Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 28, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NMI HOLDINGS, INC. | |
Entity Central Index Key | 1,547,903 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 59,862,199 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Fixed maturities, available-for-sale, at fair value (amortized cost of $669,363 and $630,688 as of June 30, 2017 and December 31, 2016, respectively) | $ 673,695 | $ 628,969 |
Cash and cash equivalents | 20,035 | 47,746 |
Premiums receivable | 17,795 | 13,728 |
Accrued investment income | 3,867 | 3,421 |
Prepaid expenses | 2,072 | 1,991 |
Deferred policy acquisition costs, net | 34,206 | 30,109 |
Software and equipment, net | 21,530 | 20,402 |
Intangible assets and goodwill | 3,634 | 3,634 |
Prepaid reinsurance premiums | 38,919 | 37,921 |
Deferred tax asset, net | 45,771 | 51,434 |
Other assets | 1,471 | 542 |
Total assets | 862,995 | 839,897 |
Liabilities | ||
Term loan | 143,990 | 144,353 |
Unearned premiums | 157,152 | 152,906 |
Accounts payable and accrued expenses | 21,349 | 25,297 |
Reserve for insurance claims and claim expenses | 5,048 | 3,001 |
Reinsurance funds withheld | 32,042 | 30,633 |
Deferred ceding commission | 4,830 | 4,831 |
Warrant liability, at fair value | 3,544 | 3,367 |
Total liabilities | 367,955 | 364,388 |
Commitments and contingencies | ||
Shareholders' Equity | ||
Common stock - class A shares, $0.01 par value; 59,858,418 and 59,145,161 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively (250,000,000 shares authorized) | 598 | 591 |
Additional paid-in capital | 580,499 | 576,927 |
Accumulated other comprehensive loss, net of tax | (1,354) | (5,287) |
Accumulated deficit | (84,703) | (96,722) |
Total shareholders' equity | 495,040 | 475,509 |
Total liabilities and shareholders' equity | $ 862,995 | $ 839,897 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, amortized cost | $ 669,363 | $ 630,688 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 59,858,418 | 59,145,161 |
Common stock, shares outstanding (in shares) | 59,858,418 | 59,145,161 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues | ||||
Net premiums earned | $ 37,917 | $ 26,041 | $ 71,142 | $ 45,848 |
Net investment income | 3,908 | 3,342 | 7,715 | 6,573 |
Net realized investment gains (losses) | 188 | 61 | 130 | (824) |
Other revenues | 185 | 37 | 265 | 69 |
Total revenues | 42,198 | 29,481 | 79,252 | 51,666 |
Expenses | ||||
Insurance claims and claims expenses | 1,373 | 470 | 2,008 | 928 |
Underwriting and operating expenses | 28,048 | 23,234 | 54,037 | 45,906 |
Total expenses | 29,421 | 23,704 | 56,045 | 46,834 |
Other (expense) income | ||||
Gain (loss) from change in fair value of warrant liability | 19 | (59) | (177) | 611 |
Interest expense | (3,300) | (3,707) | (6,794) | (7,339) |
Total other expense | (3,281) | (3,766) | (6,971) | (6,728) |
Income (loss) before income taxes | 9,496 | 2,011 | 16,236 | (1,896) |
Income tax expense | 3,484 | 0 | 4,732 | 0 |
Net income (loss) | $ 6,012 | $ 2,011 | $ 11,504 | $ (1,896) |
Earnings (loss) per share | ||||
Basic earnings (loss) per share (in dollars per share) | $ 0.10 | $ 0.03 | $ 0.19 | $ (0.03) |
Diluted earnings (loss) per share (in dollars per share) | $ 0.10 | $ 0.03 | $ 0.18 | $ (0.03) |
Weighted average common shares outstanding | ||||
Basic weighted average shares outstanding (in shares) | 59,823,396 | 59,105,613 | 59,576,747 | 59,005,983 |
Dilutive weighted average shares outstanding (in shares) | 63,010,362 | 59,830,899 | 62,688,563 | 59,005,983 |
Other comprehensive income, net of tax: | ||||
Net unrealized gains in accumulated other comprehensive income, net of tax expense of $1,388 and $0 for the three months ended June 30, 2017 and 2016, respectively, and $2,073 and $0 for the six months ended June 30,2017 and 2016 | $ 2,822 | $ 8,670 | $ 4,017 | $ 17,771 |
Reclassification adjustment for losses (gains) included in net income, net of tax expense of $66 and $0 for the three months ended June 30, 2017 and 2016, respectively, and $45 and $0 for the six months ended June 30,2017 and 2016 | (122) | (61) | (84) | 824 |
Other comprehensive income, net of tax | 2,700 | 8,609 | 3,933 | 18,595 |
Comprehensive income | $ 8,712 | $ 10,620 | $ 15,437 | $ 16,699 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Net unrealized investment gains in AOCI, tax amount | $ 1,388 | $ 0 | $ 2,073 | $ 0 |
Reclassification adjustment for losses (gains) included in net income, tax amount | $ 66 | $ 0 | $ 45 | $ 0 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance at Dec. 31, 2015 | $ 402,731 | $ 588 | $ 570,340 | $ (7,474) | $ (160,723) |
Beginning balance (in shares) at Dec. 31, 2015 | 58,808 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | (224) | $ 3 | (227) | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 337 | ||||
Share-based compensation expense | 6,814 | 6,814 | |||
Change in unrealized investment gains/losses, net of tax | 2,187 | 2,187 | |||
Net income | 64,001 | 64,001 | |||
Ending balance at Dec. 31, 2016 | 475,509 | $ 591 | 576,927 | (5,287) | (96,722) |
Ending balance (in shares) at Dec. 31, 2016 | 59,145 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of change in accounting principle | 903 | 388 | 515 | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | (1,028) | $ 7 | (1,035) | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 713 | ||||
Share-based compensation expense | 4,219 | 4,219 | |||
Change in unrealized investment gains/losses, net of tax | 3,933 | 3,933 | |||
Net income | 11,504 | 11,504 | |||
Ending balance at Jun. 30, 2017 | $ 495,040 | $ 598 | $ 580,499 | $ (1,354) | $ (84,703) |
Ending balance (in shares) at Jun. 30, 2017 | 59,858 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | ||
Change in unrealized investment gains/losses, tax | $ 2,118 | $ 1,178 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities | ||
Net income (loss) | $ 11,504 | $ (1,896) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Net realized investment losses | (130) | 824 |
Loss (gain) from change in fair value of warrant liability | 177 | (611) |
Depreciation and amortization | 3,119 | 2,295 |
Net amortization of premium on investment securities | 772 | 649 |
Amortization of debt discount and debt issuance costs | 757 | 918 |
Share-based compensation expense | 4,219 | 3,156 |
Deferred income taxes | 4,449 | 0 |
Changes in operating assets and liabilities: | ||
Accrued investment income | (445) | (195) |
Premiums receivable | (4,067) | (3,725) |
Prepaid expenses | (81) | (382) |
Deferred policy acquisition costs, net | (4,097) | (7,598) |
Other assets | (929) | 5 |
Unearned premiums | 4,246 | 41,143 |
Reserve for insurance claims and claims expenses | 2,047 | 796 |
Reinsurance balances, net | 409 | 0 |
Accounts payable and accrued expenses | (7,358) | (7,817) |
Net cash provided by operating activities | 14,592 | 27,562 |
Cash flows from investing activities | ||
Purchase of short-term investments | (78,564) | (80,674) |
Purchase of fixed-maturity investments, available-for-sale | (116,991) | (93,974) |
Proceeds from maturity of short-term investments | 94,677 | 56,758 |
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 65,587 | 86,930 |
Additions to software and equipment | (4,863) | (6,182) |
Net cash used in by investing activities | (40,154) | (37,142) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock related to employee equity plans | 2,614 | 504 |
Taxes paid related to net share settlement of equity awards | (3,643) | (664) |
Repayments of term loan | (750) | (750) |
Payments of debt modification costs | (370) | 0 |
Net cash used in financing activities | (2,149) | (910) |
Net decrease in cash and cash equivalents | (27,711) | (10,490) |
Cash and cash equivalents, beginning of period | 47,746 | 57,317 |
Cash and cash equivalents, end of period | 20,035 | 46,827 |
Supplemental disclosures of cash flow information | ||
Interest paid | 7,292 | 6,431 |
Income taxes paid | $ 585 | $ 0 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation NMI Holdings, Inc. (NMIH) is a Delaware corporation, incorporated in May 2011, to provide private mortgage guaranty insurance (which we refer to as mortgage insurance or MI) through its wholly owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One). In April 2012, we completed a private placement of our securities, through which we offered and sold an aggregate of 55,000,000 of our Class A common stock resulting in net proceeds of approximately $510 million (the Private Placement), and we completed the acquisition of our insurance subsidiaries for $8.5 million in cash, common stock and warrants, plus the assumption of $1.3 million in liabilities. In November 2013, we completed an initial public offering of 2.4 million shares of our common stock, and our common stock began trading on the NASDAQ exchange on November 8, 2013, under the symbol "NMIH." In April 2013, NMIC, our primary insurance subsidiary, issued its first mortgage insurance policy. NMIC is licensed to write mortgage insurance in all 50 states and D.C. In August 2015, NMIH capitalized a wholly owned subsidiary, NMI Services, Inc. (NMIS), through which we offer outsourced loan review services on a limited basis to mortgage loan originators. Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2016 , included in our 2016 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2017 . Deferred Policy Acquisition Costs Costs directly associated with the successful acquisition of mortgage insurance policies, consisting of certain selling expenses and other policy issuance and underwriting expenses, are initially deferred and reported as deferred policy acquisition costs (DAC). DAC is reviewed periodically to determine that it does not exceed recoverable amounts and is 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. For each book year of business, these costs are amortized to expense in proportion to estimated gross profits over the estimated life of the policies. Total amortization of DAC, net of a portion of ceding commission related to the 2016 QSR Transaction (see Note 5, " Reinsurance" ) , was $1.3 million for each of the three months ended June 30, 2017 and 2016, and $2.3 million and $2.2 million for the six months ended June 30, 2017 and 2016, respectively. Premium Deficiency Reserves We consider whether a premium deficiency exists at each fiscal quarter using best estimate assumptions as of the testing date. Per ASC 944, a premium deficiency reserve shall be recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs and maintenance costs exceeds related unearned premiums and anticipated investment income. We have determined that no premium deficiency reserves were necessary for the three and six months ended June 30, 2017 or 2016 . Reinsurance We account for premiums, losses and loss expenses that are ceded to reinsurers on bases consistent with those we use to account for the original policies we issue and pursuant to the terms of our reinsurance contracts. We account for premiums ceded or otherwise paid to reinsurers as reductions to premium revenue. We earn profit and ceding commissions in connection with our 2016 QSR Transaction (see Note 5, " Reinsurance" ). Profit commissions represent a percentage of the profits recognized by reinsurers that are returned to us, based on the level of losses we cede. We recognize any profit commissions we earn as increases to premium revenue. Ceding commissions are calculated as a percentage of ceded written premiums, which are intended to cover our costs to acquire and service the direct policies. We earn the ceding commissions in a manner consistent with our recognition of earnings on the underlying insurance policies, over the terms of the policies reinsured. We account for ceding commissions as reductions to underwriting and operating expenses. We cede a portion of loss reserves, paid losses and loss expenses to our reinsurers, which are accounted for as reinsurance recoverables on the consolidated balance sheets and as reductions to loss expense on the consolidated statements of operations. We remain directly liable for all loss payments in the event we are unable to collect from any reinsurer. Variable interest entity In May 2017, NMIC entered into a reinsurance agreement with Oaktown Re Ltd. (Oaktown Re), a Bermuda-domiciled special purpose reinsurer. We have determined that Oaktown Re is a variable interest entity (VIE), as defined under GAAP (ASC 810), because it does not have sufficient equity at risk to finance its activities. We have evaluated the VIE to determine whether NMIC is its primary beneficiary and, if so, whether we would be required to consolidate the assets and liabilities of the VIE. The primary beneficiary of a VIE is an enterprise that (1) has the power to direct the activities of the VIE, which most significantly impact its economic performance and (2) has significant economic exposure to the VIE; i.e., the obligation to absorb losses or receive benefits that could potentially be significant. The determination of whether an entity is the primary beneficiary of a VIE is complex and requires management judgment regarding determinative factors, including the expected results of the VIE and how those results are absorbed by beneficial interest holders, as well as which party has the power to direct activities that most significantly impact the performance of the VIE. We have concluded that we are not the primary beneficiary of Oaktown Re and that consolidation is not required, as we do not have significant economic exposure in the entity. See Note 5, " Reinsurance" for further discussion on the reinsurance arrangement. Premiums Receivable Premiums receivable consist of premiums due on our mortgage insurance policies. If a mortgage insurance premium is unpaid for more than 120 days, the receivable is written off against earned premium and the related insurance policy is canceled. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (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. In August 2015, ASU 2015-14 deferred the provisions of ASU 2014-09 to be effective for interim and annual periods beginning after December 15, 2017. In addition, this guidance amends the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer (ASU 2017-05). The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements; however, this update is not expected to impact the recognition of revenue related to insurance premiums or investments, which represent the majority of our total revenues. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires that businesses recognize rights and obligations associated with certain leases as assets and liabilities on the balance sheet.The standard also requires additional disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For public business entities, this update is effective for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption is permitted in any period. We expect to adopt this guidance on January 1, 2019. We anticipate this standard will have an impact on our financial position, primarily due to our office space operating lease, as we will be required to recognize lease assets and lease liabilities on our consolidated balance sheet. We will continue to assess the potential impacts of this standard, including the impact the adoption of this guidance will have on our results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326). This update requires companies to measure all expected credit losses for financial assets held at the reporting date. The accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration also is amended in the standard. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-16, Income Taxes- Intra-Entity Transfers of Assets Other Than Inventory (Topic 740). This update is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted at the beginning of any annual reporting period. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350). This update is intended to simplify the test for goodwill impairment. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, after December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has determined that the adoption of this ASU will have no impact on the consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20). This update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The standard will take effect for public business entities for fiscal years beginning after December 15, 2017. Early adoption is permitted, and if an entity early adopts the guidance in an interim period, any adjustments are reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815). This update is intended to simplify the accounting for certain financial instruments with down round features. This standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. Immaterial Correction of Prior Period Amounts During the first quarter of 2017, after filing its 2016 10-K, including the audited financial statements included therein, the Company discovered that $1.8 million of deferred taxes on vested options associated with employees who had terminated employment in previous years had not been reversed. Because the Company’s deferred tax asset (DTA) was subject to a valuation allowance prior to December 31, 2016, no expense would have been recognized by the Company in periods prior to December 31, 2016. However, at December 31, 2016, when the Company released the valuation allowance against its DTA, the DTA was overstated by $1.8 million . The release of the valuation allowance resulted in a $1.8 million overstatement of the Company’s 2016 income tax benefit and net income. In order to provide consistency in the consolidated statements and as permitted by Staff Accounting Bulletin (SAB) 108, revisions for these immaterial amounts to previously reported annual amounts are reflected in the Consolidated Balance Sheet financial information herein and will be reflected in the Consolidated Statement of Operations in future filings containing such financial information as permitted by SAB 108. A comparison of the affected amounts as previously reported and as adjusted are presented below. As of and for the full year ended December 31, 2016 As previously reported As adjusted (In thousands) Income Statement Net income $ 65,841 $ 64,001 Income tax (benefit) (54,389 ) (52,550 ) Basic EPS 1.11 1.08 Diluted EPS 1.08 1.05 Balance Sheet Deferred tax asset, net $ 53,274 $ 51,434 Total assets 841,737 839,897 Accumulated deficit (94,882 ) (96,722 ) Total shareholder's equity 477,349 475,509 Change in Accounting Principle In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), which intends to simplify various aspects of the accounting for and reporting of share-based payments. The new accounting is required to be adopted using a modified retrospective approach, with a cumulative-effect adjustment to opening retained earnings for any outstanding liability awards that qualify for equity classification under the new guidance. As the guidance is effective for annual and interim reporting periods beginning after December 15, 2016, the Company adopted the new guidance in the first quarter of 2017. This required us to reflect any adjustments as of January 1, 2017, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes in the consolidated statements of operations. Additionally, our consolidated statements of cash flows now present excess tax benefits as an operating activity on a prospective basis. Finally, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The net cumulative effect of this change was recognized as a $0.5 million reduction to the accumulated deficit as of January 1, 2017. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments We have designated our investment portfolio as available-for-sale and report it at fair value. The related unrealized gains and losses are, after considering the related tax expense or benefit, recognized through comprehensive income and loss, and on an accumulated basis in shareholders' equity. Net realized investment gains and losses are reported in income based upon specific identification of securities sold. Fair Values and Gross Unrealized Gains and Losses on Investments Amortized Gross Unrealized Fair Gains Losses As of June 30, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 65,679 $ 31 $ (657 ) $ 65,053 Municipal debt securities 79,154 839 (371 ) 79,622 Corporate debt securities 375,817 4,729 (1,355 ) 379,191 Asset-backed securities 103,242 1,147 (141 ) 104,248 Total bonds 623,892 6,746 (2,524 ) 628,114 Short-term investments 45,471 110 — 45,581 Total investments $ 669,363 $ 6,856 $ (2,524 ) $ 673,695 Amortized Gross Unrealized Fair Gains Losses As of December 31, 2016 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 64,135 $ 6 $ (962 ) $ 63,179 Municipal debt securities 40,801 131 (663 ) 40,269 Corporate debt securities 349,712 1,722 (2,356 ) 349,078 Asset-backed securities 114,456 765 (560 ) 114,661 Total bonds 569,104 2,624 (4,541 ) 567,187 Short-term investments 61,584 198 — 61,782 Total investments $ 630,688 $ 2,822 $ (4,541 ) $ 628,969 As of June 30, 2017 and December 31, 2016 , there were approximately $7.0 million of cash and investments in the form of U.S. Treasury securities on deposit with various state insurance departments to satisfy regulatory requirements. Scheduled Maturities The amortized cost and fair values of available-for -sale securities as of June 30, 2017 and December 31, 2016 , by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category. As of June 30, 2017 Amortized Fair (In Thousands) Due in one year or less $ 124,108 $ 124,153 Due after one through five years 134,052 135,215 Due after five through ten years 297,453 299,591 Due after ten years 10,508 10,488 Asset-backed securities 103,242 104,248 Total investments $ 669,363 $ 673,695 As of December 31, 2016 Amortized Fair (In Thousands) Due in one year or less $ 94,382 $ 94,584 Due after one through five years 173,296 173,251 Due after five through ten years 242,005 240,060 Due after ten years 6,549 6,413 Asset-backed securities 114,456 114,661 Total investments $ 630,688 $ 628,969 Aging of Unrealized Losses As of June 30, 2017 , the investment portfolio had gross unrealized losses of $2.5 million , $0.4 million of which has been in an unrealized loss position for a period of 12 months or greater. We did not consider these securities to be other-than-temporarily impaired as of June 30, 2017 . We based our conclusion that these investments were not other-than-temporarily impaired as of June 30, 2017 on the following facts: (i) the unrealized losses were primarily caused by interest rate movements since the purchase date; (ii) we do not intend to sell these investments; and (iii) we do not believe that it is more likely than not that we will be required to sell these investments before recovery of our amortized cost basis, which may not occur until maturity. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows: Less Than 12 Months 12 Months or Greater Total # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses As of June 30, 2017 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 34 $ 53,299 $ (645 ) 3 $ 4,738 $ (12 ) 37 $ 58,037 $ (657 ) Municipal debt securities 14 26,390 (353 ) 1 1,732 (18 ) 15 28,122 (371 ) Corporate debt securities 49 105,388 (1,066 ) 5 7,916 (289 ) 54 113,304 (1,355 ) Asset-backed securities 12 20,319 (108 ) 4 4,395 (33 ) 16 24,714 (141 ) Total 109 $ 205,396 $ (2,172 ) 13 $ 18,781 $ (352 ) 122 $ 224,177 $ (2,524 ) Less Than 12 Months 12 Months or Greater Total # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses As of December 31, 2016 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 33 $ 51,093 $ (962 ) — $ — $ — 33 $ 51,093 $ (962 ) Municipal debt securities 14 28,659 (617 ) 1 1,704 (46 ) 15 30,363 (663 ) Corporate debt securities 77 135,115 (1,955 ) 8 13,873 (401 ) 85 148,988 (2,356 ) Asset-backed securities 30 38,702 (510 ) 6 2,472 (50 ) 36 41,174 (560 ) Total 154 $ 253,569 $ (4,044 ) 15 $ 18,049 $ (497 ) 169 $ 271,618 $ (4,541 ) The following table presents the components of net investment income: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 (In Thousands) Investment income $ 4,099 $ 3,536 $ 8,092 $ 6,945 Investment expenses (191 ) (194 ) (377 ) (372 ) Net investment income $ 3,908 $ 3,342 $ 7,715 $ 6,573 The following table presents the components of net realized investment gains (losses): For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 (In Thousands) Gross realized investment gains $ 188 $ 61 $ 467 $ 617 Gross realized investment losses — — (337 ) (1,441 ) Net realized investment gains (losses) $ 188 $ 61 $ 130 $ (824 ) Investment Securities - Other-than-Temporary Impairment (OTTI) For the quarter ended June 30, 2017 , we held no other-than-temporarily impaired securities. The impaired security disclosed for the quarter ended March 31, 2017 was liquidated as of June 30, 2017. There were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss). |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following describes the valuation techniques used by us to determine the fair value of our financial instruments: We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this standard are described below: Level 1 - Fair value measurements based on quoted prices in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments. Level 2 - Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 - Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions, which require significant management judgment or estimation about the inputs a hypothetical market participant would use to value that asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assets classified as Level 1 and Level 2 To determine the fair value of securities available-for-sale in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including data published in market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. This model combines all inputs to arrive at a value assigned to each security. We have not made any adjustments to the prices obtained from the independent pricing sources. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the quarter ended June 30, 2017 . Liabilities classified as Level 3 We calculate the fair value of outstanding warrants utilizing level 3 inputs, including a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. Variables in the model include the risk-free rate of return, dividend yield, expected life and expected volatility of our stock price. The following tables present the level within the fair value hierarchy at which the Company’s financial instruments were measured: Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of June 30, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 60,215 $ 4,838 $ — $ 65,053 Municipal debt securities — 79,622 — 79,622 Corporate debt securities — 379,191 — 379,191 Asset-backed securities — 104,248 — 104,248 Cash, cash equivalents and short-term investments 65,616 — — 65,616 Total assets $ 125,831 $ 567,899 $ — $ 693,730 Warrant liability — — 3,544 3,544 Total liabilities $ — $ — $ 3,544 $ 3,544 Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2016 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 50,719 $ 12,460 $ — $ 63,179 Municipal debt securities — 40,269 — 40,269 Corporate debt securities — 349,078 — 349,078 Asset-backed securities — 114,661 — 114,661 Cash, cash equivalents and short-term investments 109,528 — — 109,528 Total assets $ 160,247 $ 516,468 $ — $ 676,715 Warrant liability — — 3,367 3,367 Total liabilities $ — $ — $ 3,367 $ 3,367 There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2017 and the year-end December 31, 2016. The following is a roll-forward of Level 3 liabilities measured at fair value: For the six months ended June 30, Warrant Liability 2017 2016 (In Thousands) Balance, January 1 $ 3,367 $ 1,467 Change in fair value of warrant liability included in earnings 177 (611 ) Balance, June 30 $ 3,544 $ 856 We revalue the warrant liability quarterly using a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. As of June 30, 2017 , the assumptions used in the option-pricing model were as follows: a common stock price as of June 30, 2017 of $11.45 , risk free interest rate of 1.68% , expected life of 3.75 years , expected volatility of 30.6% and a dividend yield of 0% . The change in fair value is primarily attributable to an increase in the price of our common stock from December 31, 2016 to June 30, 2017 . |
Term Loan
Term Loan | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Term Loan | Term Loan On November 10, 2015, we entered into a credit agreement (the Credit Agreement) to obtain a three-year senior secured term loan (the Term Loan) for $150 million . On February 10, 2017, we entered into an amendment to the Credit Agreement, to extend the maturity date of the Term Loan by one year and reduce the interest rate. Based on our analysis, we concluded the amendment to the Credit Agreement should be treated as a modification. As of June 30, 2017 , the Term Loan bears interest at the Eurodollar Rate, as defined in the Credit Agreement and subject to a 1.00% floor, plus an annual margin rate of 6.75% (an all-in rate of 7.87% as of June 30, 2017 ), payable monthly or quarterly based on our interest rate election. Quarterly principal payments of $375 thousand are also required. The outstanding balance of the Term Loan as of June 30, 2017 was $147.4 million . Debt issuance costs totaling $4.8 million , including $370 thousand related to the modification and a 1% original issue discount, are being amortized to interest expense, using the effective interest method, over the contractual life of the Term Loan. Effective interest rate for the Term Loan includes interest, amortization of issuance cost and the discount. For the six months ended June 30, 2017 , we recorded $6.8 million of interest expense, including amortization of the issuance and modification costs and original issue discount. We are subject to certain quarterly covenants under the Credit Agreement. These covenants include, but are not limited to the following: a maximum debt-to-total capitalization ratio (as defined therein) of 35%, maximum risk-to-capital (RTC) ratio of 22.0:1.0, minimum liquidity (as defined therein) of $28.6 million as of June 30, 2017 , compliance with the PMIERs financial requirements (subject to any GSE-approved waivers), and minimum shareholders' equity requirements. This description is not intended to be complete in all respects and is qualified in its entirety by the terms of the Credit Agreement, including its covenants and events of default. We were in compliance with all covenants as of June 30, 2017 . Future principal payments due under the Term Loan as of June 30, 2017 are as follows: As of June 30, 2017 Principal (In thousands) 2017 $ 750 2018 1,500 2019 145,125 Total $ 147,375 |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance We have entered into two third-party reinsurance transactions to actively manage our risk, ensure PMIERs compliance and support the growth of our business. The GSEs and the Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) approved both transactions (subject to certain conditions and their periodic review of the transactions, including levels of approved capital credit). The effect of our reinsurance agreements on premiums written and earned is as follows: For the three months ended For the six months ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 (In Thousands) Net premiums written Direct $ 46,672 $ 48,862 $ 85,916 $ 86,991 Ceded (1) (6,886 ) — (11,527 ) — Net premiums written $ 39,786 $ 48,862 $ 74,389 $ 86,991 Net premiums earned Direct $ 44,233 $ 26,041 $ 81,671 $ 45,848 Ceded (1) (6,316 ) — (10,529 ) — Net premiums earned $ 37,917 $ 26,041 $ 71,142 $ 45,848 (1) Net of profit commission Excess-of-loss reinsurance In May 2017, NMIC entered into a reinsurance agreement with Oaktown Re that provides for up to $211.3 million of aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existing portfolio of mortgage insurance policies written from 2013 through December 31, 2016. For the coverage period, NMIC will retain the first layer of $126.8 million of aggregate losses and Oaktown Re will then provide second layer coverage up to the outstanding reinsurance coverage amount. NMIC will then retain losses in excess of the outstanding reinsurance coverage amount. The outstanding reinsurance coverage amount decreases over a ten-year period as the underlying covered mortgages amortize and was $197.2 million as of June 30, 2017. The outstanding reinsurance coverage amount will stop amortizing if certain credit enhancement or delinquency thresholds are triggered. Oaktown Re financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $211.3 million to unaffiliated investors (the Notes). The Notes mature on April 26, 2027. All of the proceeds paid to Oaktown Re from the sale of the Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re to NMIC under the reinsurance agreement. At all times, funds in the reinsurance trust account are required to be invested in high credit quality money market funds. We refer collectively to NMIC’s reinsurance agreement with Oaktown Re and the issuance of the Notes by Oaktown Re as the 2017 ILN Transaction. Under the terms of the 2017 ILN Transaction, NMIC makes risk premium payments for the applicable outstanding reinsurance coverage amount and pays Oaktown Re for anticipated operating expenses (capped at $300 thousand per year). For the quarter ended June 30, 2017, NMIC paid risk premiums of $1.4 million and did not cede any losses to Oaktown Re. Under the reinsurance agreement, NMIC holds an optional termination right if certain events occur, including, among others, after the reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment adopted by NMIC. In addition, there are certain events that will result in mandatory termination of the agreement, including NMIC’s failure to pay premiums or consent to reductions in the trust account to make principal payments to noteholders, among others. At the time the 2017 ILN Transaction was entered into with Oaktown Re, the Company evaluated the applicability of the accounting guidance that addresses VIEs. As a result of the evaluation of the 2017 ILN Transaction, the Company concluded that Oaktown Re is a VIE. However, given that NMIC does not have significant economic exposure in Oaktown Re, the Company does not consolidate Oaktown Re in its consolidated financial statements. Quota share reinsurance In September 2016, NMIC entered into a quota-share reinsurance transaction with a panel of third-party reinsurers (2016 QSR Transaction). Each of the third-party reinsurers has an insurer financial strength rating of A- or better by Standard and Poor’s Rating Services (S&P), A.M. Best or both. Under the 2016 QSR Transaction, effective September 1, 2016, NMIC ceded premiums related to: • 25% of existing risk written on eligible policies as of August 31, 2016; • 100% of existing risk under our pool agreement with Fannie Mae; and • 25% of risk on eligible policies written from September 1, 2016 through December 31, 2017. The following table shows the amounts related to the 2016 QSR Transaction: For the three months ended For the six months ended June 30, 2017 (In Thousands) Ceded risk-in-force $ 2,403,027 $ 2,403,027 Ceded premiums written (12,034 ) (22,326 ) Ceded premiums earned (11,463 ) (21,328 ) Ceded claims and claims expenses 342 610 Ceding commission written 2,407 4,465 Ceding commission earned 2,275 4,340 Profit commission 6,536 12,187 Ceded premiums written are recorded on the balance sheet as prepaid reinsurance premiums and amortized to ceded premiums earned in a manner consistent with the recognition of income on direct premiums. NMIC receives a 20% ceding commission for premiums ceded pursuant to this transaction. NMIC also receives a profit commission, provided that the loss ratio on the loans covered under the agreement generally remains below 60% , as measured annually. Losses on the ceded risk reduce NMIC's profit commission on a dollar-for-dollar basis. In accordance with the terms of the 2016 QSR Transaction, rather than making a cash payment or transferring investments for ceded premiums written, NMIC established a funds withheld liability, which also includes amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC will be realized from this account until exhausted. NMIC's reinsurance recoverable balance is further supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The reinsurance recoverable on loss reserves related to our 2016 QSR Transaction was $899 thousand as of June 30, 2017 . The agreement is scheduled to terminate on December 31, 2027, except with respect to the ceded pool risk, which is scheduled to terminate on August 31, 2023. However, NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2020, or at the end of any calendar quarter thereafter, which would result in NMIC reassuming the related risk. |
Reserves for Insurance Claims a
Reserves for Insurance Claims and Claims Expenses | 6 Months Ended |
Jun. 30, 2017 | |
Insurance [Abstract] | |
Reserves for Insurance Claims and Claims Expenses | Reserves for Insurance Claims and Claims Expenses We establish reserves to recognize the estimated liability for insurance claims and claim expenses related to defaults on insured mortgage loans. Our method, consistent with industry practice, is to establish reserves only for loans that have been reported to us as having been in default for at least 60 days. Our reserves also include amounts for estimated claims incurred on loans that have been in default for at least 60 days that have not yet been reported to us by the servicers, often referred to as IBNR. As of June 30, 2017 , we had reserves for insurance claims and claims expenses of $5.0 million for 249 primary loans in default. During the first six months of 2017, we paid 12 claims totaling $571 thousand , including one claim covered under the 2016 QSR Transaction. In 2013, we entered into a pool insurance transaction with Fannie Mae. We only establish reserves for pool risk if we expect claims to exceed the deductible under the pool agreement, which represents the amount of claims absorbed by Fannie Mae before we are obligated to pay any claims. At June 30, 2017 , 44 loans in the pool were past due by 60 days or more. These 44 loans represent approximately $2.6 million of risk-in-force (RIF). Due to the size of the remaining deductible of $10.0 million , the low level of notices of default (NODs) reported on loans in the pool through June 30, 2017 and the expected severity (all loans in the pool have loan-to-value ratios (LTVs) under 80% ), we have not established any pool reserves for claims or IBNR for the three and six months ended June 30, 2017 and 2016 . In connection with the settlement of pool claims, we applied $364 thousand to the pool deductible through June 30, 2017 . We have not paid any pool claims to date. 100% of our pool RIF is reinsured under the 2016 QSR Transaction. The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses: For the six months ended June 30, 2017 2016 (In Thousands) Beginning balance $ 3,001 $ 679 Less reinsurance recoverables (1) (297 ) — Beginning balance, net of reinsurance recoverables 2,704 679 Add claims incurred: Claims and claim expenses incurred: Current year (2) 2,331 1,113 Prior years (323 ) (185 ) Total claims and claims expenses incurred 2,008 928 Less claims paid: Claims and claim expenses paid: Current year (2) — — Prior years (3) 563 132 Total claims and claim expenses paid 563 132 Reserve at end of period, net of reinsurance recoverables 4,149 1,475 Add reinsurance recoverables (1) 899 — Balance, June 30 $ 5,048 $ 1,475 (1) Related to ceded losses recoverable on the 2016 QSR Transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheets. See Note 5, "Reinsurance" for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year. (3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time. The “claims incurred” section of the table above shows claims and claim expenses incurred on NODs received in the current year and in prior years and such amounts include IBNR reserves. The amount of claims incurred relating to NODs received in the current year represents the estimated amount to be ultimately paid if such loans in default result in claims. We recognized $323 thousand and $185 thousand of favorable prior year development during the six months ended June 30, 2017 and 2016, respectively, due to NOD cures and ongoing analysis of recent loss development trends. We may increase or decrease our original estimates as we learn additional information about individual defaults and claims. Reserves of $2.1 million related to prior year defaults remained as of June 30, 2017 . |
Earnings (Loss) per Share
Earnings (Loss) per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) per Share | Earnings (Loss) per Share Basic earnings (loss) per share is based on the weighted average number of shares of common stock outstanding, while diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the exercise of stock options, other share-based compensation arrangements, and the dilutive effect of outstanding warrants. The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings (loss) per share of common stock: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 (In Thousands, except for per share data) Net income (loss) $ 6,012 $ 2,011 $ 11,504 $ (1,896 ) Basic earnings (loss) per share $ 0.10 $ 0.03 $ 0.19 $ (0.03 ) Basic weighted average shares outstanding 59,823,396 59,105,613 59,576,747 59,005,983 Dilutive effect of non-vested shares 3,186,966 725,286 3,111,816 — Dilutive weighted average shares outstanding 63,010,362 59,830,899 62,688,563 59,005,983 Diluted earnings (loss) per share $ 0.10 $ 0.03 $ 0.18 $ (0.03 ) For the three and six months ended June 30, 2017 , 834,878 and 834,476 , respectively, and for the three months ended June 30, 2016, 4,049,859 of our common stock equivalents we issued under share-based compensation arrangements were not included in the calculation of diluted earnings per share because they were anti-dilutive. As a result of our net loss for the six months ended June 30, 2016 , 6,614,605 of our common stock equivalents we issued under share-based compensation arrangements and warrants were not included in the calculation of diluted loss per share because they were anti-dilutive. |
Warrants
Warrants | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Warrants | Warrants We issued 992,000 warrants in connection with our Private Placement. Each warrant gives the holder thereof the right to purchase one share of common stock at an exercise price equal to $10.00 . The warrants were issued with an aggregate fair value of $5.1 million . Upon exercise of these warrants, the amounts will be treated as additional paid-in capital. No warrants were exercised during the six months ended June 30, 2017 and 2016 .We account for these warrants to purchase our common shares in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 35% . NMIH files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries. Our provision for income taxes for the interim reporting periods are based on an estimated annual effective tax rate for the year ending December 31, 2017. Our effective tax rate on our pre-tax income was 36.7% and 29.1% for the three and six months ended June 30, 2017 , respectively, compared to 0.0% for the comparable 2016 periods. The increase in the effective tax expense for the three and six months ended June 30, 2017 , against the comparable 2016 periods is attributable to the elimination of tax benefits during the comparable 2016 periods due to the recognition of a full valuation allowance which had been recorded to reflect the amount of the deferred taxes that may not be realized. See Note 1 , "Organization and Basis of Presentation - Immaterial Correction of Prior Period Amounts ” for further details. |
Statutory Information
Statutory Information | 6 Months Ended |
Jun. 30, 2017 | |
Insurance [Abstract] | |
Statutory Information | Statutory Information Our insurance subsidiaries, NMIC and Re One, file financial statements in conformity with statutory accounting principles (SAP) prescribed or permitted by the Wisconsin OCI, NMIC's principal regulator. Prescribed SAP includes state laws, regulations and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners. The Wisconsin OCI recognizes only statutory accounting practices prescribed or permitted by the state of Wisconsin for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under Wisconsin insurance laws. NMIC and Re One's combined statutory net loss, statutory surplus, contingency reserve and RTC ratios were as follows: As of and for the six months and year ended June 30, 2017 December 31, 2016 (In Thousands) Statutory net income (loss) $ (21,706 ) $ (26,653 ) Statutory surplus 390,938 413,809 Contingency reserve 131,314 90,479 Risk-to-Capital 9.8:1 11.6:1 NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware, such as NMIH. Delaware corporation law provides that dividends are only payable out of a corporation's surplus or recent net profits (subject to certain limitations). NMIC and Re One are subject to restrictions on their ability to pay dividends without prior approval of the Wisconsin OCI. Certain other states in which NMIC is licensed also have statutes or regulations that restrict its ability to pay dividends. Since inception, NMIC has not paid any dividends to NMIH. |
Organization and Basis of Pre19
Organization and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2016 , included in our 2016 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2017 . |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs Costs directly associated with the successful acquisition of mortgage insurance policies, consisting of certain selling expenses and other policy issuance and underwriting expenses, are initially deferred and reported as deferred policy acquisition costs (DAC). DAC is reviewed periodically to determine that it does not exceed recoverable amounts and is 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. For each book year of business, these costs are amortized to expense in proportion to estimated gross profits over the estimated life of the policies. |
Premium Deficiency Reserves | Premium Deficiency Reserves We consider whether a premium deficiency exists at each fiscal quarter using best estimate assumptions as of the testing date. Per ASC 944, a premium deficiency reserve shall be recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs and maintenance costs exceeds related unearned premiums and anticipated investment income. |
Reinsurance | Reinsurance We account for premiums, losses and loss expenses that are ceded to reinsurers on bases consistent with those we use to account for the original policies we issue and pursuant to the terms of our reinsurance contracts. We account for premiums ceded or otherwise paid to reinsurers as reductions to premium revenue. We earn profit and ceding commissions in connection with our 2016 QSR Transaction (see Note 5, " Reinsurance" ). Profit commissions represent a percentage of the profits recognized by reinsurers that are returned to us, based on the level of losses we cede. We recognize any profit commissions we earn as increases to premium revenue. Ceding commissions are calculated as a percentage of ceded written premiums, which are intended to cover our costs to acquire and service the direct policies. We earn the ceding commissions in a manner consistent with our recognition of earnings on the underlying insurance policies, over the terms of the policies reinsured. We account for ceding commissions as reductions to underwriting and operating expenses. We cede a portion of loss reserves, paid losses and loss expenses to our reinsurers, which are accounted for as reinsurance recoverables on the consolidated balance sheets and as reductions to loss expense on the consolidated statements of operations. We remain directly liable for all loss payments in the event we are unable to collect from any reinsurer. |
Variable Interest Entity | Variable interest entity In May 2017, NMIC entered into a reinsurance agreement with Oaktown Re Ltd. (Oaktown Re), a Bermuda-domiciled special purpose reinsurer. We have determined that Oaktown Re is a variable interest entity (VIE), as defined under GAAP (ASC 810), because it does not have sufficient equity at risk to finance its activities. We have evaluated the VIE to determine whether NMIC is its primary beneficiary and, if so, whether we would be required to consolidate the assets and liabilities of the VIE. The primary beneficiary of a VIE is an enterprise that (1) has the power to direct the activities of the VIE, which most significantly impact its economic performance and (2) has significant economic exposure to the VIE; i.e., the obligation to absorb losses or receive benefits that could potentially be significant. The determination of whether an entity is the primary beneficiary of a VIE is complex and requires management judgment regarding determinative factors, including the expected results of the VIE and how those results are absorbed by beneficial interest holders, as well as which party has the power to direct activities that most significantly impact the performance of the VIE. |
Premiums Receivable | Premiums Receivable Premiums receivable consist of premiums due on our mortgage insurance policies. If a mortgage insurance premium is unpaid for more than 120 days, the receivable is written off against earned premium and the related insurance policy is canceled. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (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. In August 2015, ASU 2015-14 deferred the provisions of ASU 2014-09 to be effective for interim and annual periods beginning after December 15, 2017. In addition, this guidance amends the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer (ASU 2017-05). The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements; however, this update is not expected to impact the recognition of revenue related to insurance premiums or investments, which represent the majority of our total revenues. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires that businesses recognize rights and obligations associated with certain leases as assets and liabilities on the balance sheet.The standard also requires additional disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For public business entities, this update is effective for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption is permitted in any period. We expect to adopt this guidance on January 1, 2019. We anticipate this standard will have an impact on our financial position, primarily due to our office space operating lease, as we will be required to recognize lease assets and lease liabilities on our consolidated balance sheet. We will continue to assess the potential impacts of this standard, including the impact the adoption of this guidance will have on our results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326). This update requires companies to measure all expected credit losses for financial assets held at the reporting date. The accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration also is amended in the standard. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-16, Income Taxes- Intra-Entity Transfers of Assets Other Than Inventory (Topic 740). This update is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted at the beginning of any annual reporting period. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350). This update is intended to simplify the test for goodwill impairment. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, after December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has determined that the adoption of this ASU will have no impact on the consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20). This update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The standard will take effect for public business entities for fiscal years beginning after December 15, 2017. Early adoption is permitted, and if an entity early adopts the guidance in an interim period, any adjustments are reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815). This update is intended to simplify the accounting for certain financial instruments with down round features. This standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements. |
Earnings Per Share | Basic earnings (loss) per share is based on the weighted average number of shares of common stock outstanding, while diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the exercise of stock options, other share-based compensation arrangements, and the dilutive effect of outstanding warrants. |
Organization and Basis of Pre20
Organization and Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Prior Period Adjustments | A comparison of the affected amounts as previously reported and as adjusted are presented below. As of and for the full year ended December 31, 2016 As previously reported As adjusted (In thousands) Income Statement Net income $ 65,841 $ 64,001 Income tax (benefit) (54,389 ) (52,550 ) Basic EPS 1.11 1.08 Diluted EPS 1.08 1.05 Balance Sheet Deferred tax asset, net $ 53,274 $ 51,434 Total assets 841,737 839,897 Accumulated deficit (94,882 ) (96,722 ) Total shareholder's equity 477,349 475,509 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Fair Values and Gross Unrealized Gains and Losses | Fair Values and Gross Unrealized Gains and Losses on Investments Amortized Gross Unrealized Fair Gains Losses As of June 30, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 65,679 $ 31 $ (657 ) $ 65,053 Municipal debt securities 79,154 839 (371 ) 79,622 Corporate debt securities 375,817 4,729 (1,355 ) 379,191 Asset-backed securities 103,242 1,147 (141 ) 104,248 Total bonds 623,892 6,746 (2,524 ) 628,114 Short-term investments 45,471 110 — 45,581 Total investments $ 669,363 $ 6,856 $ (2,524 ) $ 673,695 Amortized Gross Unrealized Fair Gains Losses As of December 31, 2016 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 64,135 $ 6 $ (962 ) $ 63,179 Municipal debt securities 40,801 131 (663 ) 40,269 Corporate debt securities 349,712 1,722 (2,356 ) 349,078 Asset-backed securities 114,456 765 (560 ) 114,661 Total bonds 569,104 2,624 (4,541 ) 567,187 Short-term investments 61,584 198 — 61,782 Total investments $ 630,688 $ 2,822 $ (4,541 ) $ 628,969 |
Schedule of Investments by Maturity | The amortized cost and fair values of available-for -sale securities as of June 30, 2017 and December 31, 2016 , by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category. As of June 30, 2017 Amortized Fair (In Thousands) Due in one year or less $ 124,108 $ 124,153 Due after one through five years 134,052 135,215 Due after five through ten years 297,453 299,591 Due after ten years 10,508 10,488 Asset-backed securities 103,242 104,248 Total investments $ 669,363 $ 673,695 As of December 31, 2016 Amortized Fair (In Thousands) Due in one year or less $ 94,382 $ 94,584 Due after one through five years 173,296 173,251 Due after five through ten years 242,005 240,060 Due after ten years 6,549 6,413 Asset-backed securities 114,456 114,661 Total investments $ 630,688 $ 628,969 |
Schedule of Aging Unrealized Losses | For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows: Less Than 12 Months 12 Months or Greater Total # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses As of June 30, 2017 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 34 $ 53,299 $ (645 ) 3 $ 4,738 $ (12 ) 37 $ 58,037 $ (657 ) Municipal debt securities 14 26,390 (353 ) 1 1,732 (18 ) 15 28,122 (371 ) Corporate debt securities 49 105,388 (1,066 ) 5 7,916 (289 ) 54 113,304 (1,355 ) Asset-backed securities 12 20,319 (108 ) 4 4,395 (33 ) 16 24,714 (141 ) Total 109 $ 205,396 $ (2,172 ) 13 $ 18,781 $ (352 ) 122 $ 224,177 $ (2,524 ) Less Than 12 Months 12 Months or Greater Total # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses As of December 31, 2016 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 33 $ 51,093 $ (962 ) — $ — $ — 33 $ 51,093 $ (962 ) Municipal debt securities 14 28,659 (617 ) 1 1,704 (46 ) 15 30,363 (663 ) Corporate debt securities 77 135,115 (1,955 ) 8 13,873 (401 ) 85 148,988 (2,356 ) Asset-backed securities 30 38,702 (510 ) 6 2,472 (50 ) 36 41,174 (560 ) Total 154 $ 253,569 $ (4,044 ) 15 $ 18,049 $ (497 ) 169 $ 271,618 $ (4,541 ) |
Net Investment Income | The following table presents the components of net investment income: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 (In Thousands) Investment income $ 4,099 $ 3,536 $ 8,092 $ 6,945 Investment expenses (191 ) (194 ) (377 ) (372 ) Net investment income $ 3,908 $ 3,342 $ 7,715 $ 6,573 |
Net Realized Investments Gains (Losses) | The following table presents the components of net realized investment gains (losses): For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 (In Thousands) Gross realized investment gains $ 188 $ 61 $ 467 $ 617 Gross realized investment losses — — (337 ) (1,441 ) Net realized investment gains (losses) $ 188 $ 61 $ 130 $ (824 ) |
Fair Value of Financial Instr22
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following tables present the level within the fair value hierarchy at which the Company’s financial instruments were measured: Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of June 30, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 60,215 $ 4,838 $ — $ 65,053 Municipal debt securities — 79,622 — 79,622 Corporate debt securities — 379,191 — 379,191 Asset-backed securities — 104,248 — 104,248 Cash, cash equivalents and short-term investments 65,616 — — 65,616 Total assets $ 125,831 $ 567,899 $ — $ 693,730 Warrant liability — — 3,544 3,544 Total liabilities $ — $ — $ 3,544 $ 3,544 Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2016 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 50,719 $ 12,460 $ — $ 63,179 Municipal debt securities — 40,269 — 40,269 Corporate debt securities — 349,078 — 349,078 Asset-backed securities — 114,661 — 114,661 Cash, cash equivalents and short-term investments 109,528 — — 109,528 Total assets $ 160,247 $ 516,468 $ — $ 676,715 Warrant liability — — 3,367 3,367 Total liabilities $ — $ — $ 3,367 $ 3,367 |
Roll-Forward of Level 3 Liabilities Measured at Fair Value | The following is a roll-forward of Level 3 liabilities measured at fair value: For the six months ended June 30, Warrant Liability 2017 2016 (In Thousands) Balance, January 1 $ 3,367 $ 1,467 Change in fair value of warrant liability included in earnings 177 (611 ) Balance, June 30 $ 3,544 $ 856 |
Term Loan (Tables)
Term Loan (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Future Principal Payments | Future principal payments due under the Term Loan as of June 30, 2017 are as follows: As of June 30, 2017 Principal (In thousands) 2017 $ 750 2018 1,500 2019 145,125 Total $ 147,375 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Reinsurance Disclosures [Abstract] | |
Effects of Reinsurance | The effect of our reinsurance agreements on premiums written and earned is as follows: For the three months ended For the six months ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 (In Thousands) Net premiums written Direct $ 46,672 $ 48,862 $ 85,916 $ 86,991 Ceded (1) (6,886 ) — (11,527 ) — Net premiums written $ 39,786 $ 48,862 $ 74,389 $ 86,991 Net premiums earned Direct $ 44,233 $ 26,041 $ 81,671 $ 45,848 Ceded (1) (6,316 ) — (10,529 ) — Net premiums earned $ 37,917 $ 26,041 $ 71,142 $ 45,848 (1) Net of profit commission The following table shows the amounts related to the 2016 QSR Transaction: For the three months ended For the six months ended June 30, 2017 (In Thousands) Ceded risk-in-force $ 2,403,027 $ 2,403,027 Ceded premiums written (12,034 ) (22,326 ) Ceded premiums earned (11,463 ) (21,328 ) Ceded claims and claims expenses 342 610 Ceding commission written 2,407 4,465 Ceding commission earned 2,275 4,340 Profit commission 6,536 12,187 |
Reserves for Insurance Claims25
Reserves for Insurance Claims and Claims Expenses (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Insurance [Abstract] | |
Reconciliation of Liability for Insurance Claims and Claims Expenses | The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses: For the six months ended June 30, 2017 2016 (In Thousands) Beginning balance $ 3,001 $ 679 Less reinsurance recoverables (1) (297 ) — Beginning balance, net of reinsurance recoverables 2,704 679 Add claims incurred: Claims and claim expenses incurred: Current year (2) 2,331 1,113 Prior years (323 ) (185 ) Total claims and claims expenses incurred 2,008 928 Less claims paid: Claims and claim expenses paid: Current year (2) — — Prior years (3) 563 132 Total claims and claim expenses paid 563 132 Reserve at end of period, net of reinsurance recoverables 4,149 1,475 Add reinsurance recoverables (1) 899 — Balance, June 30 $ 5,048 $ 1,475 (1) Related to ceded losses recoverable on the 2016 QSR Transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheets. See Note 5, "Reinsurance" for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year. (3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time. |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings (loss) per share of common stock: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 (In Thousands, except for per share data) Net income (loss) $ 6,012 $ 2,011 $ 11,504 $ (1,896 ) Basic earnings (loss) per share $ 0.10 $ 0.03 $ 0.19 $ (0.03 ) Basic weighted average shares outstanding 59,823,396 59,105,613 59,576,747 59,005,983 Dilutive effect of non-vested shares 3,186,966 725,286 3,111,816 — Dilutive weighted average shares outstanding 63,010,362 59,830,899 62,688,563 59,005,983 Diluted earnings (loss) per share $ 0.10 $ 0.03 $ 0.18 $ (0.03 ) |
Statutory Information (Tables)
Statutory Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Insurance [Abstract] | |
Schedule of Statutory Net Loss, Surplus, Contingency Reserve and Risk-to-Capital Ratio | NMIC and Re One's combined statutory net loss, statutory surplus, contingency reserve and RTC ratios were as follows: As of and for the six months and year ended June 30, 2017 December 31, 2016 (In Thousands) Statutory net income (loss) $ (21,706 ) $ (26,653 ) Statutory surplus 390,938 413,809 Contingency reserve 131,314 90,479 Risk-to-Capital 9.8:1 11.6:1 |
Organization and Basis of Pre28
Organization and Basis of Presentation (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2013shares | Apr. 30, 2012USD ($)shares | Jun. 30, 2017USD ($)state | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)state | Jun. 30, 2016USD ($) | |
Business Acquisition [Line Items] | ||||||
Proceeds from issuance of common stock, net of stock issuance costs | $ 510,000,000 | |||||
Number of states in which the entity operates | state | 50 | 50 | ||||
Deferred policy acquisition cost, amortization expense | $ 1,300,000 | $ 1,300,000 | $ 2,300,000 | $ 2,200,000 | ||
Premium deficiency reserve | $ 0 | $ 0 | $ 0 | $ 0 | ||
Common Stock - Class A | ||||||
Business Acquisition [Line Items] | ||||||
Stock issued during period, shares, net issues (in shares) | shares | 55,000,000 | |||||
MAC Financial Holding Corporation and Subsidiaries | ||||||
Business Acquisition [Line Items] | ||||||
Consideration transferred, cash and equity interests issued and issuable | $ 8,500,000 | |||||
Consideration transferred, liabilities incurred | $ 1,300,000 | |||||
IPO | ||||||
Business Acquisition [Line Items] | ||||||
Stock issued during period, shares, net issues (in shares) | shares | 2,400,000 |
Organization and Basis of Pre29
Organization and Basis of Presentation - Prior Period Adjustment (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net income | $ 6,012 | $ 2,011 | $ 11,504 | $ (1,896) | $ 64,001 | |
Income tax (benefit) | $ 3,484 | $ 0 | $ 4,732 | $ 0 | $ (52,550) | |
Basic EPS (in dollars per share) | $ 0.10 | $ 0.03 | $ 0.19 | $ (0.03) | $ 1.08 | |
Diluted EPS (in dollars per share) | $ 0.10 | $ 0.03 | $ 0.18 | $ (0.03) | $ 1.05 | |
Deferred tax asset, net | $ 45,771 | $ 45,771 | $ 51,434 | |||
Total assets | 862,995 | 862,995 | 839,897 | |||
Accumulated deficit | (84,703) | (84,703) | (96,722) | |||
Total shareholder's equity | $ 495,040 | $ 495,040 | 475,509 | $ 402,731 | ||
Previously Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net income | 65,841 | |||||
Income tax (benefit) | $ (54,389) | |||||
Basic EPS (in dollars per share) | $ 1.11 | |||||
Diluted EPS (in dollars per share) | $ 1.08 | |||||
Deferred tax asset, net | $ 53,274 | |||||
Total assets | 841,737 | |||||
Accumulated deficit | (94,882) | |||||
Total shareholder's equity | 477,349 | |||||
Restatement Adjustment | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Deferred tax asset, net | $ (1,800) |
Organization and Basis of Pre30
Organization and Basis of Presentation - Change in Accounting Principle (Details) $ in Thousands | Dec. 31, 2016USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect adjustment | $ 903 |
Accumulated Deficit | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect adjustment | 515 |
ASU No. 2016-09 | Accumulated Deficit | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect adjustment | $ 500 |
Investments - Fair Values and G
Investments - Fair Values and Gross Unrealized Gains and Losses on Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 669,363 | $ 630,688 |
Gross Unrealized Gains | 6,856 | 2,822 |
Gross Unrealized (Losses) | (2,524) | (4,541) |
Fair Value | 673,695 | 628,969 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 65,679 | 64,135 |
Gross Unrealized Gains | 31 | 6 |
Gross Unrealized (Losses) | (657) | (962) |
Fair Value | 65,053 | 63,179 |
Municipal debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 79,154 | 40,801 |
Gross Unrealized Gains | 839 | 131 |
Gross Unrealized (Losses) | (371) | (663) |
Fair Value | 79,622 | 40,269 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 375,817 | 349,712 |
Gross Unrealized Gains | 4,729 | 1,722 |
Gross Unrealized (Losses) | (1,355) | (2,356) |
Fair Value | 379,191 | 349,078 |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 103,242 | 114,456 |
Gross Unrealized Gains | 1,147 | 765 |
Gross Unrealized (Losses) | (141) | (560) |
Fair Value | 104,248 | 114,661 |
Bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 623,892 | 569,104 |
Gross Unrealized Gains | 6,746 | 2,624 |
Gross Unrealized (Losses) | (2,524) | (4,541) |
Fair Value | 628,114 | 567,187 |
Short-term investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 45,471 | 61,584 |
Gross Unrealized Gains | 110 | 198 |
Gross Unrealized (Losses) | 0 | 0 |
Fair Value | $ 45,581 | $ 61,782 |
Investments - Scheduled Maturit
Investments - Scheduled Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Amortized Cost | ||
Due in one year or less | $ 124,108 | $ 94,382 |
Due after one through five years | 134,052 | 173,296 |
Due after five through ten years | 297,453 | 242,005 |
Due after ten years | 10,508 | 6,549 |
Asset-backed securities | 103,242 | 114,456 |
Amortized Cost | 669,363 | 630,688 |
Fair Value | ||
Due in one year or less | 124,153 | 94,584 |
Due after one through five years | 135,215 | 173,251 |
Due after five through ten years | 299,591 | 240,060 |
Due after ten years | 10,488 | 6,413 |
Asset-backed securities | 104,248 | 114,661 |
Fair Value | $ 673,695 | $ 628,969 |
Investments - Unrealized Losses
Investments - Unrealized Losses (Details) $ in Thousands | Jun. 30, 2017USD ($)security | Dec. 31, 2016USD ($)security |
Schedule of Available-for-sale Securities [Line Items] | ||
Number of securities, less than 12 months | security | 109 | 154 |
Fair value, less than 12 months | $ 205,396 | $ 253,569 |
Unrealized losses, less than 12 months | $ (2,172) | $ (4,044) |
Number of securities,12 months or greater | security | 13 | 15 |
Fair value, 12 months or greater | $ 18,781 | $ 18,049 |
Unrealized losses, 12 months or greater | $ (352) | $ (497) |
Number of securities, total | security | 122 | 169 |
Fair value | $ 224,177 | $ 271,618 |
Unrealized Losses | $ (2,524) | $ (4,541) |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Number of securities, less than 12 months | security | 34 | 33 |
Fair value, less than 12 months | $ 53,299 | $ 51,093 |
Unrealized losses, less than 12 months | $ (645) | $ (962) |
Number of securities,12 months or greater | security | 3 | 0 |
Fair value, 12 months or greater | $ 4,738 | $ 0 |
Unrealized losses, 12 months or greater | $ (12) | $ 0 |
Number of securities, total | security | 37 | 33 |
Fair value | $ 58,037 | $ 51,093 |
Unrealized Losses | $ (657) | $ (962) |
Municipal debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Number of securities, less than 12 months | security | 14 | 14 |
Fair value, less than 12 months | $ 26,390 | $ 28,659 |
Unrealized losses, less than 12 months | $ (353) | $ (617) |
Number of securities,12 months or greater | security | 1 | 1 |
Fair value, 12 months or greater | $ 1,732 | $ 1,704 |
Unrealized losses, 12 months or greater | $ (18) | $ (46) |
Number of securities, total | security | 15 | 15 |
Fair value | $ 28,122 | $ 30,363 |
Unrealized Losses | $ (371) | $ (663) |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Number of securities, less than 12 months | security | 49 | 77 |
Fair value, less than 12 months | $ 105,388 | $ 135,115 |
Unrealized losses, less than 12 months | $ (1,066) | $ (1,955) |
Number of securities,12 months or greater | security | 5 | 8 |
Fair value, 12 months or greater | $ 7,916 | $ 13,873 |
Unrealized losses, 12 months or greater | $ (289) | $ (401) |
Number of securities, total | security | 54 | 85 |
Fair value | $ 113,304 | $ 148,988 |
Unrealized Losses | $ (1,355) | $ (2,356) |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Number of securities, less than 12 months | security | 12 | 30 |
Fair value, less than 12 months | $ 20,319 | $ 38,702 |
Unrealized losses, less than 12 months | $ (108) | $ (510) |
Number of securities,12 months or greater | security | 4 | 6 |
Fair value, 12 months or greater | $ 4,395 | $ 2,472 |
Unrealized losses, 12 months or greater | $ (33) | $ (50) |
Number of securities, total | security | 16 | 36 |
Fair value | $ 24,714 | $ 41,174 |
Unrealized Losses | $ (141) | $ (560) |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Investment Income, Net [Abstract] | ||||
Investment income | $ 4,099 | $ 3,536 | $ 8,092 | $ 6,945 |
Investment expenses | (191) | (194) | (377) | (372) |
Net investment income | $ 3,908 | $ 3,342 | $ 7,715 | $ 6,573 |
Investments - Net Realized Inve
Investments - Net Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Gross realized investment gains | $ 188 | $ 61 | $ 467 | $ 617 |
Gross realized investment losses | 0 | 0 | (337) | (1,441) |
Net realized investment gains (losses) | $ 188 | $ 61 | $ 130 | $ (824) |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Unrealized loss position, accumulated loss | $ 2,524 | $ 4,541 |
Unrealized loss position, 12 months or greater | 352 | 497 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash and investments held with various state insurance departments | 7,000 | 7,000 |
Unrealized loss position, accumulated loss | 657 | 962 |
Unrealized loss position, 12 months or greater | $ 12 | $ 0 |
Fair Value of Financial Instr37
Fair Value of Financial Instruments - Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 673,695 | $ 628,969 |
Warrant liability | 3,544 | 3,367 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 65,053 | 63,179 |
Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 79,622 | 40,269 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 379,191 | 349,078 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 104,248 | 114,661 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 65,616 | 109,528 |
Total assets | 693,730 | 676,715 |
Warrant liability | 3,544 | 3,367 |
Total liabilities | 3,544 | 3,367 |
Fair Value, Measurements, Recurring | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 65,053 | 63,179 |
Fair Value, Measurements, Recurring | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 79,622 | 40,269 |
Fair Value, Measurements, Recurring | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 379,191 | 349,078 |
Fair Value, Measurements, Recurring | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 104,248 | 114,661 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 65,616 | 109,528 |
Total assets | 125,831 | 160,247 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 60,215 | 50,719 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 0 | 0 |
Total assets | 567,899 | 516,468 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 4,838 | 12,460 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 79,622 | 40,269 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 379,191 | 349,078 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 104,248 | 114,661 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 0 | 0 |
Total assets | 0 | 0 |
Warrant liability | 3,544 | 3,367 |
Total liabilities | 3,544 | 3,367 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 0 | $ 0 |
Fair Value of Financial Instr38
Fair Value of Financial Instruments - Rollforward of Level 3 (Details) - Significant Unobservable Inputs (Level 3) - Warrant Liability - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 3,367 | $ 1,467 |
Change in fair value of warrant liability included in earnings | 177 | (611) |
Ending balance | $ 3,544 | $ 856 |
Fair Value of Financial Instr39
Fair Value of Financial Instruments - Narrative (Details) - Warrant Liability - Significant Unobservable Inputs (Level 3) | 6 Months Ended |
Jun. 30, 2017$ / shares | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Share price (in dollars per share) | $ 11.45 |
Risk free rate | 1.68% |
Expected term | 3 years 9 months |
Volatility assumption | 30.60% |
Expected dividend rate | 0.00% |
Term Loan - Narrative (Details)
Term Loan - Narrative (Details) - USD ($) | Feb. 10, 2017 | Nov. 10, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Feb. 10, 2017 |
Debt Instrument [Line Items] | |||||||
Term loan | $ 147,375,000 | $ 147,375,000 | |||||
Debt issuance cost | 370,000 | $ 0 | |||||
Interest expense | 3,300,000 | $ 3,707,000 | 6,794,000 | $ 7,339,000 | |||
Senior Secured Debt | Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument term | 3 years | ||||||
Debt instrument, face amount | $ 150,000,000 | ||||||
Debt instrument, extension of term | 1 year | ||||||
Periodic payment of principal | 375,000 | ||||||
Term loan | $ 147,400,000 | $ 147,400,000 | |||||
Debt issuance cost | $ 370,000 | $ 4,800,000 | |||||
Percentage of debt discount | 1.00% | ||||||
Debt instrument covenant, maximum debt-to-total capitalization ratio | 35.00% | ||||||
Debt instrument covenant, maximum risk-to-capital ratio | 22 | ||||||
Debt instrument covenant, minimum liquidity requirement | $ 28,600,000 | ||||||
Senior Secured Debt | Credit Agreement | Eurodollar | |||||||
Debt Instrument [Line Items] | |||||||
Variable rate floor | 1.00% | ||||||
Basis spread on variable rate | 6.75% | ||||||
Interest rate during period | 7.87% |
Term Loan - Schedule of Future
Term Loan - Schedule of Future Principal Payments (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Future Principal Payments [Abstract] | |
2,017 | $ 750 |
2,018 | 1,500 |
2,019 | 145,125 |
Total | $ 147,375 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) $ in Thousands | Jun. 30, 2017USD ($)transaction | Sep. 01, 2016 | May 31, 2017USD ($) | Jun. 30, 2017USD ($)transaction | Jun. 30, 2017USD ($)transaction | Dec. 31, 2016USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) |
Ceded Credit Risk [Line Items] | ||||||||
Number of third-party reinsurance transactions, Number | transaction | 2 | 2 | 2 | |||||
Reinsurance recoverable on unpaid claims | $ 899 | $ 899 | $ 899 | $ 297 | $ 0 | $ 0 | ||
Mortgage-linked Debt | 2017 ILN Notes | Oaktown Re Ltd | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Proceeds from issuance of notes | $ 211,300 | |||||||
Third-Party Reinsurers | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Ceding commissions under 2016 QSR Transaction | 20.00% | |||||||
Threshold for loss ratio on loans under 2016 QSR Transaction to qualify for profit commission | 60.00% | |||||||
Reinsurance recoverable on unpaid claims | 899 | 899 | 899 | |||||
Third-Party Reinsurers | 2017 ILN Transaction | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Aggregate excess of loss reinsurance coverage | $ 197,200 | 211,300 | ||||||
Aggregate excess of loss reinsurance retained by company | $ 126,800 | |||||||
Risk premiums paid | $ 1,400 | |||||||
Third-Party Reinsurers | 2017 ILN Transaction | Maximum | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Anticipated payment related annual operating expenses | $ 300 | |||||||
Third-Party Reinsurers | Existing Risk Written Policies | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Percent of policies ceded under 2016 QSR Transaction | 25.00% | |||||||
Third-Party Reinsurers | Fannie Mae | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Percent of policies ceded under 2016 QSR Transaction | 100.00% | |||||||
Third-Party Reinsurers | Risk Written Policies from September 1, 2016 through December 31, 2017 | ||||||||
Ceded Credit Risk [Line Items] | ||||||||
Percent of policies ceded under 2016 QSR Transaction | 25.00% |
Reinsurance - Effect of Reinsur
Reinsurance - Effect of Reinsurance on Net Premiums Written and Earned (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net premiums written | ||||
Direct | $ 46,672 | $ 48,862 | $ 85,916 | $ 86,991 |
Ceded | (6,886) | 0 | (11,527) | 0 |
Net premiums written | 39,786 | 48,862 | 74,389 | 86,991 |
Net premiums earned | ||||
Direct | 44,233 | 26,041 | 81,671 | 45,848 |
Ceded | (6,316) | 0 | (10,529) | 0 |
Net premiums earned | $ 37,917 | $ 26,041 | $ 71,142 | $ 45,848 |
Reinsurance - Amounts Ceded Rel
Reinsurance - Amounts Ceded Related to 2016 QSR Transaction (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Ceded Credit Risk [Line Items] | ||||
Ceded premiums written | $ (6,886) | $ 0 | $ (11,527) | $ 0 |
Ceded premiums earned | (6,316) | $ 0 | (10,529) | $ 0 |
Third-Party Reinsurers | ||||
Ceded Credit Risk [Line Items] | ||||
Ceded risk-in-force | 2,403,027 | 2,403,027 | ||
Ceded premiums written | (12,034) | (22,326) | ||
Ceded premiums earned | (11,463) | (21,328) | ||
Ceded claims and claims expenses | 342 | 610 | ||
Ceding commission written | 2,407 | 4,465 | ||
Ceding commission earned | 2,275 | 4,340 | ||
Profit commission | $ 6,536 | $ 12,187 |
Reserves for Insurance Claims45
Reserves for Insurance Claims and Claims Expenses - Narrative (Details) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2017USD ($)loanclaim | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
IBNR, default period (at least) | 60 days | |||
Total gross liability for unpaid claims and claim adjustment expenses | $ 5,048 | $ 1,475 | $ 3,001 | $ 679 |
Primary loans in default | loan | 249 | |||
Number of claims paid | claim | 12 | |||
Claims paid, including amounts covered by insurance | $ 571 | |||
Favorable prior year development | 323 | $ 185 | ||
Reserve for prior year insurance claims and claim expenses | $ 2,100 | |||
Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of loans in pool past due 60 days or more | loan | 44 | |||
Risk-in-Force of loans in pool past due 60 days or more | $ 2,600 | |||
Deductible on policy | $ 10,000 | |||
Loan-to-value ratio (less than) | 0.8 | |||
Claims applied to pool deductible | $ 364 |
Reserves for Insurance Claims46
Reserves for Insurance Claims and Claims Expenses - Reconciliation of Reserve Balances for Insurance Claims Expense (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | $ 3,001 | $ 679 |
Less reinsurance recoverables | 297 | 0 |
Beginning balance, net of reinsurance recoverables | 2,704 | 679 |
Claims incurred: | ||
Current year | 2,331 | 1,113 |
Prior years | (323) | (185) |
Total claims and claims expenses incurred | 2,008 | 928 |
Claims and claim expenses paid: | ||
Current year | 0 | 0 |
Prior years | 563 | 132 |
Total claims and claim expenses paid | 563 | 132 |
Ending balance, net of reinsurance recoverables | 4,149 | 1,475 |
Add reinsurance recoverables | 899 | 0 |
Reserve at end of period, net of reinsurance recoverables | $ 5,048 | $ 1,475 |
Earnings (Loss) per Share (Deta
Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||||
Net income (loss) | $ 6,012 | $ 2,011 | $ 11,504 | $ (1,896) | $ 64,001 |
Basic earnings (loss) per share (in dollars per share) | $ 0.10 | $ 0.03 | $ 0.19 | $ (0.03) | $ 1.08 |
Basic weighted average shares outstanding (in shares) | 59,823,396 | 59,105,613 | 59,576,747 | 59,005,983 | |
Dilutive effect of non-vested shares (in shares) | 3,186,966 | 725,286 | 3,111,816 | 0 | |
Dilutive weighted average shares outstanding (in shares) | 63,010,362 | 59,830,899 | 62,688,563 | 59,005,983 | |
Diluted earnings (loss) per share (in dollars per share) | $ 0.10 | $ 0.03 | $ 0.18 | $ (0.03) | $ 1.05 |
Earnings (Loss) per Share - Nar
Earnings (Loss) per Share - Narrative (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from EPS calculation (in shares) | 834,878 | 4,049,859 | 834,476 | |
Share-based Compensation Arrangement and Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from EPS calculation (in shares) | 6,614,605 |
Warrants (Details)
Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Apr. 30, 2012 | |
Debt Disclosure [Abstract] | |||
Warrants issued (in shares) | 992,000 | ||
Right to purchase, number of shares per warrant | 1 | ||
Exercise price of warrants (in dollars per warrant) | $ 10 | ||
Warrants value | $ 5.1 | ||
Number of warrants exercised during period | 0 | 0 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Federal statutory income tax rate | 35.00% | |||
Effective income tax rate on pre-tax income or loss | 36.70% | 0.00% | 29.10% | 0.00% |
Statutory Information - Schedul
Statutory Information - Schedule of Statutory Net Loss, Surplus, and Contingency Reserve (Details) - Combined $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Statutory Accounting Practices [Line Items] | ||
Statutory net income (loss) | $ (21,706) | $ (26,653) |
Statutory surplus | 390,938 | 413,809 |
Contingency reserve | $ 131,314 | $ 90,479 |
Risk-to-Capital | 9.8 | 11.6 |