | ||||||||||||||||||||||||
Corporate debt securities | 296,829 | 296,829 | ||||||||||||||||||||||||
Mortgage-backed securities | 66,086 | 66,086 | ||||||||||||||||||||||||
Asset-backed securities | 126,188 | 126,188 | ||||||||||||||||||||||||
Money market funds | 210,688 | 210,688 | ||||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Total Investments | $ | 1,057,613 | $ | 1,057,613 | ||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||
Derivative liabilities | $ | 661 | $ | 661 | ||||||||||||||||||||||
December 31, 2013 (In thousands) | Carrying | Fair | ||||||||||||||||||||||||
Amount | Value | |||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 59,187 | $ | 59,187 | ||||||||||||||||||||||
U.S. agency securities | 14,839 | 14,839 | ||||||||||||||||||||||||
U.S. agency mortgage-backed securities | 22,241 | 22,241 | ||||||||||||||||||||||||
Municipal debt securities | 57,650 | 57,650 | ||||||||||||||||||||||||
Corporate debt securities | 125,593 | 125,593 | ||||||||||||||||||||||||
Mortgage-backed securities | 18,581 | 18,581 | ||||||||||||||||||||||||
Asset-backed securities | 20,385 | 20,385 | ||||||||||||||||||||||||
Money market funds | 14,079 | 14,079 | ||||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Total Investments | $ | 332,555 | $ | 332,555 | ||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||
Amounts due under Asset Purchase Agreement | $ | 4,949 | $ | 4,997 | ||||||||||||||||||||||
Fair Value Hierarchy | ||||||||||||||||||||||||||
ASC No. 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The level within the fair value hierarchy to measure the financial instrument shall be determined based on the lowest level input that is significant to the fair value measurement. The three levels of the fair-value hierarchy are as follows: | ||||||||||||||||||||||||||
• | Level 1—Quoted prices for identical instruments in active markets accessible at the measurement date. | |||||||||||||||||||||||||
• | Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and valuations in which all significant inputs are observable in active markets. Inputs are observable for substantially the full term of the financial instrument. | |||||||||||||||||||||||||
• | Level 3—Valuations derived from one or more significant inputs that are unobservable. | |||||||||||||||||||||||||
Determination of Fair Value | ||||||||||||||||||||||||||
When available, we generally use quoted market prices to determine fair value and classify the financial instrument in Level 1. In cases where quoted market prices for similar financial instruments are available, we utilize these inputs for valuation techniques and classify the financial instrument in Level 2. In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flows, present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rates and estimates of future cash flows and we classify the financial instrument in Level 3. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. No financial instruments were classified as Level 3 at December 31, 2013. | ||||||||||||||||||||||||||
We used the following methods and assumptions in estimating fair values of financial instruments: | ||||||||||||||||||||||||||
• | Investments available for sale—Investments available for sale are valued using quoted market prices in active markets, when available, and those investments are classified as Level 1 of the fair value hierarchy. Level 1 investments available for sale include investments such as U.S. Treasury securities, U.S. agency securities, U.S. agency mortgage-backed securities, mortgage-backed securities and money market funds. Investments available for sale are classified as Level 2 of the fair value hierarchy if quoted market prices are not available and fair values are estimated using quoted prices of similar securities or recently executed transactions for the securities. Municipal securities, corporate debt securities and asset-backed securities are classified as Level 2 investments. | |||||||||||||||||||||||||
We use independent pricing sources to determine the fair value of securities available for sale in Level 1 and Level 2 of the fair value hierarchy. We use one primary pricing service to provide individual security pricing based on observable market data and receive one quote per security. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing service and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. We review the reasonableness of prices received from our primary pricing service by comparison to prices obtained from additional pricing sources. We have not made any adjustments to the prices obtained from our primary pricing service. | ||||||||||||||||||||||||||
• | Amounts due under Asset Purchase Agreement—The fair value of amounts due under Asset Purchase Agreement is estimated using discounted cash flow analyses based on current risk-free interest rates of securities with similar maturities. The fair value estimates of amounts due under Asset Purchase Agreement are classified as Level 2 since quoted market prices are not available, but observable inputs are used in the valuation. | |||||||||||||||||||||||||
• | Derivative liabilities—We define fair value as the current amount that would be exchanged to sell an asset or transfer a liability, other than in a forced liquidation. In determining an exit market, we consider the fact that there is not a principal market for these contracts. In the absence of a principal market, we value our ACIS contracts in a hypothetical market where market participants, and potential counterparties, include other mortgage guaranty insurers or reinsurers with similar credit quality to us. We believe that in the absence of a principal market, this hypothetical market provides the most relevant information with respect to fair value estimates. | |||||||||||||||||||||||||
We determine the fair value of our derivative instruments primarily using internally-generated models. We utilize market observable inputs, such as the performance of the underlying pool of mortgages, mortgage prepayment speeds and pricing spreads on the reference STACR notes, whenever they are available. There is a high degree of uncertainty about our fair value estimates since our contracts are not traded or exchanged, which makes external validation and corroboration of our estimates difficult. Considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates may not be indicative of amounts we could realize in a current market exchange or negotiated termination. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. | ||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value | ||||||||||||||||||||||||||
All assets measured at fair value are categorized in the table below based upon the lowest level of significant input to the valuations. All fair value measurements at the reporting date were on a recurring basis. | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
(In thousands) | Quoted Prices | Significant | Significant | Total | ||||||||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||||||||||
Markets for | Observable | Inputs | ||||||||||||||||||||||||
Identical | Inputs | (Level 3) | ||||||||||||||||||||||||
Instruments | (Level 2) | |||||||||||||||||||||||||
(Level 1) | ||||||||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 74,216 | $ | — | $ | — | $ | 74,216 | ||||||||||||||||||
U.S. agency securities | 4,520 | — | — | 4,520 | ||||||||||||||||||||||
U.S. agency mortgage-backed securities | 83,540 | — | — | 83,540 | ||||||||||||||||||||||
Municipal debt securities | — | 195,546 | — | 195,546 | ||||||||||||||||||||||
Corporate debt securities | — | 296,829 | — | 296,829 | ||||||||||||||||||||||
Mortgage-backed securities | 4,882 | 61,204 | — | 66,086 | ||||||||||||||||||||||
Asset-backed securities | — | 126,188 | — | 126,188 | ||||||||||||||||||||||
Money market funds | 210,688 | — | — | 210,688 | ||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Total assets at fair value | $ | 377,846 | $ | 679,767 | $ | — | $ | 1,057,613 | ||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Liabilities | ||||||||||||||||||||||||||
Derivative liabilities | — | — | 661 | 661 | ||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 661 | $ | 661 | ||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | |||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
(In thousands) | Quoted Prices | Significant | Significant | Total | ||||||||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||||||||||
Markets for | Observable | Inputs | ||||||||||||||||||||||||
Identical | Inputs | (Level 3) | ||||||||||||||||||||||||
Instruments | (Level 2) | |||||||||||||||||||||||||
(Level 1) | ||||||||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 59,187 | $ | — | $ | — | $ | 59,187 | ||||||||||||||||||
U.S. agency securities | 14,839 | — | — | 14,839 | ||||||||||||||||||||||
U.S. agency mortgage-backed securities | 22,241 | — | — | 22,241 | ||||||||||||||||||||||
Municipal debt securities | — | 57,650 | — | 57,650 | ||||||||||||||||||||||
Corporate debt securities | — | 125,593 | — | 125,593 | ||||||||||||||||||||||
Mortgage-backed securities | 5,333 | 13,248 | — | 18,581 | ||||||||||||||||||||||
Asset-backed securities | — | 20,385 | — | 20,385 | ||||||||||||||||||||||
Money market funds | 14,079 | — | — | 14,079 | ||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Total assets at fair value | $ | 115,679 | $ | 216,876 | $ | — | $ | 332,555 | ||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Changes in Level 3 Recurring Fair Value Measurements | ||||||||||||||||||||||||||
The following table presents changes during the year ended December 31, 2014 in Level 3 liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 liabilities in the Consolidated Balance Sheets at December 31, 2014. We had no Level 3 assets in the year ended December 31, 2014 and no Level 3 assets or liabilities in the year ended December 31, 2013. | ||||||||||||||||||||||||||
(In thousands) | Fair Value | Net | Other | Purchases, | Gross | Gross | Fair Value | Changes in | ||||||||||||||||||
Beginning | Realized and | Comprehensive | Sales, | Transfers | Transfers | End of Year | Unrealized | |||||||||||||||||||
of Year | Unrealized | Income (Loss) | Issues and | In | Out | Gains (Losses) | ||||||||||||||||||||
Gains (Losses) | Settlements, Net | Included in | ||||||||||||||||||||||||
Included | Income on | |||||||||||||||||||||||||
in Income | Instruments | |||||||||||||||||||||||||
Held at | ||||||||||||||||||||||||||
End of Year | ||||||||||||||||||||||||||
Derivative liabilities | $ | — | $ | 78 | $ | — | $ | 739 | $ | — | $ | — | $ | 661 | $ | 78 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Level 3 Liabilities | $ | — | $ | 78 | $ | — | $ | 739 | $ | — | $ | — | $ | 661 | $ | 78 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table summarizes the significant unobservable inputs used in our recurring Level 3 fair value measurements as of December 31, 2014: | ||||||||||||||||||||||||||
($ in thousands) | Fair Value | Valuation Technique | Unobservable Input | Weighted | ||||||||||||||||||||||
Average | ||||||||||||||||||||||||||
Derivative liabilities | $ | 661 | Discounted cash flows | Constant prepayment rate | 5.40 | % | ||||||||||||||||||||
Default rate | 1.85 | % | ||||||||||||||||||||||||
Reference STACR credit spread | 3.72 | % | ||||||||||||||||||||||||
The significant unobservable inputs used for derivative liabilities are constant prepayment rates ("CPR") and default rates on the reference pool of mortgages and the credit spreads on the reference STACR notes. An increase in the default rate and reference STACR credit spread will increase the fair value of the liability. An increase in the CPR will decrease the fair value measurement of the liability. | ||||||||||||||||||||||||||
Statutory_Accounting
Statutory Accounting | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Statutory Accounting | |||||||||||
Statutory Accounting | Note 17. Statutory Accounting | ||||||||||
Our U.S. insurance subsidiaries prepare statutory-basis financial statements in accordance with the accounting practices prescribed or permitted by their respective state's department of insurance, which is a comprehensive basis of accounting other than GAAP. We did not use any prescribed or permitted statutory accounting practices (individually or in the aggregate) that resulted in reported statutory surplus or capital that was significantly different from the statutory surplus or capital that would have been reported had National Association of Insurance Commissioners' statutory accounting practices been followed. The following table presents Essent Guaranty's and Essent PA's statutory net income or loss, statutory surplus and contingency reserve liability as of and for the years ended December 31: | |||||||||||
(In thousands) | 2014 | 2013 | 2012 | ||||||||
Essent Guaranty | |||||||||||
Statutory net income (loss) | $ | 118,204 | $ | 49,838 | $ | (16,278 | ) | ||||
Statutory surplus | 465,226 | 346,406 | 163,790 | ||||||||
Contingency reserve liability | 179,221 | 79,921 | 23,313 | ||||||||
Essent PA | |||||||||||
Statutory net income | $ | 13,299 | $ | 5,926 | $ | 749 | |||||
Statutory surplus | 42,672 | 34,528 | 14,159 | ||||||||
Contingency reserve liability | 16,909 | 6,857 | 1,780 | ||||||||
Net income determined in accordance with statutory accounting practices differs from GAAP. In 2014, the more significant differences between net income determined under statutory accounting practices and GAAP for Essent Guaranty and Essent PA relate to policy acquisition costs and income taxes. Under statutory accounting practices, policy acquisition costs are expensed as incurred while such costs are capitalized and amortized to expense over the life of the policy under GAAP. As discussed in Note 12, we are eligible for a tax deduction, subject to certain limitations for amounts required by state law or regulation to be set aside in statutory contingency reserves when we purchase T&L Bonds. Under statutory accounting practices, this deduction reduces the tax provision recorded by Essent Guaranty and Essent PA and, as a result, increases statutory net income and surplus as compared to net income and equity determined in accordance with GAAP. | |||||||||||
At December 31, 2014 and 2013, the statutory capital of our U.S. insurance subsidiaries, which is defined as the total of statutory surplus and contingency reserves, was well in excess of the statutory capital necessary to satisfy their regulatory requirements. | |||||||||||
On July 10, 2014, the Federal Housing Finance Agency ("FHFA") released for public input Private Mortgage Insurer Eligibility Requirement ("PMIERs"). If implemented, the PMIERs represent revised standards by which private mortgage insurers would be eligible to provide mortgage insurance on loans owned or guaranteed by Fannie Mae and Freddie Mac. The PMIERs would replace the current eligibility requirements separately established by each of Fannie Mae and Freddie Mac prior to the financial crisis. As proposed, the PMIERs include new financial strength requirements incorporating a risk-based framework that would require approved insurers to have a sufficient level of liquid assets from which to pay claims. These new requirements would impact the amount of capital a mortgage insurer must hold. The draft requirements also include enhanced operational performance expectations and define remedial actions that would apply should an approved insurer fail to comply with the new requirements. The public input period with respect to the PMIERs closed on September 8, 2014. The FHFA has advised us that it does not expect to release the final PMIERs until at least late in the first quarter of 2015. | |||||||||||
Statement of Statutory Accounting Principles No. 58, Mortgage Guaranty Insurance, requires mortgage insurers to establish a special contingency reserve for statutory accounting purposes included in total liabilities equal to 50% of earned premium for that year. During 2014, Essent Guaranty increased its contingency reserve by $99.3 million and Essent PA increased its contingency reserve by $10.1 million. This reserve is required to be maintained for a period of 120 months to protect against the effects of adverse economic cycles. After 120 months, the reserve is released to unassigned funds. In the event an insurer's loss ratio in any calendar year exceeds 35%, however, the insurer may, after regulatory approval, release from its contingency reserves an amount equal to the excess portion of such losses. Essent Guaranty and Essent PA did not release any amounts from their contingency reserves in 2014, 2013 or 2012. | |||||||||||
Capital_Maintenance_Agreement
Capital Maintenance Agreement | 12 Months Ended |
Dec. 31, 2014 | |
Capital Maintenance Agreement | |
Capital Maintenance Agreement | Note 18. Capital Maintenance Agreement |
Essent Guaranty has a capital maintenance agreement with Essent PA under which Essent Guaranty agreed to contribute funds, under specified conditions, to maintain Essent PA's risk to capital ratio at or below 25.0 to 1 in return for a surplus note. As of December 31, 2014, Essent PA's risk to capital ratio was 14.6 to 1 and there were no amounts outstanding related to this agreement. | |
Quarterly_Financial_Data_Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Quarterly Financial Data (Unaudited) | ||||||||||||||
Quarterly Financial Data (Unaudited) | Note 19. Quarterly Financial Data (Unaudited) | |||||||||||||
The following table summarizes the unaudited results of operations for each quarter of 2014 and 2013. We have prepared the consolidated quarterly information on a basis consistent with the audited consolidated financial statements. In the opinion of management, the financial information reflects all adjustments (which include normal recurring adjustments) required for a fair presentation of the financial information for the quarters presented. This information should be read in conjunction with our audited financial statements and the related notes. The results of interim periods are not necessarily indicative of the results for the full year. | ||||||||||||||
2014 | ||||||||||||||
(In thousands, except per share amounts) | December 31 | September 30 | June 30 | March 31 | ||||||||||
Net premiums earned | $ | 67,814 | $ | 60,323 | $ | 50,342 | $ | 44,750 | ||||||
Other revenues | 4,928 | 4,298 | 3,941 | 3,071 | ||||||||||
Provision for losses and LAE | 3,049 | 1,391 | 966 | 902 | ||||||||||
Other underwriting and operating expenses | 25,656 | 24,469 | 23,648 | 23,459 | ||||||||||
Income before income taxes | 44,037 | 38,761 | 29,669 | 23,460 | ||||||||||
Net income | 28,866 | 25,070 | 19,555 | 15,006 | ||||||||||
Basic earnings per Common Share | 0.34 | 0.30 | 0.23 | 0.18 | ||||||||||
$ | $ | $ | $ | |||||||||||
Diluted earnings per Common Share | 0.33 | 0.29 | 0.23 | 0.18 | ||||||||||
$ | $ | $ | $ | |||||||||||
Basic weighted average Common Shares outstanding | 86,134 | 83,640 | 83,276 | 82,864 | ||||||||||
Diluted weighted average Common Shares outstanding | 87,950 | 85,028 | 84,706 | 84,696 | ||||||||||
2013 | ||||||||||||||
December 31 | September 30 | June 30 | March 31 | |||||||||||
Net premiums earned | $ | 40,344 | $ | 34,282 | $ | 27,481 | $ | 21,264 | ||||||
Other revenues | 2,009 | 2,173 | 2,083 | 1,767 | ||||||||||
Provision for losses and LAE | 692 | 319 | 580 | 730 | ||||||||||
Other underwriting and operating expenses | 22,299 | 18,237 | 15,557 | 14,962 | ||||||||||
Income (loss) before income taxes | 19,362 | 17,899 | 13,427 | 7,339 | ||||||||||
Net income (loss) | 19,017 | 15,619 | 23,577 | 7,200 | ||||||||||
Net income (loss) allocable to Common | 12,037 | N/A | N/A | N/A | ||||||||||
Net income (loss) allocable to Class A | N/A | 15,490 | 23,037 | 7,200 | ||||||||||
Net income (loss) allocable to Class B-2 | N/A | 129 | 540 | — | ||||||||||
Basic earnings (loss) per share | ||||||||||||||
Common Shares | $ | 0.23 | N/A | N/A | N/A | |||||||||
Class A common shares | N/A | $ | 0.36 | $ | 0.63 | $ | 0.23 | |||||||
Class B-2 common shares | N/A | 0.07 | 0.40 | — | ||||||||||
Diluted earnings (loss) per share | ||||||||||||||
Common Shares | $ | 0.22 | N/A | N/A | N/A | |||||||||
Class A common shares | N/A | $ | 0.35 | $ | 0.62 | $ | 0.23 | |||||||
Class B-2 common shares | N/A | 0.02 | 0.09 | — | ||||||||||
Basic weighted average shares outstanding | ||||||||||||||
Common Shares | 51,741 | N/A | N/A | N/A | ||||||||||
Class A common shares | N/A | 43,616 | 36,793 | 31,805 | ||||||||||
Class B-2 common shares | N/A | 1,822 | 1,334 | 853 | ||||||||||
Diluted weighted average shares outstanding | ||||||||||||||
Common Shares | 55,130 | N/A | N/A | N/A | ||||||||||
Class A common shares | N/A | 43,788 | 36,901 | 31,864 | ||||||||||
Class B-2 common shares | N/A | 6,054 | 5,994 | 6,009 | ||||||||||
Schedule_ISummary_of_Investmen
Schedule I-Summary of Investments-Other Than Investments in Related Parties | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Schedule I-Summary of Investments-Other Than Investments in Related Parties | |||||||||||
Schedule I-Summary of Investments-Other Than Investments in Related Parties | Essent Group Ltd. and Subsidiaries | ||||||||||
Schedule I—Summary of Investments—Other Than Investments in Related Parties | |||||||||||
December 31, 2014 | |||||||||||
Type of Investment | Amortized | Fair | Amount at which | ||||||||
(In thousands) | Cost | Value | shown in the | ||||||||
Balance Sheet | |||||||||||
Fixed maturities: | |||||||||||
Bonds: | |||||||||||
United States Government and government agencies and authorities | $ | 160,113 | $ | 162,276 | $ | 162,276 | |||||
States, municipalities and political subdivisions | 191,723 | 195,546 | 195,546 | ||||||||
Mortgage-backed securities | 66,396 | 66,086 | 66,086 | ||||||||
Asset-backed securities | 126,474 | 126,188 | 126,188 | ||||||||
All other corporate bonds | 295,507 | 296,829 | 296,829 | ||||||||
| | | | | | | | | | | |
Total fixed maturities | 840,213 | 846,925 | 846,925 | ||||||||
| | | | | | | | | | | |
Short-term investments | 210,688 | 210,688 | 210,688 | ||||||||
| | | | | | | | | | | |
Total investments | $ | 1,050,901 | 1,057,613 | $ | 1,057,613 | ||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule_IIFinancial_Informati
Schedule II-Financial Information of Registrant | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Schedule II-Financial Information of Registrant | |||||||||||
Schedule II-Financial Information of Registrant | Essent Group Ltd. and Subsidiaries | ||||||||||
Schedule II—Financial Information of Registrant | |||||||||||
Balance Sheets | |||||||||||
Parent Company Only | |||||||||||
December 31, | |||||||||||
(In thousands) | 2014 | 2013 | |||||||||
Assets | |||||||||||
Fixed maturities | $ | 1,197 | $ | — | |||||||
Short-term investments | 116,630 | 2,002 | |||||||||
Cash | 8,500 | 244,218 | |||||||||
Due from affiliates | 1,179 | 528 | |||||||||
Investment in consolidated subsidiaries | 828,482 | 476,066 | |||||||||
Other assets | 668 | 961 | |||||||||
| | | | | | | | ||||
Total Assets | $ | 956,656 | $ | 723,775 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Liabilities and stockholders' equity | |||||||||||
Liabilities | |||||||||||
Other accrued liabilities | $ | 918 | $ | 1,634 | |||||||
| | | | | | | | ||||
Total liabilities | 918 | 1,634 | |||||||||
| | | | | | | | ||||
Commitments and contingencies | |||||||||||
Stockholders' Equity | |||||||||||
Common shares | 1,388 | 1,297 | |||||||||
Additional paid-in capital | 893,285 | 754,390 | |||||||||
Accumulated other comprehensive income (loss) | 4,667 | (1,447 | ) | ||||||||
Retained earnings (accumulated deficit) | 56,398 | (32,099 | ) | ||||||||
| | | | | | | | ||||
Total stockholders' equity | 955,738 | 722,141 | |||||||||
| | | | | | | | ||||
Total liabilities and stockholders' equity | $ | 956,656 | $ | 723,775 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Essent Group Ltd. and Subsidiaries | |||||||||||
Schedule II—Condensed Financial Information of Registrant | |||||||||||
Condensed Statements of Comprehensive Income (Loss) | |||||||||||
Parent Company Only | |||||||||||
Year Ended December 31, | |||||||||||
(In thousands) | 2014 | 2013 | 2012 | ||||||||
Revenues: | |||||||||||
Investment income | $ | 1,019 | $ | 4 | $ | 3 | |||||
Realized gains, net | 218 | — | — | ||||||||
Administrative service fees from subsidiaries | 1,020 | — | — | ||||||||
| | | | | | | | | | | |
Total revenues | 2,257 | 4 | 3 | ||||||||
| | | | | | | | | | | |
Expenses: | |||||||||||
Administrative service fees to subsidiaries | 826 | 90 | 46 | ||||||||
Other operating expenses | 4,085 | 1,567 | 250 | ||||||||
| | | | | | | | | | | |
Total expenses | 4,911 | 1,657 | 296 | ||||||||
Loss before income taxes and equity in undistributed net income in subsidiaries | (2,654 | ) | (1,653 | ) | (293 | ) | |||||
| | | | | | | | | | | |
Loss before equity in undistributed net income (loss) of subsidiaries | (2,654 | ) | (1,653 | ) | (293 | ) | |||||
Equity in undistributed net income (loss) of subsidiaries | 91,151 | 67,066 | (13,250 | ) | |||||||
| | | | | | | | | | | |
Net income (loss) | $ | 88,497 | $ | 65,413 | $ | (13,543 | ) | ||||
Other comprehensive (loss) income: | |||||||||||
Change in unrealized appreciation (depreciation) of investments, net of tax expense (benefit) of $2,825 in 2014, ($2,080) in 2013 and $333 in 2012 | 6,114 | (3,861 | ) | 618 | |||||||
| | | | | | | | | | | |
Total other comprehensive income (loss) | 6,114 | (3,861 | ) | 618 | |||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Comprehensive income (loss) | $ | 94,611 | $ | 61,552 | $ | (12,925 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Essent Group Ltd. and Subsidiaries | |||||||||||
Schedule II—Condensed Financial Information of Registrant | |||||||||||
Condensed Statements of Cash Flows | |||||||||||
Parent Company Only | |||||||||||
Year Ended December 31, | |||||||||||
(In thousands) | 2014 | 2013 | 2012 | ||||||||
Operating Activities | |||||||||||
Net income (loss) | $ | 88,497 | $ | 65,413 | $ | (13,543 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Equity in net income of subsidiaries | (91,151 | ) | (67,066 | ) | 13,250 | ||||||
Gain on the sale of investments, net | (218 | ) | — | — | |||||||
Stock-based compensation expense | 1,076 | — | — | ||||||||
Amortization of premium on investment securities | 502 | — | — | ||||||||
Excess tax benefits from stock-based compensation | (1,809 | ) | — | — | |||||||
Changes in assets and liabilities: | |||||||||||
Other assets | (358 | ) | (1,450 | ) | 121 | ||||||
Other accrued liabilities | 13,252 | 4,196 | 2,373 | ||||||||
| | | | | | | | | | | |
Net cash provided by operating activities | 9,791 | 1,093 | 2,201 | ||||||||
| | | | | | | | | | | |
Investing Activities | |||||||||||
Net change in short term investments | (114,628 | ) | 999 | (2,001 | ) | ||||||
Investments in subsidiaries | (255,155 | ) | (197,000 | ) | (54,567 | ) | |||||
Purchase of investments available for sale | (95,128 | ) | — | — | |||||||
Proceeds from sales of investments available for sale | 93,650 | — | — | ||||||||
| | | | | | | | | | | |
Net cash used in investing activities | (371,261 | ) | (196,001 | ) | (56,568 | ) | |||||
| | | | | | | | | | | |
Financing Activities | |||||||||||
Issuance of common shares net of costs | 126,441 | 438,403 | 54,497 | ||||||||
Treasury stock acquired | (2,498 | ) | (311 | ) | (916 | ) | |||||
Excess tax benefits from stock-based compensation | 1,809 | — | — | ||||||||
Investor fee payment | — | — | (1,677 | ) | |||||||
| | | | | | | | | | | |
Net cash provided by financing activities | 125,752 | 438,092 | 51,904 | ||||||||
| | | | | | | | | | | |
Net (decrease) increase in cash | (235,718 | ) | 243,184 | (2,463 | ) | ||||||
Cash at beginning of period | 244,218 | 1,034 | 3,497 | ||||||||
| | | | | | | | | | | |
Cash at end of period | $ | 8,500 | $ | 244,218 | $ | 1,034 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Essent Group Ltd. and Subsidiaries | |||||||||||
Schedule II—Condensed Financial Information of Registrant | |||||||||||
Parent Company Only | |||||||||||
Supplementary Notes | |||||||||||
Note A | |||||||||||
The accompanying Parent Company financial statements should be read in conjunction with the consolidated financial statements and notes to consolidated financial statements. These financial statements have been prepared on the same basis and using the same accounting policies as described in the consolidated financial statements included herein, except that the Parent Company uses the equity-method of accounting for its majority-owned subsidiaries. | |||||||||||
Note B | |||||||||||
Under the insurance laws of the Commonwealth of Pennsylvania, the insurance subsidiaries may pay dividends during any 12-month period in an amount equal to the greater of (i) 10% of the preceding year-end statutory policyholders' surplus or (ii) the preceding year's statutory net income. The Pennsylvania statute also requires that dividends and other distributions be paid out of positive unassigned surplus without prior approval. Essent Guaranty currently has negative unassigned surplus and therefore, would require prior approval by the Pennsylvania Insurance Commissioner to make any dividend payment or other distributions in 2015. Essent PA would be able to pay a dividend of $3.7 million in 2015. | |||||||||||
During the three years ending December 31, 2014, the Parent Company did not receive any dividends from its subsidiaries. | |||||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||
Use of Estimates | Use of Estimates | |||||||||||||
The preparation of financial statements in accordance 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 and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. | ||||||||||||||
Investments Available for Sale | Investments Available for Sale | |||||||||||||
Investments available for sale include securities that we sell from time to time to provide liquidity and in response to changes in the market. Debt and equity securities classified as available for sale are reported at fair value with unrealized gains and losses on these securities reported in other comprehensive income, net of deferred income taxes. See Note 16 for a description of the valuation methods for investments available for sale. | ||||||||||||||
We monitor our fixed maturities for unrealized losses that appear to be other than temporary. A fixed maturity security is considered to be other-than-temporarily impaired when the security's fair value is less than its amortized cost basis and 1) we intend to sell the security, 2) it is more likely than not that we will be required to sell the security before recovery of the security's amortized cost basis, or 3) we believe we will be unable to recover the entire amortized cost basis of the security (i.e., a credit loss has occurred). When we determine that a credit loss has been incurred, but we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery of the security's amortized cost basis, the portion of the other-than-temporary impairment that is credit related is recorded as a realized loss in the consolidated statements of comprehensive income (loss), and the portion of the other-than-temporary impairment that is not credit related is included in other comprehensive income (loss). For those fixed maturities for which an other-than-temporary impairment has occurred, we adjust the amortized cost basis of the security and record a realized loss in the consolidated statements of comprehensive income (loss). | ||||||||||||||
We recognize purchase premiums and discounts in interest income using the interest method over the term of the securities. Gains and losses on the sales of securities are recorded on the trade date and are determined using the specific identification method. | ||||||||||||||
Short-term investments are defined as short-term, highly liquid investments, both readily convertible to cash and having maturities at acquisition of twelve months or less. | ||||||||||||||
Long-Lived Assets | Long-Lived Assets | |||||||||||||
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are charged to expense as incurred. Estimated useful lives are 5 years for furniture and fixtures and 2 to 3 years for equipment, computer hardware and purchased software. Certain costs associated with the acquisition or development of internal-use software are capitalized. Once the software is ready for its intended use, these costs are amortized on a straight-line basis over the software's expected useful life, which is generally 3 years. We amortize leasehold improvements over the shorter of the lives of the leases or estimated service lives of the leasehold improvements. The balances by type were as follows at December 31: | ||||||||||||||
2014 | 2013 | |||||||||||||
(In thousands) | Cost | Accumulated | Cost | Accumulated | ||||||||||
Depreciation/ | Depreciation/ | |||||||||||||
Amortization | Amortization | |||||||||||||
Furniture and fixtures | $ | 1,411 | $ | (713 | ) | $ | 1,055 | $ | (545 | ) | ||||
Office equipment | 472 | (178 | ) | 151 | (66 | ) | ||||||||
Computer hardware | 3,258 | (2,523 | ) | 2,769 | (1,942 | ) | ||||||||
Purchased software | 32,352 | (31,110 | ) | 31,416 | (30,557 | ) | ||||||||
Costs of internal-use software | 5,868 | (4,320 | ) | 5,182 | (3,326 | ) | ||||||||
Leasehold improvements | 1,740 | (416 | ) | 634 | (360 | ) | ||||||||
| | | | | | | | | | | | | | |
Total | $ | 45,101 | $ | (39,260 | ) | $ | 41,207 | $ | (36,796 | ) | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
In connection with the acquisition of the proprietary mortgage insurance information technology and operating platform of Triad Guaranty, Inc. and Triad Guaranty Insurance Corporation (collectively referred to as "Triad"), we recorded identifiable intangible assets associated with acquired technology and workforce-in-place. Amortization of these assets began on December 1, 2009 and was increased in April 2011 in connection with the additional purchase price recorded effective March 31, 2011. See additional discussion as to the terms of the Triad transaction and the related purchase accounting in Note 6. The amount of purchase price allocated to the acquired technology was amortized to expense on a straight-line basis over 36 months and was fully amortized as of November 30, 2012. The amount of purchase price allocated to workforce-in-place was amortized to expense on a straight-line basis over 48 months and was fully amortized as of November 30, 2013. We recognized amortization associated with the acquired technology of $12.0 million for the year ended December 31, 2012. We recognized amortization associated with the workforce-in-place of $0.4 million in each of the years ended December 31, 2013 and 2012. | ||||||||||||||
The cost of the acquired technology and related accumulated depreciation is included in property and equipment in the accompanying consolidated balance sheets. | ||||||||||||||
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs | |||||||||||||
We defer certain personnel costs and premium tax expense directly related to the successful acquisition of new insurance policies and amortize these costs over the period the related estimated gross profits are recognized in order to match costs and revenues. We do not defer any underwriting costs associated with our contract underwriting services. Costs related to the acquisition of mortgage insurance business are initially deferred and reported as deferred policy acquisition costs. Consistent with industry accounting practice, amortization of these costs for each underwriting year book of business is recognized in proportion to estimated gross profits. Estimated gross profits are composed of earned premium, interest income, losses and loss adjustment expenses. The deferred costs are adjusted as appropriate for policy cancellations to be consistent with our revenue recognition policy. We estimate the rate of amortization to reflect actual experience and any changes to persistency or loss development. Deferred policy acquisition costs are reviewed periodically to determine that they do not exceed recoverable amounts, after considering investment income. Policy acquisition costs deferred were $6.6 million, $5.7 million and $2.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. Amortization of deferred policy acquisition costs totaled $3.2 million, $1.7 million, and $0.5 million for the years ended December 31, 2014, 2013 and 2012, respectively, and is included in other underwriting and operating expenses on the consolidated statements of comprehensive income (loss). | ||||||||||||||
Insurance Premium Revenue Recognition | Insurance Premium Revenue Recognition | |||||||||||||
Mortgage guaranty insurance policies are contracts that are generally non-cancelable by the insurer, are renewable at a fixed price, and provide for payment of premium on a monthly, annual or single basis. Upon renewal, we are not able to re-underwrite or re-price our policies. Consistent with industry accounting practices, premiums written on a monthly basis are earned as coverage is provided. Monthly policies accounted for 86% of earned premium in 2014. Premiums written on an annual basis are amortized on a pro rata basis over the year of coverage. Primary mortgage insurance written on policies covering more than one year are referred to as single premium policies. A portion of the revenue from single premium policies is recognized in earned premium in the current period, and the remaining portion is deferred as unearned premium and earned over the expected life of the policy. If single premium policies related to insured loans are cancelled due to repayment by the borrower, and the premium is non-refundable, then the remaining unearned premium related to each cancelled policy is recognized as earned premium upon notification of the cancellation. The Company recorded $8.2 million and $4.1 million of earned premium related to policy cancellations for the years ended December 31, 2014 and 2013, respectively. Unearned premium represents the portion of premium written that is applicable to the estimated unexpired risk of insured loans. Rates used to determine the earning of single premium policies are estimates based on an analysis of the expiration of risk. | ||||||||||||||
A significant portion of our premium revenue relates to master policies with certain lending institutions. For the year ended December 31, 2014 one lender represented 15% of our total revenue. The loss of this customer could have a significant impact on our revenues and results of operations. | ||||||||||||||
Reserve for Losses and Loss Adjustment Expenses | Reserve for Losses and Loss Adjustment Expenses | |||||||||||||
We establish reserves for losses based on our best estimate of ultimate claim costs for defaulted loans using the general principles contained in ASC No. 944, in accordance with industry practice. However, consistent with industry standards for mortgage insurers, we do not establish loss reserves for future claims on insured loans which are not currently in default. Loans are classified as in default when the borrower has missed two consecutive payments. Once we are notified that a borrower has defaulted, we will consider internal and third-party information and models, including the status of the loan as reported by its servicer and the type of loan product to determine the likelihood that a default will reach claim status. In addition, we will project the amount that we will pay if a default becomes a claim (referred to as "claim severity"). Based on this information, at each reporting date we determine our best estimate of loss reserves at a given point in time. Included in loss reserves are reserves for incurred but not reported ("IBNR") claims. IBNR reserves represent our estimated unpaid losses on loans that are in default, but have not yet been reported to us as delinquent by our customers. We will also establish reserves for associated loss adjustment expenses, consisting of the estimated cost of the claims administration process, including legal and other fees and expenses associated with administering the claims process. Establishing reserves is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Our estimates of claim rates and claim sizes will be strongly influenced by prevailing economic conditions, such as the overall state of the economy, current rates or trends in unemployment, changes in housing values and/or interest rates, and our best judgments as to the future values or trends of these macroeconomic factors. Losses incurred are also generally affected by the characteristics of our insured loans, such as the loan amount, loan-to-value ratio, the percentage of coverage on the insured loan and the credit quality of the borrower. | ||||||||||||||
Premium Deficiency Reserve | Premium Deficiency Reserve | |||||||||||||
We are required to establish a premium deficiency reserve if the net present value of the expected future losses and expenses for a particular group of policies exceeds the net present value of expected future premium, anticipated investment income and existing reserves for that specified group of policies. We reassess our expectations for premium, losses and expenses of our mortgage insurance business periodically and update our premium deficiency analysis accordingly. As of December 31, 2014 and 2013, we concluded that no premium deficiency reserve was required to be recorded in the accompanying consolidated financial statements. | ||||||||||||||
Derivative Instruments | Derivative Instruments | |||||||||||||
In 2014, Essent Re issued insurance and reinsurance policies in connection with Freddie Mac's Agency Credit Insurance Structure ("ACIS") program. These policies are accounted for as a derivative under GAAP with the fair value of these policies reported as an asset or liability and changes in the fair value of these policies reported in earnings as a component of other income. | ||||||||||||||
Stock-Based Compensation | Stock-Based Compensation | |||||||||||||
We measure the cost of employee services received in exchange for awards of equity instruments at the grant date of the award using a fair value based method. Prior to our initial public offering, we estimated the fair value of each nonvested share grant on the date of grant based on management's best estimate using methods further described in Note 10 of our consolidated financial statements. Subsequent to our initial public offering, fair value is determined on the date of grant based on quoted market prices. We recognize compensation expense on nonvested shares over the vesting period of the award. | ||||||||||||||
Income Taxes | Income Taxes | |||||||||||||
Deferred income tax assets and liabilities are determined using the asset and liability (or balance sheet) method. Under this method, we determine the net deferred tax asset or liability based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and give current recognition to changes in tax rates and laws. Changes in tax laws, rates, regulations and policies, or the final determination of tax audits or examinations, could materially affect our tax estimates. We evaluate the realizability of the deferred tax asset and recognize a valuation allowance if, based on the weight of all available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. When evaluating the realizability of the deferred tax asset, we consider estimates of expected future taxable income, existing and projected book/tax differences, carryback and carryforward periods, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires management to forecast changes in the mortgage market, as well as the related impact on mortgage insurance, and the competitive and general economic environment in future periods. Changes in the estimate of deferred tax asset realizability, if applicable, are included in income tax expense on the consolidated statements of comprehensive income (loss). | ||||||||||||||
ASC No. 740 provides a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with ASC No. 740, before a tax benefit can be recognized, a tax position is evaluated using a threshold that it is more likely than not that the tax position will be sustained upon examination. When evaluating the more-likely-than-not recognition threshold, ASC No. 740 provides that a company should presume the tax position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. If the tax position meets the more-likely-than-not recognition threshold, it is initially and subsequently measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. | ||||||||||||||
As described in Note 12, we purchase non-interest-bearing United States Mortgage Guaranty Tax and Loss Bonds ("T&L Bonds") issued by the Treasury Department. These assets are carried at cost and are reported as prepaid federal income tax on the consolidated balance sheets. | ||||||||||||||
It is our policy to classify interest and penalties related to unrecognized tax benefits as income tax expense. | ||||||||||||||
Earnings per Share | Earnings per Share | |||||||||||||
Basic earnings (loss) per common share amounts are calculated based on income available to common stockholders and the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per common share amounts are calculated based on income available to common stockholders and the weighted average number of common and potential common shares outstanding during the reporting period. Potential common shares, composed of the incremental common shares issuable upon vesting of unvested common shares, are included in the earnings per share calculation to the extent that they are dilutive. Prior to the completion of our initial public offering as more fully discussed in Note 3, basic and diluted earnings (loss) per common share were calculated using the "two-class" method since the cash dividends on our Class B-2 common shares could differ from the dividends on the Class A common shares. The two-class method is an earnings allocation formula that determines earnings (loss) per share for each class of common shares according to dividends declared and participation rights in undistributed earnings or losses. | ||||||||||||||
Recently Issued Accounting Standards | Recently Issued Accounting Standards | |||||||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update is intended to provide a consistent approach in recognizing revenue. In accordance with the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The provisions of this update are effective for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the impact the adoption of this ASU will have on the consolidated financial statements. | ||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||
Schedule of balances by type of long-lived assets | 2014 | 2013 | ||||||||||||
(In thousands) | Cost | Accumulated | Cost | Accumulated | ||||||||||
Depreciation/ | Depreciation/ | |||||||||||||
Amortization | Amortization | |||||||||||||
Furniture and fixtures | $ | 1,411 | $ | (713 | ) | $ | 1,055 | $ | (545 | ) | ||||
Office equipment | 472 | (178 | ) | 151 | (66 | ) | ||||||||
Computer hardware | 3,258 | (2,523 | ) | 2,769 | (1,942 | ) | ||||||||
Purchased software | 32,352 | (31,110 | ) | 31,416 | (30,557 | ) | ||||||||
Costs of internal-use software | 5,868 | (4,320 | ) | 5,182 | (3,326 | ) | ||||||||
Leasehold improvements | 1,740 | (416 | ) | 634 | (360 | ) | ||||||||
| | | | | | | | | | | | | | |
Total | $ | 45,101 | $ | (39,260 | ) | $ | 41,207 | $ | (36,796 | ) | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Investments_Available_for_Sale1
Investments Available for Sale (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments Available for Sale | ||||||||||||||||||||
Schedule of investments available for sale | ||||||||||||||||||||
December 31, 2014 (In thousands) | Amortized | Unrealized | Unrealized | Fair Value | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
U.S. Treasury securities | $ | 73,432 | $ | 927 | $ | (143 | ) | $ | 74,216 | |||||||||||
U.S. agency securities | 4,491 | 29 | — | 4,520 | ||||||||||||||||
U.S. agency mortgage-backed securities | 82,190 | 1,564 | (214 | ) | 83,540 | |||||||||||||||
Municipal debt securities(1) | 191,723 | 4,147 | (324 | ) | 195,546 | |||||||||||||||
Corporate debt securities | 295,507 | 2,123 | (801 | ) | 296,829 | |||||||||||||||
Mortgage-backed securities | 66,396 | 574 | (884 | ) | 66,086 | |||||||||||||||
Asset-backed securities | 126,474 | 136 | (422 | ) | 126,188 | |||||||||||||||
Money market funds | 210,688 | — | — | 210,688 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total investments available for sale | $ | 1,050,901 | $ | 9,500 | $ | (2,788 | ) | $ | 1,057,613 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
December 31, 2013 (In thousands) | Amortized | Unrealized | Unrealized | Fair Value | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
U.S. Treasury securities | $ | 59,100 | $ | 977 | $ | (890 | ) | $ | 59,187 | |||||||||||
U.S. agency securities | 14,763 | 76 | — | 14,839 | ||||||||||||||||
U.S. agency mortgage-backed securities | 23,023 | 53 | (835 | ) | 22,241 | |||||||||||||||
Municipal debt securities(1) | 57,947 | 155 | (452 | ) | 57,650 | |||||||||||||||
Corporate debt securities | 126,311 | 378 | (1,096 | ) | 125,593 | |||||||||||||||
Mortgage-backed securities | 19,219 | — | (638 | ) | 18,581 | |||||||||||||||
Asset-backed securities | 20,340 | 81 | (36 | ) | 20,385 | |||||||||||||||
Money market funds | 14,079 | — | — | 14,079 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total investments available for sale | $ | 334,782 | $ | 1,720 | $ | (3,947 | ) | $ | 332,555 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
-1 | At December 31, 2014, approximately 59.7% of municipal debt securities were special revenue bonds, 37.5% were general obligation bonds, 1.5% were tax allocation bonds, 0.8% were certification of participation bonds and 0.5% were special assessment bonds. At December 31, 2013, all municipal debt securities were general obligation bonds. | |||||||||||||||||||
Schedule of amortized cost and fair value of available for sale securities by contractual maturity | The amortized cost and fair value of available for sale securities at December 31, 2014, by contractual maturity, are shown below. | |||||||||||||||||||
(In thousands) | Amortized Cost | Fair Value | ||||||||||||||||||
U.S. Treasury securities: | ||||||||||||||||||||
Due in 1 year | $ | 2,082 | $ | 2,088 | ||||||||||||||||
Due after 1 but within 5 years | 17,706 | 17,741 | ||||||||||||||||||
Due after 5 but within 10 years | 53,644 | 54,387 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 73,432 | 74,216 | ||||||||||||||||||
| | | | | | | | |||||||||||||
U.S. agency securities: | ||||||||||||||||||||
Due in 1 year | 2,050 | 2,061 | ||||||||||||||||||
Due after 1 but within 5 years | 2,441 | 2,459 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 4,491 | 4,520 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Municipal debt securities | ||||||||||||||||||||
Due in 1 year | — | — | ||||||||||||||||||
Due after 1 but within 5 years | 72,127 | 72,230 | ||||||||||||||||||
Due after 5 but within 10 years | 62,704 | 64,906 | ||||||||||||||||||
Due after 10 years | 56,892 | 58,410 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 191,723 | 195,546 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Corporate debt securities: | ||||||||||||||||||||
Due in 1 year | 13,504 | 13,536 | ||||||||||||||||||
Due after 1 but within 5 years | 185,063 | 184,964 | ||||||||||||||||||
Due after 5 but within 10 years | 95,490 | 96,861 | ||||||||||||||||||
Due after 10 years | 1,450 | 1,468 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Subtotal | 295,507 | 296,829 | ||||||||||||||||||
| | | | | | | | |||||||||||||
U.S. agency mortgage-backed securities | 82,190 | 83,540 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Mortgage-backed securities | 66,396 | 66,086 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Asset-backed securities | 126,474 | 126,188 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Money market funds | 210,688 | 210,688 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total investments available for sale | $ | 1,050,901 | $ | 1,057,613 | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Schedule of realized gross gains and losses on sale of investments available for sale | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Realized gross gains | $ | 1,368 | $ | 116 | $ | 145 | ||||||||||||||
Realized gross losses | 443 | — | 2 | |||||||||||||||||
Schedule of fair value of investments in an unrealized loss position and related unrealized losses | ||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||
(In thousands) | Fair | Gross | Fair | Gross | Fair | Gross | ||||||||||||||
Value | Unrealized | Value | Unrealized | Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
At December 31, 2014 | ||||||||||||||||||||
U.S. Treasury securities | $ | 16,543 | $ | (34 | ) | $ | 5,155 | $ | (109 | ) | $ | 21,698 | $ | (143 | ) | |||||
U.S. agency mortgage-backed securities | 2,334 | — | 8,566 | (214 | ) | 10,900 | (214 | ) | ||||||||||||
Municipal debt securities | 39,902 | (229 | ) | 8,684 | (95 | ) | 48,586 | (324 | ) | |||||||||||
Corporate debt securities | 113,717 | (701 | ) | 12,659 | (100 | ) | 126,376 | (801 | ) | |||||||||||
Mortgage-backed securities | 28,091 | (264 | ) | 16,092 | (620 | ) | 44,183 | (884 | ) | |||||||||||
Asset-backed securities | 100,248 | (405 | ) | 2,201 | (17 | ) | 102,449 | (422 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 300,835 | $ | (1,633 | ) | $ | 53,357 | $ | (1,155 | ) | $ | 354,192 | $ | (2,788 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less than 12 months | 12 months or more | Total | ||||||||||||||||||
(In thousands) | Fair | Gross | Fair | Gross | Fair | Gross | ||||||||||||||
Value | Unrealized | Value | Unrealized | Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||
U.S. Treasury securities | $ | 16,474 | $ | (890 | ) | $ | — | $ | — | $ | 16,474 | $ | (890 | ) | ||||||
U.S. agency mortgage-backed securities | 13,484 | (452 | ) | 3,685 | (383 | ) | 17,169 | (835 | ) | |||||||||||
Municipal debt securities | 21,573 | (267 | ) | 13,074 | (185 | ) | 34,647 | (452 | ) | |||||||||||
Corporate debt securities | 75,364 | (1,038 | ) | 3,148 | (58 | ) | 78,512 | (1,096 | ) | |||||||||||
Mortgage-backed securities | 13,249 | (347 | ) | 5,333 | (291 | ) | 18,582 | (638 | ) | |||||||||||
Asset-backed securities | 6,024 | (36 | ) | — | — | 6,024 | (36 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 146,168 | $ | (3,030 | ) | $ | 25,240 | $ | (917 | ) | $ | 171,408 | $ | (3,947 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Schedule of net investment income | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Fixed maturities | $ | 13,356 | $ | 4,671 | $ | 2,632 | ||||||||||||||
Short-term investments | 56 | 26 | 14 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Gross investment income | 13,412 | 4,697 | 2,646 | |||||||||||||||||
Investment expenses | (1,127 | ) | (587 | ) | (377 | ) | ||||||||||||||
| | | | | | | | | | | ||||||||||
Net investment income | $ | 12,285 | $ | 4,110 | $ | 2,269 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Accounts_Receivable_Tables
Accounts Receivable (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Accounts Receivable | ||||||||
Schedule of accounts receivable | ||||||||
Accounts receivable consist of the following at December 31: | ||||||||
(In thousands) | 2014 | 2013 | ||||||
Premiums receivable | $ | 13,210 | $ | 9,488 | ||||
Other receivables | 2,600 | 518 | ||||||
| | | | | | | | |
Total accounts receivable | 15,810 | 10,006 | ||||||
Less: Allowance for doubtful accounts | — | — | ||||||
| | | | | | | | |
Accounts receivable, net | $ | 15,810 | $ | 10,006 | ||||
| | | | | | | | |
| | | | | | | | |
Triad_Transaction_Tables
Triad Transaction (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Triad Transaction | ||||||||||||||
Schedule of components of purchase price and allocation of cost of assets acquired | ||||||||||||||
(In thousands) | ||||||||||||||
Cash payment | $ | 9,123 | ||||||||||||
Triad's liabilities assumed at closing | 877 | |||||||||||||
Transaction costs | 484 | |||||||||||||
Net present value of fixed payments | 4,995 | |||||||||||||
Net present value of contingent payments | 14,595 | |||||||||||||
| | | | | ||||||||||
Total | $ | 30,074 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
The cost of the assets acquired was allocated based on their relative fair value as of the Closing Date (December 1, 2009) as follows: | ||||||||||||||
(In thousands) | 2009 | 2011 | Total | |||||||||||
Acquired technology | 94.2 | % | $ | 14,573 | $ | 13,741 | $ | 28,314 | ||||||
Workforce-in-place | 4.3 | 671 | 633 | 1,304 | ||||||||||
Software | 0.7 | 110 | 103 | 213 | ||||||||||
Hardware | 0.5 | 71 | 67 | 138 | ||||||||||
Other assets | 0.3 | 54 | 51 | 105 | ||||||||||
| | | | | | | | | | | | | | |
Total | 100.0 | % | $ | 15,479 | $ | 14,595 | $ | 30,074 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Reserve_for_Losses_and_Loss_Ad1
Reserve for Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Reserve for Losses and Loss Adjustment Expenses | ||||||||
Schedule of reconciliation of beginning and ending reserve balances for losses and loss adjustment expenses (LAE) | The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses ("LAE") for the years ended December 31: | |||||||
($ in thousands) | 2014 | 2013 | ||||||
Reserve for losses and LAE at beginning of year | $ | 3,070 | $ | 1,499 | ||||
Less: Reinsurance recoverables | — | — | ||||||
| | | | | | | | |
Net reserve for losses and LAE at beginning of year | 3,070 | 1,499 | ||||||
Add provision for losses and LAE, net of reinsurance, occurring in: | ||||||||
Current year | 6,877 | 2,986 | ||||||
Prior years | (569 | ) | (665 | ) | ||||
| | | | | | | | |
Net incurred losses during the current year | 6,308 | 2,321 | ||||||
| | | | | | | | |
Deduct payments for losses and LAE, net of reinsurance, occurring in: | ||||||||
Current year | 138 | 239 | ||||||
Prior years | 813 | 511 | ||||||
| | | | | | | | |
Net loss and LAE payments during the current year | 951 | 750 | ||||||
| | | | | | | | |
Net reserve for losses and LAE at end of year | 8,427 | 3,070 | ||||||
Plus: Reinsurance recoverables | — | — | ||||||
| | | | | | | | |
Reserve for losses and LAE at end of year | $ | 8,427 | $ | 3,070 | ||||
| | | | | | | | |
| | | | | | | | |
Loans in default at end of year | 457 | 159 | ||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies | |||||
Schedule of future minimum lease payments of all non-cancelable operating leases | The future minimum lease payments of non-cancelable operating leases are as follows at December 31, 2014: | ||||
Year Ended December 31, (In thousands) | |||||
2015 | $ | 1,486 | |||
2016 | 2,117 | ||||
2017 | 2,022 | ||||
2018 | 1,940 | ||||
2019 | 1,984 | ||||
2020 and thereafter | 10,358 | ||||
| | | | | |
Total minimum payments required | $ | 19,907 | |||
| | | | | |
| | | | | |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Schedule of portion of nonvested Common Shares earned based upon achievement of compounded annual book value per share growth | ||||||||||||||||||||
Performance level | Compounded | Nonvested | ||||||||||||||||||
Annual Book | Common Shares | |||||||||||||||||||
Value Per | Earned | |||||||||||||||||||
Share Growth | ||||||||||||||||||||
< 11 | % | 0 | % | |||||||||||||||||
Threshold | 11 | % | 10 | % | ||||||||||||||||
12 | % | 36 | % | |||||||||||||||||
13 | % | 61 | % | |||||||||||||||||
14 | % | 87 | % | |||||||||||||||||
Maximum | 15 | % | 100 | % | ||||||||||||||||
Summary of nonvested Common Share and nonvested Common Share unit activity | The following tables summarize nonvested Common Share and nonvested Common Share unit activity for the year ended December 31: | |||||||||||||||||||
2014 | ||||||||||||||||||||
Time and Performance- | Time-Based | Share Units | ||||||||||||||||||
Based Share Awards | Share Awards | |||||||||||||||||||
(Shares in thousands) | Number of | Weighted | Number of | Weighted | Number of | Weighted | ||||||||||||||
Shares | Average | Shares | Average | Share Units | Average | |||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding at beginning of year | 1,238 | $ | 14.5 | 2,839 | $ | 4.82 | 528 | $ | 17.03 | |||||||||||
Granted | 52 | 22.68 | 82 | 23.47 | 188 | 21.95 | ||||||||||||||
Vested | — | N/A | (1,434 | ) | 1.57 | (26 | ) | 19 | ||||||||||||
Forfeited | — | N/A | (15 | ) | 2.7 | (26 | ) | 17.83 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at end of year | 1,290 | $ | 14.83 | 1,472 | $ | 9.04 | 664 | $ | 18.32 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
2013 | ||||||||||||||||||||
Time and Performance- | Time-Based | Share Units | ||||||||||||||||||
Based Share Awards | Share Awards | |||||||||||||||||||
(Shares in thousands) | Number of | Weighted | Number of | Weighted | Number of | Weighted | ||||||||||||||
Shares | Average | Shares | Average | Share Units | Average | |||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding at beginning of year | — | N/A | — | N/A | — | N/A | ||||||||||||||
Exchange of Class A and Class B-2 for Common Shares(1) | — | N/A | 2,298 | $ | 2.1 | — | N/A | |||||||||||||
Granted | 1,238 | $ | 14.5 | 613 | 14.5 | 531 | $ | 17.03 | ||||||||||||
Vested | — | N/A | (72 | ) | 0.22 | — | N/A | |||||||||||||
Forfeited | — | N/A | — | N/A | (3 | ) | 17 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at end of year | 1,238 | $ | 14.5 | 2,839 | $ | 4.82 | 528 | $ | 17.03 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
-1 | Class A and Class B-2 shares exchanged for Common Shares reflect the 2 for 3 share split and the applicable conversion rates to Common Shares that were effective immediately prior to the closing of the initial public offering. | |||||||||||||||||||
Schedule of compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Compensation expense | $ | 12,520 | $ | 3,597 | $ | 1,926 | ||||||||||||||
Income tax benefit | 4,382 | 1,259 | 674 | |||||||||||||||||
Class B-2 | ||||||||||||||||||||
Summary of nonvested common share activity | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
(Shares in thousands) | Number of | Weighted | Number of | Weighted | ||||||||||||||||
Shares | Average | Shares | Average | |||||||||||||||||
Grant Date | Grant Date | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Outstanding at beginning of year | 5,461 | $ | 0.11 | 5,973 | $ | 0.11 | ||||||||||||||
Granted | 96 | 1.8 | 195 | 0.26 | ||||||||||||||||
Vested | (1,209 | ) | 0.1 | (645 | ) | 0.09 | ||||||||||||||
Forfeited | (2,614 | ) | 0.13 | (62 | ) | 0.19 | ||||||||||||||
Converted to Common Shares | (1,734 | ) | 0.17 | — | N/A | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding at end of year | — | N/A | 5,461 | 0.11 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Class A | ||||||||||||||||||||
Summary of nonvested common share activity | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
(Shares in thaawousands) | Number of | Weighted | Number of | Weighted | ||||||||||||||||
Shares | Average | Shares | Average | |||||||||||||||||
Grant Date | Grant Date | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Outstanding at beginning of year | 199 | $ | 10.08 | 257 | $ | 10 | ||||||||||||||
Granted | 239 | 10.92 | 215 | 10.11 | ||||||||||||||||
Vested | — | N/A | (271 | ) | 10.03 | |||||||||||||||
Forfeited | (9 | ) | 10.59 | (2 | ) | 10 | ||||||||||||||
Converted to Common Shares | (429 | ) | 8.01 | — | N/A | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding at end of year | — | N/A | 199 | 10.08 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
Schedule of components of income tax expense (benefit) | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | 2012 | |||||||||||||||||
Current | $ | 2,816 | $ | 881 | $ | — | ||||||||||||||
Deferred | 44,614 | (8,267 | ) | (333 | ) | |||||||||||||||
| | | | | | | | | | | ||||||||||
Total income tax expense (benefit) | $ | 47,430 | $ | (7,386 | ) | $ | (333 | ) | ||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Schedule of reconciliation of difference between income tax expense (benefit) and expected tax provision at weighted average tax rate | ||||||||||||||||||||
(In thousands) | 2014 | % of pretax | 2013 | % of pretax | 2012 | % of pretax | ||||||||||||||
income | income | loss | ||||||||||||||||||
Tax provision (benefit) at weighted average statutory rates | $ | 47,930 | 35.3 | % | $ | 21,405 | 36.9 | % | $ | (4,394 | ) | 31.7 | % | |||||||
Non-deductible expenses | 398 | 0.3 | % | 276 | 0.5 | % | 199 | (1.4 | )% | |||||||||||
Tax exempt interest, net of proration | (961 | ) | (0.7 | )% | (159 | ) | (0.3 | )% | — | — | ||||||||||
Change in valuation allowance | — | — | (28,886 | ) | (49.8 | )% | 3,933 | (28.3 | )% | |||||||||||
Other | 63 | 0 | % | (22 | ) | 0 | % | (71 | ) | 0.4 | % | |||||||||
| | | | | | | | | | | | | | | | | | | | |
Total income tax provision (benefit) | $ | 47,430 | 34.9 | % | $ | (7,386 | ) | (12.7 | )% | $ | (333 | ) | 2.4 | % | ||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Schedule of net deferred tax (liability) asset and components | ||||||||||||||||||||
(In thousands) | 2014 | 2013 | ||||||||||||||||||
Deferred tax assets | $ | 31,729 | $ | 27,043 | ||||||||||||||||
Deferred tax liabilities | (68,821 | ) | (16,697 | ) | ||||||||||||||||
| | | | | | | | |||||||||||||
Net deferred tax (liability) asset | $ | (37,092 | ) | $ | 10,346 | |||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
(In thousands) | 2014 | 2013 | ||||||||||||||||||
Contingency reserves | $ | (63,103 | ) | $ | (14,420 | ) | ||||||||||||||
Unearned premium reserve | 16,099 | 11,637 | ||||||||||||||||||
Fixed assets | 6,274 | 7,646 | ||||||||||||||||||
Start-up expenditures, net | 4,611 | 5,064 | ||||||||||||||||||
Nonvested shares | 4,140 | 965 | ||||||||||||||||||
Deferred policy acquisition costs | (3,359 | ) | (2,160 | ) | ||||||||||||||||
Unrealized (gain) loss on investments | (2,045 | ) | 779 | |||||||||||||||||
Alternative minimum tax credit carryforward | 490 | 877 | ||||||||||||||||||
Prepaid expenses | (159 | ) | (53 | ) | ||||||||||||||||
Accrued expenses | (155 | ) | (64 | ) | ||||||||||||||||
Loss reserves | 86 | 43 | ||||||||||||||||||
Organizational expenditures | 29 | 32 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Net deferred tax (liability) asset | $ | (37,092 | ) | $ | 10,346 | |||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
Earnings_Loss_per_Share_EPS_Ta
Earnings (Loss) per Share (EPS) (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Earnings (Loss) per Share (EPS) | |||||||||||
Schedule of reconciliation of net income (loss) and weighted average common shares outstanding used in computations of basic and diluted loss per common share | |||||||||||
(In thousands, except per share amounts) | 2014 | 2013 | 2012 | ||||||||
Net income (loss) | $ | 88,497 | $ | 65,413 | $ | (13,543 | ) | ||||
Less: Common Shares dividends declared | — | — | — | ||||||||
Less: Class A dividends declared | — | — | — | ||||||||
Less: Class B-2 dividends declared | — | — | — | ||||||||
| | | | | | | | | | | |
Undistributed net income (loss) | $ | 88,497 | $ | 65,413 | $ | (13,543 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income (loss) allocable to Common | $ | 88,497 | $ | 12,706 | N/A | ||||||
Net income (loss) allocable to Class A | N/A | 52,707 | $ | (13,541 | ) | ||||||
Net income (loss) allocable to Class B-2 | N/A | N/A | (2 | ) | |||||||
Basic earnings (loss) per share: | |||||||||||
Common | $ | 1.05 | $ | 0.9 | N/A | ||||||
Class A | N/A | N/A | $ | (0.49 | ) | ||||||
Class B-2 | N/A | N/A | (0.01 | ) | |||||||
Diluted earnings (loss) per share: | |||||||||||
Common | $ | 1.03 | $ | 0.7 | N/A | ||||||
Class A | N/A | N/A | $ | (0.49 | ) | ||||||
Class B-2 | N/A | N/A | (0.01 | ) | |||||||
Basic weighted average common shares outstanding: | |||||||||||
Common | 83,986 | 14,044 | N/A | ||||||||
Class A | N/A | N/A | 27,445 | ||||||||
Class B-2 | N/A | N/A | 393 | ||||||||
Dilutive effect of nonvested shares: | |||||||||||
Common | 1,616 | 4,059 | N/A | ||||||||
Class A | N/A | N/A | — | ||||||||
Class B-2 | N/A | N/A | — | ||||||||
Diluted weighted average common shares outstanding: | |||||||||||
Common | 85,602 | 18,103 | N/A | ||||||||
Class A | N/A | N/A | 27,445 | ||||||||
Class B-2 | N/A | N/A | 393 | ||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Accumulated Other Comprehensive Income | |||||||||||
Rollforward of accumulated other comprehensive income (loss) | |||||||||||
2014 | |||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | ||||||||
Balance at beginning of period | $ | (2,227 | ) | $ | 780 | $ | (1,447 | ) | |||
Other comprehensive income: | |||||||||||
Unrealized holding gains arising during the period | 9,864 | (3,073 | ) | 6,791 | |||||||
Less: Reclassification adjustment for gains included in net income(1) | (925 | ) | 248 | (677 | ) | ||||||
| | | | | | | | | | | |
Net unrealized gains on investments | 8,939 | (2,825 | ) | 6,114 | |||||||
| | | | | | | | | | | |
Other comprehensive income | 8,939 | (2,825 | ) | 6,114 | |||||||
| | | | | | | | | | | |
Balance at end of period | $ | 6,712 | $ | (2,045 | ) | $ | 4,667 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
2013 | |||||||||||
(In thousands) | Before Tax | Tax Effect | Net of Tax | ||||||||
Balance at beginning of period | $ | 3,714 | $ | (1,300 | ) | $ | 2,414 | ||||
Other comprehensive loss: | |||||||||||
Unrealized holding losses arising during the period | (5,825 | ) | 2,039 | (3,786 | ) | ||||||
Less: Reclassification adjustment for gains included in net income(1) | (116 | ) | 41 | (75 | ) | ||||||
| | | | | | | | | | | |
Net unrealized losses on investments | (5,941 | ) | 2,080 | (3,861 | ) | ||||||
| | | | | | | | | | | |
Other comprehensive loss | (5,941 | ) | 2,080 | (3,861 | ) | ||||||
| | | | | | | | | | | |
Balance at end of period | $ | (2,227 | ) | $ | 780 | $ | (1,447 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | Included in net realized investments gains on our consolidated statement of operations | ||||||||||
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||||||||||||||
Schedule of estimated fair values and related carrying amounts of financial instruments | ||||||||||||||||||||||||||
December 31, 2014 (In thousands) | Carrying | Fair | ||||||||||||||||||||||||
Amount | Value | |||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 74,216 | $ | 74,216 | ||||||||||||||||||||||
U.S. agency securities | 4,520 | 4,520 | ||||||||||||||||||||||||
U.S. agency mortgage-backed securities | 83,540 | 83,540 | ||||||||||||||||||||||||
Municipal debt securities | 195,546 | 195,546 | ||||||||||||||||||||||||
Corporate debt securities | 296,829 | 296,829 | ||||||||||||||||||||||||
Mortgage-backed securities | 66,086 | 66,086 | ||||||||||||||||||||||||
Asset-backed securities | 126,188 | 126,188 | ||||||||||||||||||||||||
Money market funds | 210,688 | 210,688 | ||||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Total Investments | $ | 1,057,613 | $ | 1,057,613 | ||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||
Derivative liabilities | $ | 661 | $ | 661 | ||||||||||||||||||||||
December 31, 2013 (In thousands) | Carrying | Fair | ||||||||||||||||||||||||
Amount | Value | |||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 59,187 | $ | 59,187 | ||||||||||||||||||||||
U.S. agency securities | 14,839 | 14,839 | ||||||||||||||||||||||||
U.S. agency mortgage-backed securities | 22,241 | 22,241 | ||||||||||||||||||||||||
Municipal debt securities | 57,650 | 57,650 | ||||||||||||||||||||||||
Corporate debt securities | 125,593 | 125,593 | ||||||||||||||||||||||||
Mortgage-backed securities | 18,581 | 18,581 | ||||||||||||||||||||||||
Asset-backed securities | 20,385 | 20,385 | ||||||||||||||||||||||||
Money market funds | 14,079 | 14,079 | ||||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Total Investments | $ | 332,555 | $ | 332,555 | ||||||||||||||||||||||
| | | | | | | | |||||||||||||||||||
| | | | | | | | |||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||
Amounts due under Asset Purchase Agreement | $ | 4,949 | $ | 4,997 | ||||||||||||||||||||||
Schedule of assets measured at fair vale on a recurring basis | December 31, 2014 | |||||||||||||||||||||||||
(In thousands) | Quoted Prices | Significant | Significant | Total | ||||||||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||||||||||
Markets for | Observable | Inputs | ||||||||||||||||||||||||
Identical | Inputs | (Level 3) | ||||||||||||||||||||||||
Instruments | (Level 2) | |||||||||||||||||||||||||
(Level 1) | ||||||||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 74,216 | $ | — | $ | — | $ | 74,216 | ||||||||||||||||||
U.S. agency securities | 4,520 | — | — | 4,520 | ||||||||||||||||||||||
U.S. agency mortgage-backed securities | 83,540 | — | — | 83,540 | ||||||||||||||||||||||
Municipal debt securities | — | 195,546 | — | 195,546 | ||||||||||||||||||||||
Corporate debt securities | — | 296,829 | — | 296,829 | ||||||||||||||||||||||
Mortgage-backed securities | 4,882 | 61,204 | — | 66,086 | ||||||||||||||||||||||
Asset-backed securities | — | 126,188 | — | 126,188 | ||||||||||||||||||||||
Money market funds | 210,688 | — | — | 210,688 | ||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Total assets at fair value | $ | 377,846 | $ | 679,767 | $ | — | $ | 1,057,613 | ||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Liabilities | ||||||||||||||||||||||||||
Derivative liabilities | — | — | 661 | 661 | ||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 661 | $ | 661 | ||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | |||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
(In thousands) | Quoted Prices | Significant | Significant | Total | ||||||||||||||||||||||
in Active | Other | Unobservable | ||||||||||||||||||||||||
Markets for | Observable | Inputs | ||||||||||||||||||||||||
Identical | Inputs | (Level 3) | ||||||||||||||||||||||||
Instruments | (Level 2) | |||||||||||||||||||||||||
(Level 1) | ||||||||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | 59,187 | $ | — | $ | — | $ | 59,187 | ||||||||||||||||||
U.S. agency securities | 14,839 | — | — | 14,839 | ||||||||||||||||||||||
U.S. agency mortgage-backed securities | 22,241 | — | — | 22,241 | ||||||||||||||||||||||
Municipal debt securities | — | 57,650 | — | 57,650 | ||||||||||||||||||||||
Corporate debt securities | — | 125,593 | — | 125,593 | ||||||||||||||||||||||
Mortgage-backed securities | 5,333 | 13,248 | — | 18,581 | ||||||||||||||||||||||
Asset-backed securities | — | 20,385 | — | 20,385 | ||||||||||||||||||||||
Money market funds | 14,079 | — | — | 14,079 | ||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Total assets at fair value | $ | 115,679 | $ | 216,876 | $ | — | $ | 332,555 | ||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
| | | | | | | | | | | | | | |||||||||||||
Schedule of changes during year in Level 3 liabilities measured at fair value on a recurring basis, and realized and unrealized gains (losses) related to Level 3 liabilities in Consolidated Balance Sheets | The following table presents changes during the year ended December 31, 2014 in Level 3 liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 liabilities in the Consolidated Balance Sheets at December 31, 2014. | |||||||||||||||||||||||||
(In thousands) | Fair Value | Net | Other | Purchases, | Gross | Gross | Fair Value | Changes in | ||||||||||||||||||
Beginning | Realized and | Comprehensive | Sales, | Transfers | Transfers | End of Year | Unrealized | |||||||||||||||||||
of Year | Unrealized | Income (Loss) | Issues and | In | Out | Gains (Losses) | ||||||||||||||||||||
Gains (Losses) | Settlements, Net | Included in | ||||||||||||||||||||||||
Included | Income on | |||||||||||||||||||||||||
in Income | Instruments | |||||||||||||||||||||||||
Held at | ||||||||||||||||||||||||||
End of Year | ||||||||||||||||||||||||||
Derivative liabilities | $ | — | $ | 78 | $ | — | $ | 739 | $ | — | $ | — | $ | 661 | $ | 78 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Level 3 Liabilities | $ | — | $ | 78 | $ | — | $ | 739 | $ | — | $ | — | $ | 661 | $ | 78 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | Fair Value | Net | Other | Purchases, | Gross | Gross | Fair Value | Changes in | ||||||||||||||||||
Beginning | Realized and | Comprehensive | Sales, | Transfers | Transfers | End of Year | Unrealized | |||||||||||||||||||
of Year | Unrealized | Income (Loss) | Issues and | In | Out | Gains (Losses) | ||||||||||||||||||||
Gains (Losses) | Settlements, Net | Included in | ||||||||||||||||||||||||
Included | Income on | |||||||||||||||||||||||||
in Income | Instruments | |||||||||||||||||||||||||
Held at | ||||||||||||||||||||||||||
End of Year | ||||||||||||||||||||||||||
Derivative liabilities | $ | — | $ | 78 | $ | — | $ | 739 | $ | — | $ | — | $ | 661 | $ | 78 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Level 3 Liabilities | $ | — | $ | 78 | $ | — | $ | 739 | $ | — | $ | — | $ | 661 | $ | 78 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Summary of significant unobservable inputs used in recurring Level 3 fair value measurements | The following table summarizes the significant unobservable inputs used in our recurring Level 3 fair value measurements as of December 31, 2014: | |||||||||||||||||||||||||
($ in thousands) | Fair Value | Valuation Technique | Unobservable Input | Weighted | ||||||||||||||||||||||
Average | ||||||||||||||||||||||||||
Derivative liabilities | $ | 661 | Discounted cash flows | Constant prepayment rate | 5.40 | % | ||||||||||||||||||||
Default rate | 1.85 | % | ||||||||||||||||||||||||
Reference STACR credit spread | 3.72 | % | ||||||||||||||||||||||||
Statutory_Accounting_Tables
Statutory Accounting (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Statutory Accounting | |||||||||||
Schedule of statutory net income or loss, statutory surplus and contingency reserve liability | The following table presents Essent Guaranty's and Essent PA's statutory net income or loss, statutory surplus and contingency reserve liability as of and for the years ended December 31: | ||||||||||
(In thousands) | 2014 | 2013 | 2012 | ||||||||
Essent Guaranty | |||||||||||
Statutory net income (loss) | $ | 118,204 | $ | 49,838 | $ | (16,278 | ) | ||||
Statutory surplus | 465,226 | 346,406 | 163,790 | ||||||||
Contingency reserve liability | 179,221 | 79,921 | 23,313 | ||||||||
Essent PA | |||||||||||
Statutory net income | $ | 13,299 | $ | 5,926 | $ | 749 | |||||
Statutory surplus | 42,672 | 34,528 | 14,159 | ||||||||
Contingency reserve liability | 16,909 | 6,857 | 1,780 | ||||||||
Quarterly_Financial_Data_Unaud1
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Quarterly Financial Data (Unaudited) | ||||||||||||||
Summary of unaudited quarterly results of operations | ||||||||||||||
2014 | ||||||||||||||
(In thousands, except per share amounts) | December 31 | September 30 | June 30 | March 31 | ||||||||||
Net premiums earned | $ | 67,814 | $ | 60,323 | $ | 50,342 | $ | 44,750 | ||||||
Other revenues | 4,928 | 4,298 | 3,941 | 3,071 | ||||||||||
Provision for losses and LAE | 3,049 | 1,391 | 966 | 902 | ||||||||||
Other underwriting and operating expenses | 25,656 | 24,469 | 23,648 | 23,459 | ||||||||||
Income before income taxes | 44,037 | 38,761 | 29,669 | 23,460 | ||||||||||
Net income | 28,866 | 25,070 | 19,555 | 15,006 | ||||||||||
Basic earnings per Common Share | 0.34 | 0.30 | 0.23 | 0.18 | ||||||||||
$ | $ | $ | $ | |||||||||||
Diluted earnings per Common Share | 0.33 | 0.29 | 0.23 | 0.18 | ||||||||||
$ | $ | $ | $ | |||||||||||
Basic weighted average Common Shares outstanding | 86,134 | 83,640 | 83,276 | 82,864 | ||||||||||
Diluted weighted average Common Shares outstanding | 87,950 | 85,028 | 84,706 | 84,696 | ||||||||||
2013 | ||||||||||||||
December 31 | September 30 | June 30 | March 31 | |||||||||||
Net premiums earned | $ | 40,344 | $ | 34,282 | $ | 27,481 | $ | 21,264 | ||||||
Other revenues | 2,009 | 2,173 | 2,083 | 1,767 | ||||||||||
Provision for losses and LAE | 692 | 319 | 580 | 730 | ||||||||||
Other underwriting and operating expenses | 22,299 | 18,237 | 15,557 | 14,962 | ||||||||||
Income (loss) before income taxes | 19,362 | 17,899 | 13,427 | 7,339 | ||||||||||
Net income (loss) | 19,017 | 15,619 | 23,577 | 7,200 | ||||||||||
Net income (loss) allocable to Common | 12,037 | N/A | N/A | N/A | ||||||||||
Net income (loss) allocable to Class A | N/A | 15,490 | 23,037 | 7,200 | ||||||||||
Net income (loss) allocable to Class B-2 | N/A | 129 | 540 | — | ||||||||||
Basic earnings (loss) per share | ||||||||||||||
Common Shares | $ | 0.23 | N/A | N/A | N/A | |||||||||
Class A common shares | N/A | $ | 0.36 | $ | 0.63 | $ | 0.23 | |||||||
Class B-2 common shares | N/A | 0.07 | 0.40 | — | ||||||||||
Diluted earnings (loss) per share | ||||||||||||||
Common Shares | $ | 0.22 | N/A | N/A | N/A | |||||||||
Class A common shares | N/A | $ | 0.35 | $ | 0.62 | $ | 0.23 | |||||||
Class B-2 common shares | N/A | 0.02 | 0.09 | — | ||||||||||
Basic weighted average shares outstanding | ||||||||||||||
Common Shares | 51,741 | N/A | N/A | N/A | ||||||||||
Class A common shares | N/A | 43,616 | 36,793 | 31,805 | ||||||||||
Class B-2 common shares | N/A | 1,822 | 1,334 | 853 | ||||||||||
Diluted weighted average shares outstanding | ||||||||||||||
Common Shares | 55,130 | N/A | N/A | N/A | ||||||||||
Class A common shares | N/A | 43,788 | 36,901 | 31,864 | ||||||||||
Class B-2 common shares | N/A | 6,054 | 5,994 | 6,009 | ||||||||||
Nature_of_Operations_and_Basis1
Nature of Operations and Basis of Presentation (Details) | 12 Months Ended | 6 Months Ended |
Dec. 31, 2014 | Dec. 31, 2014 | |
Essent Guaranty | ||
Nature of operations and basis of presentation | ||
Number of states in which the entity is licensed to write mortgage insurance | 50 | 50 |
Essent PA | Essent Guaranty | Reinsurance for mortgage insurance coverage in excess of 25% | ||
Nature of operations and basis of presentation | ||
Reinsurance for mortgage insurance coverage threshold (as a percent) | 25.00% | |
Essent Re | Essent Guaranty | Quota share reinsurance | ||
Nature of operations and basis of presentation | ||
Reinsurance percentage | 25.00% | |
Maximum | ||
Nature of operations and basis of presentation | ||
Residential mortgage down payment percentage for which mortgage insurance is generally required | 20.00% |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Long-Lived Assets | ||
Cost | $45,101 | $41,207 |
Accumulated Depreciation/Amortization | -39,260 | -36,796 |
Furniture and fixtures | ||
Long-Lived Assets | ||
Estimated useful lives | P5Y | |
Cost | 1,411 | 1,055 |
Accumulated Depreciation/Amortization | -713 | -545 |
Office equipment | ||
Long-Lived Assets | ||
Cost | 472 | 151 |
Accumulated Depreciation/Amortization | -178 | -66 |
Office equipment | Minimum | ||
Long-Lived Assets | ||
Estimated useful lives | P2Y | |
Office equipment | Maximum | ||
Long-Lived Assets | ||
Estimated useful lives | P3Y | |
Computer hardware | ||
Long-Lived Assets | ||
Cost | 3,258 | 2,769 |
Accumulated Depreciation/Amortization | -2,523 | -1,942 |
Computer hardware | Minimum | ||
Long-Lived Assets | ||
Estimated useful lives | P2Y | |
Computer hardware | Maximum | ||
Long-Lived Assets | ||
Estimated useful lives | P3Y | |
Purchased software | ||
Long-Lived Assets | ||
Cost | 32,352 | 31,416 |
Accumulated Depreciation/Amortization | -31,110 | -30,557 |
Purchased software | Minimum | ||
Long-Lived Assets | ||
Estimated useful lives | P2Y | |
Purchased software | Maximum | ||
Long-Lived Assets | ||
Estimated useful lives | P3Y | |
Cost of internal-use software | ||
Long-Lived Assets | ||
Estimated useful lives | P3Y | |
Cost | 5,868 | 5,182 |
Accumulated Depreciation/Amortization | -4,320 | -3,326 |
Leasehold improvements | ||
Long-Lived Assets | ||
Cost | 1,740 | 634 |
Accumulated Depreciation/Amortization | ($416) | ($360) |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Nov. 30, 2012 | Dec. 31, 2012 | Nov. 30, 2013 | Dec. 31, 2013 |
Acquired technology | ||||
Identifiable intangible assets acquired | ||||
Amortization period | 36 months | |||
Amortization | $12 | |||
Workforce-in-place | ||||
Identifiable intangible assets acquired | ||||
Amortization period | 48 months | |||
Amortization | $0.40 | $0.40 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Policy Acquisition Costs | |||
Policy acquisition costs deferred | $6.60 | $5.70 | $2.20 |
Other underwriting and operating expenses | |||
Deferred Policy Acquisition Costs | |||
Amortization of deferred policy acquisition costs | $3.20 | $1.70 | $0.50 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Insurance Premium Revenue Recognition | ||
Earned premiums from mortgage guaranty insurance monthly policies as a percentage of total earned premiums | 86.00% | |
Threshold coverage period for single premium primary mortgage insurance policies | 1 year | |
Unearned single premium recognized as earned upon notice of policy cancellation due to repayment of insured loan by borrower | $8.20 | $4.10 |
Total revenue | Customer concentration | One lender | ||
Customer concentration | ||
Concentration risk, percentage | 15.00% |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 5) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
payment | ||
Reserve for Losses and Loss Adjustment Expenses | ||
Number of consecutive missed loan payments by borrower for classification of insured loan as in default | 2 | |
Premium Deficiency Reserve | ||
Premium Deficiency Reserve | $0 | $0 |
Equity_Transactions_Details
Equity Transactions (Details) (USD $) | 1 Months Ended | 0 Months Ended | 10 Months Ended | 12 Months Ended | 35 Months Ended | 57 Months Ended | ||
Share data in Millions, except Per Share data, unless otherwise specified | Nov. 30, 2013 | Nov. 30, 2014 | Nov. 05, 2013 | Nov. 04, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Nov. 04, 2013 |
IPO | ||||||||
Equity Transactions | ||||||||
Shares issued (in shares) | 20 | |||||||
Share price (in dollars per share) | $17 | |||||||
Shares sold by selling shareholders | 2.7 | |||||||
Net proceeds from sale of stock | $313,700,000 | |||||||
Public offering | ||||||||
Equity Transactions | ||||||||
Shares issued (in shares) | 6 | |||||||
Share price (in dollars per share) | $22.25 | |||||||
Shares sold by selling shareholders | 7.8 | |||||||
Net proceeds from sale of stock | 126,700,000 | |||||||
2009 Restricted Share Plan | Conversion of a class of shares into a single class of common shares | Class A and Class B-2 Common Shares | ||||||||
Equity Transactions | ||||||||
Number of new shares issued upon conversion of stock | 64.7 | |||||||
Class A Common Share Subscription Agreement and related legal documents | Macquarie equity funding arrangement | Class A | ||||||||
Equity Transactions | ||||||||
Fee as percentage of the gross proceeds from sale of shares | 1.00% | |||||||
Fee as percentage of the gross proceeds from sale of shares, maximum amount | 5,200,000 | 5,200,000 | ||||||
Total fee earned by Macquarie | 4,000,000 | |||||||
Fee payable | 0 | |||||||
Class A Common Share Subscription Agreement and related legal documents | Investors | Class A | ||||||||
Equity Transactions | ||||||||
Equity contributions committed in exchange for common shares | 600,000,000 | 600,000,000 | ||||||
Contributions made by investors | $125,000,000 | $55,000,000 | $258,300,000 | $438,300,000 | ||||
Shares issued (in shares) | 12.3 | 5.4 | 25.5 |
Investments_Available_for_Sale2
Investments Available for Sale (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments available for sale | ||
Amortized Cost | $1,050,901 | $334,782 |
Unrealized Gains | 9,500 | 1,720 |
Unrealized Losses | -2,788 | -3,947 |
Total investments | 1,057,613 | 332,555 |
U.S. Treasury securities | ||
Investments available for sale | ||
Amortized Cost | 73,432 | 59,100 |
Unrealized Gains | 927 | 977 |
Unrealized Losses | -143 | -890 |
Total investments | 74,216 | 59,187 |
U.S. agency securities | ||
Investments available for sale | ||
Amortized Cost | 4,491 | 14,763 |
Unrealized Gains | 29 | 76 |
Total investments | 4,520 | 14,839 |
Municipal debt securities | ||
Investments available for sale | ||
Amortized Cost | 191,723 | 57,947 |
Unrealized Gains | 4,147 | 155 |
Unrealized Losses | -324 | -452 |
Total investments | 195,546 | 57,650 |
Municipal debt securities | Special revenue bonds | ||
Investments available for sale | ||
Percentage of total investments | 59.70% | |
Municipal debt securities | General obligation bonds | ||
Investments available for sale | ||
Percentage of total investments | 37.50% | |
Municipal debt securities | Tax allocation bonds | ||
Investments available for sale | ||
Percentage of total investments | 1.50% | |
Municipal debt securities | Certification of participation bonds | ||
Investments available for sale | ||
Percentage of total investments | 0.80% | |
Municipal debt securities | Special assessment bonds | ||
Investments available for sale | ||
Percentage of total investments | 0.50% | |
Corporate debt securities | ||
Investments available for sale | ||
Amortized Cost | 295,507 | 126,311 |
Unrealized Gains | 2,123 | 378 |
Unrealized Losses | -801 | -1,096 |
Total investments | 296,829 | 125,593 |
Mortgage-backed securities | ||
Investments available for sale | ||
Amortized Cost | 66,396 | 19,219 |
Unrealized Gains | 574 | |
Unrealized Losses | -884 | -638 |
Total investments | 66,086 | 18,581 |
Asset-backed securities | ||
Investments available for sale | ||
Amortized Cost | 126,474 | 20,340 |
Unrealized Gains | 136 | 81 |
Unrealized Losses | -422 | -36 |
Total investments | 126,188 | 20,385 |
Money market funds | ||
Investments available for sale | ||
Amortized Cost | 210,688 | 14,079 |
Total investments | 210,688 | 14,079 |
U.S. Agency | Mortgage backed securities | ||
Investments available for sale | ||
Amortized Cost | 82,190 | 23,023 |
Unrealized Gains | 1,564 | 53 |
Unrealized Losses | -214 | -835 |
Total investments | $83,540 | $22,241 |
Investments_Available_for_Sale3
Investments Available for Sale (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Amortized Cost | ||
Total investments | $1,050,901 | $334,782 |
Fair Value | ||
Total investments | 1,057,613 | 332,555 |
U.S. Treasury securities | ||
Amortized Cost | ||
Due in 1 year | 2,082 | |
Due after 1 but within 5 years | 17,706 | |
Due after 5 but within 10 years | 53,644 | |
Subtotal | 73,432 | |
Total investments | 73,432 | 59,100 |
Fair Value | ||
Due in 1 year | 2,088 | |
Due after 1 but within 5 years | 17,741 | |
Due after 5 but within 10 years | 54,387 | |
Subtotal | 74,216 | |
Total investments | 74,216 | 59,187 |
U.S. agency securities | ||
Amortized Cost | ||
Due in 1 year | 2,050 | |
Due after 1 but within 5 years | 2,441 | |
Subtotal | 4,491 | |
Total investments | 4,491 | 14,763 |
Fair Value | ||
Due in 1 year | 2,061 | |
Due after 1 but within 5 years | 2,459 | |
Subtotal | 4,520 | |
Total investments | 4,520 | 14,839 |
Municipal debt securities | ||
Amortized Cost | ||
Due after 1 but within 5 years | 72,127 | |
Due after 5 but within 10 years | 62,704 | |
Due after 10 years | 56,892 | |
Subtotal | 191,723 | |
Total investments | 191,723 | 57,947 |
Fair Value | ||
Due after 1 but within 5 years | 72,230 | |
Due after 5 but within 10 years | 64,906 | |
Due after 10 years | 58,410 | |
Subtotal | 195,546 | |
Total investments | 195,546 | 57,650 |
Corporate debt securities | ||
Amortized Cost | ||
Due in 1 year | 13,504 | |
Due after 1 but within 5 years | 185,063 | |
Due after 5 but within 10 years | 95,490 | |
Due after 10 years | 1,450 | |
Subtotal | 295,507 | |
Total investments | 295,507 | 126,311 |
Fair Value | ||
Due in 1 year | 13,536 | |
Due after 1 but within 5 years | 184,964 | |
Due after 5 but within 10 years | 96,861 | |
Due after 10 years | 1,468 | |
Subtotal | 296,829 | |
Total investments | 296,829 | 125,593 |
Mortgage-backed securities | ||
Amortized Cost | ||
Periodic payments throughout | 66,396 | |
Total investments | 66,396 | 19,219 |
Fair Value | ||
Periodic payments throughout | 66,086 | |
Total investments | 66,086 | 18,581 |
Asset-backed securities | ||
Amortized Cost | ||
Periodic payments throughout | 126,474 | |
Total investments | 126,474 | 20,340 |
Fair Value | ||
Periodic payments throughout | 126,188 | |
Total investments | 126,188 | 20,385 |
Money market funds | ||
Amortized Cost | ||
Total investments | 210,688 | 14,079 |
Fair Value | ||
Total investments | 210,688 | 14,079 |
U.S. Agency | Mortgage backed securities | ||
Amortized Cost | ||
Periodic payments throughout | 82,190 | |
Total investments | 82,190 | 23,023 |
Fair Value | ||
Periodic payments throughout | 83,540 | |
Total investments | $83,540 | $22,241 |
Investments_Available_for_Sale4
Investments Available for Sale (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Realized gross gains and losses on the sale of investments available for sale | |||
Realized gross gains | $1,368,000 | $116,000 | $145,000 |
Realized gross losses | 443,000 | 2,000 | |
Fair Value | |||
Less than 12 months | 300,835,000 | 146,168,000 | |
12 months or more | 53,357,000 | 25,240,000 | |
Total | 354,192,000 | 171,408,000 | |
Gross Unrealized Losses | |||
Less than 12 months | -1,633,000 | -3,030,000 | |
12 months or more | -1,155,000 | -917,000 | |
Total | -2,788,000 | -3,947,000 | |
Other information | |||
Other-than-temporary impairments | 0 | 0 | 0 |
Fair value of investments deposited with insurance regulatory authorities | 8,500,000 | 8,600,000 | |
U.S. Treasury securities | |||
Fair Value | |||
Less than 12 months | 16,543,000 | 16,474,000 | |
12 months or more | 5,155,000 | ||
Total | 21,698,000 | 16,474,000 | |
Gross Unrealized Losses | |||
Less than 12 months | -34,000 | -890,000 | |
12 months or more | -109,000 | ||
Total | -143,000 | -890,000 | |
Municipal debt securities | |||
Fair Value | |||
Less than 12 months | 39,902,000 | 21,573,000 | |
12 months or more | 8,684,000 | 13,074,000 | |
Total | 48,586,000 | 34,647,000 | |
Gross Unrealized Losses | |||
Less than 12 months | -229,000 | -267,000 | |
12 months or more | -95,000 | -185,000 | |
Total | -324,000 | -452,000 | |
Corporate debt securities | |||
Fair Value | |||
Less than 12 months | 113,717,000 | 75,364,000 | |
12 months or more | 12,659,000 | 3,148,000 | |
Total | 126,376,000 | 78,512,000 | |
Gross Unrealized Losses | |||
Less than 12 months | -701,000 | -1,038,000 | |
12 months or more | -100,000 | -58,000 | |
Total | -801,000 | -1,096,000 | |
Mortgage-backed securities | |||
Fair Value | |||
Less than 12 months | 28,091,000 | 13,249,000 | |
12 months or more | 16,092,000 | 5,333,000 | |
Total | 44,183,000 | 18,582,000 | |
Gross Unrealized Losses | |||
Less than 12 months | -264,000 | -347,000 | |
12 months or more | -620,000 | -291,000 | |
Total | -884,000 | -638,000 | |
Asset-backed securities | |||
Fair Value | |||
Less than 12 months | 100,248,000 | 6,024,000 | |
12 months or more | 2,201,000 | ||
Total | 102,449,000 | 6,024,000 | |
Gross Unrealized Losses | |||
Less than 12 months | -405,000 | -36,000 | |
12 months or more | -17,000 | ||
Total | -422,000 | -36,000 | |
Essent Re | |||
Other information | |||
Fair value of the required investments on deposit in trusts | 51,200,000 | ||
U.S. Agency | Mortgage backed securities | |||
Fair Value | |||
Less than 12 months | 2,334,000 | 13,484,000 | |
12 months or more | 8,566,000 | 3,685,000 | |
Total | 10,900,000 | 17,169,000 | |
Gross Unrealized Losses | |||
Less than 12 months | -452,000 | ||
12 months or more | -214,000 | -383,000 | |
Total | ($214,000) | ($835,000) |
Investments_Available_for_Sale5
Investments Available for Sale (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Components of net investment income | |||
Gross investment income | $13,412 | $4,697 | $2,646 |
Investment expenses | -1,127 | -587 | -377 |
Net investment income | 12,285 | 4,110 | 2,269 |
Fixed maturities | |||
Components of net investment income | |||
Gross investment income | 13,356 | 4,671 | 2,632 |
Short-term investments | |||
Components of net investment income | |||
Gross investment income | $56 | $26 | $14 |
Accounts_Receivable_Details
Accounts Receivable (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Receivable | |||
Premiums receivable | $13,210 | $9,488 | |
Other receivables | 2,600 | 518 | |
Total accounts receivable | 15,810 | 10,006 | |
Accounts receivable, net | 15,810 | 10,006 | |
Provision for doubtful accounts | $0 | $0 | $0 |
Premiums receivable | |||
Accounts Receivable | |||
Threshold period unpaid for write-off of mortgage insurance premiums | 90 days |
Triad_Transaction_Details
Triad Transaction (Details) (USD $) | 12 Months Ended | 0 Months Ended | 16 Months Ended | 0 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 01, 2009 | Mar. 31, 2011 | Dec. 01, 2011 | Dec. 01, 2010 | |
item | |||||||
Triad Transaction | |||||||
Payments made | $5,000,000 | $5,000,000 | $5,000,000 | ||||
Payment obligations | |||||||
Interest expense associated with the liability due | 51,000 | 108,000 | 138,000 | ||||
Triad | Services Agreement | Other income | |||||||
Services agreement | |||||||
Fees earned under Services Agreement | 2,300,000 | 3,000,000 | 3,800,000 | ||||
Essent Guaranty | Triad Assets | |||||||
Triad Transaction | |||||||
Number of employees | 39 | ||||||
Contingent payments | 15,000,000 | ||||||
Period after closing date for commencement of contingent payments | 30 months | ||||||
Number of semi-annual installments for contingent payments | 6 | ||||||
Period prior to commencement of contingent payments for measurement of contingent payment obligation | 6 months | ||||||
Purchase price | 30,074,000 | ||||||
Fixed assets, period of depreciation | 3 years | ||||||
Components of purchase price for assets acquired | |||||||
Cash payments | 9,123,000 | ||||||
Transaction costs | 484,000 | ||||||
Total purchase price | 30,074,000 | ||||||
Allocation of cost assets acquired | |||||||
Allocation of cost of assets acquired (as a percent) | 100.00% | ||||||
Cost of assets acquired | 30,074,000 | ||||||
Adjustment for additional contingent payments | |||||||
Assets adjustment | 14,595,000 | ||||||
Payment obligations | |||||||
Interest expense associated with the liability due | 100,000 | 100,000 | 100,000 | ||||
Essent Guaranty | Triad Assets | Initial valuation | |||||||
Triad Transaction | |||||||
Purchase price | 15,500,000 | ||||||
Components of purchase price for assets acquired | |||||||
Total purchase price | 15,500,000 | ||||||
Allocation of cost assets acquired | |||||||
Cost of assets acquired | 15,479,000 | ||||||
Essent Guaranty | Triad Assets | Minimum | |||||||
Triad Transaction | |||||||
Aggregate unpaid principal balance of mortgage loans for which mortgage insurance policies were written | 500,000,000 | ||||||
Essent Guaranty | Triad Assets | Maximum | |||||||
Components of purchase price for assets acquired | |||||||
Cash payments | 30,000,000 | ||||||
Essent Guaranty | Triad Assets | Software | |||||||
Allocation of cost assets acquired | |||||||
Allocation of cost of assets acquired (as a percent) | 0.70% | ||||||
Property and equipment | 213,000 | ||||||
Adjustment for additional contingent payments | |||||||
Property and equipment | 103,000 | ||||||
Essent Guaranty | Triad Assets | Software | Initial valuation | |||||||
Allocation of cost assets acquired | |||||||
Property and equipment | 110,000 | ||||||
Essent Guaranty | Triad Assets | Computer hardware | |||||||
Allocation of cost assets acquired | |||||||
Allocation of cost of assets acquired (as a percent) | 0.50% | ||||||
Property and equipment | 138,000 | ||||||
Adjustment for additional contingent payments | |||||||
Property and equipment | 67,000 | ||||||
Essent Guaranty | Triad Assets | Computer hardware | Initial valuation | |||||||
Allocation of cost assets acquired | |||||||
Property and equipment | 71,000 | ||||||
Essent Guaranty | Triad Assets | Other assets | |||||||
Allocation of cost assets acquired | |||||||
Allocation of cost of assets acquired (as a percent) | 0.30% | ||||||
Property and equipment | 105,000 | ||||||
Adjustment for additional contingent payments | |||||||
Property and equipment | 51,000 | ||||||
Essent Guaranty | Triad Assets | Other assets | Initial valuation | |||||||
Allocation of cost assets acquired | |||||||
Property and equipment | 54,000 | ||||||
Essent Guaranty | Triad Assets | Acquired technology | |||||||
Allocation of cost assets acquired | |||||||
Allocation of cost of assets acquired (as a percent) | 94.20% | ||||||
Intangible assets | 28,314,000 | ||||||
Adjustment for additional contingent payments | |||||||
Intangible assets adjustment | 13,741,000 | ||||||
Essent Guaranty | Triad Assets | Acquired technology | Initial valuation | |||||||
Allocation of cost assets acquired | |||||||
Intangible assets | 14,573,000 | ||||||
Essent Guaranty | Triad Assets | Workforce-in-place | |||||||
Allocation of cost assets acquired | |||||||
Allocation of cost of assets acquired (as a percent) | 4.30% | ||||||
Intangible assets | 1,304,000 | ||||||
Adjustment for additional contingent payments | |||||||
Intangible assets adjustment | 633,000 | ||||||
Essent Guaranty | Triad Assets | Workforce-in-place | Initial valuation | |||||||
Allocation of cost assets acquired | |||||||
Intangible assets | 671,000 | ||||||
Essent Guaranty | Triad Assets | Triad's liabilities assumed | |||||||
Components of purchase price for assets acquired | |||||||
Liabilities and payment obligations | 877,000 | ||||||
Essent Guaranty | Triad Assets | Fixed payment purchase price obligation | |||||||
Triad Transaction | |||||||
Payment obligation | 15,000,000 | ||||||
Payments made | 10,000,000 | 2,500,000 | 2,500,000 | ||||
Components of purchase price for assets acquired | |||||||
Liabilities and payment obligations | 4,995,000 | ||||||
Essent Guaranty | Triad Assets | Contingent payment purchase price obligation | |||||||
Triad Transaction | |||||||
Payment obligation | 15,000,000 | ||||||
Payments made | 5,000,000 | 5,000,000 | 5,000,000 | ||||
Components of purchase price for assets acquired | |||||||
Liabilities and payment obligations | $14,595,000 |
Reserve_for_Losses_and_Loss_Ad2
Reserve for Losses and Loss Adjustment Expenses (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
loan | loan | |
Reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (LAE) | ||
Reserve for losses and LAE at beginning of year | $3,070,000 | $1,499,000 |
Net reserve for losses and LAE at beginning of year | 3,070,000 | 1,499,000 |
Add provision for losses and LAE, net of reinsurance, occurring in: | ||
Current year | 6,877,000 | 2,986,000 |
Prior years | -569,000 | -665,000 |
Net incurred losses during the current year | 6,308,000 | 2,321,000 |
Deduct payments for losses and LAE, net of reinsurance, occurring in: | ||
Current year | 138,000 | 239,000 |
Prior years | 813,000 | 511,000 |
Net loss and LAE payments during the current year | 951,000 | 750,000 |
Net reserve for losses and LAE at end of year | 8,427,000 | 3,070,000 |
Reserve for losses and LAE at end of year | 8,427,000 | 3,070,000 |
Loans in default at end of year | 457 | 159 |
Reserve for losses and LAE, for prior years | $1,700,000 | $300,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (Indemnifications related to contract underwriting services, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Indemnifications related to contract underwriting services | ||
Commitments and contingencies | ||
Amount paid for remedies | $12,420 | $5,359 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies | |||
Rent expense | $1,600,000 | $1,500,000 | $1,000,000 |
Future minimum lease payments of all non-cancelable operating leases | |||
2015 | 1,486,000 | ||
2016 | 2,117,000 | ||
2017 | 2,022,000 | ||
2018 | 1,940,000 | ||
2019 | 1,984,000 | ||
Thereafter | 10,358,000 | ||
Total minimum payments required | 19,907,000 | ||
Minimum sublease rental income, due in 2015 | $100,000 |
Capital_Stock_Details
Capital Stock (Details) | 0 Months Ended | ||||
In Thousands, unless otherwise specified | Nov. 04, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 05, 2013 | Dec. 31, 2012 |
Vote | |||||
Capital Stock | |||||
Authorized share capital | 233,333 | 233,333 | 233,300 | ||
Share split ratio | 0.67 | ||||
Number of votes per share | 1 | ||||
Shareholder ownership threshold for voting rights (as a percent) | 9.50% | ||||
Maximum number of votes per share for certain shareholders under 9.5% shareholder provision | 1 | ||||
Minimum number of votes per share for other shareholders under 9.5% shareholder provision | 1 | ||||
Class A | |||||
Capital Stock | |||||
Dividend rate, as a percentage of issue price per annum | 10.00% |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) | 0 Months Ended | 1 Months Ended | |||
In Millions, unless otherwise specified | Nov. 04, 2013 | Nov. 05, 2013 | Feb. 28, 2014 | Sep. 30, 2013 | Dec. 31, 2014 |
Stock-based compensation | |||||
Share split ratio | 0.67 | ||||
Class B-2 | Conversion of a class of shares into a single class of common shares | |||||
Stock-based compensation | |||||
Ratio for conversion into common shares | 1 | ||||
2013 Plan | |||||
Stock-based compensation | |||||
Shares authorized | 14.7 | ||||
Increase in number of authorized shares on the first day of each fiscal year | 1.5 | ||||
Increase in number of authorized shares on the first day of each fiscal year, as a percentage of outstanding Common Shares (as a percent) | 2.00% | ||||
Number of shares available for future grant | 13.5 | ||||
2013 Plan | Incentive share options | |||||
Stock-based compensation | |||||
Shares authorized | 14.7 | ||||
2013 Plan | Time-Based | First vesting date | Nonvested shares | |||||
Stock-based compensation | |||||
Vesting (as a percent) | 33.00% | 25.00% | |||
2013 Plan | Time-Based | Second vesting date | Nonvested shares | |||||
Stock-based compensation | |||||
Vesting (as a percent) | 33.00% | 25.00% | |||
2013 Plan | Time-Based | Third vesting date | Nonvested shares | |||||
Stock-based compensation | |||||
Vesting (as a percent) | 33.00% | 25.00% | |||
2013 Plan | Time-Based | Fourth vesting date | Nonvested shares | |||||
Stock-based compensation | |||||
Vesting (as a percent) | 25.00% | ||||
2013 Plan | Performance-Based | Nonvested shares | |||||
Stock-based compensation | |||||
Performance period | 3 years | 3 years | |||
2013 Plan | Performance-Based | One-year anniversary of completion of performance period | Nonvested shares | |||||
Stock-based compensation | |||||
Vesting period | 1 year |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 2) (Nonvested shares) | 12 Months Ended |
Dec. 31, 2014 | |
Compounded Annual Book Value Per Share Growth 11% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth (as a percent) | 11.00% |
Nonvested Common Shares Earned (as a percent) | 10.00% |
Compounded Annual Book Value Per Share Growth 11% | Maximum | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth (as a percent) | 11.00% |
Nonvested Common Shares Earned (as a percent) | 0.00% |
Compounded Annual Book Value Per Share Growth 12% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth (as a percent) | 12.00% |
Nonvested Common Shares Earned (as a percent) | 36.00% |
Compounded Annual Book Value Per Share Growth 13% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth (as a percent) | 13.00% |
Nonvested Common Shares Earned (as a percent) | 61.00% |
Compounded Annual Book Value Per Share Growth 14% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth (as a percent) | 14.00% |
Nonvested Common Shares Earned (as a percent) | 87.00% |
Compounded Annual Book Value Per Share Growth 15% | Minimum | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth (as a percent) | 15.00% |
Nonvested Common Shares Earned (as a percent) | 100.00% |
StockBased_Compensation_Detail2
Stock-Based Compensation (Details 3) (USD $) | 0 Months Ended | 12 Months Ended | 1 Months Ended | ||||
Nov. 04, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Feb. 28, 2015 | Feb. 28, 2014 | Nov. 30, 2013 | 31-May-14 | |
Additional information | |||||||
Share split ratio | 0.67 | ||||||
Nonvested share units | |||||||
Number of Shares | |||||||
Outstanding at beginning of year (in shares) | 528,000 | ||||||
Granted (in shares) | 188,000 | 531,000 | |||||
Vested (in shares) | -26,000 | ||||||
Forfeited (in shares) | -26,000 | -3,000 | |||||
Outstanding at end of year (in shares) | 664,000 | 528,000 | |||||
Weighted Average Grant Date Fair Value | |||||||
Outstanding at beginning of year (in dollars per share) | $17.03 | ||||||
Granted (in dollars per share) | $21.95 | $17.03 | |||||
Vested (in dollars per share) | $19 | ||||||
Forfeited (in dollars per share) | $17.83 | $17 | |||||
Outstanding at end of year (in dollars per share) | $18.32 | $17.03 | |||||
Nonvested share units | Incentive bonus for performance year | |||||||
Stock-based compensation | |||||||
Vesting period | 3 years | ||||||
First vesting date | Nonvested shares | Incentive bonus for performance year | |||||||
Stock-based compensation | |||||||
Vesting (as a percent) | 33.00% | ||||||
First vesting date | Nonvested share units | Incentive bonus for performance year | |||||||
Stock-based compensation | |||||||
Vesting (as a percent) | 33.00% | ||||||
Second vesting date | Nonvested shares | Incentive bonus for performance year | |||||||
Stock-based compensation | |||||||
Vesting (as a percent) | 33.00% | ||||||
Second vesting date | Nonvested share units | Incentive bonus for performance year | |||||||
Stock-based compensation | |||||||
Vesting (as a percent) | 33.00% | ||||||
Third vesting date | Nonvested shares | Incentive bonus for performance year | |||||||
Stock-based compensation | |||||||
Vesting (as a percent) | 33.00% | ||||||
Third vesting date | Nonvested share units | Incentive bonus for performance year | |||||||
Stock-based compensation | |||||||
Vesting (as a percent) | 33.00% | ||||||
Time and Performance-Based | Nonvested shares | |||||||
Number of Shares | |||||||
Outstanding at beginning of year (in shares) | 1,238,000 | ||||||
Granted (in shares) | 52,000 | 1,238,000 | |||||
Outstanding at end of year (in shares) | 1,290,000 | 1,238,000 | |||||
Weighted Average Grant Date Fair Value | |||||||
Outstanding at beginning of year (in dollars per share) | $14.50 | ||||||
Granted (in dollars per share) | $22.68 | $14.50 | |||||
Outstanding at end of year (in dollars per share) | $14.83 | $14.50 | |||||
Time-Based | Nonvested shares | |||||||
Number of Shares | |||||||
Outstanding at beginning of year (in shares) | 2,839,000 | ||||||
Exchange of Class A and Class B-2 for Common Shares (in shares) | 2,298,000 | ||||||
Granted (in shares) | 82,000 | 613,000 | |||||
Vested (in shares) | -1,434,000 | -72,000 | |||||
Forfeited (in shares) | -15,000 | ||||||
Outstanding at end of year (in shares) | 1,472,000 | 2,839,000 | |||||
Weighted Average Grant Date Fair Value | |||||||
Outstanding at beginning of year (in dollars per share) | $4.82 | ||||||
Exchange of Class A and Class B-2 for Common Shares | $2.10 | ||||||
Granted (in dollars per share) | $23.47 | $14.50 | |||||
Vested (in dollars per share) | $1.57 | $0.22 | |||||
Forfeited (in dollars per share) | $2.70 | ||||||
Outstanding at end of year (in dollars per share) | $9.04 | $4.82 | |||||
Time-Based | Nonvested shares | Incentive bonus for performance year | |||||||
Number of Shares | |||||||
Granted (in shares) | 58,389 | ||||||
Time-Based | Nonvested share units | |||||||
Stock-based compensation | |||||||
Vesting period | 3 years | ||||||
Time-Based | Nonvested share units | Incentive bonus for performance year | |||||||
Number of Shares | |||||||
Granted (in shares) | 70,670 | ||||||
Time-Based | Nonvested share units | Non-employee directors | Maximum | |||||||
Stock-based compensation | |||||||
Vesting period | 1 year |
StockBased_Compensation_Detail3
Stock-Based Compensation (Details 4) (Nonvested shares, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Class A | ||
Number of Shares | ||
Outstanding at beginning of year (in shares) | 199,000 | 257,000 |
Granted (in shares) | 239,000 | 215,000 |
Vested (in shares) | -271,000 | |
Forfeited (in shares) | -9,000 | -2,000 |
Converted to Common Shares (in shares) | -429,000 | |
Outstanding at end of year (in shares) | 199,000 | |
Weighted Average Grant Date Fair Value | ||
Outstanding at beginning of year (in dollars per share) | $10.08 | $10 |
Granted (in dollars per share) | $10.92 | $10.11 |
Vested (in dollars per share) | $10.03 | |
Forfeited (in dollars per share) | $10.59 | $10 |
Converted to Common Shares (in dollars per share) | $8.01 | |
Outstanding at end of year (in dollars per share) | $10.08 | |
Class A | Maximum | Incentive bonus for performance year | ||
Additional information | ||
Vesting period | 3 years | |
2009 Restricted Share Plan | Class B-2 | ||
Stock-based compensation | ||
Amount used to derive Investment Percentage, denominator | $750,000 | |
Number of Shares | ||
Outstanding at beginning of year (in shares) | 5,461,000 | 5,973,000 |
Granted (in shares) | 96,000 | 195,000 |
Vested (in shares) | -1,209,000 | -645,000 |
Forfeited (in shares) | -2,614,000 | -62,000 |
Converted to Common Shares (in shares) | -1,734,000 | |
Outstanding at end of year (in shares) | 5,461,000 | |
Weighted Average Grant Date Fair Value | ||
Outstanding at beginning of year (in dollars per share) | $0.11 | $0.11 |
Granted (in dollars per share) | $1.80 | $0.26 |
Vested (in dollars per share) | $0.10 | $0.09 |
Forfeited (in dollars per share) | $0.13 | $0.19 |
Converted to Common Shares (in dollars per share) | $0.17 | |
Outstanding at end of year (in dollars per share) | $0.11 | |
2009 Restricted Share Plan | Vesting on the third anniversary | Class B-2 | ||
Stock-based compensation | ||
Vesting (as a percent) | 33.00% | |
2009 Restricted Share Plan | Vesting on the fourth anniversary | Class B-2 | ||
Stock-based compensation | ||
Vesting (as a percent) | 33.00% | |
2009 Restricted Share Plan | Vesting on the fifth anniversary | Class B-2 | ||
Stock-based compensation | ||
Vesting (as a percent) | 33.00% |
StockBased_Compensation_Detail4
Stock-Based Compensation (Details 5) (USD $) | 12 Months Ended | 1 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2015 | |
Stock-based compensation | ||||
Total unrecognized compensation expense | $28,100,000 | |||
Expected weighted average period for recognition of expense | 2 years 8 months 12 days | |||
Shares tendered by employees to pay employee withholding taxes | 105,317 | 3,846 | ||
Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares | ||||
Compensation expense | 12,520,000 | 3,597,000 | 1,926,000 | |
Income tax benefit | 4,382,000 | 1,259,000 | 674,000 | |
Class A | ||||
Stock-based compensation | ||||
Shares tendered by employees to pay employee withholding taxes | 17,644 | 86,014 | ||
Class A | Former employees | ||||
Stock-based compensation | ||||
Shares purchased (in shares) | 1,135 | 710 | ||
Shares purchased (in dollars per share) | $10.92 | $10.11 | ||
Class B-2 | ||||
Stock-based compensation | ||||
Shares tendered by employees to pay employee withholding taxes | 1,714 | 0 | ||
Class B-2 | Former employees | ||||
Stock-based compensation | ||||
Shares purchased (in shares) | 4,990 | |||
Shares purchased (in dollars per share) | $1.80 | |||
Nonvested shares | ||||
Stock-based compensation | ||||
Total fair value of shares vested | $32,700,000 | $4,000,000 | $3,100,000 | |
Nonvested shares | Time-Based | ||||
Stock-based compensation | ||||
Shares granted | 82,000 | 613,000 | ||
Weighted fair market value at grant date (in dollars per share) | $23.47 | $14.50 | ||
Nonvested shares | Time-Based | Incentive bonus for performance year | ||||
Stock-based compensation | ||||
Shares granted | 58,389 | |||
Nonvested shares | Time and Performance-Based | ||||
Stock-based compensation | ||||
Shares granted | 52,000 | 1,238,000 | ||
Weighted fair market value at grant date (in dollars per share) | $22.68 | $14.50 | ||
Nonvested shares | Time and Performance-Based | Long-term incentives | ||||
Stock-based compensation | ||||
Shares granted | 60,818 | |||
Nonvested shares | Class A | ||||
Stock-based compensation | ||||
Shares granted | 239,000 | 215,000 | ||
Weighted fair market value at grant date (in dollars per share) | $10.92 | $10.11 | ||
Nonvested share units | ||||
Stock-based compensation | ||||
Shares granted | 188,000 | 531,000 | ||
Weighted fair market value at grant date (in dollars per share) | $21.95 | $17.03 | ||
Nonvested share units | Time-Based | Incentive bonus for performance year | ||||
Stock-based compensation | ||||
Shares granted | 70,670 | |||
Vesting on grant date | Class A | ||||
Stock-based compensation | ||||
Shares granted | 57,349 | 47,500 | ||
Weighted fair market value at grant date (in dollars per share) | $10.92 | $10.11 | ||
Vesting on grant date | 2013 Plan | Nonvested shares | ||||
Stock-based compensation | ||||
Shares granted | 17,158 | |||
Weighted fair market value at grant date (in dollars per share) | $24.71 |
Dividends_Restrictions_Details
Dividends Restrictions (Details) (USD $) | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2013 | |
Essent Guaranty | |||||
Dividends Restrictions | |||||
Dividend payment ability, period of payment of dividends | 12 months | ||||
Dividend payment ability, as a percentage of preceding year-end statutory policyholders' surplus | 10.00% | ||||
Essent PA | |||||
Dividends Restrictions | |||||
Dividend payment ability, period of payment of dividends | 12 months | ||||
Dividend payment ability, as a percentage of preceding year-end statutory policyholders' surplus | 10.00% | ||||
Dividend payment ability | 3,700,000 | ||||
Essent Group and intermediate holding companies | Essent Guaranty | |||||
Dividends Restrictions | |||||
Dividends paid to parent company | 0 | 0 | 0 | ||
Essent Holdings | Essent PA | |||||
Dividends Restrictions | |||||
Dividends paid to parent company | $200,000 | $5,000 |
Dividends_Restrictions_Details1
Dividends Restrictions (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Equity | ||||
Total equity | $955,738 | $722,141 | $219,123 | $176,061 |
Essent Re | ||||
Equity | ||||
Total equity | 155,100 | |||
Essent Re | Minimum | Essent Guaranty | Quota share reinsurance | ||||
Equity | ||||
Total equity | $100,000 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Components of income tax expense | |||
Current | $2,816 | $881 | |
Deferred | 44,614 | -8,267 | -333 |
Total income tax expense | 47,430 | -7,386 | -333 |
Reconciliation of the difference between income tax expense and the expected tax provision at the weighted average tax rate | |||
Tax provision at weighted average statutory rates | 47,930 | 21,405 | -4,394 |
Non-deductible expenses | 398 | 276 | 199 |
Tax-exempt interest,net of proration | -961 | -159 | |
Change in valuation allowance | -28,886 | 3,933 | |
Other | 63 | -22 | -71 |
Total income tax expense | $47,430 | ($7,386) | ($333) |
% of pretax income | |||
Tax provision at statutory rates (as a percent) | 35.30% | 36.90% | 31.70% |
Non-deductible expenses (as a percent) | 0.30% | 0.50% | -1.40% |
Tax exempt interest, net of proration (as a percent) | -0.70% | -0.30% | |
Change in valuation allowance (as a percent) | -49.80% | -28.30% | |
Other (as a percent) | 0.00% | 0.00% | 0.40% |
Total income tax expense (as a percent) | 34.90% | -12.70% | 2.40% |
U.S. | |||
Income Taxes | |||
Statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Bermuda | |||
Income Taxes | |||
Statutory rate (as a percent) | 0.00% | 0.00% | 0.00% |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Net deferred tax asset | ||
Deferred tax assets | $31,729 | $27,043 |
Deferred tax liabilities | -68,821 | -16,697 |
Net deferred tax (liability) | -37,092 | |
Net deferred tax asset | 10,346 | |
Components of the net deferred tax asset | ||
Contingency reserves | -63,103 | -14,420 |
Unearned premium reserve | 16,099 | 11,637 |
Fixed assets | 6,274 | 7,646 |
Start-up expenditures, net | 4,611 | 5,064 |
Nonvested shares | 4,140 | 965 |
Deferred policy acquisition costs | -3,359 | -2,160 |
Unrealized (gain) on investments | -2,045 | |
Unrealized loss on investments | 779 | |
Alternative minimum tax credit carryforward | 490 | 877 |
Prepaid expenses | -159 | -53 |
Accrued expenses | -155 | -64 |
Loss reserves | 86 | 43 |
Organizational expenditures | 29 | 32 |
Net deferred tax (liability) | -37,092 | |
Net deferred tax asset | $10,346 |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes | |||
Net purchases of T&L Bonds | $51,673,000 | $8,000,000 | |
T&L Bonds held as of end of year | 59,673,000 | 8,000,000 | |
Valuation allowance | 28,900,000 | ||
Net deferred tax benefit recognized | $8,300,000 |
Income_Taxes_Details_4
Income Taxes (Details 4) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income taxes | ||
Unrecognized tax benefits | 0 | $0 |
U.S. | Subsidiaries | ||
Income taxes | ||
Taxes provided on un-remitted earnings | 0 | |
Cumulative amount of earnings that would be subject to withholding tax, if distributed outside of the U.S. | 105,000,000 | |
U.S. | Subsidiaries | U.S/Ireland tax treaty benefits availed | ||
Income taxes | ||
Associated withholding tax liability on cumulative amount of earnings that would be subject to withholding tax, if distributed outside of the U.S. | 5,000,000 | |
Essent Irish Intermediate | Essent Holdings | ||
Income taxes | ||
Withholding taxes accrued with respect to un-remitted earnings | 0 | |
Essent Irish Intermediate | Essent Holdings | U.S/Ireland tax treaty benefits availed | ||
Income taxes | ||
Withholding tax rate on dividends paid (as a percent) | 5.00% | |
Essent Irish Intermediate | Essent Holdings | Absent U.S/Ireland tax treaty benefits | ||
Income taxes | ||
Withholding tax rate on dividends paid (as a percent) | 30.00% |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 04, 2013 | Nov. 05, 2013 |
Investment advisory agreement | Goldman Sachs Asset Management, L. P. | |||||
Related Party Transactions | |||||
Expense incurred | $0.50 | $0.40 | $0.20 | ||
Underwriting agreements | Goldman Sachs | |||||
Related Party Transactions | |||||
Amounts paid | $3.50 | $6.90 | |||
Goldman Sachs | Essent Group | |||||
Related Party Transactions | |||||
Percentage of outstanding shares held by investor | 11.35% | ||||
Goldman Sachs | Essent Group | Maximum | |||||
Related Party Transactions | |||||
Percentage of outstanding shares held by investor | 10.00% |
Earnings_Loss_per_Share_EPS_De
Earnings (Loss) per Share (EPS) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings (loss) per share (EPS) | |||||||||||
Net income (loss) | $19,017 | $15,619 | $23,577 | $7,200 | $88,497 | $65,413 | ($13,543) | ||||
Undistributed net income (loss) | 88,497 | 65,413 | -13,543 | ||||||||
Net income (loss) | 28,866 | 25,070 | 19,555 | 15,006 | 12,037 | 88,497 | 12,706 | ||||
Basic earnings (loss) per share (in dollars per share) | $0.34 | $0.30 | $0.23 | $0.18 | $0.23 | $1.05 | $0.90 | ||||
Diluted earnings (loss) per share (in dollars per share) | $0.33 | $0.29 | $0.23 | $0.18 | $0.22 | $1.03 | $0.70 | ||||
Basic weighted average common shares outstanding | 86,134 | 83,640 | 83,276 | 82,864 | 51,741 | 83,986 | 14,044 | ||||
Dilutive effect of nonvested shares (in shares) | 1,616 | 4,059 | |||||||||
Diluted weighted average common shares outstanding | 87,950 | 85,028 | 84,706 | 84,696 | 55,130 | 85,602 | 18,103 | ||||
Class A | |||||||||||
Earnings (loss) per share (EPS) | |||||||||||
Net income (loss) allocable to common shares | 15,490 | 23,037 | 7,200 | 52,707 | -13,541 | ||||||
Basic earnings (loss) per share (in dollars per share) | $0.36 | $0.63 | $0.23 | ($0.49) | |||||||
Diluted earnings (loss) per share (in dollars per share) | $0.35 | $0.62 | $0.23 | ($0.49) | |||||||
Basic weighted average common shares outstanding | 43,616 | 36,793 | 31,805 | 27,445 | |||||||
Diluted weighted average common shares outstanding | 43,788 | 36,901 | 31,864 | 27,445 | |||||||
Class B-2 | |||||||||||
Earnings (loss) per share (EPS) | |||||||||||
Net income (loss) allocable to common shares | $129 | $540 | ($2) | ||||||||
Basic earnings (loss) per share (in dollars per share) | $0.07 | $0.40 | ($0.01) | ||||||||
Diluted earnings (loss) per share (in dollars per share) | $0.02 | $0.09 | ($0.01) | ||||||||
Basic weighted average common shares outstanding | 1,822 | 1,334 | 853 | 393 | |||||||
Diluted weighted average common shares outstanding | 6,054 | 5,994 | 6,009 | 393 |
Earnings_Loss_per_Share_EPS_De1
Earnings (Loss) per Share (EPS) (Details 2) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2012 | |
Antidilutive shares | ||
Antidilutive nonvested shares | 141,503 | |
Class A | ||
Antidilutive shares | ||
Antidilutive nonvested shares | 343,448 | |
Class B-2 | ||
Antidilutive shares | ||
Antidilutive nonvested shares | 5,663,300 |
Earnings_Loss_per_Share_EPS_De2
Earnings (Loss) per Share (EPS) (Details 3) (Performance-based share awards) | Dec. 31, 2014 |
Performance-based share awards | |
Contingently issuable awards | |
Percentage of award issuable if current period end were end of contingency period | 100.00% |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Before Tax | |||
Balance at beginning of period | ($2,227) | $3,714 | |
Other comprehensive income (loss): | |||
Unrealized holding gains (losses) arising during the period | 9,864 | -5,825 | |
Less: Reclassification adjustment for gains included in net income | -925 | -116 | |
Net unrealized gains (losses) on investments | 8,939 | -5,941 | |
Other comprehensive income (loss) | 8,939 | -5,941 | |
Balance at end of period | 6,712 | -2,227 | 3,714 |
Tax Effect | |||
Balance at beginning of period | 780 | -1,300 | |
Other comprehensive income (loss): | |||
Unrealized holding (gains) losses arising during the period | -3,073 | 2,039 | |
Less: Reclassification adjustment for gains included in net income | 248 | 41 | |
Net unrealized (gains) losses on investments | -2,825 | 2,080 | -333 |
Other comprehensive income (loss) | -2,825 | 2,080 | |
Balance at end of period | -2,045 | 780 | -1,300 |
Net of Tax | |||
Balance at beginning of period | -1,447 | 2,414 | |
Other comprehensive income (loss): | |||
Unrealized holding gains (losses) arising during the period | 6,791 | -3,786 | |
Less: Reclassification adjustment for gains included in net income | -677 | -75 | |
Net unrealized gains (losses) on investments | 6,114 | -3,861 | 618 |
Total other comprehensive income (loss) | 6,114 | -3,861 | 618 |
Balance at end of period | $4,667 | ($1,447) | $2,414 |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial Assets: | ||
Total investments | $1,057,613 | $332,555 |
Financial Liabilities: | ||
Amounts due under Asset Purchase Agreement | 4,949 | |
U.S. Treasury securities | ||
Financial Assets: | ||
Total investments | 74,216 | 59,187 |
U.S. agency securities | ||
Financial Assets: | ||
Total investments | 4,520 | 14,839 |
Municipal debt securities | ||
Financial Assets: | ||
Total investments | 195,546 | 57,650 |
Corporate debt securities | ||
Financial Assets: | ||
Total investments | 296,829 | 125,593 |
Mortgage-backed securities | ||
Financial Assets: | ||
Total investments | 66,086 | 18,581 |
Asset-backed securities | ||
Financial Assets: | ||
Total investments | 126,188 | 20,385 |
Money market funds | ||
Financial Assets: | ||
Total investments | 210,688 | 14,079 |
U.S. Agency | Mortgage backed securities | ||
Financial Assets: | ||
Total investments | 83,540 | 22,241 |
Carrying Amount | ||
Financial Assets: | ||
Total investments | 1,057,613 | 332,555 |
Financial Liabilities: | ||
Derivative liabilities | 661 | |
Amounts due under Asset Purchase Agreement | 4,949 | |
Carrying Amount | U.S. Treasury securities | ||
Financial Assets: | ||
Total investments | 74,216 | 59,187 |
Carrying Amount | U.S. agency securities | ||
Financial Assets: | ||
Total investments | 4,520 | 14,839 |
Carrying Amount | Municipal debt securities | ||
Financial Assets: | ||
Total investments | 195,546 | 57,650 |
Carrying Amount | Corporate debt securities | ||
Financial Assets: | ||
Total investments | 296,829 | 125,593 |
Carrying Amount | Mortgage-backed securities | ||
Financial Assets: | ||
Total investments | 66,086 | 18,581 |
Carrying Amount | Asset-backed securities | ||
Financial Assets: | ||
Total investments | 126,188 | 20,385 |
Carrying Amount | Money market funds | ||
Financial Assets: | ||
Total investments | 210,688 | 14,079 |
Carrying Amount | U.S. Agency | Mortgage backed securities | ||
Financial Assets: | ||
Total investments | 83,540 | 22,241 |
Fair Value | ||
Financial Assets: | ||
Total investments | 1,057,613 | 332,555 |
Financial Liabilities: | ||
Derivative liabilities | 661 | |
Amounts due under Asset Purchase Agreement | 4,997 | |
Fair Value | U.S. Treasury securities | ||
Financial Assets: | ||
Total investments | 74,216 | 59,187 |
Fair Value | U.S. agency securities | ||
Financial Assets: | ||
Total investments | 4,520 | 14,839 |
Fair Value | Municipal debt securities | ||
Financial Assets: | ||
Total investments | 195,546 | 57,650 |
Fair Value | Corporate debt securities | ||
Financial Assets: | ||
Total investments | 296,829 | 125,593 |
Fair Value | Mortgage-backed securities | ||
Financial Assets: | ||
Total investments | 66,086 | 18,581 |
Fair Value | Asset-backed securities | ||
Financial Assets: | ||
Total investments | 126,188 | 20,385 |
Fair Value | Money market funds | ||
Financial Assets: | ||
Total investments | 210,688 | 14,079 |
Fair Value | U.S. Agency | Mortgage backed securities | ||
Financial Assets: | ||
Total investments | $83,540 | $22,241 |
Fair_Value_of_Financial_Instru3
Fair Value of Financial Instruments (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair value of financial instruments | ||
Total investments | $1,057,613 | $332,555 |
U.S. Treasury securities | ||
Fair value of financial instruments | ||
Total investments | 74,216 | 59,187 |
U.S. agency securities | ||
Fair value of financial instruments | ||
Total investments | 4,520 | 14,839 |
Municipal debt securities | ||
Fair value of financial instruments | ||
Total investments | 195,546 | 57,650 |
Corporate debt securities | ||
Fair value of financial instruments | ||
Total investments | 296,829 | 125,593 |
Mortgage-backed securities | ||
Fair value of financial instruments | ||
Total investments | 66,086 | 18,581 |
Asset-backed securities | ||
Fair value of financial instruments | ||
Total investments | 126,188 | 20,385 |
Money market funds | ||
Fair value of financial instruments | ||
Total investments | 210,688 | 14,079 |
U.S. Agency | Mortgage backed securities | ||
Fair value of financial instruments | ||
Total investments | 83,540 | 22,241 |
Recurring basis | Quoted Prices in Active Markets for Identical Instruments (Level 1) | ||
Fair value of financial instruments | ||
Total investments | 377,846 | 115,679 |
Recurring basis | Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. Treasury securities | ||
Fair value of financial instruments | ||
Total investments | 74,216 | 59,187 |
Recurring basis | Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. agency securities | ||
Fair value of financial instruments | ||
Total investments | 4,520 | 14,839 |
Recurring basis | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Mortgage-backed securities | ||
Fair value of financial instruments | ||
Total investments | 4,882 | 5,333 |
Recurring basis | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Money market funds | ||
Fair value of financial instruments | ||
Total investments | 210,688 | 14,079 |
Recurring basis | Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. Agency | Mortgage backed securities | ||
Fair value of financial instruments | ||
Total investments | 83,540 | 22,241 |
Recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair value of financial instruments | ||
Total investments | 679,767 | 216,876 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Municipal debt securities | ||
Fair value of financial instruments | ||
Total investments | 195,546 | 57,650 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair value of financial instruments | ||
Total investments | 296,829 | 125,593 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities | ||
Fair value of financial instruments | ||
Total investments | 61,204 | 13,248 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Fair value of financial instruments | ||
Total investments | 126,188 | 20,385 |
Recurring basis | Significant Unobservable Inputs (Level 3) | ||
Fair value of financial instruments | ||
Derivative liabilities | 661 | |
Total liabilities at fair value | 661 | |
Recurring basis | Fair Value | ||
Fair value of financial instruments | ||
Total investments | 1,057,613 | 332,555 |
Derivative liabilities | 661 | |
Total liabilities at fair value | 661 | |
Recurring basis | Fair Value | U.S. Treasury securities | ||
Fair value of financial instruments | ||
Total investments | 74,216 | 59,187 |
Recurring basis | Fair Value | U.S. agency securities | ||
Fair value of financial instruments | ||
Total investments | 4,520 | 14,839 |
Recurring basis | Fair Value | Municipal debt securities | ||
Fair value of financial instruments | ||
Total investments | 195,546 | 57,650 |
Recurring basis | Fair Value | Corporate debt securities | ||
Fair value of financial instruments | ||
Total investments | 296,829 | 125,593 |
Recurring basis | Fair Value | Mortgage-backed securities | ||
Fair value of financial instruments | ||
Total investments | 66,086 | 18,581 |
Recurring basis | Fair Value | Asset-backed securities | ||
Fair value of financial instruments | ||
Total investments | 126,188 | 20,385 |
Recurring basis | Fair Value | Money market funds | ||
Fair value of financial instruments | ||
Total investments | 210,688 | 14,079 |
Recurring basis | Fair Value | U.S. Agency | Mortgage backed securities | ||
Fair value of financial instruments | ||
Total investments | $83,540 | $22,241 |
Fair_Value_of_Financial_Instru4
Fair Value of Financial Instruments (Details 3) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Changes in Level 3 Recurring Fair Value Measurements | |
Net Realized and Unrealized Gains (Losses) Included in Income | $78 |
Purchases, Sales, Issues and Settlements, Net | 739 |
Fair Value End of Year | 661 |
Change in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Year | 78 |
Derivative liabilities | |
Changes in Level 3 Recurring Fair Value Measurements | |
Net Realized and Unrealized Gains (Losses) Included in Income | 78 |
Purchases, Sales, Issues and Settlements, Net | 739 |
Fair Value End of Year | 661 |
Change in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Year | $78 |
Fair_Value_of_Financial_Instru5
Fair Value of Financial Instruments (Details 4) (Recurring basis, Significant Unobservable Inputs (Level 3), USD $) | 0 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Significant unobservable inputs used in our recurring Level 3 fair value measurements | |
Fair value | 661 |
Derivative liabilities | |
Significant unobservable inputs used in our recurring Level 3 fair value measurements | |
Fair value | 661 |
Derivative liabilities | Discounted cash flows | Weighted average | |
Significant unobservable inputs used in our recurring Level 3 fair value measurements | |
Constant prepayment rate | 5.40% |
Default rate | 1.85% |
Reference STACR credit spread | 3.72% |
Statutory_Accounting_Details
Statutory Accounting (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Essent Guaranty | |||
Dividends Restrictions | |||
Statutory net income (loss) | $118,204,000 | $49,838,000 | ($16,278,000) |
Statutory surplus | 465,226,000 | 346,406,000 | 163,790,000 |
Contingency reserve liability | 179,221,000 | 79,921,000 | 23,313,000 |
Increase in contingency reserve | 99,300,000 | ||
Essent PA | |||
Dividends Restrictions | |||
Statutory net income (loss) | 13,299,000 | 5,926,000 | 749,000 |
Statutory surplus | 42,672,000 | 34,528,000 | 14,159,000 |
Contingency reserve liability | 16,909,000 | 6,857,000 | 1,780,000 |
Increase in contingency reserve | $10,100,000 |
Capital_Maintenance_Agreement_
Capital Maintenance Agreement (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Essent Guaranty | Capital maintenance agreement | Essent PA | |
Capital Maintenance Agreement | |
Amounts outstanding | $0 |
Essent Guaranty | Capital maintenance agreement | Essent PA | Maximum | |
Capital Maintenance Agreement | |
Risk to capital ratio | 25 |
Essent PA | |
Capital Maintenance Agreement | |
Risk to capital ratio | 14.6 |
Quarterly_Financial_Data_Unaud2
Quarterly Financial Data (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Net premiums earned | $67,814 | $60,323 | $50,342 | $44,750 | $40,344 | $34,282 | $27,481 | $21,264 | $223,229 | $123,371 | $41,793 |
Other revenues | 4,928 | 4,298 | 3,941 | 3,071 | 2,009 | 2,173 | 2,083 | 1,767 | |||
Provision for losses and LAE | 3,049 | 1,391 | 966 | 902 | 692 | 319 | 580 | 730 | 6,308 | 2,321 | 1,466 |
Other underwriting and operating expenses | 25,656 | 24,469 | 23,648 | 23,459 | 22,299 | 18,237 | 15,557 | 14,962 | 97,232 | 71,055 | 61,126 |
Income (loss) before income taxes | 44,037 | 38,761 | 29,669 | 23,460 | 19,362 | 17,899 | 13,427 | 7,339 | 135,927 | 58,027 | -13,876 |
Net income (loss) | 19,017 | 15,619 | 23,577 | 7,200 | 88,497 | 65,413 | -13,543 | ||||
Net income | 28,866 | 25,070 | 19,555 | 15,006 | 12,037 | 88,497 | 12,706 | ||||
Earnings (loss) per share: | |||||||||||
Basic earnings (loss) per share (in dollars per share) | $0.34 | $0.30 | $0.23 | $0.18 | $0.23 | $1.05 | $0.90 | ||||
Diluted earnings (loss) per share (in dollars per share) | $0.33 | $0.29 | $0.23 | $0.18 | $0.22 | $1.03 | $0.70 | ||||
Weighted average common shares outstanding: | |||||||||||
Basic (in shares) | 86,134 | 83,640 | 83,276 | 82,864 | 51,741 | 83,986 | 14,044 | ||||
Diluted (in shares) | 87,950 | 85,028 | 84,706 | 84,696 | 55,130 | 85,602 | 18,103 | ||||
Class A | |||||||||||
Net income (loss) allocable to common shares | 15,490 | 23,037 | 7,200 | 52,707 | -13,541 | ||||||
Earnings (loss) per share: | |||||||||||
Basic earnings (loss) per share (in dollars per share) | $0.36 | $0.63 | $0.23 | ($0.49) | |||||||
Diluted earnings (loss) per share (in dollars per share) | $0.35 | $0.62 | $0.23 | ($0.49) | |||||||
Weighted average common shares outstanding: | |||||||||||
Basic (in shares) | 43,616 | 36,793 | 31,805 | 27,445 | |||||||
Diluted (in shares) | 43,788 | 36,901 | 31,864 | 27,445 | |||||||
Class B-2 | |||||||||||
Net income (loss) allocable to common shares | $129 | $540 | ($2) | ||||||||
Earnings (loss) per share: | |||||||||||
Basic earnings (loss) per share (in dollars per share) | $0.07 | $0.40 | ($0.01) | ||||||||
Diluted earnings (loss) per share (in dollars per share) | $0.02 | $0.09 | ($0.01) | ||||||||
Weighted average common shares outstanding: | |||||||||||
Basic (in shares) | 1,822 | 1,334 | 853 | 393 | |||||||
Diluted (in shares) | 6,054 | 5,994 | 6,009 | 393 |
Schedule_ISummary_of_Investmen1
Schedule I-Summary of Investments-Other Than Investments in Related Parties (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | $1,050,901 | $334,782 |
Fair Value | 1,057,613 | 332,555 |
Amount at which shown in the Balance Sheet | 1,057,613 | |
Mortgage-backed securities | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 66,396 | 19,219 |
Fair Value | 66,086 | 18,581 |
Asset-backed securities | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 126,474 | 20,340 |
Fair Value | 126,188 | 20,385 |
Fixed maturities | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 840,213 | 320,703 |
Fair Value | 846,925 | 318,476 |
Amount at which shown in the Balance Sheet | 846,925 | |
Fixed maturities | United States Government and government agencies and authorities | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 160,113 | |
Fair Value | 162,276 | |
Amount at which shown in the Balance Sheet | 162,276 | |
Fixed maturities | States, municipalities and political subdivisions | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 191,723 | |
Fair Value | 195,546 | |
Amount at which shown in the Balance Sheet | 195,546 | |
Fixed maturities | Mortgage-backed securities | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 66,396 | |
Fair Value | 66,086 | |
Amount at which shown in the Balance Sheet | 66,086 | |
Fixed maturities | Asset-backed securities | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 126,474 | |
Fair Value | 126,188 | |
Amount at which shown in the Balance Sheet | 126,188 | |
Fixed maturities | All other corporate bonds | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 295,507 | |
Fair Value | 296,829 | |
Amount at which shown in the Balance Sheet | 296,829 | |
Short-term investments | ||
Investments-Other Than Investments in Related Parties | ||
Amortized Cost | 210,688 | 14,079 |
Fair Value | 210,688 | 14,079 |
Amount at which shown in the Balance Sheet | $210,688 |
Schedule_IIFinancial_Informati1
Schedule II-Financial Information of Registrant (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Assets | ||||
Total investments | $1,057,613 | $332,555 | ||
Cash | 24,411 | 477,655 | ||
Other assets | 2,768 | 2,846 | ||
Total assets | 1,181,461 | 853,970 | ||
Liabilities | ||||
Other accrued liabilities | 8,671 | 7,335 | ||
Total liabilities | 225,723 | 131,829 | ||
Commitments and contingencies | ||||
Stockholders' Equity | ||||
Common shares | 1,388 | 1,297 | ||
Additional paid-in capital | 893,285 | 754,390 | ||
Accumulated other comprehensive income (loss) | 4,667 | -1,447 | 2,414 | |
Retained earnings (accumulated deficit) | 56,398 | -32,099 | ||
Total stockholders' equity | 955,738 | 722,141 | 219,123 | 176,061 |
Total liabilities and stockholders' equity | 1,181,461 | 853,970 | ||
Fixed maturities | ||||
Assets | ||||
Total investments | 846,925 | 318,476 | ||
Short-term investments | ||||
Assets | ||||
Total investments | 210,688 | 14,079 | ||
Parent Company | ||||
Assets | ||||
Cash | 8,500 | 244,218 | ||
Due from affiliates | 1,179 | 528 | ||
Investment in consolidated subsidiaries | 828,482 | 476,066 | ||
Other assets | 668 | 961 | ||
Total assets | 956,656 | 723,775 | ||
Liabilities | ||||
Other accrued liabilities | 918 | 1,634 | ||
Total liabilities | 918 | 1,634 | ||
Commitments and contingencies | ||||
Stockholders' Equity | ||||
Common shares | 1,388 | 1,297 | ||
Additional paid-in capital | 893,285 | 754,390 | ||
Accumulated other comprehensive income (loss) | 4,667 | -1,447 | ||
Retained earnings (accumulated deficit) | 56,398 | -32,099 | ||
Total stockholders' equity | 955,738 | 722,141 | ||
Total liabilities and stockholders' equity | 956,656 | 723,775 | ||
Parent Company | Fixed maturities | ||||
Assets | ||||
Total investments | 1,197 | |||
Parent Company | Short-term investments | ||||
Assets | ||||
Total investments | $116,630 | $2,002 |
Schedule_IIFinancial_Informati2
Schedule II-Financial Information of Registrant (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||||||||||
Investment income | $12,285 | $4,110 | $2,269 | ||||||||
Realized gains, net | 925 | 116 | 143 | ||||||||
Total revenues | 239,467 | 131,403 | 48,716 | ||||||||
Expenses: | |||||||||||
Loss before income taxes and equity in undistributed net income in subsidiaries | 44,037 | 38,761 | 29,669 | 23,460 | 19,362 | 17,899 | 13,427 | 7,339 | 135,927 | 58,027 | -13,876 |
Net income (loss) | 19,017 | 15,619 | 23,577 | 7,200 | 88,497 | 65,413 | -13,543 | ||||
Other comprehensive income (loss): | |||||||||||
Change in unrealized appreciation (depreciation) of investments, net of tax expense (benefit) of $2,825 in 2014, ($2,080) in 2013 and $333 in 2012 | 6,114 | -3,861 | 618 | ||||||||
Total other comprehensive income (loss) | 6,114 | -3,861 | 618 | ||||||||
Comprehensive income (loss) | 94,611 | 61,552 | -12,925 | ||||||||
Change in unrealized appreciation (depreciation) of investments, tax expense (benefit) | 2,825 | -2,080 | 333 | ||||||||
Parent Company | |||||||||||
Revenues: | |||||||||||
Investment income | 1,019 | 4 | 3 | ||||||||
Realized gains, net | 218 | ||||||||||
Administrative service fees from subsidiaries | 1,020 | ||||||||||
Total revenues | 2,257 | 4 | 3 | ||||||||
Expenses: | |||||||||||
Administrative service fees to subsidiaries | 826 | 90 | 46 | ||||||||
Other operating expenses | 4,085 | 1,567 | 250 | ||||||||
Total expenses | 4,911 | 1,657 | 296 | ||||||||
Loss before income taxes and equity in undistributed net income in subsidiaries | -2,654 | -1,653 | -293 | ||||||||
Loss before equity in undistributed net income (loss) of subsidiaries | -2,654 | -1,653 | -293 | ||||||||
Equity in undistributed net income (loss) of subsidiaries | 91,151 | 67,066 | -13,250 | ||||||||
Net income (loss) | 88,497 | 65,413 | -13,543 | ||||||||
Other comprehensive income (loss): | |||||||||||
Change in unrealized appreciation (depreciation) of investments, net of tax expense (benefit) of $2,825 in 2014, ($2,080) in 2013 and $333 in 2012 | 6,114 | -3,861 | 618 | ||||||||
Total other comprehensive income (loss) | 6,114 | -3,861 | 618 | ||||||||
Comprehensive income (loss) | 94,611 | 61,552 | -12,925 | ||||||||
Change in unrealized appreciation (depreciation) of investments, tax expense (benefit) | $2,825 | ($2,080) | $333 |
Schedule_IIFinancial_Informati3
Schedule II-Financial Information of Registrant (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating Activities | |||||||
Net income (loss) | $19,017 | $15,619 | $23,577 | $7,200 | $88,497 | $65,413 | ($13,543) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Gain on the sale of investments, net | -925 | -116 | -143 | ||||
Stock-based compensation expense | 12,520 | 3,597 | 1,926 | ||||
Amortization of premium on investment securities | 6,840 | 3,129 | 1,801 | ||||
Excess tax benefits from stock-based compensation | -1,809 | ||||||
Changes in assets and liabilities: | |||||||
Other assets | 78 | -1,628 | -38 | ||||
Net cash provided by operating activities | 153,704 | 119,008 | 36,639 | ||||
Investing Activities | |||||||
Net change in short term investments | -196,609 | -6,982 | 7,363 | ||||
Purchase of investments available for sale | -699,324 | -136,094 | -137,481 | ||||
Proceeds from sales of investments available for sale | 144,744 | 36,582 | 49,438 | ||||
Net cash used in investing activities | -727,700 | -96,760 | -79,729 | ||||
Financing Activities | |||||||
Issuance of common shares net of costs | 126,441 | 438,403 | 54,497 | ||||
Treasury stock acquired | -2,498 | -311 | -916 | ||||
Excess tax benefits from stock-based compensation | 1,809 | ||||||
Investor fee payment | -1,677 | ||||||
Net cash provided by financing activities | 120,752 | 433,092 | 46,904 | ||||
Net (decrease) increase in cash | -453,244 | 455,340 | 3,814 | ||||
Cash at beginning of year | 22,315 | 477,655 | 22,315 | 18,501 | |||
Cash at end of year | 477,655 | 24,411 | 477,655 | 22,315 | |||
Parent Company | |||||||
Operating Activities | |||||||
Net income (loss) | 88,497 | 65,413 | -13,543 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Equity in net income of subsidiaries | -91,151 | -67,066 | 13,250 | ||||
Gain on the sale of investments, net | -218 | ||||||
Stock-based compensation expense | 1,076 | ||||||
Amortization of premium on investment securities | 502 | ||||||
Excess tax benefits from stock-based compensation | -1,809 | ||||||
Changes in assets and liabilities: | |||||||
Other assets | -358 | -1,450 | 121 | ||||
Other accrued liabilities | 13,252 | 4,196 | 2,373 | ||||
Net cash provided by operating activities | 9,791 | 1,093 | 2,201 | ||||
Investing Activities | |||||||
Net change in short term investments | -114,628 | 999 | -2,001 | ||||
Investments in subsidiaries | -255,155 | -197,000 | -54,567 | ||||
Purchase of investments available for sale | -95,128 | ||||||
Proceeds from sales of investments available for sale | 93,650 | ||||||
Net cash used in investing activities | -371,261 | -196,001 | -56,568 | ||||
Financing Activities | |||||||
Issuance of common shares net of costs | 126,441 | 438,403 | 54,497 | ||||
Treasury stock acquired | -2,498 | -311 | -916 | ||||
Excess tax benefits from stock-based compensation | 1,809 | ||||||
Investor fee payment | -1,677 | ||||||
Net cash provided by financing activities | 125,752 | 438,092 | 51,904 | ||||
Net (decrease) increase in cash | -235,718 | 243,184 | -2,463 | ||||
Cash at beginning of year | 1,034 | 244,218 | 1,034 | 3,497 | |||
Cash at end of year | $244,218 | $8,500 | $244,218 | $1,034 |
Schedule_IIFinancial_Informati4
Schedule II-Financial Information of Registrant (Details 4) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Essent Guaranty | |
Condensed Financial Information of Registrant | |
Dividend payment ability, period of payment of dividends | 12 months |
Dividend payment ability, as a percentage of preceding year-end statutory policyholders' surplus | 10.00% |
Essent PA | |
Condensed Financial Information of Registrant | |
Dividend payment ability, period of payment of dividends | 12 months |
Dividend payment ability, as a percentage of preceding year-end statutory policyholders' surplus | 10.00% |
Dividend payment ability | 3.7 |