Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 13, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NMI HOLDINGS, INC. | ||
Entity Central Index Key | 1,547,903 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 671,117,064 | ||
Entity Common Stock, Shares Outstanding | 60,610,731 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Fixed maturities, available-for-sale, at fair value (amortized cost of $713,859 and $630,688 as of December 31, 2017 and December 31, 2016, respectively) | $ 715,875 | $ 628,969 |
Cash and cash equivalents | 19,196 | 47,746 |
Premiums receivable | 25,179 | 13,728 |
Accrued investment income | 4,212 | 3,421 |
Prepaid expenses | 2,151 | 1,991 |
Deferred policy acquisition costs, net | 37,925 | 30,109 |
Software and equipment, net | 22,802 | 20,402 |
Intangible assets and goodwill | 3,634 | 3,634 |
Prepaid reinsurance premiums | 40,250 | 37,921 |
Deferred tax asset, net | 19,929 | 51,434 |
Other assets | 3,695 | 542 |
Total assets | 894,848 | 839,897 |
Liabilities | ||
Term loan | 143,882 | 144,353 |
Unearned premiums | 163,166 | 152,906 |
Accounts payable and accrued expenses | 23,364 | 25,297 |
Reserve for insurance claims and claim expenses | 8,761 | 3,001 |
Reinsurance funds withheld | 34,102 | 30,633 |
Deferred ceding commission | 5,024 | 4,831 |
Warrant liability, at fair value | 7,472 | 3,367 |
Total liabilities | 385,771 | 364,388 |
Commitments and contingencies | ||
Shareholders' equity | ||
Common stock - class A shares, $0.01 par value; 60,517,512 and 59,145,161 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively (250,000,000 shares authorized) | 605 | 591 |
Additional paid-in capital | 585,488 | 576,927 |
Accumulated other comprehensive loss, net of tax | (2,859) | (5,287) |
Accumulated deficit | (74,157) | (96,722) |
Total shareholders' equity | 509,077 | 475,509 |
Total liabilities and shareholders' equity | $ 894,848 | $ 839,897 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Fixed maturity, amortized cost | $ 713,859 | $ 630,688 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 60,517,512 | 59,145,161 |
Common stock, shares outstanding (in shares) | 60,517,512 | 59,145,161 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | |||||||||||
Net premiums earned | $ 50,079 | $ 44,519 | $ 37,917 | $ 33,225 | $ 32,825 | $ 31,808 | $ 26,041 | $ 19,807 | $ 165,740 | $ 110,481 | $ 45,506 |
Net investment income | 4,388 | 4,170 | 3,908 | 3,807 | 3,634 | 3,544 | 3,342 | 3,231 | 16,273 | 13,751 | 7,246 |
Net realized investment gains (losses) | 9 | 69 | 188 | (58) | 65 | 66 | 61 | (885) | 208 | (693) | 831 |
Other revenues | 62 | 195 | 185 | 80 | 105 | 102 | 37 | 32 | 522 | 276 | 25 |
Total revenues | 182,743 | 123,815 | 53,608 | ||||||||
Expenses | |||||||||||
Insurance claims and claims expenses | 2,374 | 957 | 1,373 | 635 | 800 | 664 | 470 | 458 | 5,339 | 2,392 | 650 |
Underwriting and operating expenses | 28,297 | 24,645 | 28,048 | 25,989 | 23,281 | 24,037 | 23,234 | 22,671 | 106,979 | 93,223 | 80,599 |
Total expenses | 112,318 | 95,615 | 81,249 | ||||||||
Other expense | |||||||||||
(Loss) gain from change in fair value of warrant liability | (3,426) | (502) | 19 | (196) | (1,714) | (797) | (59) | 670 | (4,105) | (1,900) | 1,905 |
Interest expense | (3,382) | (3,352) | (3,300) | (3,494) | (3,776) | (3,733) | (3,707) | (3,632) | (13,528) | (14,848) | (2,057) |
Total other expense | (17,633) | (16,748) | (152) | ||||||||
Income (loss) before income taxes | 17,059 | 19,497 | 9,496 | 6,740 | 7,059 | 6,289 | 2,011 | (3,907) | 52,792 | 11,452 | (27,793) |
Income tax expense (benefit) | 18,825 | 7,185 | 3,484 | 1,248 | (52,663) | 114 | 0 | 0 | 30,742 | (52,549) | 0 |
Net income (loss) | $ (1,766) | $ 12,312 | $ 6,012 | $ 5,492 | $ 59,722 | $ 6,175 | $ 2,011 | $ (3,907) | $ 22,050 | $ 64,001 | $ (27,793) |
Earnings (loss) per share | |||||||||||
Earnings (loss) per share, basic (in dollars per share) | $ (0.03) | $ 0.21 | $ 0.10 | $ 0.09 | $ 1.01 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.37 | $ 1.08 | $ (0.47) |
Earnings (loss) per share, diluted (in dollars per share) | $ (0.03) | $ 0.20 | $ 0.10 | $ 0.09 | $ 0.98 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.35 | $ 1.05 | $ (0.47) |
Weighted average common shares outstanding | |||||||||||
Weighted average common shares outstanding, basic (in shares) | 60,219 | 59,884 | 59,823 | 59,184 | 59,140 | 59,130 | 59,106 | 58,937 | 59,816 | 59,071 | 58,683 |
Weighted average common shares outstanding, diluted (in shares) | 60,219 | 63,089 | 63,010 | 62,339 | 61,229 | 60,285 | 59,831 | 58,937 | 62,186 | 60,829 | 58,683 |
Other comprehensive income (loss), net of tax: | |||||||||||
Net unrealized gains (losses) in accumulated other comprehensive income, net of tax expense of $1,234, $1,178, and $0 for each of the years in the three-year period ended December 31, 2017, respectively | $ 2,559 | $ 1,429 | $ (3,518) | ||||||||
Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $73, $0, and $0 for each of the years in the three-years ended December 31, 2017, respectively | (131) | 758 | (349) | ||||||||
Other comprehensive income (loss), net of tax | 2,428 | 2,187 | (3,867) | ||||||||
Comprehensive income (loss) | $ 24,478 | $ 66,188 | $ (31,660) |
CONSOLIDATED STATEMENTS OF COM5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Change in unrealized investment gains (losses), tax amount | $ 1,234 | $ 1,178 | $ 0 |
Reclassification adjustment from AOCI for sale of securities, tax | $ 73 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock - Class A | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance at Dec. 31, 2014 | $ 426,958 | $ 584 | $ 562,911 | $ (3,607) | $ (132,930) |
Beginning balance (in shares) at Dec. 31, 2014 | 58,429,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | (690) | $ 4 | (694) | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 379,000 | ||||
Share-based compensation expense | 8,123 | 8,123 | |||
Change in unrealized investment gains/losses, net of tax expense ($1,307 in 2017; $1,178 in 2016; $0 in 2015) | (3,867) | (3,867) | |||
Net income (loss) | (27,793) | (27,793) | |||
Ending balance at Dec. 31, 2015 | 402,731 | $ 588 | 570,340 | (7,474) | (160,723) |
Ending balance (in shares) at Dec. 31, 2015 | 58,808,000 | ||||
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) | 337,000 | ||||
Share-based compensation expense | 6,814 | 6,814 | |||
Change in unrealized investment gains/losses, net of tax expense ($1,307 in 2017; $1,178 in 2016; $0 in 2015) | 2,187 | 2,187 | |||
Net income (loss) | 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 | 59,145,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of change in accounting principle | 903 | 388 | 515 | ||
Common stock: class A shares issued related to warrants | $ 183 | 183 | |||
Common stock: class A shares issued related to warrants (in shares) | 32,000 | 32,368 | |||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ (1,480) | $ 14 | (1,494) | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 1,341,000 | ||||
Share-based compensation expense | 9,484 | 9,484 | |||
Change in unrealized investment gains/losses, net of tax expense ($1,307 in 2017; $1,178 in 2016; $0 in 2015) | 2,428 | 2,428 | |||
Net income (loss) | 22,050 | 22,050 | |||
Ending balance at Dec. 31, 2017 | $ 509,077 | $ 605 | $ 585,488 | $ (2,859) | $ (74,157) |
Ending balance (in shares) at Dec. 31, 2017 | 60,518,000 |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Change in unrealized investment gains/losses, tax amount | $ 1,307 | $ 1,178 | $ 0 |
Common stock: class A shares issued related to warrants (in shares) | 32,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common Stock - Class A | |||
Common stock: class A shares issued related to warrants (in shares) | 32,368 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net income (loss) | $ 22,050 | $ 64,001 | $ (27,793) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Net realized investment (gains) losses | (208) | 693 | (831) |
Loss (gain) from change in fair value of warrant liability | 4,105 | 1,900 | (1,905) |
Depreciation and amortization | 6,663 | 5,660 | 4,861 |
Net amortization of premium on investment securities | 1,599 | 1,259 | 0 |
Amortization of debt discount and debt issuance costs | 1,473 | 1,914 | 251 |
Deferred income taxes | 31,102 | (52,909) | 0 |
Share-based compensation expense | 9,484 | 6,854 | 8,174 |
Changes in operating assets and liabilities: | |||
Accrued investment income | (11,451) | (8,585) | (4,095) |
Premiums receivable | (791) | (548) | (1,166) |
Prepaid expenses | (160) | (563) | 626 |
Deferred policy acquisition costs, net | (7,816) | (12,579) | (14,545) |
Other assets | (3,153) | (452) | 419 |
Unearned premiums | 10,260 | 62,133 | 68,704 |
Reserve for insurance claims and claim expenses | 5,760 | 2,322 | 596 |
Reinsurance balances, net | 1,332 | (2,456) | 0 |
Accounts payable and accrued expenses | (2,486) | 3,300 | 8,167 |
Net cash provided by operating activities | 67,763 | 71,944 | 41,463 |
Cash flows from investing activities | |||
Purchase of short-term investments | (131,196) | (170,067) | (21,160) |
Purchase of fixed-maturity investments, available-for-sale | (219,079) | (143,568) | (343,771) |
Proceeds from maturity of short-term investments | 170,278 | 129,033 | 0 |
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 95,435 | 116,281 | 140,901 |
Software and equipment | (8,510) | (11,471) | (6,135) |
Net cash used in provided by investing activities | (93,072) | (79,792) | (230,165) |
Cash flows from financing activities | |||
Taxes paid related to net share settlement of equity awards | (8,582) | (755) | (1,105) |
Proceeds from issuance of common stock related to employee equity plans | 7,103 | 532 | 415 |
Proceeds from issuance of common stock related to warrants | 183 | 0 | 0 |
Proceeds from term loan, net of discount | 0 | 0 | 148,500 |
Repayments of term loan | (1,500) | (1,500) | (375) |
Payments of debt modification costs | (445) | 0 | (4,437) |
Net cash (used in) provided by financing activities | (3,241) | (1,723) | 142,998 |
Net decrease in cash and cash equivalents | (28,550) | (9,571) | (45,704) |
Cash and cash equivalents, beginning of period | 47,746 | 57,317 | 103,021 |
Cash and cash equivalents, end of period | 19,196 | 47,746 | 57,317 |
Supplemental disclosures of cash flow information | |||
Interest paid | 13,355 | 9,669 | 5 |
Income taxes paid | $ 1,220 | $ 200 | $ 0 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 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 to mortgage loan originators. Basis of Presentation The accompanying consolidated financial statements include the results of NMIH and its wholly owned subsidiaries. All inter-company transactions have been eliminated. These financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) and our accounts are maintained in US dollars. 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. |
Summary of Accounting Policies
Summary of Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Accounting Principles | Summary of Accounting Principles Insurance Premium Revenue Recognition Premiums for primary mortgage insurance policies may be paid in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium), with such election and payment type fixed at policy inception. Premiums written at origination for single premium policies are initially deferred as unearned premiums and amortized into earnings over the estimated policy life, in accordance with the anticipated expiration of risk. Monthly premiums are recognized as revenue in the month billed and when the coverage is effective. Annual premiums are initially deferred and earned on a straight-line basis over the year of coverage. Premiums written on pool transactions are earned over the period that coverage is provided. Upon cancellation of a policy, all remaining non-refundable deferred and unearned premium is immediately earned, and any refundable premium is returned to the policyholder. Premiums returned to policyholders are recorded as a reduction of written and earned premiums in the current period. For the year ended December 31, 2017 , one customer represented 11% of our consolidated revenues. At December 31, 2017 , approximately 14% of our total risk-in-force (RIF) was concentrated in California. Use of Estimates We use accounting principles and methods that conform to GAAP. Where GAAP specifically excludes mortgage insurance we follow general industry practices. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. Reserves for Insurance Claims and Claims Expenses Consistent with industry practice, we establish reserves for claims based on our best estimate of ultimate claim costs for defaulted loans using the general principles contained in Accounting Standards Committee (ASC) 944, Financial Services - Insurance (ASC 944). We establish reserves for loans that have been in default for at least 60 days. Reserves for claims and allocated claims expenses, referred to as case reserves, are established when we are notified of defaults by loan servicers. Additional claims reserves, referred to as IBNR reserves, are established for loans that we estimate (based on actuarial review) have been in default for at least 60 days, but have not yet been reported to us as such by servicers. We also establish reserves for unallocated claims expenses not associated with specific claims. Claims expenses represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claims settlement process. The establishment of claims and claims expense reserves is subject to inherent uncertainty and requires significant judgment by management. Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of the claim payment expected to be paid on each such loan in default, which is referred to as claim severity. Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, size of the loan and LTV ratios, and are strongly influenced by prevailing economic conditions, such as mortgage rates, trends in unemployment and house price appreciation. We conduct an annual actuarial review to evaluate and, if necessary, update these assumptions. Investments We have designated our investment portfolio as available-for-sale and report it at fair value. The related unrealized gains and losses, after considering the related tax expense or benefit, are recognized as a component of accumulated other comprehensive income (loss) in shareholders' equity. Net realized investment gains and losses are reported in income based on specific identification of securities sold, and are reclassified out of accumulated other comprehensive income (loss). We measure fair value and classify invested assets in a hierarchy for disclosure purposes consisting of three "levels" based on the observability of inputs available in the marketplace used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). See " Note 4, Fair Value of Financial Instruments " for further discussion. Purchases and sales of investments are recorded on a trade date basis. Net investment income is recognized when earned, and includes interest and dividend income together with amortization of market premiums and discounts using the effective yield method, and is net of investment management fees and other investment related expenses. For asset-backed securities and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the change in effective yields and maturities are recognized on a prospective basis through yield adjustments. Each quarter, we evaluate our investments to determine whether declines in fair value below amortized cost were considered other-than-temporary in accordance with applicable guidance. Under the current guidance, a debt security impairment is deemed other-than-temporary if (i) we either intend to sell the security or it is more likely than not that we will be required to sell the security before recovery or (ii) we do not expect to collect cash flows sufficient to recover the amortized cost basis of the security. In evaluating whether a decline in fair value is other-than-temporary, we consider several factors including, but not limited to: • our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery; • severity and duration of the decline in fair value; • the financial condition of the issuer; • the failure of the issuer to make scheduled interest or principal payments; • recent credit downgrades of the applicable security or the issuer below investment grade; and • adverse conditions specifically related to the security, an industry, or a geographic area. We consider items such as commercial paper with original maturities of 90 days or less to be short-term investments. 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 for each of the three years in the three-years period ended December 31, 2017 , 2016 and 2015, net of a portion of ceding commission related to the 2016 QSR Transaction (see Note 6, " Reinsurance " ) , was $5.8 million , $4.3 million and $2.8 million , 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 future premiums, existing reserves and anticipated investment income. We have determined that no premium deficiency reserves were necessary for any of the years in the three years period ended December 31, 2017 . Reinsurance We account for premiums, claims and claims 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 6, " Reinsurance " ). Profit commissions represent a percentage of the profits recognized by reinsurers that are returned to us, based on the level of claims 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 earned as reductions to underwriting and operating expenses. We cede a portion of claims and claims expenses reserves to our reinsurers, which are accounted for as reinsurance recoverables in "Other Assets" on the consolidated balance sheets and as reductions to claims 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. Income Taxes We account for income taxes using the liability method in accordance with ASC Topic 740, Income Taxes . The liability method measures the expected future tax effects of temporary differences at the enacted tax rates applicable for the period in which the deferred asset or liability is expected to be realized or settled. Temporary differences are differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements that would result in future increases or decreases in taxes owed on a cash basis compared to amounts already recognized as tax expense in the consolidated statement of operations. Warrants We account for 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 . Our outstanding warrants may be settled by us using either (i) physical settlement method or (ii) cashless exercise, where shares that are issued upon exercise of the warrants are reduced, to cover the cost of the exercise, in lieu of the holder remitting a cash payment of the exercise price. The warrants expire and are not exercisable after the 10th anniversary of the date the warrant was issued. The exercise price and the number of warrants are subject to anti-dilution provisions whereby the existing exercise price is adjusted downward, and the number of warrants increased, for events that may not be dilutive. The adjustment may be in excess of any dilution suffered. As a result, the warrants are classified as a liability. We revalue the warrants at the end of each reporting period, and any change in fair value is reported in the statements of operations in the period in which the change occurred. We calculated the fair value of the warrants using a Black-Scholes option-pricing model in combination with a binomial model. Share-Based Compensation We account for stock compensation in accordance with ASC 718, Compensation - Stock Compensation , which addresses accounting for share-based awards and recognition of compensation expense, measured using grant date fair value, over the requisite service or performance period of the award. Share-based compensation includes restricted stock unit (RSU) and stock option grants under the NMI Holdings, Inc. 2012 Stock Incentive Plan (2012 Plan) and the NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan (Amended 2014 Plan), which amended and restated the NMI Holdings, Inc. 2014 Omnibus Incentive Plan (2014 Plan). We calculate the fair value of stock option grants using a Black-Scholes option pricing model, which takes into account various subjective assumptions. Key assumptions used in the model include the expected volatility of our stock price, dividend yield and the risk-free interest rate, as well as the expected option term, giving consideration to the contractual terms of any award and the effects of expected exercise and post-vesting termination behavior. RSU grants to employees may contain a service condition, market and service condition or performance and service condition. RSU grants to employees with a service or a performance condition and RSU grants to non-employee directors are valued at our stock price on the date of grant less the present value of anticipated dividends. The fair value of RSU grants to employees with a market condition is determined based on a Monte Carlo simulation model at the date of grant. Earnings per Share Basic earnings (loss) per share is based on the weighted-average number of common shares outstanding, while diluted earnings (loss) per share is based on the weighted-average number of common shares outstanding and common share equivalents that would be issuable upon the vesting of existing service based RSUs, and exercise of vested and unvested stock options and outstanding warrants. Cash and Cash Equivalents We consider items such as certificates of deposit and money market funds with original maturities of 90 days or less to be cash equivalents. Software and Equipment We capitalize certain costs associated with the development of internal-use software and equipment. Software and equipment are stated at cost, less accumulated amortization and depreciation. Amortization of software and depreciation of equipment commences at the beginning of the month following our placement of the assets into use. Amortization and depreciation are calculated on a straight-line basis over the estimated useful life of the respective assets, typically from 3 to 7 years, unless factors indicate a shorter useful life. For further detail, see " Note 12, Software and Equipment. " Business Combinations, Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired from a business combination. In accordance with ASC 350, Intangibles - Goodwill and Other , we test goodwill for impairment during the third quarter each year, or more frequently if we believe indicators of impairment exist. We have not identified any impairments of goodwill through December 31, 2017. Our intangible assets consist of state licenses and GSE applications which have indefinite lives. We test indefinite-lived intangible assets for impairment during the fourth quarter of each year or more frequently if we believe indicators of impairment exist. We have not identified any impairments of indefinite-lived intangible assets through December 31, 2017. 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. We have determined that the receivable write-off was immaterial as of December 31, 2017. Variable interest entity In May 2017, NMIC entered into a reinsurance agreement with Oaktown Re Ltd. (Oaktown Re), a Bermuda-domiciled special purpose reinsurer. At inception of the reinsurance agreement, we determined that Oaktown Re was a variable interest entity (VIE), as defined under GAAP (ASC 810), because it did not have sufficient equity at risk to finance its activities. We evaluated the VIE to determine whether NMIC was its primary beneficiary and, if so, whether we were 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 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 6, " Reinsurance " for further discussion of the reinsurance arrangement. 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 December 2016, the FASB clarified that all contracts that are within the scope of Topic 944, Financial Services-Insurance , are excluded from the scope of ASU 2014-09. Accordingly, this update will not impact the recognition of revenue related to insurance premiums or investment income, which represent a majority of our total revenues. The adoption of this update for our loan review services revenue (our only revenue stream in scope), effective January 1, 2018, will be done using the modified-retrospective approach and is immaterial to our consolidated financial statements. 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. In September 2017, ASU 2017-13, added guidance from an SEC Staff Announcement, "Transition Related to Accounting Standards Update No. 2016-02." 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 standard also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact the adoption of this ASU will have, if any, on our 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. We have determined that the adoption of this update, effective January 1, 2018, will have no impact on our 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. The adoption of this update, effective January 1, 2018, will have no impact on our 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. We have determined that the adoption of this ASU will have no impact on our 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 adoption of this update, effective January 1, 2018, will have no impact on our 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 equity-linked financial instruments. 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. The guidance must be applied using a full or modified retrospective approach. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. Immaterial Correction of Prior Period Amounts During the first quarter of 2017, after filing the 2016 10-K, including the audited financial statements included therein, we discovered that $1.8 million of deferred taxes on vested options associated with employees terminated in previous years had not been reversed. Because our deferred tax asset (DTA) was subject to a valuation allowance prior to December 31, 2016, no expense would have been recognized in periods prior to December 31, 2016. However, at December 31, 2016, when we released the valuation allowance against the DTA, the DTA was overstated by $1.8 million and resulted in a $1.8 million overstatement of our 2016 income tax benefit and net income. 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 in the Consolidated Statements of Operations. 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 ) (52,549 ) 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 shareholders' equity 477,349 475,509 Statement of Cash Flows Net income $ 65,841 $ 64,001 Deferred income taxes (54,749 ) (52,909 ) Footnote 11. Income Taxes Reconciliation between the statutory to effective income tax (benefit) rate: Valuation allowance (527.0 )% (511.1 )% Effective income tax rate (474.9 )% (459.0 )% Components of net deferred income tax asset (liability): Share-based compensation $ 11,231 $ 9,080 Valuation allowance (7,252 ) (6,941 ) Net deferred income tax asset (liability) 53,274 51,434 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, we 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. Subsequent Events NMIC entered into its second quota share reinsurance treaty with a broad panel of highly rated reinsurers that will take effect January 1, 2018 (2018 QSR Transaction). Under the 2018 QSR Transaction, NMIC agrees to cede 25% of its eligible policies written in 2018 and 20% to 30% (amount at NMIC's sole election, to be exercised no later than December 1, 2018) of eligible policies written in 2019. The Company will receive a ceding commission equal to 20% of ceded premiums earned, as well as a profit commission equal to 61% of ceded premiums earned, reduced by any losses ceded under the treaty. The 2018 QSR Transaction is scheduled to terminate on December 31, 2029. |
Investments
Investments | 12 Months Ended |
Dec. 31, 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 on specific identification of securities sold. Fair Values and Gross Unrealized Gains and Losses on Investments Amortized Gross Unrealized Fair Gains Losses As of December 31, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 65,669 $ — $ (981 ) $ 64,688 Municipal debt securities 89,973 534 (659 ) 89,848 Corporate debt securities 435,562 4,231 (1,958 ) 437,835 Asset-backed securities 100,153 916 (125 ) 100,944 Total bonds 691,357 5,681 (3,723 ) 693,315 Long-term investments - other 353 — — 353 Short-term investments 22,149 58 — 22,207 Total investments $ 713,859 $ 5,739 $ (3,723 ) $ 715,875 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 December 31, 2017 and December 31, 2016 , approximately $7.0 million and $6.9 million of our cash and investments were held 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 December 31, 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 December 31, 2017 Amortized Fair (In Thousands) Due in one year or less $ 97,406 $ 97,394 Due after one through five years 195,795 195,626 Due after five through ten years 305,798 306,930 Due after ten years 14,707 14,981 Asset-backed securities 100,153 100,944 Total investments $ 713,859 $ 715,875 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 December 31, 2017 , the investment portfolio had gross unrealized losses of $3.7 million , $2.2 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 December 31, 2017 . We based our conclusion that these investments were not other-than-temporarily impaired as of December 31, 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 December 31, 2017 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 16 $ 29,806 $ (394 ) 26 $ 34,882 $ (587 ) 42 $ 64,688 $ (981 ) Municipal debt securities 21 38,628 (264 ) 10 17,945 (395 ) 31 56,573 (659 ) Corporate debt securities 94 128,313 (829 ) 23 48,978 (1,129 ) 117 177,291 (1,958 ) Asset-backed securities 22 27,947 (63 ) 5 12,438 (62 ) 27 40,385 (125 ) Total 153 $ 224,694 $ (1,550 ) 64 $ 114,243 $ (2,173 ) 217 $ 338,937 $ (3,723 ) 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 year ended December 31, 2017 2016 2015 (In Thousands) Investment income $ 17,046 14,503 7,729 Investment expenses (773 ) (752 ) (483 ) Net investment income $ 16,273 $ 13,751 $ 7,246 The following table presents the components of net realized investment gains (losses): For the year ended December 31, 2017 2016 2015 (In Thousands) Gross realized investment gains $ 546 748 1,526 Gross realized investment losses (338 ) (1,441 ) (695 ) Net realized investment gains (losses) $ 208 $ (693 ) $ 831 Investment Securities - Other-than-Temporary Impairment (OTTI) As of December 31, 2017 and 2016, we held no other-than-temporarily impaired securities. For the year ended December 31, 2017, we recognized OTTI losses in earnings of $144 thousand in the first quarter related to a single security with an unfavorable recovery forecast. The impaired security was liquidated in the second quarter. There were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss). For the year ended December 31, 2015, we recognized an OTTI loss in earnings of $89 thousand due to a planned sale that we expected would result in a loss. The impaired security was liquidated in February 2016. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 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 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. 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 our financial instruments were measured: Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 59,844 $ 4,844 $ — $ 64,688 Municipal debt securities — 89,848 — 89,848 Corporate debt securities — 437,835 — 437,835 Asset-backed securities — 100,944 — 100,944 Long-term investments - other 353 — — 353 Cash, cash equivalents and short-term investments 41,403 — — 41,403 Total assets $ 101,600 $ 633,471 $ — $ 735,071 Warrant liability — — 7,472 7,472 Total liabilities $ — $ — $ 7,472 $ 7,472 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, nor any transfers in or out of Level three, of the fair value hierarchy during the years ended December 31, 2017 and 2016. The following is a roll-forward of Level 3 liabilities measured at fair value: For the year ended December 31, 2017 2016 2015 (In Thousands) Balance, January 1, $ 3,367 $ 1,467 $ 3,372 Change in fair value of warrant liability included in earnings 4,105 1,900 (1,905 ) Balance, December 31 $ 7,472 $ 3,367 $ 1,467 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. The following table outlines the key inputs and assumptions used in the option-pricing model as of the dates indicated. As of December 31, 2017 2016 2015 Common Stock Price $ 17.00 $ 10.65 $ 6.77 Risk free interest rate 1.99 % 1.78 % 1.91 % Expected life 3.07 years 4.33 years 5.92 years Expected volatility 30.6 % 32.7 % 32.7 % Dividend yield 0% 0% 0% The changes in fair value of the warrant liability for the years ended December 31, 2017, 2016 and 2015 are primarily attributable to changes in the price of our common stock during the respective periods. |
Term Loan
Term Loan | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Term Loan | Term Loan On November 10, 2015, we entered into a credit agreement (the Credit Agreement) to obtain a $150 million three -year senior secured term loan (the Term Loan). On February 10, 2017, we amended the Credit Agreement (Amendment No. 1) to reduce the interest rate and extend the maturity date of the Term Loan from November 10, 2018 to November 10, 2019. On October 25, 2017, we further amended the Credit Agreement (Amendment No. 2) to remove a covenant that required NMIH to maintain liquidity (as defined therein) in an aggregate amount no less than all remaining interest payments due under the Term Loan. As modified by Amendment No. 2, the Credit Agreement retains a requirement that NMIH maintain liquidity in an aggregate amount no less than the sum of all remaining principal amortization payments due under the Term Loan, excluding principal scheduled to be paid on its maturity date. We have concluded that the amendments to the Credit Agreement should be treated as modifications. As of December 31, 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% , representing an all-in rate of 8.23% , 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 December 31, 2017 was $147 million . Debt issuance costs totaling $4.9 million , including $445 thousand related to Amendment No.1 and Amendment No.2 modifications 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. Interest expense for the Term Loan includes interest and amortization of issuance costs, modification costs and the original issue discount. For the twelve months ended December 31, 2017 , we recorded $13.5 million of interest expense. We are subject to various covenants under the amended Credit Agreement, which 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 $2.6 million as of December 31, 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 amended Credit Agreement, including its covenants and events of default. We were in compliance with all covenants as of December 31, 2017 . Future principle payments for the Term Loan as of December 31, 2017 are as follows: As of December 31, 2017 Principal (In thousands) 2018 1,500 2019 $ 145,125 Total $ 146,625 |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance We enter into third-party reinsurance transactions to actively manage our risk, ensure PMIERs compliance and support the growth of our business. The GSEs and the Wisconsin OCI have approved all such transactions (subject to certain conditions and periodic ongoing review, including levels of approved capital credit). The effect of our reinsurance agreements on premiums written and earned is as follows: For the year ended December 31, 2017 December 31, 2016 December 31, 2015 (In Thousands) Net premiums written Direct $ 202,586 $ 177,962 $ 114,210 Ceded (1) (28,914 ) (43,270 ) — Net premiums written $ 173,672 $ 134,692 $ 114,210 Net premiums earned Direct $ 192,326 $ 115,830 $ 45,506 Ceded (1) (26,586 ) (5,349 ) — Net premiums earned $ 165,740 $ 110,481 $ 45,506 (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 reinsurance 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 from $211.3 million at inception over a ten -year period as the underlying covered mortgages amortize and/or are repaid, and was $177 million as of December 31, 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 its anticipated operating expenses (capped at $300 thousand per year). For the year ended December 31, 2017 , NMIC paid risk premiums of $5.0 million . NMIC 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, a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment afforded to NMIC under the agreement. 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, we evaluated the applicability of the accounting guidance that addresses VIEs. As a result of the evaluation of the 2017 ILN Transaction, we concluded that Oaktown Re is a VIE. However, given that NMIC does not have significant economic exposure in Oaktown Re, we do not consolidate Oaktown Re in our 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 year ended December 31, 2017 December 31, 2016 (In Thousands) Ceded risk-in-force $ 2,983,353 $ 2,008,385 Ceded premiums written (51,948 ) (50,553 ) Ceded premiums earned (49,619 ) (12,632 ) Ceded claims and claims expenses 1,687 297 Ceding commission written 10,390 10,111 Ceding commission earned 9,806 2,303 Profit commission 28,084 7,283 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. Ceded claims and claims expenses 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 $1.9 million as of December 31, 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. |
Reserve for Insurance Claims an
Reserve for Insurance Claims and Claim Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Insurance [Abstract] | |
Reserves for Insurance Claims and Claim Expenses | Reserves for Insurance Claims and Claim Expenses We establish reserves to recognize the estimated liability for insurance claims and claim expenses related to defaults on insured mortgage loans. Consistent with industry practice, we establish reserves for loans that have been reported to us by servicers as having been in default for at least 60 days, referred to as case reserves, and additional loans that we estimate (based on actuarial review) have been in default for at least 60 days that have not yet been reported to us by servicers, referred to as IBNR reserves. We also establish claims expense reserves, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claims settlement process. As of December 31, 2017 , we had reserves for insurance claims and claims expenses of $8.8 million for 928 primary loans in default. For the year ended 2017, we paid 27 claims totaling $1.3 million , including nine claims ceded under the 2016 QSR Transaction representing $81 thousand of ceded claims and claims expenses. In 2013, we entered into a pool insurance transaction with Fannie Mae. The pool transaction includes a deductible, which represents the amount of claims to be absorbed by Fannie Mae before we are obligated to pay any claims. We only establish reserves for pool risk if we expect claims to exceed this deductible. At December 31, 2017 , 66 loans in the pool were past due by 60 days or more. These 66 loans represented approximately $4.3 million of RIF. Due to the size of the remaining deductible, the low level of notices of default (NODs) reported on loans in the pool through December 31, 2017 and the expected severity (all loans in the pool have loan-to-value (LTV) ratios under 80% ,) we did not have any case or IBNR reserves for pool risks at December 31, 2017 or December 31, 2016. In connection with the settlement of pool claims, we applied $368 thousand to the pool deductible through December 31, 2017 . At December 31, 2017, the remaining pool deductible was $10.0 million . 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 claim expenses: For the year ended December 31, 2017 December 31, 2016 December 31, 2015 (In Thousands) Beginning balance $ 3,001 $ 679 $ 83 Less reinsurance recoverables (1) (297 ) — — Beginning balance, net of reinsurance recoverables 2,704 679 83 Add claims incurred: Claims and claim expenses incurred: Current year (2) 6,140 2,457 699 Prior years (3) (801 ) (65 ) (49 ) Total claims and claims expenses incurred 5,339 2,392 650 Less claims paid: Claims and claim expenses paid: Current year (2) 27 171 50 Prior years (3) 1,157 196 4 Total claims and claim expenses paid 1,184 367 54 Reserve at end of period, net of reinsurance recoverables 6,859 2,704 679 Add reinsurance recoverables (1) 1,902 297 — Ending balance $ 8,761 $ 3,001 $ 679 (1) Related to ceded losses recoverable on the 2016 QSR Transaction, included in "Other Assets" on the Consolidated Balance Sheets. See Note 6, " 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 for current and prior years, including IBNR reserves. The amount of claims incurred relating to current year NODs represents the estimated amount of claims and claims expenses to be ultimately paid on such loans in default. We recognized $801 thousand , $65 thousand , and $ 49 thousand of favorable prior year development related to claims incurred in prior years during the year ended December 31, 2017, 2016 and 2015, 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 and continue to observe and analyze loss development trends in our portfolio. Gross reserves of $1.0 million related to prior year defaults remained as of December 31, 2017 . The following tables provide claim development data, by accident year and a reconciliation to the reserve for insurance claims and claims expenses. Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance (1) As of December 31, 2017 Accident Year 2013 2014 2015 2016 2017 Total of IBNR NODs (2) ($ Values In Thousands) 2013 $ — $ — $ — $ — $ — — 2014 83 34 4 4 — — 2015 699 664 743 2 3 2016 2,394 1,568 16 32 2017 6,028 452 893 Total $ 8,343 $ 470 928 (1) Amounts include case and IBNR reserves. (2) The number of NODs outstanding as of December 31, 2017 is the total number of loans in default over 60 days for which we have established reserves. Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance Accident Year 2013 2014 2015 2016 2017 (In Thousands) 2013 $ — $ — $ — $ — $ — 2014 — 4 4 4 2015 50 246 684 2016 171 890 2017 27 Total $ 1,605 Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses (In Thousands) As of December 31, 2017 Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance $ 8,343 Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance (1,605 ) Liabilities for unpaid claims and allocated claims adjustment expenses, net of reinsurance 6,738 Reinsurance recoverable on unpaid claims 1,902 Unallocated claims adjustment expenses 121 Total gross liability for unpaid claims and claim adjustment expenses $ 8,761 The following table shows, on average, the percentage of claims and allocated claims adjustment expenses paid over the years after a claim is incurred. Average annual percentage payout of incurred claims and allocated claims adjustment expenses by age, net of reinsurance Year 1 Year 2 Year 3 Year 4 Year 5 Claims duration disclosure 6% 57 % 59 % — % — % |
Earnings (Loss) Per Share (EPS)
Earnings (Loss) Per Share (EPS) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share (EPS) | Earnings (Loss) per Share (EPS) 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 vesting of service based RSUs, and exercise of vested and unvested stock options and outstanding warrants. The following table reconciles the net income (loss) 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 year ended December 31, 2017 2016 2015 (In Thousands, except for per share data) Basic net income (loss) $ 22,050 $ 64,001 $ (27,793 ) Basic weighted average shares outstanding 59,816 59,071 58,683 Basic earnings (loss) per share $ 0.37 $ 1.08 $ (0.47 ) Diluted net income (loss) $ 22,050 $ 64,001 $ (27,793 ) Basic weighted average shares outstanding 59,816 59,071 58,683 Dilutive effect of issuable shares 2,370 1,758 — Diluted weighted average shares outstanding 62,186 60,829 58,683 Diluted earnings (loss) per share $ 0.35 $ 1.05 $ (0.47 ) Anti-dilutive securities 995 4,764 6,267 |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Warrants | Warrants We issued 992 thousand 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 . During the year ended December 31, 2017, 55 thousand warrants were exercised resulting in 32 thousand common shares issued. No warrants were exercised during the years ended 2016 and 2015. 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. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation Share-based compensation includes stock options and restricted stock units (RSUs) granted under the 2012 Plan and the Amended 2014 Plan. The 2012 Plan was approved by the Board on April 16, 2012 and authorized 5.5 million shares of common stock to be reserved for issuance, with 3.85 million shares available for stock options and 1.65 million shares available for RSUs. Options granted under the 2012 Plan are non-qualified stock options and may be granted to employees, directors and other key persons. The exercise price per share for options covered by the 2012 Plan is determined by the Board at the time of grant, but shall not be less than the fair market value of our common stock, defined as the closing price of our common stock, on the date of the grant. The term of the stock option grants is established by the Board, but no stock option shall be exercisable more than ten years after the date the stock option is granted. The vesting period of the stock option grants is also established by the Board at the time of grant and generally is for a three -year period. Upon the exercise of stock options, we issue shares from the authorized, unissued share reserve. The 2014 Plan was approved by our stockholders at our annual meeting on May 8, 2014. The 2014 Plan authorized 4.0 million shares of common stock to be reserved for issuance. On May 11, 2017, our stockholders approved the Amended 2014 Plan at our annual stockholder meeting. The Amended 2014 Plan authorized an additional 2.0 million shares of common stock for issuance and, when taken together with the 2014 Plan, authorized a total of 6.0 million shares of common stock to be reserved for issuance. These shares may be either authorized but unissued shares or treasury shares. A summary of option activity during the years ended December 31, 2017, December 31, 2016, and December 31, 2015 is as follows: For the year ended December 31, 2017 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2016 3,026 $ 3.97 $ 10.27 Options granted 574 3.89 11.06 Options exercised (273 ) 3.93 10.17 Options forfeited (1 ) 4.97 12.32 Options expired (15 ) 4.76 12.02 Options outstanding at December 31, 2017 3,311 3.95 $ 10.41 For the year ended December 31, 2016 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2015 3,851 $ 3.94 $ 10.21 Options granted — — — Options exercised — — — Options forfeited (41 ) 3.33 8.92 Options expired (784 ) 3.87 10.06 Options outstanding at December 31, 2016 3,026 $ 3.97 $ 10.27 For the Year Ended December 31, 2015 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2014 3,630 $ 4.16 $ 10.66 Options granted 789 3.06 8.49 Options exercised — — — Options forfeited (64 ) 4.90 12.20 Options expired (504 ) 4.05 10.48 Options outstanding at December 31, 2015 3,851 $ 3.94 $ 10.21 As of December 31, 2017 , there were approximately 2.6 million fully vested and exercisable options. There were 272.8 thousand exercises during the year with an aggregate intrinsic value of $1.3 million . The weighted average exercise price for the fully vested and exercisable options was $10.39 . The remaining weighted average contractual life of fully vested and exercisable options as of December 31, 2017 was 5.2 years. The aggregate grant date intrinsic value of fully vested and exercisable options was $17.0 million as of December 31, 2017 . As of December 31, 2017 , there was $1.1 million of total unrecognized compensation cost related to non-vested stock options. The weighted-average period over which total remaining compensation costs related to non-vested stock options will be recognized is 1.52 years. We account for stock options under ASC 718, which requires all share-based payments to be recognized in the financial statements at their fair values. To measure the fair value of outstanding stock options granted or modified, we utilize the Black-Scholes options pricing model. Compensation expenses are recognized over the requisite service period, which is generally the three -year vesting period of the options (vesting in one-third increments per year). The estimated grant date fair values of the stock options granted during the years ended December 31, 2017 and 2015 were calculated using the Black-Scholes valuation model based on the following assumptions. There were no stock options granted during 2016. As of December 31, 2017 2016 2015 Expected life 6 years — 6 years Risk free interest rate 2.04%-2.08% — % 1.65%-1.78% Dividend yield — % — % — % Expected stock price volatility 30.5%-32.7% — % 34.4 % Projected forfeiture rate — % — % 7.50 % Expected Life - is the period of time over which the options granted are expected to remain outstanding giving consideration to vesting schedules, historical exercise and forfeiture patterns. We use the simplified method outlined in SEC Staff Accounting Bulletin No. 107 to estimate expected life for options granted during the period as historical exercise data is not available and the options meet the requirements set out in the Bulletin. Options granted have a maximum term of ten years. Risk-Free Interest Rate - is the U.S. Treasury rate on the date of the grant having a term approximating the expected life of the option. Dividend Yield - is calculated by dividing the expected annual dividend by our stock price at the valuation date. Expected Price Volatility - is a measure of the amount by which a price has fluctuated or is expected to fluctuate. At the time of grants, our common shares' trading history was not sufficient to calculate an expected volatility representative of the volatility over the expected lives of the options. As a substitute for such estimate, we used historical volatilities of a set of comparable companies in the industry in which we operate. Projected Forfeiture Rate - is the estimated percentage of options granted that are expected to be forfeited or canceled before becoming fully vested. An increase in the forfeiture rate will decrease compensation expense. In the first quarter of 2017, we adopted ASU 2016-09 and elected to account for forfeitures as they occur, rather than estimate expected forfeitures. A summary of RSU activity during the years ended December 31, 2017 , 2016 and 2015 are as follows: For the year ended December 31, 2017 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2016 2,538 $ 6.01 Restricted stock units granted 988 11.22 Restricted stock units vested (1,367 ) 6.67 Restricted stock units forfeited (94 ) 8.96 Non-vested restricted stock units at December 31, 2017 2,065 $ 8.15 For the year ended December 31, 2016 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2015 1,443 $ 7.81 Restricted stock units granted 1,551 4.98 Restricted stock units vested (381 ) 8.71 Restricted stock units forfeited (75 ) 5.81 Non-vested restricted stock units at December 31, 2016 2,538 $ 6.01 For the Year Ended December 31, 2015 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2014 1,209 $ 8.90 Restricted stock units granted 784 7.48 Restricted stock units vested (465 ) 9.88 Restricted stock units forfeited (85 ) 8.95 Non-vested restricted stock units at December 31, 2015 1,443 $ 7.81 At December 31, 2017 , we had 2.1 million shares of granted and non-vested RSUs, consisting of 1.9 million shares that are subject to service condition vesting requirements and 0.2 million shares that are subject to service and performance condition vesting requirements. All RSUs subject to market and service condition vesting requirements vested prior to December 31, 2017. The total fair value of shares vested during the year ended December 31, 2017 was $18.1 million . The remaining weighted average contractual life of non-vested RSUs was 8.6 years. As of December 31, 2017, there was $7.0 million of total unrecognized compensation costs related to non-vested RSUs, compared to $4.2 million as of December 31, 2016. The weighted-average period over which total remaining compensation costs related to non-vested RSUs will be recognized was 1.6 years. Non-vested RSUs subject to service condition vesting requirements vest over a service period ranging from one to five years. Non-vested RSUs subject to performance condition vesting requirements are scheduled to vest at December 31, 2018, with the number of shares eligible for vesting based on the satisfaction of a return on equity goal. The fair value of RSUs subject to service and performance condition vesting requirements is measured as the closing price of our common stock on the date of grant less the present value of anticipated dividends to be paid during the service period. In July 2017, the Board approved a modification to the vesting terms of 29,818 granted and non-vested RSUs held by one employee. The modification accelerated the vesting date for all RSUs that would otherwise have vested in February 2018 to the date of the employee's retirement on July 31, 2017. We recognized an incremental compensation cost of $252 thousand in connection with this modification. The incremental compensation cost was measured as the excess of the fair value of the modified award over the fair value of the original award immediately before its terms were modified using relevant valuation inputs as of the modification date. 401(k) Savings Plan Beginning on January 1, 2014, we offered to our employees a 401(k) Savings Plan (401(k) Plan) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, we match up to 100% of eligible employees' pre-tax contributions up to 4% of eligible compensation. We contributed approximately $1.5 million for the year ended December 31, 2017 , compared to $1.5 million and $1.2 million for the years ended December 31, 2016 and 2015, respectively. Phantom Shares In May 2016, we granted 8,169 phantom stock units to one independent director with a grant date fair market value of $50 thousand . Each phantom unit entitled the holder to a cash award equal to the fair market value of the unit based on the price of our stock on the first anniversary of the grant date. We accounted for these units in accordance with ASC 718-30, Stock Compensation Awards Classified as Liabilities . These units vested in May 2017 and were settled for $89 thousand in cash. No phantom stock units were granted during the year ended December 31, 2017 and none remained outstanding as of December 31, 2017. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Total income tax expense (benefit) consists of the following components: For the year ended December 31, 2017 2016 2015 (In Thousands) Current $ 778 $ 360 $ — Deferred 29,964 (52,909 ) — Total income tax expense (benefit) $ 30,742 $ (52,549 ) $ — For the year ended December 31, 2017 , we had income tax expense of $30.7 million , including amounts related to current year alternative minimum tax and changes to our net deferred tax asset. The changes to our net deferred tax asset reflect a one-time non-cash charge of $13.6 million primarily due to the re-measurement of our deferred tax assets and liabilities in connection with the enactment of the Tax Cuts and Jobs Act (the Act) on December 22, 2017. Provisional amounts The Act reduces the statutory U.S. federal corporate income tax rate from 35% to 21%. We have not completed our full assessment of the tax effects of the enactment of the Act on our December 31, 2017 deferred tax balances; however, in certain cases, as described below, we have made reasonable estimates of the effects on our deferred tax balances. We recognized a $13.6 million income tax expense in the year ended December 31, 2017 for the items we could reasonably estimate. We are still analyzing the Act and refining our calculations, which could impact the measurement of our existing deferred tax asset related to share-based compensation. For tax years beginning after December 31, 2017, the Act expanded the number of individuals whose compensation is subject to a $1 million cap on tax deductibility and includes performance-based compensation in the calculation. As a result, the Company recorded a provisional amount to reduce the future tax benefit related to share-based compensation. We will continue to make and refine our calculations as additional analysis is completed. In addition, our estimates may also be affected as we incorporate additional guidance that may be issued by the U.S. Treasury Department, the IRS, or other standard-setting bodies. For the year ended December 31, 2016, we had income tax benefit of $52.5 million primarily related to the release of the valuation allowance recorded against our federal and certain state net deferred tax assets. At December 31, 2016, we determined that positive evidence of sufficient quantity and quality outweighed negative evidence, and supported a conclusion that it was more-likely-than-not that the Company would realize its federal and certain state net deferred tax assets. As a result, at December 31, 2016, we released the valuation allowance previously recorded against federal and certain state net deferred tax assets and recorded the effects of the change in income from continuing operations, generating financial statement benefits of $58.2 million and $0.3 million related to net federal and certain state net deferred tax assets, respectively. The 2016 provision for income taxes also included amounts for current year alternative minimum tax and changes to our net deferred tax asset. For the year ended December 31, 2015, we recorded income tax expense of $0.0 due to the recognition of a valuation allowance against our federal and state net deferred tax assets. We are a U.S. taxpayer and are subject to the statutory U.S. federal corporate income tax rate of 35% for all prior years through December 31, 2017. We will be subject to the statutory U.S. federal corporate income tax rate of 21% for 2018 and all future periods. Our holding company files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries. The following table presents a reconciliation between the federal statutory income tax rate and our effective income tax (benefit) rate: For the year ended December 31, 2017 2016 2015 Federal statutory income tax rate 35.0 % 35.0 % 35.0 % Re-measurement from change in federal statutory rate 25.7 — — Share-based and other compensation (4.7 ) 9.7 — Warrant gain/loss 1.8 4.0 1.6 Other 0.4 3.4 (0.8 ) Valuation allowance — (511.1 ) (35.8 ) Effective income tax rate 58.2 % (459.0 )% — % The components of our net deferred tax asset are summarized as follows: As of December 31, 2017 2016 Deferred tax asset (In Thousands) Net operating loss carry forwards $ 25,665 $ 47,867 Share-based compensation 6,122 9,080 Unearned premium reserve 5,306 9,514 Deferred ceding commissions 1,084 1,999 Capitalized start-up costs 517 833 Unrealized loss on investments — 711 Alternative minimum tax credit — 360 Other 2,061 5,893 Total gross deferred tax asset 40,755 76,257 Less: valuation allowance (7,160 ) (6,941 ) Total deferred tax asset 33,595 69,316 Deferred tax liability Deferred acquisition costs (8,185 ) (12,456 ) Capitalized software (4,603 ) (5,076 ) Unrealized gain on investments (434 ) — Intangible assets (82 ) (137 ) Other (362 ) (213 ) Total deferred tax liability (13,666 ) (17,882 ) Net deferred tax asset $ 19,929 $ 51,434 At December 31, 2017 , our net deferred tax asset decreased to $19.9 million from $51.4 million at December 31, 2016 due to the re-measurement of our deferred tax balances at the reduced statutory U.S. federal corporate income tax rate of 21% and the utilization of net operating loss carryforwards during 2017. Provisional amounts Following enactment of the Act, we re-measured our deferred tax balances based on the rate at which they are expected to reverse in the future, which is generally 21%. We have not, however, completed our full assessment of the impact the Act will have on our December 31, 2017 deferred tax balances. We are still analyzing certain aspects of the Act and refining our calculation on our deferred tax asset balance related to share-based compensation, which could potentially affect the measurement of these balances or potentially give rise to further increases or decreases to our deferred tax amounts. The provisional amount recorded primarily related to the re-measurement of our deferred tax assets and liabilities was $13.6 million . At December 31, 2017, we had a federal net operating loss carryforward of $93.3 million which expires from 2030 to 2037, and state net operating loss carryforwards of $89.1 million , which expire in varying amounts during the years 2031 to 2037. Section 382 of the Internal Revenue Code imposes annual limitations on a corporation's ability to utilize its net operating loss carryforwards if it experiences an "ownership change." As a result of the acquisition of our insurance subsidiaries in 2012, $7.3 million of NOLs were subject to annual limitations of $0.8 million through 2016, and $0.3 million , thereafter, through 2029. As a result of the adoption of ASU 2016-09 in the first quarter of 2017, we recognized a discrete tax benefit of $3.3 million associated with excess tax benefits for share-based compensation. As of December 31, 2017, our federal net operating loss carryforward balance included $2.2 million of excess share-based compensation previously excluded from the net deferred tax asset balance as of December 31, 2016. We recorded valuation allowances of $7.2 million and $6.9 million at December 31, 2017 and 2016, respectively, to reflect the amounts of state net deferred tax assets that may not be realized. The valuation allowance at December 31, 2017 primarily relates to state net operating losses generated by NMIH, as NMIH operates at a loss and currently only generates revenue from its investment portfolio. As of December 31, 2017 and 2016, we had no reserves for unrecognized tax benefits, and had taken no material uncertain tax positions that would have required recognition and measurement. It is our policy to classify interest and penalties related to unrecognized tax benefits as income tax expense. We file income tax returns with the U.S. federal government and various state jurisdictions which are subject to potential examination by tax authorities. We are not currently under examination by federal or state jurisdictions. Our U.S. federal income tax returns for 2014 and subsequent years and state income tax returns for 2013 and subsequent years remain open by statute. |
Software and Equipment
Software and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Software and Equipment | Software and Equipment Software and equipment consist largely of capitalized software developed to support our MI operations. Software and equipment, net of accumulated amortization and depreciation, as of December 31, 2017 and December 31, 2016, consists of the following: December 31, 2017 December 31, 2016 (In Thousands) Software $ 31,616 $ 23,621 Equipment 4,133 3,102 Leasehold improvements 3,491 3,453 Subtotal 39,240 30,176 Accumulated amortization and depreciation (16,438 ) (9,774 ) Software and equipment, net $ 22,802 $ 20,402 The capitalized amount for software, equipment, and leasehold during the year ended December 31, 2017, 2016 and 2015, was $9.1 million , $11.2 million , and $6.7 million , respectively. Amortization and depreciation expense for software, equipment, and leasehold improvements for the years ended December 31, 2017, 2016, and 2015 was $6.7 million , $4.9 million , and $3.2 million , respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible assets and goodwill consist of identifiable intangible assets and goodwill we purchased in connection with the acquisition of our insurance subsidiaries, and at December 31, 2017 and December 31, 2016, were as follows for both years: (In Thousands) Expected Lives Goodwill $ 3,244 Indefinite State licenses 260 Indefinite GSE applications 130 Indefinite Total intangible assets and goodwill $ 3,634 We test goodwill and intangible assets for impairment in the third and fourth quarter, respectively, of every year, or more frequently if we believe indicators of impairment exist. No impairments of indefinite-lived intangibles or goodwill were identified during the years ended December 31, 2017 and 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies PMIERs As an Approved Insurer , NMIC is subject to ongoing compliance with the PMIERs. ( Italicized terms have the same meaning that such terms have in the PMIERs, as described below.) The PMIERs establish operational, business, remedial and financial requirements applicable to Approved Insurers . The PMIERs financial requirements prescribe a risk-based methodology whereby the amount of assets required to be held against each insured loan is determined based on certain risk characteristics, such as FICO, vintage (year of origination), performing vs. non-performing ( i.e. , current vs. delinquent), LTV and other risk features. An asset charge is calculated for each insured loan based on its risk profile. In general, higher quality loans carry lower charges. Under the PMIERs financial requirements, Approved Insurers must maintain available assets that equal or exceed minimum required assets , which is an amount equal to the greater of (i) $400 million or (ii) a total risk-based required asset amount . The risk-based required asset amount is a function of the risk profile of an Approved Insurers net RIF, calculated by applying on a loan-by-loan basis certain risk-based factors derived from tables set out in the PMIERs to the net RIF, and other transactional adjustments approved by the GSEs, such as with respect to our 2017 ILN Transaction and 2016 QSR Transaction. The risk-based required asset amount for primary insurance is subject to a floor of 5.6% of total, performing, primary RIF, and the risk-based required asset amount for pool insurance considers both the factors in the tables and the net remaining stop loss for each pool insurance policy. The PMIERs financial requirements also increase the amount of available assets that must be held by an Approved Insurer for LPMI policies originated on or after January 1, 2016. By April 15th of each year, NMIC must certify it met all PMIERs requirements as of December 31st of the prior year. We certified to the GSEs by April 15, 2017 that NMIC fully complied with the PMIERs as of December 31, 2016. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of its failure to meet one or more of the PMIERs requirements. We continuously monitor our compliance with the PMIERs Office Lease The company leases office space under a facilities lease in Emeryville, California. In December 2016, the Company amended its lease to extend its term through March 2023. As of December 31, 2017, the future minimum lease payments under this lease are as follows: Years ending December 31, (In Thousands) 2018 $ 1,711 2019 2,346 2020 2,417 2021 2,489 2022 2,564 2023 657 Totals $ 12,184 We incurred rent expense related to this lease of $2.1 million , $1.5 million , and $1.5 million for the years ended December 31, 2017, 2016, and 2015, respectively. |
Regulatory Information
Regulatory Information | 12 Months Ended |
Dec. 31, 2017 | |
Insurance [Abstract] | |
Regulatory Information | Regulatory Information Statutory Requirements 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 for each of the years in the three-year period ended December 31, 2017 were as follows: For the year ended December 31, 2017 2016 2015 (In Thousands) Statutory net loss $ (35,946 ) $ (26,653 ) $ (52,322 ) Statutory surplus 371,084 413,809 391,422 Contingency reserve 186,641 90,479 32,564 Risk-to-capital 13.2:1 11.6:1 8.7:1 Under applicable law in Wisconsin and 15 other states, mortgage insurers must maintain minimum amounts of statutory capital relative to RIF to continue to write new business. While formulations of minimum statutory capital may vary in each state, the most common measure allows for a maximum permitted RTC ratio of 25:1 . Wisconsin and certain other states, including California and Illinois, apply a substantially similar requirement referred to as minimum policyholders' position. A working group of the National Association of Commissioners (NAIC) is currently developing a loan level capital model applicable to mortgage guaranty insurers that is expected to ultimately be incorporated into a revised NAIC Mortgage Guaranty Insurance Model Act. Following adoption by the NAIC, some or all of the 16 states that currently have minimum statutory capital requirements, and perhaps others that do not, are expected to enact a portion or all of the revised Model Act, including the loan-level capital model. As of December 31, 2017, NMIC's performing primary RIF, net of reinsurance, was approximately $ 7.3 billion, resulting in an RTC ratio of 14.0:1 , significantly below the state financial requirements. As of December 31, 2016, NMIC's performing primary RIF, net of reinsurance, was approximately $ 5.8 billion, resulting in an RTC ratio of 12.4:1 . Reinsurance Ohio regulation limits the amount of risk a mortgage insurer may retain on a single loan to 25% of the borrower's indebtedness and, as a result, the portion of such insurance in excess of 25% must be reinsured. NMIC and Re One have entered into a primary excess share reinsurance agreement, effective August 1, 2012, and a facultative pool reinsurance agreement, effective September 1, 2013, under which NMIC cedes premiums, loss reserves and claims to Re One on an excess share basis for any primary or pool policy which offers coverage greater than 25% on any loan insured thereunder, after giving effect to third-party reinsurance. NMIC will use reinsurance provided by Re One solely for purposes of compliance with Ohio's coverage limit. The facultative pool reinsurance agreement was amended effective September 1, 2016, to reduce the risk ceded by NMIC to Re One in connection with the inception of the 2016 QSR Transaction. Dividend Restrictions 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 capital surplus or, subject to certain limitations, recent net profits. As of December 31, 2017, NMIH's shareholders' equity was approximately $ 509 million. NMIH's total assets, excluding investment and intercompany receivables for NMIC, Re One, and NMIS, were approximately $ 84 million at December 31, 2017. NMIC and Re One are subject to restrictions on their ability to pay dividends without prior approval of the Wisconsin OCI. Under Wisconsin law, NMIC and Re One may pay dividends up to specified levels ( i.e. , "ordinary" dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts, or "extraordinary" dividends, are subject to the Wisconsin OCI's prior approval. Under Wisconsin law, an extraordinary dividend is defined as any payment or distribution that together with other dividends and distributions made within the preceding 12 months exceeds the lesser of (i) 10% of the insurer's statutory policyholders' surplus as of the preceding December 31 or (ii) adjusted statutory net income for the 12-month period ending the preceding December 31. NMIC and Re One have never paid any dividends to NMIH. NMIC reported a statutory net loss for the twelve months ended December 31, 2017 and cannot pay any dividends to NMIH through December 31, 2018 without the 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. As of December 31, 2017, the amount of restricted net assets held by our consolidated insurance subsidiaries totaled approximately $ 574 million. The amount of restricted assets used to determine any dividend to NMIH, once all restrictions expire, would be computed under SAP which may differ from the amount of restricted assets computed under GAAP. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) 2017 Quarters 2017 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 33,225 $ 37,917 $ 44,519 $ 50,079 $ 165,740 Net investment income 3,807 3,908 4,170 4,388 16,273 Net realized investment (losses) gains (58 ) 188 69 9 208 Other revenues 80 185 195 62 522 Insurance claims and claims expenses 635 1,373 957 2,374 5,339 Underwriting and operating expenses 25,989 28,048 24,645 28,297 106,979 (Loss) gain from change in fair value of warrant liability (196 ) 19 (502 ) (3,426 ) (4,105 ) Interest expense 3,494 3,300 3,352 3,382 13,528 Pre-tax (loss) income 6,740 9,496 19,497 17,059 52,792 Income tax expense (benefit) 1,248 3,484 7,185 18,825 30,742 Net (loss) income $ 5,492 $ 6,012 $ 12,312 (1,766 ) 22,050 (Loss) income per share: (1) Basic (loss) earnings per share $ 0.09 $ 0.10 $ 0.21 $ (0.03 ) $ 0.37 Diluted (loss) earnings per share $ 0.09 $ 0.10 $ 0.20 $ (0.03 ) $ 0.35 Weighted average common shares outstanding - basic 59,184 59,823 59,884 60,219 59,816 Weighted average common shares outstanding - diluted 62,339 63,010 63,089 60,219 62,186 2016 Quarters 2016 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 19,807 $ 26,041 $ 31,808 $ 32,825 $ 110,481 Net investment income 3,231 3,342 3,544 3,634 13,751 Net realized investment (losses) gains (885 ) 61 66 65 (693 ) Other revenues 32 37 102 105 276 Insurance claims and claims expenses 458 470 664 800 2,392 Underwriting and operating expenses 22,671 23,234 24,037 23,281 93,223 Gain (loss) from change in fair value of warrant liability 670 (59 ) (797 ) (1,714 ) (1,900 ) Interest expense 3,632 3,707 3,733 3,776 14,848 Pre-tax (loss) income (3,907 ) 2,011 6,289 7,059 11,452 Income tax expense (benefit) — — 114 (52,663 ) (52,549 ) Net (loss) income (3,907 ) 2,011 6,175 59,722 64,001 (Loss) income per share: (1) Basic (loss) earnings per share $ (0.07 ) $ 0.03 $ 0.10 $ 1.01 $ 1.08 Diluted (loss) earnings per share $ (0.07 ) $ 0.03 $ 0.10 $ 0.98 $ 1.05 Weighted average common shares outstanding - basic 58,937 59,106 59,130 59,140 59,071 Weighted average common shares outstanding - diluted 58,937 59,831 60,285 61,229 60,829 (1) Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of quarterly per share data may not equal the per share data for the year. |
SCHEDULE I - SUMMARY OF INVESTM
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Investments, Other than Investments in Related Parties [Abstract] | |
Summary of Investments - Other than Investments in Related Parties | December 31, 2017 Amortized Cost Fair Value Amount Reflected on Balance Sheet (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 65,669 $ 64,688 $ 64,688 Municipal debt securities 89,973 89,848 89,848 Corporate debt securities 435,562 437,835 437,835 Asset-backed securities 100,153 100,944 100,944 Total bonds 691,357 693,315 693,315 Long-term investments - other 353 353 353 Short-term investments 22,149 22,207 22,207 Total investments $ 713,859 $ 715,875 $ 715,875 |
SCHEDULE II - FINANCIAL INFORMA
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Financial Information of Registrant Parent Company Only | December 31, 2017 December 31, 2016 (1) (In Thousands, except for share data) Assets Fixed maturities, available-for-sale, at fair value $ 50,505 $ 58,209 Cash and cash equivalents 528 15,858 Investment in subsidiaries, at equity in net assets 573,695 503,731 Accrued investment income 203 151 Prepaid expenses 2,108 1,991 Due from affiliates, net 22,407 9,211 Software and equipment, net 22,802 20,401 Deferred tax asset, net 6,610 36,534 Other assets 1,704 182 Total assets $ 680,562 $ 646,268 Liabilities Term loan $ 143,882 $ 144,353 Accounts payable and accrued expenses 20,131 23,039 Warrant liability, at fair value 7,472 3,367 Total liabilities 171,485 170,759 Shareholders' equity Common stock - class A shares, $0.01 par value; 605 591 Additional paid-in capital 585,488 576,927 Accumulated other comprehensive loss, net of tax (2,859 ) (5,287 ) Accumulated deficit (74,157 ) (96,722 ) Total shareholders' equity 509,077 475,509 Total liabilities and shareholders' equity $ 680,562 $ 646,268 (1) The 2016 prior period balance sheet has been revised. See Item 8, " Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2, Summary of Accounting Principles - Immaterial Correction of Prior Period Amounts ," for further details. For the year ended December 31, 2017 2016 (1) 2015 (In Thousands) Revenues Net investment income $ 691 $ 773 $ 2,535 Net realized investment gains 1 53 379 Total revenues 692 826 2,914 Expenses Other operating expenses 16,374 17,600 17,157 Total expenses 16,374 17,600 17,157 Other expense (Loss) gain from change in fair value of warrant liability (4,105 ) (1,900 ) 1,905 Interest expense — (14,848 ) (2,057 ) Total other expenses (4,105 ) (16,748 ) (152 ) Equity in net income (loss) of subsidiaries 67,146 58,819 (14,430 ) Income (loss) before income taxes 47,359 25,297 (28,825 ) Income tax expense (benefit) 25,309 (38,704 ) (1,032 ) Net income (loss) $ 22,050 $ 64,001 $ (27,793 ) Other comprehensive income (loss), net of tax: Net unrealized gains in accumulated other comprehensive loss, net of tax (benefit) expense of ($49), $82, and $0 for each of the years in the three-year period ended December 31, 2017, respectively (90 ) 100 141 Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for each of the years in the three-year period ended December 31, 2017 (1 ) 53 186 Equity in other comprehensive income (loss) of subsidiaries 2,519 2,034 (4,194 ) Other comprehensive income (loss), net of tax 2,428 2,187 (3,867 ) Comprehensive income (loss) $ 24,478 $ 66,188 $ (31,660 ) (1) The 2016 prior period consolidated statements of operations has been revised. See Item 8 , "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2, Summary of Accounting Principles - Immaterial Correction of Prior Period Amounts, " for further details. For the year ended December 31, 2017 2016 (1) 2015 Cash flows from operating activities (In Thousands) Net income (loss) $ 22,050 $ 64,001 $ (27,793 ) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Share-based compensation expense 9,484 6,854 8,174 Loss (gain) from change in fair value of warrant liability 4,105 1,900 (1,905 ) Net realized investment gains (1 ) (53 ) (379 ) Depreciation and amortization 233 5,779 3,885 Amortization of debt discount and debt issuance costs 1,474 1,914 251 Changes in operating assets and liabilities: Equity in net (income) loss of subsidiaries (67,239 ) (58,819 ) 14,430 Accrued investment income (52 ) (2 ) 481 Receivable from affiliates (13,103 ) (828 ) 1,566 Prepaid expenses (116 ) (563 ) 626 Other assets (1,523 ) (126 ) 453 Deferred tax asset 30,876 (36,616 ) — Accounts payable and accrued expenses (3,463 ) 2,711 8,025 Net cash (used in) provided by operating activities (17,275 ) (13,848 ) 7,814 Cash flows from investing activities Capitalization of subsidiaries (300 ) (800 ) (153,500 ) Purchase of short-term investments (98,255 ) (127,329 ) (21,160 ) Purchase of fixed-maturity investments, available-for-sale (19,884 ) (172 ) (66,411 ) Proceeds from maturity of short-term investments 114,170 115,049 — Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale 11,451 41,750 79,652 Software and equipment (1,996 ) (10,251 ) (6,135 ) Net cash provided by (used in) investing activities 5,186 18,247 (167,554 ) Cash flows from financing activities Taxes paid related to net share settlement of equity awards (8,582 ) (756 ) (1,105 ) Proceeds from issuance of common stock related to employee equity plans 7,103 532 415 Proceeds from issuance of common stock related to warrants 183 — — Proceeds from term loan, net of discount — — 148,500 Repayments of term loan (1,500 ) (1,500 ) (375 ) Payments of debt modification costs (445 ) — (4,437 ) Net cash (used in) provided by financing activities (3,241 ) (1,724 ) 142,998 Net increase (decrease) in cash and cash equivalents (15,330 ) 2,675 (16,742 ) Cash and cash equivalents, beginning of period 15,858 13,183 29,925 Cash and cash equivalents, end of period $ 528 $ 15,858 $ 13,183 (1) The 2016 prior period consolidated statements of cash flows has been revised. See Item 8 , "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2, Summary of Accounting Principles - Immaterial Correction of Prior Period Amounts, " for further details. Note A The NMI Holdings, Inc. (Parent Company) financial statements represent the stand-alone financial statements of the Parent Company. These financial statements have been prepared on the same basis and using the same accounting policies as described in the consolidated financial statements included herein. Refer to the Parent Company's consolidated financial statements for additional information. Revisions to Prior Periods Certain other prior balances have been reclassified to conform to the current period presentation. Note B Our insurance subsidiaries are subject to statutory regulations as to maintenance of policyholders' surplus and payment of dividends. The maximum amount of dividends that the insurance subsidiaries may pay in any twelve-month period without regulatory approval by the Wisconsin OCI is the lesser of adjusted statutory net income or 10% of statutory policyholders' surplus as of the preceding calendar year end. Adjusted statutory net income is defined for this purpose to be the greater of statutory net income, net of realized investment gains, for the calendar year preceding the date of the dividend or statutory net income, net of realized investment gains, for the three calendar years preceding the date of the dividend less dividends paid within the first two of the preceding three calendar years. Note C The Parent Company provides certain services to its subsidiaries. The Parent Company allocates to its subsidiaries corporate expense it incurs in the capacity of supporting those subsidiaries, based on either an allocated percentage of time spent or internally allocated capital. Total operating expenses allocated to subsidiaries for each of the years in the three year period ended December 31, 2017 were $101.0 million , $80.5 million and $76.0 million , respectively. Amounts charged to the subsidiaries for operating expenses are based on actual cost, without any mark-up. The Parent Company considers these charges fair and reasonable. The subsidiaries reimburse the Parent Company for these costs in a timely manner, which has the impact of improving the cash flows of the Parent Company. |
SCHEDULE IV - FINANCIAL INFORMA
SCHEDULE IV - FINANCIAL INFORMATION OF REGISTRANT REINSURANCE - PARENT COMPANY ONLY | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract] | |
Financial Information of Registrant Reinsurance Parent Company Only | In September 2016, to continue to grow our business and manage insurance risk and our minimum required assets under PMIERs financial requirements, NMIC entered into a quota-share reinsurance transaction with a panel of third-party reinsurers. The Parent Company has no reinsurance agreements. The insurance subsidiaries are both mono-line mortgage insurance companies and the assets of each are dedicated only to the support of our mortgage insurance operations. NMIC only writes direct mortgage insurance business and assumes no business from any other entity. Re One only assumes business from NMIC to allow NMIC to comply with Ohio's coverage limit, after giving effect to third-party reinsurance. Neither NMIC nor Re One count any subsidiary of any kind in their admitted statutory assets. Gross Amount Ceded to Other Companies Assumed from Other Companies Net Amount Percentage of Amount Assumed to Net For the years ended December 31, (In thousands) 2017 $ 192,326 $ 26,586 $ — $ 165,740 — % 2016 115,830 5,349 — 110,481 — % 2015 — — — — — % 2014 — — — — — % |
Summary of Accounting Policies
Summary of Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the results of NMIH and its wholly owned subsidiaries. All inter-company transactions have been eliminated. These financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) and our accounts are maintained in US dollars. 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. |
Insurance Premium Revenue Recognition | Insurance Premium Revenue Recognition Premiums for primary mortgage insurance policies may be paid in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium), with such election and payment type fixed at policy inception. Premiums written at origination for single premium policies are initially deferred as unearned premiums and amortized into earnings over the estimated policy life, in accordance with the anticipated expiration of risk. Monthly premiums are recognized as revenue in the month billed and when the coverage is effective. Annual premiums are initially deferred and earned on a straight-line basis over the year of coverage. Premiums written on pool transactions are earned over the period that coverage is provided. Upon cancellation of a policy, all remaining non-refundable deferred and unearned premium is immediately earned, and any refundable premium is returned to the policyholder. Premiums returned to policyholders are recorded as a reduction of written and earned premiums in the current period. |
Use of Estimates | Use of Estimates We use accounting principles and methods that conform to GAAP. Where GAAP specifically excludes mortgage insurance we follow general industry practices. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. |
Reserve for Insurance Claims and Claims Expenses | Reserves for Insurance Claims and Claims Expenses Consistent with industry practice, we establish reserves for claims based on our best estimate of ultimate claim costs for defaulted loans using the general principles contained in Accounting Standards Committee (ASC) 944, Financial Services - Insurance (ASC 944). We establish reserves for loans that have been in default for at least 60 days. Reserves for claims and allocated claims expenses, referred to as case reserves, are established when we are notified of defaults by loan servicers. Additional claims reserves, referred to as IBNR reserves, are established for loans that we estimate (based on actuarial review) have been in default for at least 60 days, but have not yet been reported to us as such by servicers. We also establish reserves for unallocated claims expenses not associated with specific claims. Claims expenses represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claims settlement process. The establishment of claims and claims expense reserves is subject to inherent uncertainty and requires significant judgment by management. Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of the claim payment expected to be paid on each such loan in default, which is referred to as claim severity. Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, size of the loan and LTV ratios, and are strongly influenced by prevailing economic conditions, such as mortgage rates, trends in unemployment and house price appreciation. We conduct an annual actuarial review to evaluate and, if necessary, update these assumptions. |
Investments | Investments We have designated our investment portfolio as available-for-sale and report it at fair value. The related unrealized gains and losses, after considering the related tax expense or benefit, are recognized as a component of accumulated other comprehensive income (loss) in shareholders' equity. Net realized investment gains and losses are reported in income based on specific identification of securities sold, and are reclassified out of accumulated other comprehensive income (loss). We measure fair value and classify invested assets in a hierarchy for disclosure purposes consisting of three "levels" based on the observability of inputs available in the marketplace used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). See " Note 4, Fair Value of Financial Instruments " for further discussion. Purchases and sales of investments are recorded on a trade date basis. Net investment income is recognized when earned, and includes interest and dividend income together with amortization of market premiums and discounts using the effective yield method, and is net of investment management fees and other investment related expenses. For asset-backed securities and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the change in effective yields and maturities are recognized on a prospective basis through yield adjustments. Each quarter, we evaluate our investments to determine whether declines in fair value below amortized cost were considered other-than-temporary in accordance with applicable guidance. Under the current guidance, a debt security impairment is deemed other-than-temporary if (i) we either intend to sell the security or it is more likely than not that we will be required to sell the security before recovery or (ii) we do not expect to collect cash flows sufficient to recover the amortized cost basis of the security. In evaluating whether a decline in fair value is other-than-temporary, we consider several factors including, but not limited to: • our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery; • severity and duration of the decline in fair value; • the financial condition of the issuer; • the failure of the issuer to make scheduled interest or principal payments; • recent credit downgrades of the applicable security or the issuer below investment grade; and • adverse conditions specifically related to the security, an industry, or a geographic area. We consider items such as commercial paper with original maturities of 90 days or less to be short-term investments. |
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 future premiums, existing reserves and anticipated investment income. We have determined that no premium deficiency reserves were necessary for any of the years in the three years period ended December 31, 2017 . |
Reinsurance | Reinsurance We account for premiums, claims and claims 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 6, " Reinsurance " ). Profit commissions represent a percentage of the profits recognized by reinsurers that are returned to us, based on the level of claims 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 earned as reductions to underwriting and operating expenses. We cede a portion of claims and claims expenses reserves to our reinsurers, which are accounted for as reinsurance recoverables in "Other Assets" on the consolidated balance sheets and as reductions to claims 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. |
Income Taxes | Income Taxes We account for income taxes using the liability method in accordance with ASC Topic 740, Income Taxes . The liability method measures the expected future tax effects of temporary differences at the enacted tax rates applicable for the period in which the deferred asset or liability is expected to be realized or settled. Temporary differences are differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements that would result in future increases or decreases in taxes owed on a cash basis compared to amounts already recognized as tax expense in the consolidated statement of operations. |
Warrants | Warrants We account for 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 . Our outstanding warrants may be settled by us using either (i) physical settlement method or (ii) cashless exercise, where shares that are issued upon exercise of the warrants are reduced, to cover the cost of the exercise, in lieu of the holder remitting a cash payment of the exercise price. The warrants expire and are not exercisable after the 10th anniversary of the date the warrant was issued. The exercise price and the number of warrants are subject to anti-dilution provisions whereby the existing exercise price is adjusted downward, and the number of warrants increased, for events that may not be dilutive. The adjustment may be in excess of any dilution suffered. As a result, the warrants are classified as a liability. We revalue the warrants at the end of each reporting period, and any change in fair value is reported in the statements of operations in the period in which the change occurred. We calculated the fair value of the warrants using a Black-Scholes option-pricing model in combination with a binomial model. |
Share-based Compensation | Share-Based Compensation We account for stock compensation in accordance with ASC 718, Compensation - Stock Compensation , which addresses accounting for share-based awards and recognition of compensation expense, measured using grant date fair value, over the requisite service or performance period of the award. Share-based compensation includes restricted stock unit (RSU) and stock option grants under the NMI Holdings, Inc. 2012 Stock Incentive Plan (2012 Plan) and the NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan (Amended 2014 Plan), which amended and restated the NMI Holdings, Inc. 2014 Omnibus Incentive Plan (2014 Plan). We calculate the fair value of stock option grants using a Black-Scholes option pricing model, which takes into account various subjective assumptions. Key assumptions used in the model include the expected volatility of our stock price, dividend yield and the risk-free interest rate, as well as the expected option term, giving consideration to the contractual terms of any award and the effects of expected exercise and post-vesting termination behavior. RSU grants to employees may contain a service condition, market and service condition or performance and service condition. RSU grants to employees with a service or a performance condition and RSU grants to non-employee directors are valued at our stock price on the date of grant less the present value of anticipated dividends. The fair value of RSU grants to employees with a market condition is determined based on a Monte Carlo simulation model at the date of grant. |
Earnings per Share | Earnings per Share Basic earnings (loss) per share is based on the weighted-average number of common shares outstanding, while diluted earnings (loss) per share is based on the weighted-average number of common shares outstanding and common share equivalents that would be issuable upon the vesting of existing service based RSUs, and exercise of vested and unvested stock options and outstanding warrants. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider items such as certificates of deposit and money market funds with original maturities of 90 days or less to be cash equivalents. |
Software and Equipment | Software and Equipment We capitalize certain costs associated with the development of internal-use software and equipment. Software and equipment are stated at cost, less accumulated amortization and depreciation. Amortization of software and depreciation of equipment commences at the beginning of the month following our placement of the assets into use. Amortization and depreciation are calculated on a straight-line basis over the estimated useful life of the respective assets, typically from 3 to 7 years, unless factors indicate a shorter useful life. |
Business Combinations, Goodwill and Intangible Assets | Business Combinations, Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired from a business combination. In accordance with ASC 350, Intangibles - Goodwill and Other , we test goodwill for impairment during the third quarter each year, or more frequently if we believe indicators of impairment exist. We have not identified any impairments of goodwill through December 31, 2017. Our intangible assets consist of state licenses and GSE applications which have indefinite lives. We test indefinite-lived intangible assets for impairment during the fourth quarter of each year or more frequently if we believe indicators of impairment exist. We have not identified any impairments of indefinite-lived intangible assets through December 31, 2017. |
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. We have determined that the receivable write-off was immaterial as of December 31, 2017. |
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. At inception of the reinsurance agreement, we determined that Oaktown Re was a variable interest entity (VIE), as defined under GAAP (ASC 810), because it did not have sufficient equity at risk to finance its activities. We evaluated the VIE to determine whether NMIC was its primary beneficiary and, if so, whether we were 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 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. |
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 December 2016, the FASB clarified that all contracts that are within the scope of Topic 944, Financial Services-Insurance , are excluded from the scope of ASU 2014-09. Accordingly, this update will not impact the recognition of revenue related to insurance premiums or investment income, which represent a majority of our total revenues. The adoption of this update for our loan review services revenue (our only revenue stream in scope), effective January 1, 2018, will be done using the modified-retrospective approach and is immaterial to our consolidated financial statements. 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. In September 2017, ASU 2017-13, added guidance from an SEC Staff Announcement, "Transition Related to Accounting Standards Update No. 2016-02." 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 standard also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact the adoption of this ASU will have, if any, on our 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. We have determined that the adoption of this update, effective January 1, 2018, will have no impact on our 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. The adoption of this update, effective January 1, 2018, will have no impact on our 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. We have determined that the adoption of this ASU will have no impact on our 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 adoption of this update, effective January 1, 2018, will have no impact on our 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 equity-linked financial instruments. 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. The guidance must be applied using a full or modified retrospective approach. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. |
Summary of Accounting Policie29
Summary of Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [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 ) (52,549 ) 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 shareholders' equity 477,349 475,509 Statement of Cash Flows Net income $ 65,841 $ 64,001 Deferred income taxes (54,749 ) (52,909 ) Footnote 11. Income Taxes Reconciliation between the statutory to effective income tax (benefit) rate: Valuation allowance (527.0 )% (511.1 )% Effective income tax rate (474.9 )% (459.0 )% Components of net deferred income tax asset (liability): Share-based compensation $ 11,231 $ 9,080 Valuation allowance (7,252 ) (6,941 ) Net deferred income tax asset (liability) 53,274 51,434 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 65,669 $ — $ (981 ) $ 64,688 Municipal debt securities 89,973 534 (659 ) 89,848 Corporate debt securities 435,562 4,231 (1,958 ) 437,835 Asset-backed securities 100,153 916 (125 ) 100,944 Total bonds 691,357 5,681 (3,723 ) 693,315 Long-term investments - other 353 — — 353 Short-term investments 22,149 58 — 22,207 Total investments $ 713,859 $ 5,739 $ (3,723 ) $ 715,875 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 December 31, 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 December 31, 2017 Amortized Fair (In Thousands) Due in one year or less $ 97,406 $ 97,394 Due after one through five years 195,795 195,626 Due after five through ten years 305,798 306,930 Due after ten years 14,707 14,981 Asset-backed securities 100,153 100,944 Total investments $ 713,859 $ 715,875 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 December 31, 2017 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 16 $ 29,806 $ (394 ) 26 $ 34,882 $ (587 ) 42 $ 64,688 $ (981 ) Municipal debt securities 21 38,628 (264 ) 10 17,945 (395 ) 31 56,573 (659 ) Corporate debt securities 94 128,313 (829 ) 23 48,978 (1,129 ) 117 177,291 (1,958 ) Asset-backed securities 22 27,947 (63 ) 5 12,438 (62 ) 27 40,385 (125 ) Total 153 $ 224,694 $ (1,550 ) 64 $ 114,243 $ (2,173 ) 217 $ 338,937 $ (3,723 ) 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 ) |
Schedule of Net Investment Income | The following table presents the components of net investment income: For the year ended December 31, 2017 2016 2015 (In Thousands) Investment income $ 17,046 14,503 7,729 Investment expenses (773 ) (752 ) (483 ) Net investment income $ 16,273 $ 13,751 $ 7,246 |
Schedule of Net Realized Investment Gains (Losses) | The following table presents the components of net realized investment gains (losses): For the year ended December 31, 2017 2016 2015 (In Thousands) Gross realized investment gains $ 546 748 1,526 Gross realized investment losses (338 ) (1,441 ) (695 ) Net realized investment gains (losses) $ 208 $ (693 ) $ 831 |
Fair Value of Financial Instr31
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements of Financial Instruments | The following tables present the level within the fair value hierarchy at which our financial instruments were measured: Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2017 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 59,844 $ 4,844 $ — $ 64,688 Municipal debt securities — 89,848 — 89,848 Corporate debt securities — 437,835 — 437,835 Asset-backed securities — 100,944 — 100,944 Long-term investments - other 353 — — 353 Cash, cash equivalents and short-term investments 41,403 — — 41,403 Total assets $ 101,600 $ 633,471 $ — $ 735,071 Warrant liability — — 7,472 7,472 Total liabilities $ — $ — $ 7,472 $ 7,472 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 year ended December 31, 2017 2016 2015 (In Thousands) Balance, January 1, $ 3,367 $ 1,467 $ 3,372 Change in fair value of warrant liability included in earnings 4,105 1,900 (1,905 ) Balance, December 31 $ 7,472 $ 3,367 $ 1,467 |
Schedule of Key Inputs and Assumptions in Option-Pricing Model | The following table outlines the key inputs and assumptions used in the option-pricing model as of the dates indicated. As of December 31, 2017 2016 2015 Common Stock Price $ 17.00 $ 10.65 $ 6.77 Risk free interest rate 1.99 % 1.78 % 1.91 % Expected life 3.07 years 4.33 years 5.92 years Expected volatility 30.6 % 32.7 % 32.7 % Dividend yield 0% 0% 0% |
Term Loan (Tables)
Term Loan (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Future Principal Payments | Future principle payments for the Term Loan as of December 31, 2017 are as follows: As of December 31, 2017 Principal (In thousands) 2018 1,500 2019 $ 145,125 Total $ 146,625 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Schedule of Effects of Reinsurance Agreements | The following table shows the amounts related to the 2016 QSR Transaction: For the year ended December 31, 2017 December 31, 2016 (In Thousands) Ceded risk-in-force $ 2,983,353 $ 2,008,385 Ceded premiums written (51,948 ) (50,553 ) Ceded premiums earned (49,619 ) (12,632 ) Ceded claims and claims expenses 1,687 297 Ceding commission written 10,390 10,111 Ceding commission earned 9,806 2,303 Profit commission 28,084 7,283 The effect of our reinsurance agreements on premiums written and earned is as follows: For the year ended December 31, 2017 December 31, 2016 December 31, 2015 (In Thousands) Net premiums written Direct $ 202,586 $ 177,962 $ 114,210 Ceded (1) (28,914 ) (43,270 ) — Net premiums written $ 173,672 $ 134,692 $ 114,210 Net premiums earned Direct $ 192,326 $ 115,830 $ 45,506 Ceded (1) (26,586 ) (5,349 ) — Net premiums earned $ 165,740 $ 110,481 $ 45,506 (1) Net of profit commission |
Reserves for Insurance Claims a
Reserves for Insurance Claims and Claim Expenses (Tables) | 12 Months Ended |
Dec. 31, 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 claim expenses: For the year ended December 31, 2017 December 31, 2016 December 31, 2015 (In Thousands) Beginning balance $ 3,001 $ 679 $ 83 Less reinsurance recoverables (1) (297 ) — — Beginning balance, net of reinsurance recoverables 2,704 679 83 Add claims incurred: Claims and claim expenses incurred: Current year (2) 6,140 2,457 699 Prior years (3) (801 ) (65 ) (49 ) Total claims and claims expenses incurred 5,339 2,392 650 Less claims paid: Claims and claim expenses paid: Current year (2) 27 171 50 Prior years (3) 1,157 196 4 Total claims and claim expenses paid 1,184 367 54 Reserve at end of period, net of reinsurance recoverables 6,859 2,704 679 Add reinsurance recoverables (1) 1,902 297 — Ending balance $ 8,761 $ 3,001 $ 679 (1) Related to ceded losses recoverable on the 2016 QSR Transaction, included in "Other Assets" on the Consolidated Balance Sheets. See Note 6, " 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. |
Schedule of Claims Development Data | The following tables provide claim development data, by accident year and a reconciliation to the reserve for insurance claims and claims expenses. Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance (1) As of December 31, 2017 Accident Year 2013 2014 2015 2016 2017 Total of IBNR NODs (2) ($ Values In Thousands) 2013 $ — $ — $ — $ — $ — — 2014 83 34 4 4 — — 2015 699 664 743 2 3 2016 2,394 1,568 16 32 2017 6,028 452 893 Total $ 8,343 $ 470 928 (1) Amounts include case and IBNR reserves. (2) The number of NODs outstanding as of December 31, 2017 is the total number of loans in default over 60 days for which we have established reserves. Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance Accident Year 2013 2014 2015 2016 2017 (In Thousands) 2013 $ — $ — $ — $ — $ — 2014 — 4 4 4 2015 50 246 684 2016 171 890 2017 27 Total $ 1,605 |
Schedule of Reconciliation of Claims Development to Liability | Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses (In Thousands) As of December 31, 2017 Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance $ 8,343 Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance (1,605 ) Liabilities for unpaid claims and allocated claims adjustment expenses, net of reinsurance 6,738 Reinsurance recoverable on unpaid claims 1,902 Unallocated claims adjustment expenses 121 Total gross liability for unpaid claims and claim adjustment expenses $ 8,761 |
Schedule of Historical Claims Duration | The following table shows, on average, the percentage of claims and allocated claims adjustment expenses paid over the years after a claim is incurred. Average annual percentage payout of incurred claims and allocated claims adjustment expenses by age, net of reinsurance Year 1 Year 2 Year 3 Year 4 Year 5 Claims duration disclosure 6% 57 % 59 % — % — % |
Earnings (Loss) Per Share (EP35
Earnings (Loss) Per Share (EPS) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles the net income (loss) 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 year ended December 31, 2017 2016 2015 (In Thousands, except for per share data) Basic net income (loss) $ 22,050 $ 64,001 $ (27,793 ) Basic weighted average shares outstanding 59,816 59,071 58,683 Basic earnings (loss) per share $ 0.37 $ 1.08 $ (0.47 ) Diluted net income (loss) $ 22,050 $ 64,001 $ (27,793 ) Basic weighted average shares outstanding 59,816 59,071 58,683 Dilutive effect of issuable shares 2,370 1,758 — Diluted weighted average shares outstanding 62,186 60,829 58,683 Diluted earnings (loss) per share $ 0.35 $ 1.05 $ (0.47 ) Anti-dilutive securities 995 4,764 6,267 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | A summary of option activity during the years ended December 31, 2017, December 31, 2016, and December 31, 2015 is as follows: For the year ended December 31, 2017 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2016 3,026 $ 3.97 $ 10.27 Options granted 574 3.89 11.06 Options exercised (273 ) 3.93 10.17 Options forfeited (1 ) 4.97 12.32 Options expired (15 ) 4.76 12.02 Options outstanding at December 31, 2017 3,311 3.95 $ 10.41 For the year ended December 31, 2016 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2015 3,851 $ 3.94 $ 10.21 Options granted — — — Options exercised — — — Options forfeited (41 ) 3.33 8.92 Options expired (784 ) 3.87 10.06 Options outstanding at December 31, 2016 3,026 $ 3.97 $ 10.27 For the Year Ended December 31, 2015 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2014 3,630 $ 4.16 $ 10.66 Options granted 789 3.06 8.49 Options exercised — — — Options forfeited (64 ) 4.90 12.20 Options expired (504 ) 4.05 10.48 Options outstanding at December 31, 2015 3,851 $ 3.94 $ 10.21 |
Schedule of Stock Options Valuation Assumptions | The estimated grant date fair values of the stock options granted during the years ended December 31, 2017 and 2015 were calculated using the Black-Scholes valuation model based on the following assumptions. There were no stock options granted during 2016. As of December 31, 2017 2016 2015 Expected life 6 years — 6 years Risk free interest rate 2.04%-2.08% — % 1.65%-1.78% Dividend yield — % — % — % Expected stock price volatility 30.5%-32.7% — % 34.4 % Projected forfeiture rate — % — % 7.50 % |
Schedule of Restricted Stock Units Activity | A summary of RSU activity during the years ended December 31, 2017 , 2016 and 2015 are as follows: For the year ended December 31, 2017 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2016 2,538 $ 6.01 Restricted stock units granted 988 11.22 Restricted stock units vested (1,367 ) 6.67 Restricted stock units forfeited (94 ) 8.96 Non-vested restricted stock units at December 31, 2017 2,065 $ 8.15 For the year ended December 31, 2016 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2015 1,443 $ 7.81 Restricted stock units granted 1,551 4.98 Restricted stock units vested (381 ) 8.71 Restricted stock units forfeited (75 ) 5.81 Non-vested restricted stock units at December 31, 2016 2,538 $ 6.01 For the Year Ended December 31, 2015 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2014 1,209 $ 8.90 Restricted stock units granted 784 7.48 Restricted stock units vested (465 ) 9.88 Restricted stock units forfeited (85 ) 8.95 Non-vested restricted stock units at December 31, 2015 1,443 $ 7.81 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Taxes (Benefit) | Total income tax expense (benefit) consists of the following components: For the year ended December 31, 2017 2016 2015 (In Thousands) Current $ 778 $ 360 $ — Deferred 29,964 (52,909 ) — Total income tax expense (benefit) $ 30,742 $ (52,549 ) $ — |
Schedule of Effective Income Tax Rate Reconciliation | The following table presents a reconciliation between the federal statutory income tax rate and our effective income tax (benefit) rate: For the year ended December 31, 2017 2016 2015 Federal statutory income tax rate 35.0 % 35.0 % 35.0 % Re-measurement from change in federal statutory rate 25.7 — — Share-based and other compensation (4.7 ) 9.7 — Warrant gain/loss 1.8 4.0 1.6 Other 0.4 3.4 (0.8 ) Valuation allowance — (511.1 ) (35.8 ) Effective income tax rate 58.2 % (459.0 )% — % |
Schedule of Deferred Tax Assets and Liabilities | The components of our net deferred tax asset are summarized as follows: As of December 31, 2017 2016 Deferred tax asset (In Thousands) Net operating loss carry forwards $ 25,665 $ 47,867 Share-based compensation 6,122 9,080 Unearned premium reserve 5,306 9,514 Deferred ceding commissions 1,084 1,999 Capitalized start-up costs 517 833 Unrealized loss on investments — 711 Alternative minimum tax credit — 360 Other 2,061 5,893 Total gross deferred tax asset 40,755 76,257 Less: valuation allowance (7,160 ) (6,941 ) Total deferred tax asset 33,595 69,316 Deferred tax liability Deferred acquisition costs (8,185 ) (12,456 ) Capitalized software (4,603 ) (5,076 ) Unrealized gain on investments (434 ) — Intangible assets (82 ) (137 ) Other (362 ) (213 ) Total deferred tax liability (13,666 ) (17,882 ) Net deferred tax asset $ 19,929 $ 51,434 |
Software and Equipment (Tables)
Software and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Equipment and Software | Software and equipment, net of accumulated amortization and depreciation, as of December 31, 2017 and December 31, 2016, consists of the following: December 31, 2017 December 31, 2016 (In Thousands) Software $ 31,616 $ 23,621 Equipment 4,133 3,102 Leasehold improvements 3,491 3,453 Subtotal 39,240 30,176 Accumulated amortization and depreciation (16,438 ) (9,774 ) Software and equipment, net $ 22,802 $ 20,402 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Identifiable Intangible Assets and Goodwill | Intangible assets and goodwill consist of identifiable intangible assets and goodwill we purchased in connection with the acquisition of our insurance subsidiaries, and at December 31, 2017 and December 31, 2016, were as follows for both years: (In Thousands) Expected Lives Goodwill $ 3,244 Indefinite State licenses 260 Indefinite GSE applications 130 Indefinite Total intangible assets and goodwill $ 3,634 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | As of December 31, 2017, the future minimum lease payments under this lease are as follows: Years ending December 31, (In Thousands) 2018 $ 1,711 2019 2,346 2020 2,417 2021 2,489 2022 2,564 2023 657 Totals $ 12,184 |
Regulatory Information (Tables)
Regulatory Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Insurance [Abstract] | |
Schedule of Combined Statutory Net Loss, Statutory Surplus, Contingency Reserve and RTC Ratios | NMIC and Re One's combined statutory net loss, statutory surplus, contingency reserve and RTC ratios for each of the years in the three-year period ended December 31, 2017 were as follows: For the year ended December 31, 2017 2016 2015 (In Thousands) Statutory net loss $ (35,946 ) $ (26,653 ) $ (52,322 ) Statutory surplus 371,084 413,809 391,422 Contingency reserve 186,641 90,479 32,564 Risk-to-capital 13.2:1 11.6:1 8.7:1 |
Quarterly Financial Data (Una42
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | 2017 Quarters 2017 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 33,225 $ 37,917 $ 44,519 $ 50,079 $ 165,740 Net investment income 3,807 3,908 4,170 4,388 16,273 Net realized investment (losses) gains (58 ) 188 69 9 208 Other revenues 80 185 195 62 522 Insurance claims and claims expenses 635 1,373 957 2,374 5,339 Underwriting and operating expenses 25,989 28,048 24,645 28,297 106,979 (Loss) gain from change in fair value of warrant liability (196 ) 19 (502 ) (3,426 ) (4,105 ) Interest expense 3,494 3,300 3,352 3,382 13,528 Pre-tax (loss) income 6,740 9,496 19,497 17,059 52,792 Income tax expense (benefit) 1,248 3,484 7,185 18,825 30,742 Net (loss) income $ 5,492 $ 6,012 $ 12,312 (1,766 ) 22,050 (Loss) income per share: (1) Basic (loss) earnings per share $ 0.09 $ 0.10 $ 0.21 $ (0.03 ) $ 0.37 Diluted (loss) earnings per share $ 0.09 $ 0.10 $ 0.20 $ (0.03 ) $ 0.35 Weighted average common shares outstanding - basic 59,184 59,823 59,884 60,219 59,816 Weighted average common shares outstanding - diluted 62,339 63,010 63,089 60,219 62,186 2016 Quarters 2016 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 19,807 $ 26,041 $ 31,808 $ 32,825 $ 110,481 Net investment income 3,231 3,342 3,544 3,634 13,751 Net realized investment (losses) gains (885 ) 61 66 65 (693 ) Other revenues 32 37 102 105 276 Insurance claims and claims expenses 458 470 664 800 2,392 Underwriting and operating expenses 22,671 23,234 24,037 23,281 93,223 Gain (loss) from change in fair value of warrant liability 670 (59 ) (797 ) (1,714 ) (1,900 ) Interest expense 3,632 3,707 3,733 3,776 14,848 Pre-tax (loss) income (3,907 ) 2,011 6,289 7,059 11,452 Income tax expense (benefit) — — 114 (52,663 ) (52,549 ) Net (loss) income (3,907 ) 2,011 6,175 59,722 64,001 (Loss) income per share: (1) Basic (loss) earnings per share $ (0.07 ) $ 0.03 $ 0.10 $ 1.01 $ 1.08 Diluted (loss) earnings per share $ (0.07 ) $ 0.03 $ 0.10 $ 0.98 $ 1.05 Weighted average common shares outstanding - basic 58,937 59,106 59,130 59,140 59,071 Weighted average common shares outstanding - diluted 58,937 59,831 60,285 61,229 60,829 (1) Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of quarterly per share data may not equal the per share data for the year. |
Organization and Basis of Pre43
Organization and Basis of Presentation - Narrative (Details) $ in Millions | 1 Months Ended | ||
Nov. 30, 2013shares | Apr. 30, 2012USD ($)shares | Dec. 31, 2017state | |
Business Acquisition [Line Items] | |||
Proceeds from issuance of common stock, net of stock issuance costs | $ 510 | ||
Number of states in which entity operates | state | 50 | ||
IPO | |||
Business Acquisition [Line Items] | |||
Common stock offered and sold (in shares) | shares | 2,400,000 | ||
MAC Financial Holding Corporation and Subsidiaries | |||
Business Acquisition [Line Items] | |||
Cash, common stock and warrants issued for acquisition | 8.5 | ||
Liabilities assumed in acquisition | $ 1.3 | ||
Common Class A | |||
Business Acquisition [Line Items] | |||
Common stock offered and sold (in shares) | shares | 55,000,000 |
Summary of Accounting Policie44
Summary of Accounting Policies - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
IBNR default period (at least) | 60 days | ||
Amortization of deferred acquisition expense | $ 5,800,000 | $ 4,300,000 | $ 2,800,000 |
Premium deficiency reserve expense | 0 | 0 | $ 0 |
Deferred tax asset, net | $ 19,929,000 | 51,434,000 | |
Cumulative effect of change in accounting principle | 903,000 | ||
Restatement Adjustment | |||
Finite-Lived Intangible Assets [Line Items] | |||
Deferred tax asset, net | (1,800,000) | ||
Retained Earnings | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cumulative effect of change in accounting principle | 515,000 | ||
ASU 2016-09 | Retained Earnings | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cumulative effect of change in accounting principle | $ 500,000 | ||
Software | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 3 years | ||
Software | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 7 years | ||
Equipment | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 3 years | ||
Equipment | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 7 years | ||
Customer Concentration Risk | Sales Revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Concentration risk | 11.00% | ||
Geographic Concentration Risk | Risk-in-Force | |||
Finite-Lived Intangible Assets [Line Items] | |||
Concentration risk | 14.00% |
Summary of Accounting Policie45
Summary of Accounting Policies - Prior Period Adjustments (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement | ||||||||||||
Net income (loss) | $ (1,766) | $ 12,312 | $ 6,012 | $ 5,492 | $ 59,722 | $ 6,175 | $ 2,011 | $ (3,907) | $ 22,050 | $ 64,001 | $ (27,793) | |
Income tax expense (benefit) | $ 18,825 | $ 7,185 | $ 3,484 | $ 1,248 | $ (52,663) | $ 114 | $ 0 | $ 0 | $ 30,742 | $ (52,549) | $ 0 | |
Basic earnings (loss) per share (in dollars per share) | $ (0.03) | $ 0.21 | $ 0.10 | $ 0.09 | $ 1.01 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.37 | $ 1.08 | $ (0.47) | |
Diluted earnings (loss) per share (in dollars per share) | $ (0.03) | $ 0.20 | $ 0.10 | $ 0.09 | $ 0.98 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.35 | $ 1.05 | $ (0.47) | |
Balance Sheet | ||||||||||||
Deferred tax asset, net | $ 19,929 | $ 51,434 | $ 19,929 | $ 51,434 | ||||||||
Total assets | 894,848 | 839,897 | 894,848 | 839,897 | ||||||||
Accumulated deficit | (74,157) | (96,722) | (74,157) | (96,722) | ||||||||
Total shareholders' equity | 509,077 | 475,509 | 509,077 | 475,509 | $ 402,731 | $ 426,958 | ||||||
Statement of Cash Flows | ||||||||||||
Net income (loss) | (1,766) | $ 12,312 | $ 6,012 | $ 5,492 | 59,722 | $ 6,175 | $ 2,011 | $ (3,907) | 22,050 | 64,001 | (27,793) | |
Deferred income taxes | $ 31,102 | $ (52,909) | $ 0 | |||||||||
Reconciliation between the statutory to effective income tax (benefit) rate: | ||||||||||||
Valuation allowance | 0.00% | (511.10%) | (35.80%) | |||||||||
Effective income tax rate | 58.20% | (459.00%) | 0.00% | |||||||||
Components of net deferred income tax asset (liability): | ||||||||||||
Share-based compensation | 6,122 | 9,080 | $ 6,122 | $ 9,080 | ||||||||
Valuation allowance | (7,160) | (6,941) | (7,160) | (6,941) | ||||||||
Deferred tax asset, net | $ 19,929 | 51,434 | $ 19,929 | 51,434 | ||||||||
Previously Reported | ||||||||||||
Income Statement | ||||||||||||
Net income (loss) | 65,841 | |||||||||||
Income tax expense (benefit) | $ (54,389) | |||||||||||
Basic earnings (loss) per share (in dollars per share) | $ 1.11 | |||||||||||
Diluted earnings (loss) per share (in dollars per share) | $ 1.08 | |||||||||||
Balance Sheet | ||||||||||||
Deferred tax asset, net | 53,274 | $ 53,274 | ||||||||||
Total assets | 841,737 | 841,737 | ||||||||||
Accumulated deficit | (94,882) | (94,882) | ||||||||||
Total shareholders' equity | 477,349 | 477,349 | ||||||||||
Statement of Cash Flows | ||||||||||||
Net income (loss) | 65,841 | |||||||||||
Deferred income taxes | $ (54,749) | |||||||||||
Reconciliation between the statutory to effective income tax (benefit) rate: | ||||||||||||
Valuation allowance | (527.00%) | |||||||||||
Effective income tax rate | (474.90%) | |||||||||||
Components of net deferred income tax asset (liability): | ||||||||||||
Share-based compensation | 11,231 | $ 11,231 | ||||||||||
Valuation allowance | (7,252) | (7,252) | ||||||||||
Deferred tax asset, net | $ 53,274 | $ 53,274 |
Summary of Accounting Policie46
Summary of Accounting Policies - Subsequent Events (Details) - Third-Party Reinsurers | Jan. 01, 2018 | Sep. 01, 2016 |
Subsequent Event [Line Items] | ||
Ceding commissions under QSR Transaction | 20.00% | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Ceding commissions under QSR Transaction | 20.00% | |
Profit commission earned on ceded premiums under QSR Transaction | 61.00% | |
Subsequent Event | Eligible Policies Written in 2018 | ||
Subsequent Event [Line Items] | ||
Percent of policies ceded under QSR Transaction | 25.00% | |
Subsequent Event | Eligible Policies Written in 2019 | Minimum | ||
Subsequent Event [Line Items] | ||
Percent of policies ceded under QSR Transaction | 20.00% | |
Subsequent Event | Eligible Policies Written in 2019 | Maximum | ||
Subsequent Event [Line Items] | ||
Percent of policies ceded under QSR Transaction | 30.00% |
Investments - Fair Values and G
Investments - Fair Values and Gross Unrealized Gains and Losses on Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 713,859 | $ 630,688 |
Gross Unrealized Gains | 5,739 | 2,822 |
Gross Unrealized (Losses) | (3,723) | (4,541) |
Fair Value | 715,875 | 628,969 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 65,669 | 64,135 |
Gross Unrealized Gains | 0 | 6 |
Gross Unrealized (Losses) | (981) | (962) |
Fair Value | 64,688 | 63,179 |
Municipal debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 89,973 | 40,801 |
Gross Unrealized Gains | 534 | 131 |
Gross Unrealized (Losses) | (659) | (663) |
Fair Value | 89,848 | 40,269 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 435,562 | 349,712 |
Gross Unrealized Gains | 4,231 | 1,722 |
Gross Unrealized (Losses) | (1,958) | (2,356) |
Fair Value | 437,835 | 349,078 |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 100,153 | 114,456 |
Gross Unrealized Gains | 916 | 765 |
Gross Unrealized (Losses) | (125) | (560) |
Fair Value | 100,944 | 114,661 |
Total bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 691,357 | 569,104 |
Gross Unrealized Gains | 5,681 | 2,624 |
Gross Unrealized (Losses) | (3,723) | (4,541) |
Fair Value | 693,315 | 567,187 |
Long-term investments - other | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 353 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized (Losses) | 0 | |
Fair Value | 353 | |
Short-term investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 22,149 | 61,584 |
Gross Unrealized Gains | 58 | 198 |
Gross Unrealized (Losses) | 0 | 0 |
Fair Value | $ 22,207 | $ 61,782 |
Investments - Scheduled Maturit
Investments - Scheduled Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Amortized Cost | ||
Amortized Cost, Due in one year or less | $ 97,406 | $ 94,382 |
Amortized Cost, Due after one through five years | 195,795 | 173,296 |
Amortized Cost, Due after five through ten years | 305,798 | 242,005 |
Amortized Cost, Due after ten years | 14,707 | 6,549 |
Amortized Cost, Asset-backed securities | 100,153 | 114,456 |
Amortized Cost | 713,859 | 630,688 |
Fair Value | ||
Fair Value, Due in one year or less | 97,394 | 94,584 |
Fair Value, Due after one through five years | 195,626 | 173,251 |
Fair Value, Due after five through ten years | 306,930 | 240,060 |
Fair Value Due after ten years | 14,981 | 6,413 |
Fair Value, Asset-backed securities | 100,944 | 114,661 |
Fair Value | $ 715,875 | $ 628,969 |
Investments - Unrealized Losses
Investments - Unrealized Losses (Details) $ in Thousands | Dec. 31, 2017USD ($)security | Dec. 31, 2016USD ($)security |
Number of securities | ||
Number of Securities, Less than 12 Months | security | 153 | 154 |
Number of Securities, 12 Months or Greater | security | 64 | 15 |
Number of Securities, Total | security | 217 | 169 |
Fair value | ||
Fair Value, Less than 12 Months | $ 224,694 | $ 253,569 |
Fair Value, 12 Months or Greater | 114,243 | 18,049 |
Fair Value, Total | 338,937 | 271,618 |
Unrealized loss | ||
Unrealized Losses, Less than 12 Months | (1,550) | (4,044) |
Unrealized Losses, 12 Months or Greater | (2,173) | (497) |
Unrealized Losses, Total | $ (3,723) | $ (4,541) |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Number of securities | ||
Number of Securities, Less than 12 Months | security | 16 | 33 |
Number of Securities, 12 Months or Greater | security | 26 | 0 |
Number of Securities, Total | security | 42 | 33 |
Fair value | ||
Fair Value, Less than 12 Months | $ 29,806 | $ 51,093 |
Fair Value, 12 Months or Greater | 34,882 | 0 |
Fair Value, Total | 64,688 | 51,093 |
Unrealized loss | ||
Unrealized Losses, Less than 12 Months | (394) | (962) |
Unrealized Losses, 12 Months or Greater | (587) | 0 |
Unrealized Losses, Total | $ (981) | $ (962) |
Municipal debt securities | ||
Number of securities | ||
Number of Securities, Less than 12 Months | security | 21 | 14 |
Number of Securities, 12 Months or Greater | security | 10 | 1 |
Number of Securities, Total | security | 31 | 15 |
Fair value | ||
Fair Value, Less than 12 Months | $ 38,628 | $ 28,659 |
Fair Value, 12 Months or Greater | 17,945 | 1,704 |
Fair Value, Total | 56,573 | 30,363 |
Unrealized loss | ||
Unrealized Losses, Less than 12 Months | (264) | (617) |
Unrealized Losses, 12 Months or Greater | (395) | (46) |
Unrealized Losses, Total | $ (659) | $ (663) |
Corporate debt securities | ||
Number of securities | ||
Number of Securities, Less than 12 Months | security | 94 | 77 |
Number of Securities, 12 Months or Greater | security | 23 | 8 |
Number of Securities, Total | security | 117 | 85 |
Fair value | ||
Fair Value, Less than 12 Months | $ 128,313 | $ 135,115 |
Fair Value, 12 Months or Greater | 48,978 | 13,873 |
Fair Value, Total | 177,291 | 148,988 |
Unrealized loss | ||
Unrealized Losses, Less than 12 Months | (829) | (1,955) |
Unrealized Losses, 12 Months or Greater | (1,129) | (401) |
Unrealized Losses, Total | $ (1,958) | $ (2,356) |
Asset-backed securities | ||
Number of securities | ||
Number of Securities, Less than 12 Months | security | 22 | 30 |
Number of Securities, 12 Months or Greater | security | 5 | 6 |
Number of Securities, Total | security | 27 | 36 |
Fair value | ||
Fair Value, Less than 12 Months | $ 27,947 | $ 38,702 |
Fair Value, 12 Months or Greater | 12,438 | 2,472 |
Fair Value, Total | 40,385 | 41,174 |
Unrealized loss | ||
Unrealized Losses, Less than 12 Months | (63) | (510) |
Unrealized Losses, 12 Months or Greater | (62) | (50) |
Unrealized Losses, Total | $ (125) | $ (560) |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |||
Investment income | $ 17,046 | $ 14,503 | $ 7,729 |
Investment expenses | (773) | (752) | (483) |
Net investment income | $ 16,273 | $ 13,751 | $ 7,246 |
Investments - Net Realized Inve
Investments - Net Realized Investments Gains (Losses) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |||
Gross realized investment gains | $ 546 | $ 748 | $ 1,526 |
Gross realized investment losses | (338) | (1,441) | (695) |
Net realized investment gains (losses) | $ 208 | $ (693) | $ 831 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2016 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Gross unrealized losses | $ 3,723 | $ 4,541 | |
Unrealized losses for a period of 12 months or greater | 2,173 | 497 | |
Other-than-temporary impairment | 144 | $ 89 | |
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 | 6,900 | |
Gross unrealized losses | 981 | 962 | |
Unrealized losses for a period of 12 months or greater | $ 587 | $ 0 |
Fair Value of Financial Instr53
Fair Value of Financial Instruments - Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 715,875 | $ 628,969 |
Warrant liability | 7,472 | 3,367 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 41,403 | 109,528 |
Total assets | 735,071 | 676,715 |
Warrant liability | 7,472 | 3,367 |
Total liabilities | 7,472 | 3,367 |
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 | 41,403 | 109,528 |
Total assets | 101,600 | 160,247 |
Warrant liability | 0 | 0 |
Total liabilities | 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 | 633,471 | 516,468 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
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 | 7,472 | 3,367 |
Total liabilities | 7,472 | 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] | ||
Fair Value | 64,688 | 63,179 |
U.S. Treasury securities and obligations of U.S. government agencies | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 64,688 | 63,179 |
U.S. Treasury securities and obligations of U.S. government agencies | 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] | ||
Fair Value | 59,844 | 50,719 |
U.S. Treasury securities and obligations of U.S. government agencies | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 4,844 | 12,460 |
U.S. Treasury securities and obligations of U.S. government agencies | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 89,848 | 40,269 |
Municipal debt securities | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 89,848 | 40,269 |
Municipal debt securities | 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] | ||
Fair Value | 0 | 0 |
Municipal debt securities | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 89,848 | 40,269 |
Municipal debt securities | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 437,835 | 349,078 |
Corporate debt securities | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 437,835 | 349,078 |
Corporate debt securities | 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] | ||
Fair Value | 0 | 0 |
Corporate debt securities | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 437,835 | 349,078 |
Corporate debt securities | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 100,944 | 114,661 |
Asset-backed securities | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 100,944 | 114,661 |
Asset-backed securities | 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] | ||
Fair Value | 0 | 0 |
Asset-backed securities | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 100,944 | 114,661 |
Asset-backed securities | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | $ 0 |
Long-term investments - other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 353 | |
Long-term investments - other | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 353 | |
Long-term investments - other | 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] | ||
Fair Value | 353 | |
Long-term investments - other | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | |
Long-term investments - other | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 0 |
Fair Value of Financial Instr54
Fair Value of Financial Instruments - Roll-Foward of Level 3 Liabilities Measured at Fair Value (Details) - Significant Unobservable Inputs (Level 3) - Warrant Liability - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | $ 3,367 | $ 1,467 | $ 3,372 |
Change in fair value of warrant liability included in earnings | 4,105 | 1,900 | (1,905) |
Ending balance | $ 7,472 | $ 3,367 | $ 1,467 |
Fair Value of Financial Instr55
Fair Value of Financial Instruments - Valuation Assumptions for Warrant Liabilities (Details) - Warrant Liability - Significant Unobservable Inputs (Level 3) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |||
Common Stock Price | $ 17 | $ 10.65 | $ 6.77 |
Risk free interest rate | 1.99% | 1.78% | 1.91% |
Expected life | 3 years 26 days | 4 years 3 months 29 days | 5 years 11 months 1 day |
Expected volatility | 30.60% | 32.70% | 32.70% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Term Loan - Narrative (Details)
Term Loan - Narrative (Details) - USD ($) | Nov. 10, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 25, 2017 |
Debt Instrument [Line Items] | |||||||||||||
Term loan | $ 146,625,000 | $ 146,625,000 | |||||||||||
Interest expense | (3,382,000) | $ (3,352,000) | $ (3,300,000) | $ (3,494,000) | $ (3,776,000) | $ (3,733,000) | $ (3,707,000) | $ (3,632,000) | $ (13,528,000) | $ (14,848,000) | $ (2,057,000) | ||
Credit Agreement | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument covenant, maximum debt-to-total capitalization ratio | 35.00% | ||||||||||||
Debt Instrument covenant, maximum risk-to-capital ratio | 22 | ||||||||||||
Debt Instrument, Covenant, Liquidity Requirement, Minimum | $ 2,600,000 | ||||||||||||
Senior Secured Term Loan B | Credit Agreement | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, face amount | $ 150,000,000 | ||||||||||||
Debt instrument term | 3 years | ||||||||||||
Periodic payment of principal | 375,000 | ||||||||||||
Term loan | $ 147,000,000 | $ 147,000,000 | |||||||||||
Payments of Debt Issuance Costs | $ 4,900,000 | ||||||||||||
Percentage of debt discount | 1.00% | ||||||||||||
Senior Secured Term Loan B | Credit Agreement | Eurodollar | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Variable rate floor | 1.00% | ||||||||||||
Basis spread on variable rate | 6.75% | ||||||||||||
Interest rate during period | 8.23% | ||||||||||||
Senior Secured Term Loan B | Credit Agreement Amendment | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Payments of Debt Issuance Costs | $ 445,000 |
Term Loan - Schedule of Future
Term Loan - Schedule of Future Principal Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future Principal Payments [Abstract] | |
2,018 | $ 1,500 |
2,019 | 145,125 |
Total | $ 146,625 |
Reinsurance - Effect of Reinsur
Reinsurance - Effect of Reinsurance on Net Premiums Written and Earned (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net premiums written | |||||||||||
Direct | $ 202,586 | $ 177,962 | $ 114,210 | ||||||||
Ceded | (28,914) | (43,270) | 0 | ||||||||
Net premiums written | 173,672 | 134,692 | 114,210 | ||||||||
Net premiums earned | |||||||||||
Gross Amount | 192,326 | 115,830 | 45,506 | ||||||||
Ceded | (26,586) | (5,349) | 0 | ||||||||
Net premiums earned | $ 50,079 | $ 44,519 | $ 37,917 | $ 33,225 | $ 32,825 | $ 31,808 | $ 26,041 | $ 19,807 | $ 165,740 | $ 110,481 | $ 45,506 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Sep. 01, 2016 | May 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Ceded Credit Risk [Line Items] | |||||||
Reinsurance recoverable on unpaid claims | $ 1,902 | $ 1,902 | $ 297 | $ 0 | $ 0 | ||
Third-Party Reinsurers | |||||||
Ceded Credit Risk [Line Items] | |||||||
Ceding commissions under 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 | $ 1,900 | $ 1,900 | |||||
2017 ILN Transaction | |||||||
Ceded Credit Risk [Line Items] | |||||||
Optional termination right, percent of reinsurance coverage threshold | 10.00% | 10.00% | |||||
2017 ILN Transaction | Third-Party Reinsurers | |||||||
Ceded Credit Risk [Line Items] | |||||||
Aggregate excess of loss reinsurance coverage | $ 177,000 | ||||||
Aggregate excess of loss reinsurance retained by company | $ 126,800 | ||||||
Reinsurance coverage, term of underlying mortgage amortization (in years) | 10 years | ||||||
Risk premiums paid | $ 5,000 | ||||||
Existing Risk Written Policies | Third-Party Reinsurers | |||||||
Ceded Credit Risk [Line Items] | |||||||
Percent of policies ceded under QSR Transaction | 25.00% | ||||||
Fannie Mae | Third-Party Reinsurers | |||||||
Ceded Credit Risk [Line Items] | |||||||
Percent of policies ceded under QSR Transaction | 100.00% | ||||||
Risk Written Policies from September 1, 2016 through December 31, 2017 | Third-Party Reinsurers | |||||||
Ceded Credit Risk [Line Items] | |||||||
Percent of policies ceded under QSR Transaction | 25.00% | ||||||
2017 ILN Notes | Oaktown Re Ltd | Secured Debt | |||||||
Ceded Credit Risk [Line Items] | |||||||
Proceeds from issuance of notes | $ 211,300 | ||||||
Maximum | 2017 ILN Transaction | Third-Party Reinsurers | |||||||
Ceded Credit Risk [Line Items] | |||||||
Aggregate excess of loss reinsurance coverage | $ 211,300 | ||||||
Anticipated payment related to annual operating expenses | $ 300 |
Reinsurance - Amounts Ceded Rel
Reinsurance - Amounts Ceded Related to 2016 QSR Transaction (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Ceded Credit Risk [Line Items] | |||
Ceded premiums written | $ (28,914) | $ (43,270) | $ 0 |
Ceded premiums earned | (26,586) | (5,349) | $ 0 |
Ceded claims and claims expenses | 1,687 | 297 | |
Profit commission | 28,084 | 7,283 | |
Third-Party Reinsurers | |||
Ceded Credit Risk [Line Items] | |||
Ceded risk-in-force | 2,983,353 | 2,008,385 | |
Ceded premiums written | (51,948) | (50,553) | |
Ceded premiums earned | (49,619) | (12,632) | |
Ceding commission written | 10,390 | 10,111 | |
Ceding commission earned | $ 9,806 | $ 2,303 |
Reserves for Insurance Claims61
Reserves for Insurance Claims and Claim Expenses - Narrative (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017USD ($)loanclaim | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
IBNR default period (at least) | 60 days | |||
Reserve for insurance claims and claim expenses | $ 8,761 | $ 3,001 | $ 679 | $ 83 |
Primary loans in default | loan | 928 | |||
Number of claims paid | claim | 27 | |||
Claims paid including amounts covered by insurance | $ 1,300 | |||
Favorable prior year development | 801 | $ 65 | $ 49 | |
Reserve for prior year insurance claims and claims expense | $ 1,000 | |||
Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of loans in pool past due 60 days or more | loan | 66 | |||
Risk-in-Force of loans in pool past due 60 days or more | $ 4,300 | |||
Loan-to-value ratio (less than) | 0.8 | |||
Claims applied to pool deductible | $ 368 | |||
Deductible on policy | $ 10,000 | |||
2016 QSR Transaction | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of covered claims included in number of claims paid | claim | 9 | |||
Component of claims paid covered under QSR Transaction | $ 81 | |||
2016 QSR Transaction | Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Percent of pool RIF reinsured | 100.00% |
Reserves for Insurance Claims62
Reserves for Insurance Claims and Claim Expenses - Reconciliation of Reserve Balances for Insurance Claims Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Beginning balance | $ 3,001 | $ 679 | $ 83 |
Less reinsurance recoverables | (297) | 0 | 0 |
Beginning balance, net of reinsurance recoverables | 2,704 | 679 | 83 |
Claims and claim expenses incurred: | |||
Current year | 6,140 | 2,457 | 699 |
Prior years | (801) | (65) | (49) |
Total claims and claims expenses incurred | 5,339 | 2,392 | 650 |
Claims and claim expenses paid: | |||
Current year | 27 | 171 | 50 |
Prior years | 1,157 | 196 | 4 |
Total claims and claim expenses paid | 1,184 | 367 | 54 |
Reserve at end of period, net of reinsurance recoverables | 6,859 | 2,704 | 679 |
Add reinsurance recoverables | (1,902) | (297) | 0 |
Ending balance | $ 8,761 | $ 3,001 | $ 679 |
Reserves for Insurance Claims63
Reserves for Insurance Claims and Claim Expenses - Claim Development by Accident Year and Reconciliation of Reserve for Insurance Claims and Claims Expense (Details) - Financial Guarantee Insurance Product Line $ in Thousands | Dec. 31, 2017USD ($)claim | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
Claims Development [Line Items] | |||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 8,343 | ||||
Incurred but not reported claims liability | $ 470 | ||||
Cumulative number of reported claims | claim | 928 | ||||
Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 1,605 | ||||
2,013 | |||||
Claims Development [Line Items] | |||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 0 | $ 0 | $ 0 | $ 0 | |
Incurred but not reported claims liability | $ 0 | ||||
Cumulative number of reported claims | claim | 0 | ||||
Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 0 | 0 | 0 | 0 | $ 0 |
2,014 | |||||
Claims Development [Line Items] | |||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 4 | 4 | 34 | 83 | |
Incurred but not reported claims liability | $ 0 | ||||
Cumulative number of reported claims | claim | 0 | ||||
Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 4 | 4 | 4 | $ 0 | |
2,015 | |||||
Claims Development [Line Items] | |||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 743 | 664 | 699 | ||
Incurred but not reported claims liability | $ 2 | ||||
Cumulative number of reported claims | claim | 3 | ||||
Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 684 | 246 | $ 50 | ||
2,016 | |||||
Claims Development [Line Items] | |||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 1,568 | 2,394 | |||
Incurred but not reported claims liability | $ 16 | ||||
Cumulative number of reported claims | claim | 32 | ||||
Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 890 | $ 171 | |||
2,017 | |||||
Claims Development [Line Items] | |||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 6,028 | ||||
Incurred but not reported claims liability | $ 452 | ||||
Cumulative number of reported claims | claim | 893 | ||||
Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 27 |
Reserves for Insurance Claims64
Reserves for Insurance Claims and Claim Expenses - Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claims Adjustment Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Reinsurance recoverable on unpaid claims | $ 1,902 | $ 297 | $ 0 | $ 0 |
Total gross liability for unpaid claims and claim adjustment expenses | 8,761 | $ 3,001 | $ 679 | $ 83 |
Financial Guarantee Insurance Product Line | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 8,343 | |||
Cumulative Paid Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | (1,605) | |||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 6,738 | |||
Reinsurance recoverable on unpaid claims | 1,902 | |||
Unallocated claims adjustment expenses | 121 | |||
Total gross liability for unpaid claims and claim adjustment expenses | $ 8,761 |
Reserves for Insurance Claims65
Reserves for Insurance Claims and Claim Expenses - Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Details) - Financial Guarantee Insurance Product Line | Dec. 31, 2017 |
Average annual percentage payout of incurred claims and allocated claims adjustment expenses by age, net of reinsurance | |
Year 1 | 6.00% |
Year 2 | 57.00% |
Year 3 | 59.00% |
Year 4 | 0.00% |
Year 5 | 0.00% |
Earnings (Loss) Per Share (EP66
Earnings (Loss) Per Share (EPS) - Computation of Basic and Diluted Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic EPS | |||||||||||
Basic net income (loss) | $ (1,766) | $ 12,312 | $ 6,012 | $ 5,492 | $ 59,722 | $ 6,175 | $ 2,011 | $ (3,907) | $ 22,050 | $ 64,001 | $ (27,793) |
Basic weighted average shares outstanding (in shares) | 60,219 | 59,884 | 59,823 | 59,184 | 59,140 | 59,130 | 59,106 | 58,937 | 59,816 | 59,071 | 58,683 |
Basic earnings (loss) per share (in dollars per share) | $ (0.03) | $ 0.21 | $ 0.10 | $ 0.09 | $ 1.01 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.37 | $ 1.08 | $ (0.47) |
Diluted EPS | |||||||||||
Diluted net income (loss) | $ 22,050 | $ 64,001 | $ (27,793) | ||||||||
Basic weighted average shares outstanding (in shares) | 60,219 | 59,884 | 59,823 | 59,184 | 59,140 | 59,130 | 59,106 | 58,937 | 59,816 | 59,071 | 58,683 |
Dilutive effect of issuable shares (in shares) | 2,370 | 1,758 | 0 | ||||||||
Dilutive weighted average shares outstanding (in shares) | 60,219 | 63,089 | 63,010 | 62,339 | 61,229 | 60,285 | 59,831 | 58,937 | 62,186 | 60,829 | 58,683 |
Diluted earnings (loss) per share (in dollars per share) | $ (0.03) | $ 0.20 | $ 0.10 | $ 0.09 | $ 0.98 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.35 | $ 1.05 | $ (0.47) |
Antidilutive securities excluded from computation of earnings per share (in shares) | 995 | 4,764 | 6,267 |
Warrants - Narrative (Details)
Warrants - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | 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 | |||
Warrants exercised (in shares) | 55,000 | 0 | 0 | |
Stock issued upon exercise of warrants (in shares) | 32,000 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) $ / shares in Units, $ in Thousands | May 11, 2017shares | Apr. 16, 2012shares | Jul. 31, 2017USD ($)employeeshares | May 31, 2017USD ($) | May 31, 2016USD ($)independent_directorshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014shares | May 08, 2014shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options vested (in shares) | 2,600,000 | |||||||||
Options exercised (in shares) | 272,800 | 0 | 0 | |||||||
Aggregate intrinsic value of options exercised | $ | $ 1,300 | |||||||||
Weighted average exercise price for options vested (in dollars per share) | $ / shares | $ 10.39 | |||||||||
Weighted average remaining contractual term | 5 years 2 months 12 days | |||||||||
Options vested aggregate value | $ | $ 17,000 | |||||||||
Unrecognized compensation cost related to non-vested stock options | $ | $ 1,100 | |||||||||
Employer matching contribution, percent of match (up to) | 100.00% | |||||||||
Employer matching contribution, percent of employees' gross pay (up to) | 4.00% | |||||||||
Contribution amount | $ | $ 1,500 | $ 1,500 | $ 1,200 | |||||||
Stock Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Expiration period (not more than) | 10 years | |||||||||
Unrecognized compensation cost, period for recognition | 1 year 6 months 7 days | |||||||||
Share-based awards vesting period (in years) | 3 years | |||||||||
Restricted Stock Units (RSUs) | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Unrecognized compensation cost, period for recognition | 1 year 7 months 6 days | |||||||||
Restricted stock units outstanding (in shares) | 2,065,000 | 2,538,000 | 1,443,000 | 1,209,000 | ||||||
Fair value of shares vested | $ | $ 18,100 | |||||||||
Weighted average remaining contractual life of RSUs outstanding | 8 years 7 months 6 days | |||||||||
Unrecognized compensation cost related to RSUs | $ | $ 7,000 | $ 4,200 | ||||||||
Number of non-vested RSUs modified (in shares) | 29,818 | |||||||||
Number of employees affected by award modification | employee | 1 | |||||||||
Incremental compensation cost related to modification | $ | $ 252 | |||||||||
Share-based awards granted (in shares) | 988,000 | 1,551,000 | 784,000 | |||||||
Restricted Stock Units (RSUs) | Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based awards vesting period (in years) | 1 year | |||||||||
Restricted Stock Units (RSUs) | Maximum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based awards vesting period (in years) | 5 years | |||||||||
RSUs Subject to Service Conditions | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Restricted stock units outstanding (in shares) | 1,900,000 | |||||||||
RSUs Subject to Service and Performance Conditions | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Restricted stock units outstanding (in shares) | 200,000 | |||||||||
2012 Stock Incentive Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized to be reserved for issuance (in shares) | 5,500,000 | |||||||||
2012 Stock Incentive Plan | Stock Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized to be reserved for issuance (in shares) | 3,850,000 | |||||||||
Expiration period (not more than) | 10 years | |||||||||
Award requisite service period | 3 years | |||||||||
2012 Stock Incentive Plan | Restricted Stock Units (RSUs) | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized to be reserved for issuance (in shares) | 1,650,000 | |||||||||
2014 Omnibus Incentive Plan | Common Class A | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized to be reserved for issuance (in shares) | 6,000,000 | 4,000,000 | ||||||||
Additional shares authorized (in shares) | 2,000,000 | |||||||||
Director Phantom Share Plan | Phantom Share Units (PSUs) | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based awards granted (in shares) | 8,169 | 0 | ||||||||
Number of independent directors granted share-based award | independent_director | 1 | |||||||||
Grant date fair market value of share-based award | $ | $ 50 | |||||||||
Cash used to settle phantom share awards | $ | $ 89 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Options, Outstanding [Roll Forward] | |||
Options beginning balance (in shares) | 3,026,000 | 3,851,000 | 3,630,000 |
Options granted (in shares) | 574,000 | 0 | 789,000 |
Options exercised (in shares) | (272,800) | 0 | 0 |
Options forfeited (in shares) | (1,000) | (41,000) | (64,000) |
Options expired (in shares) | (15,000) | (784,000) | (504,000) |
Options ending balance (in shares) | 3,311,000 | 3,026,000 | 3,851,000 |
Stock Options, Weighted Average Grant Date Fair Value Per Share [Roll Forward] | |||
Options beginning balance (in dollars per share) | $ 3.97 | $ 3.94 | $ 4.16 |
Options granted (in dollars per share) | 3.89 | 0 | 3.06 |
Options exercised (in dollars per share) | 3.93 | 0 | 0 |
Options forfeited (in dollars per share) | 4.97 | 3.33 | 4.90 |
Options expired (in dollars per share) | 4.76 | 3.87 | 4.05 |
Options ending balance (in dollars per share) | 3.95 | 3.97 | 3.94 |
Stock Options, Weighted Average Exercise Price [Roll Forward] | |||
Options beginning balance (in dollars per share) | 10.27 | 10.21 | 10.66 |
Options granted (in dollars per share) | 11.06 | 0 | 8.49 |
Options exercised (in dollars per share) | 10.17 | 0 | 0 |
Options forfeited (in dollars per share) | 12.32 | 8.92 | 12.20 |
Options expired (in dollars per share) | 12.02 | 10.06 | 10.48 |
Options beginning balance (in dollars per share) | $ 10.41 | $ 10.27 | $ 10.21 |
Share-Based Compensation - St70
Share-Based Compensation - Stock Option Valuation Assumptions (Details) - Stock Options | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life | 6 years | 0 years | 6 years |
Risk free interest rate | 0.00% | ||
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock price volatility | 0.00% | 34.40% | |
Projected forfeiture rate | 0.00% | 0.00% | 7.50% |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk free interest rate | 2.04% | 1.65% | |
Expected stock price volatility | 30.50% | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk free interest rate | 2.08% | 1.78% | |
Expected stock price volatility | 32.70% |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restricted Stock Units, Shares [Roll Forward] | |||
Non-vested restricted stock units, beginning balance (in shares) | 2,538 | 1,443 | 1,209 |
Restricted stock units granted (in shares) | 988 | 1,551 | 784 |
Restricted stock units vested (in shares) | (1,367) | (381) | (465) |
Restricted stock units forfeited (in shares) | (94) | (75) | (85) |
Non-vested restricted stock units, ending balance (in shares) | 2,065 | 2,538 | 1,443 |
Restricted Stock Units, Weighted Average Grant Date Fair Value [Abstract] | |||
Non-vested restricted stock units, beginning balance (in dollars per share) | $ 6.01 | $ 7.81 | $ 8.90 |
Restricted Stock Units Granted (in dollars per share) | 11.22 | 4.98 | 7.48 |
Restricted Stock Units Vested (in dollars per share) | 6.67 | 8.71 | 9.88 |
Restricted Stock Units Forfeited (in dollars per share) | 8.96 | 5.81 | 8.95 |
Non-vested restricted stock units, ending balance (in dollars per share) | $ 8.15 | $ 6.01 | $ 7.81 |
Income Taxes - Components of Pr
Income Taxes - Components of Provision for Income Taxes (Benefits) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
Current | $ 778 | $ 360 | $ 0 | ||||||||
Deferred | 29,964 | (52,909) | 0 | ||||||||
Total income tax expense (benefit) | $ 18,825 | $ 7,185 | $ 3,484 | $ 1,248 | $ (52,663) | $ 114 | $ 0 | $ 0 | $ 30,742 | $ (52,549) | $ 0 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Contingency [Line Items] | |||||||||||
Income tax expense (benefit) | $ 18,825,000 | $ 7,185,000 | $ 3,484,000 | $ 1,248,000 | $ (52,663,000) | $ 114,000 | $ 0 | $ 0 | $ 30,742,000 | $ (52,549,000) | $ 0 |
Provisional income tax expense related to Tax Cuts and Jobs Act of 2017 | 13,600,000 | ||||||||||
Net deferred income tax asset (liability) | 19,929,000 | 51,434,000 | 19,929,000 | 51,434,000 | |||||||
Net deferred tax liability | 51,400,000 | 51,400,000 | |||||||||
Loss carry forwards subject to expiration | 7,300,000 | 7,300,000 | |||||||||
Tax benefit related to excess tax benefits for share-based compensation | $ 3,300,000 | ||||||||||
Operating loss carryforwards related to excess share-based compensation | 2,200,000 | 2,200,000 | |||||||||
Valuation allowance | 7,160,000 | 6,941,000 | 7,160,000 | 6,941,000 | |||||||
Unrecognized tax benefits reserve | 0 | $ 0 | 0 | 0 | |||||||
Annual Limitation Through Year Two [Member] | |||||||||||
Income Tax Contingency [Line Items] | |||||||||||
Loss carry forwards subject to expiration | 800,000 | 800,000 | |||||||||
Annual Limitations After Year Two [Member] | |||||||||||
Income Tax Contingency [Line Items] | |||||||||||
Loss carry forwards subject to expiration | 300,000 | 300,000 | |||||||||
Domestic Tax Authority [Member] | |||||||||||
Income Tax Contingency [Line Items] | |||||||||||
Decrease in deferred tax asset valuation allowance | 58,200,000 | ||||||||||
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | |||||||||||
Income Tax Contingency [Line Items] | |||||||||||
Operating loss carryforwards | 93,300,000 | 93,300,000 | |||||||||
State and Local Jurisdiction [Member] | |||||||||||
Income Tax Contingency [Line Items] | |||||||||||
Decrease in deferred tax asset valuation allowance | $ 300,000 | ||||||||||
Operating loss carryforwards | $ 89,100,000 | $ 89,100,000 |
Income Taxes - Income Tax Recon
Income Taxes - Income Tax Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory income tax rate | 35.00% | 35.00% | 35.00% |
Re-measurement from change in federal statutory rate | 25.70% | 0.00% | 0.00% |
Share-based and other compensation | (4.70%) | 9.70% | 0.00% |
Warrant gain/loss | 1.80% | 4.00% | 1.60% |
Other | 0.40% | 3.40% | (0.80%) |
Valuation allowance | 0.00% | (511.10%) | (35.80%) |
Effective income tax rate | 58.20% | (459.00%) | 0.00% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Asset and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax asset | ||
Net operating loss carry forwards | $ 25,665 | $ 47,867 |
Share-based compensation | 6,122 | 9,080 |
Unearned premium reserve | 5,306 | 9,514 |
Deferred ceding commissions | 1,084 | 1,999 |
Capitalized start-up costs | 517 | 833 |
Unrealized loss on investments | 0 | 711 |
Alternative minimum tax credit | 0 | 360 |
Other | 2,061 | 5,893 |
Total gross deferred tax assets | 40,755 | 76,257 |
Less: valuation allowance | (7,160) | (6,941) |
Total deferred tax assets | 33,595 | 69,316 |
Deferred tax liability | ||
Deferred acquisition costs | (8,185) | (12,456) |
Capitalized software | (4,603) | (5,076) |
Unrealized gain on investments | (434) | 0 |
Intangible assets | (82) | (137) |
Other | (362) | (213) |
Total deferred tax liabilities | (13,666) | (17,882) |
Net deferred tax asset | $ 19,929 | $ 51,434 |
Software and Equipment - Balanc
Software and Equipment - Balances and Activity (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | $ 39,240 | $ 30,176 |
Accumulated amortization and depreciation | (16,438) | (9,774) |
Software and equipment, net | 22,802 | 20,402 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 31,616 | 23,621 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 4,133 | 3,102 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | $ 3,491 | $ 3,453 |
Software and Equipment - Narrat
Software and Equipment - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Capitalized costs related to software, equipment, and leaseholds | $ 9.1 | $ 11.2 | $ 6.7 |
Depreciation and amortization | $ 6.7 | $ 4.9 | $ 3.2 |
Intangible Assets and Goodwil78
Intangible Assets and Goodwill - Balances (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill | $ 3,244,000 | $ 3,244,000 |
Intangible assets and goodwill | 3,634,000 | 3,634,000 |
Impairment loss related to intangible assets and goodwill | 0 | 0 |
State licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets | 260,000 | 260,000 |
GSE applications | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets | $ 130,000 | $ 130,000 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Approved insurers, required assets (equal or greater than) | $ 400,000,000 | ||
Approved insurers, risked-based required assets, primary insurance floor | 5.60% | ||
Rent expense | $ 2,100,000 | $ 1,500,000 | $ 1,500,000 |
Commitments and Contingencies80
Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 1,711 |
2,019 | 2,346 |
2,020 | 2,417 |
2,021 | 2,489 |
2,022 | 2,564 |
2,023 | 657 |
Totals | $ 12,184 |
Regulatory Information - Schedu
Regulatory Information - Schedule of Combined Statutory Net Loss, Statutory Surplus, Contingency Reserve and RTC Ratios (Details) - NMIC and Re one Combined $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Statutory Accounting Practices [Line Items] | |||
Statutory net loss | $ (35,946) | $ (26,653) | $ (52,322) |
Statutory surplus | 371,084 | 413,809 | 391,422 |
Contingency reserve | $ 186,641 | $ 90,479 | $ 32,564 |
Risk-to-Capital | 13.2 | 11.6 | 8.7 |
Regulatory Information - Narrat
Regulatory Information - Narrative (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017USD ($)state | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Statutory Accounting Practices [Line Items] | ||||
Maximum permitted RTC ratio | 25 | |||
Number of states which require minimum amount of statutory capital relative to risk in force | state | 16 | |||
Mortgage insurance, percentage of indebtedness on single loan | 25.00% | |||
Shareholders' equity | $ 509,077 | $ 475,509 | $ 402,731 | $ 426,958 |
Investment in subsidiaries, at equity in net assets | $ 84,000 | |||
Ordinary dividends, restriction with regards to capital surplus | 10.00% | |||
Subsidiaries | ||||
Statutory Accounting Practices [Line Items] | ||||
Investment in subsidiaries, at equity in net assets | $ 574,000 | |||
NMIC | ||||
Statutory Accounting Practices [Line Items] | ||||
Risk-to-capital | 14 | 12.4 | ||
Mortgage insurance risk in force | $ 7,300,000 | $ 5,800,000 |
Quarterly Financial Data (Una83
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net premiums earned | $ 50,079 | $ 44,519 | $ 37,917 | $ 33,225 | $ 32,825 | $ 31,808 | $ 26,041 | $ 19,807 | $ 165,740 | $ 110,481 | $ 45,506 |
Net investment income | 4,388 | 4,170 | 3,908 | 3,807 | 3,634 | 3,544 | 3,342 | 3,231 | 16,273 | 13,751 | 7,246 |
Net realized investment gains (losses) | 9 | 69 | 188 | (58) | 65 | 66 | 61 | (885) | 208 | (693) | 831 |
Other revenues | 62 | 195 | 185 | 80 | 105 | 102 | 37 | 32 | 522 | 276 | 25 |
Insurance claims and claims expenses | 2,374 | 957 | 1,373 | 635 | 800 | 664 | 470 | 458 | 5,339 | 2,392 | 650 |
Underwriting and operating expenses | 28,297 | 24,645 | 28,048 | 25,989 | 23,281 | 24,037 | 23,234 | 22,671 | 106,979 | 93,223 | 80,599 |
(Loss) gain from change in fair value of warrant liability | (3,426) | (502) | 19 | (196) | (1,714) | (797) | (59) | 670 | (4,105) | (1,900) | 1,905 |
Interest expense | 3,382 | 3,352 | 3,300 | 3,494 | 3,776 | 3,733 | 3,707 | 3,632 | 13,528 | 14,848 | 2,057 |
Income (loss) before income taxes | 17,059 | 19,497 | 9,496 | 6,740 | 7,059 | 6,289 | 2,011 | (3,907) | 52,792 | 11,452 | (27,793) |
Income tax expense (benefit) | 18,825 | 7,185 | 3,484 | 1,248 | (52,663) | 114 | 0 | 0 | 30,742 | (52,549) | 0 |
Net income (loss) | $ (1,766) | $ 12,312 | $ 6,012 | $ 5,492 | $ 59,722 | $ 6,175 | $ 2,011 | $ (3,907) | $ 22,050 | $ 64,001 | $ (27,793) |
Loss (income) per share | |||||||||||
Earnings (loss) per share, basic (in dollars per share) | $ (0.03) | $ 0.21 | $ 0.10 | $ 0.09 | $ 1.01 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.37 | $ 1.08 | $ (0.47) |
Earnings (loss) per share, diluted (in dollars per share) | $ (0.03) | $ 0.20 | $ 0.10 | $ 0.09 | $ 0.98 | $ 0.10 | $ 0.03 | $ (0.07) | $ 0.35 | $ 1.05 | $ (0.47) |
Weighted average common shares outstanding, basic (in shares) | 60,219 | 59,884 | 59,823 | 59,184 | 59,140 | 59,130 | 59,106 | 58,937 | 59,816 | 59,071 | 58,683 |
Weighted average common shares outstanding, diluted (in shares) | 60,219 | 63,089 | 63,010 | 62,339 | 61,229 | 60,285 | 59,831 | 58,937 | 62,186 | 60,829 | 58,683 |
SCHEDULE I - SUMMARY OF INVES84
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | $ 713,859 |
Fair Value | 715,875 |
Amount Reflected on Balance Sheet | 715,875 |
U.S. Treasury securities and obligations of U.S. government agencies | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 65,669 |
Fair Value | 64,688 |
Amount Reflected on Balance Sheet | 64,688 |
Municipal debt securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 89,973 |
Fair Value | 89,848 |
Amount Reflected on Balance Sheet | 89,848 |
Corporate debt securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 435,562 |
Fair Value | 437,835 |
Amount Reflected on Balance Sheet | 437,835 |
Asset-backed securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 100,153 |
Fair Value | 100,944 |
Amount Reflected on Balance Sheet | 100,944 |
Total bonds | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 691,357 |
Fair Value | 693,315 |
Amount Reflected on Balance Sheet | 693,315 |
Long-term investments - other | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 353 |
Fair Value | 353 |
Amount Reflected on Balance Sheet | 353 |
Short-term investments | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 22,149 |
Fair Value | 22,207 |
Amount Reflected on Balance Sheet | $ 22,207 |
SCHEDULE II - FINANCIAL INFOR85
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $713,859 and $630,688 as of December 31, 2017 and December 31, 2016, respectively) | $ 715,875 | $ 628,969 | ||
Cash and cash equivalents | 19,196 | 47,746 | $ 57,317 | $ 103,021 |
Investment in subsidiaries, at equity in net assets | 84,000 | |||
Accrued investment income | 4,212 | 3,421 | ||
Prepaid expenses | 2,151 | 1,991 | ||
Software and equipment, net | 22,802 | 20,402 | ||
Deferred tax asset, net | 19,929 | 51,434 | ||
Other assets | 3,695 | 542 | ||
Total assets | 894,848 | 839,897 | ||
Liabilities | ||||
Term loan | 143,882 | 144,353 | ||
Accounts payable and accrued expenses | 23,364 | 25,297 | ||
Warrant liability, at fair value | 7,472 | 3,367 | ||
Total liabilities | 385,771 | 364,388 | ||
Equity [Abstract] | ||||
Common stock - class A shares, $0.01 par value; 60,517,512 and 59,145,161 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively (250,000,000 shares authorized) | 605 | 591 | ||
Additional paid-in capital | 585,488 | 576,927 | ||
Accumulated other comprehensive loss, net of tax | (2,859) | (5,287) | ||
Accumulated deficit | (74,157) | (96,722) | ||
Total shareholders' equity | 509,077 | 475,509 | 402,731 | 426,958 |
Total liabilities and shareholders' equity | 894,848 | 839,897 | ||
Parent | ||||
Assets | ||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $713,859 and $630,688 as of December 31, 2017 and December 31, 2016, respectively) | 50,505 | 58,209 | ||
Cash and cash equivalents | 528 | 15,858 | $ 13,183 | $ 29,925 |
Investment in subsidiaries, at equity in net assets | 573,695 | 503,731 | ||
Accrued investment income | 203 | 151 | ||
Prepaid expenses | 2,108 | 1,991 | ||
Due from affiliates, net | 22,407 | 9,211 | ||
Software and equipment, net | 22,802 | 20,401 | ||
Deferred tax asset, net | 6,610 | 36,534 | ||
Other assets | 1,704 | 182 | ||
Total assets | 680,562 | 646,268 | ||
Liabilities | ||||
Term loan | 143,882 | 144,353 | ||
Accounts payable and accrued expenses | 20,131 | 23,039 | ||
Warrant liability, at fair value | 7,472 | 3,367 | ||
Total liabilities | 171,485 | 170,759 | ||
Equity [Abstract] | ||||
Total liabilities and shareholders' equity | $ 680,562 | $ 646,268 |
SCHEDULE II - FINANCIAL INFOR86
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Balance Sheet Additional Information (Details) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 60,517,512 | 59,145,161 |
Common stock, shares outstanding (in shares) | 60,517,512 | 59,145,161 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Parent | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 60,517,512 | 59,145,161 |
Common stock, shares outstanding (in shares) | 60,517,512 | 59,145,161 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
SCHEDULE II - FINANCIAL INFOR87
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | |||||||||||
Net investment income | $ 4,388 | $ 4,170 | $ 3,908 | $ 3,807 | $ 3,634 | $ 3,544 | $ 3,342 | $ 3,231 | $ 16,273 | $ 13,751 | $ 7,246 |
Net realized investment gains (losses) | 9 | 69 | 188 | (58) | 65 | 66 | 61 | (885) | 208 | (693) | 831 |
Total revenues | 182,743 | 123,815 | 53,608 | ||||||||
Expenses | |||||||||||
Total expenses | 112,318 | 95,615 | 81,249 | ||||||||
Other expense | |||||||||||
(Loss) gain from change in fair value of warrant liability | (3,426) | (502) | 19 | (196) | (1,714) | (797) | (59) | 670 | (4,105) | (1,900) | 1,905 |
Interest expense | (3,382) | (3,352) | (3,300) | (3,494) | (3,776) | (3,733) | (3,707) | (3,632) | (13,528) | (14,848) | (2,057) |
Total other expenses | (17,633) | (16,748) | (152) | ||||||||
Income (loss) before income taxes | 17,059 | 19,497 | 9,496 | 6,740 | 7,059 | 6,289 | 2,011 | (3,907) | 52,792 | 11,452 | (27,793) |
Income tax expense (benefit) | 18,825 | 7,185 | 3,484 | 1,248 | (52,663) | 114 | 0 | 0 | 30,742 | (52,549) | 0 |
Net income (loss) | $ (1,766) | $ 12,312 | $ 6,012 | $ 5,492 | $ 59,722 | $ 6,175 | $ 2,011 | $ (3,907) | 22,050 | 64,001 | (27,793) |
Other comprehensive (loss) income, net of tax: | |||||||||||
Net unrealized gains (losses) in accumulated other comprehensive income, net of tax expense of $1,234, $1,178, and $0 for each of the years in the three-year period ended December 31, 2017, respectively | 2,559 | 1,429 | (3,518) | ||||||||
Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $73, $0, and $0 for each of the years in the three-years ended December 31, 2017, respectively | (131) | 758 | (349) | ||||||||
Other comprehensive income (loss), net of tax | 2,428 | 2,187 | (3,867) | ||||||||
Comprehensive income (loss) | 24,478 | 66,188 | (31,660) | ||||||||
Parent | |||||||||||
Revenues | |||||||||||
Net investment income | 691 | 773 | 2,535 | ||||||||
Net realized investment gains (losses) | 1 | 53 | 379 | ||||||||
Total revenues | 692 | 826 | 2,914 | ||||||||
Expenses | |||||||||||
Other operating expenses | 16,374 | 17,600 | 17,157 | ||||||||
Total expenses | 16,374 | 17,600 | 17,157 | ||||||||
Other expense | |||||||||||
(Loss) gain from change in fair value of warrant liability | (4,105) | (1,900) | 1,905 | ||||||||
Interest expense | 0 | (14,848) | (2,057) | ||||||||
Total other expenses | (4,105) | (16,748) | (152) | ||||||||
Equity in net income (loss) of subsidiaries | 67,146 | 58,819 | (14,430) | ||||||||
Income (loss) before income taxes | 47,359 | 25,297 | (28,825) | ||||||||
Income tax expense (benefit) | 25,309 | (38,704) | (1,032) | ||||||||
Net income (loss) | 22,050 | 64,001 | (27,793) | ||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Net unrealized gains (losses) in accumulated other comprehensive income, net of tax expense of $1,234, $1,178, and $0 for each of the years in the three-year period ended December 31, 2017, respectively | (90) | 100 | 141 | ||||||||
Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $73, $0, and $0 for each of the years in the three-years ended December 31, 2017, respectively | (1) | 53 | 186 | ||||||||
Equity in other comprehensive income (loss) of subsidiaries | 2,519 | 2,034 | (4,194) | ||||||||
Other comprehensive income (loss), net of tax | 2,428 | 2,187 | (3,867) | ||||||||
Comprehensive income (loss) | $ 24,478 | $ 66,188 | $ (31,660) |
SCHEDULE II - FINANCIAL INFOR88
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Income Statement Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Income Statements, Captions [Line Items] | |||
Change in unrealized investment gains (losses), tax amount | $ 1,234 | $ 1,178 | $ 0 |
Reclassification adjustment from AOCI for sale of securities, tax | 73 | 0 | 0 |
Parent | |||
Condensed Income Statements, Captions [Line Items] | |||
Change in unrealized investment gains (losses), tax amount | (49) | 82 | 0 |
Reclassification adjustment from AOCI for sale of securities, tax | $ 0 | $ 0 | $ 0 |
SCHEDULE II - FINANCIAL INFOR89
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Cash Flow Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||||||||||
Net income (loss) | $ (1,766) | $ 12,312 | $ 6,012 | $ 5,492 | $ 59,722 | $ 6,175 | $ 2,011 | $ (3,907) | $ 22,050 | $ 64,001 | $ (27,793) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Share-based compensation expense | 9,484 | 6,854 | 8,174 | ||||||||
Loss (gain) from change in fair value of warrant liability | 4,105 | 1,900 | (1,905) | ||||||||
Net realized investment gains | (9) | $ (69) | $ (188) | 58 | (65) | $ (66) | $ (61) | 885 | (208) | 693 | (831) |
Depreciation and amortization | 6,663 | 5,660 | 4,861 | ||||||||
Amortization of debt discount and debt issuance costs | 1,473 | 1,914 | 251 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Premiums receivable | (791) | (548) | (1,166) | ||||||||
Prepaid expenses | (160) | (563) | 626 | ||||||||
Other assets | (3,153) | (452) | 419 | ||||||||
Deferred income taxes | 29,964 | (52,909) | 0 | ||||||||
Accounts payable and accrued expenses | (2,486) | 3,300 | 8,167 | ||||||||
Net cash provided by operating activities | 67,763 | 71,944 | 41,463 | ||||||||
Cash flows from investing activities | |||||||||||
Purchase of short-term investments | (131,196) | (170,067) | (21,160) | ||||||||
Purchase of fixed-maturity investments, available-for-sale | (219,079) | (143,568) | (343,771) | ||||||||
Proceeds from maturity of short-term investments | 170,278 | 129,033 | 0 | ||||||||
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 95,435 | 116,281 | 140,901 | ||||||||
Software and equipment | (8,510) | (11,471) | (6,135) | ||||||||
Net cash used in provided by investing activities | (93,072) | (79,792) | (230,165) | ||||||||
Cash flows from financing activities | |||||||||||
Taxes paid related to net share settlement of equity awards | (8,582) | (755) | (1,105) | ||||||||
Proceeds from issuance of common stock related to employee equity plans | 7,103 | 532 | 415 | ||||||||
Proceeds from issuance of common stock related to warrants | 183 | 0 | 0 | ||||||||
Proceeds from term loan, net of discount | 0 | 0 | 148,500 | ||||||||
Repayments of term loan | (1,500) | (1,500) | (375) | ||||||||
Payments of debt modification costs | (445) | 0 | (4,437) | ||||||||
Net cash (used in) provided by financing activities | (3,241) | (1,723) | 142,998 | ||||||||
Net decrease in cash and cash equivalents | (28,550) | (9,571) | (45,704) | ||||||||
Cash and cash equivalents, beginning of period | 47,746 | 57,317 | 47,746 | 57,317 | 103,021 | ||||||
Cash and cash equivalents, end of period | 19,196 | 47,746 | 19,196 | 47,746 | 57,317 | ||||||
Parent | |||||||||||
Cash flows from operating activities | |||||||||||
Net income (loss) | 22,050 | 64,001 | (27,793) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Share-based compensation expense | 9,484 | 6,854 | 8,174 | ||||||||
Loss (gain) from change in fair value of warrant liability | 4,105 | 1,900 | (1,905) | ||||||||
Net realized investment gains | (1) | (53) | (379) | ||||||||
Depreciation and amortization | 233 | 5,779 | 3,885 | ||||||||
Amortization of debt discount and debt issuance costs | 1,474 | 1,914 | 251 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Equity in net (income) loss of subsidiaries | (67,239) | (58,819) | 14,430 | ||||||||
Premiums receivable | (52) | (2) | 481 | ||||||||
Receivable from affiliates | (13,103) | (828) | 1,566 | ||||||||
Prepaid expenses | (116) | (563) | 626 | ||||||||
Other assets | (1,523) | (126) | 453 | ||||||||
Deferred income taxes | 30,876 | (36,616) | 0 | ||||||||
Accounts payable and accrued expenses | (3,463) | 2,711 | 8,025 | ||||||||
Net cash provided by operating activities | (17,275) | (13,848) | 7,814 | ||||||||
Cash flows from investing activities | |||||||||||
Capitalization of subsidiaries | (300) | (800) | (153,500) | ||||||||
Purchase of short-term investments | (98,255) | (127,329) | (21,160) | ||||||||
Purchase of fixed-maturity investments, available-for-sale | (19,884) | (172) | (66,411) | ||||||||
Proceeds from maturity of short-term investments | 114,170 | 115,049 | 0 | ||||||||
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 11,451 | 41,750 | 79,652 | ||||||||
Software and equipment | (1,996) | (10,251) | (6,135) | ||||||||
Net cash used in provided by investing activities | 5,186 | 18,247 | (167,554) | ||||||||
Cash flows from financing activities | |||||||||||
Taxes paid related to net share settlement of equity awards | (8,582) | (756) | (1,105) | ||||||||
Proceeds from issuance of common stock related to employee equity plans | 7,103 | 532 | 415 | ||||||||
Proceeds from issuance of common stock related to warrants | 183 | 0 | 0 | ||||||||
Proceeds from term loan, net of discount | 0 | 0 | 148,500 | ||||||||
Repayments of term loan | (1,500) | (1,500) | (375) | ||||||||
Payments of debt modification costs | (445) | 0 | (4,437) | ||||||||
Net cash (used in) provided by financing activities | (3,241) | (1,724) | 142,998 | ||||||||
Net decrease in cash and cash equivalents | (15,330) | 2,675 | (16,742) | ||||||||
Cash and cash equivalents, beginning of period | $ 15,858 | $ 13,183 | 15,858 | 13,183 | 29,925 | ||||||
Cash and cash equivalents, end of period | $ 528 | $ 15,858 | $ 528 | $ 15,858 | $ 13,183 |
SCHEDULE II - FINANCIAL INFOR90
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Supplemental Notes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Subsidiaries | |||
Condensed Financial Statements, Captions [Line Items] | |||
Operating underwriting and operating expenses | $ 101 | $ 80.5 | $ 76 |
SCHEDULE IV - FINANCIAL INFOR91
SCHEDULE IV - FINANCIAL INFORMATION OF REGISTRANT REINSURANCE - PARENT COMPANY ONLY (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||||||||||
Gross Amount | $ 192,326 | $ 115,830 | $ 45,506 | |||||||||
Ceded to Other Companies | 26,586 | 5,349 | 0 | |||||||||
Net Amount | $ 50,079 | $ 44,519 | $ 37,917 | $ 33,225 | $ 32,825 | $ 31,808 | $ 26,041 | $ 19,807 | 165,740 | 110,481 | 45,506 | |
Parent | ||||||||||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||||||||||
Gross Amount | 192,326 | 115,830 | 0 | $ 0 | ||||||||
Ceded to Other Companies | 26,586 | 5,349 | 0 | 0 | ||||||||
Assumed from Other Companies | 0 | 0 | 0 | 0 | ||||||||
Net Amount | $ 165,740 | $ 110,481 | $ 0 | $ 0 | ||||||||
Percentage of Amount Assumed to Net | 0.00% | 0.00% | 0.00% | 0.00% |