COVER PAGE
COVER PAGE - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 04, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-36174 | |
Entity Registrant Name | NMI Holdings, Inc. | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-4914248 | |
Entity Address, Address Line One | 2100 Powell Street | |
Entity Address, City or Town | Emeryville | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94608 | |
City Area Code | 855 | |
Local Phone Number | 530-6642 | |
Title of 12(b) Security | Class A Common Stock, par value $0.01 | |
Trading Symbol | NMIH | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 67,980,992 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Entity Central Index Key | 0001547903 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Assets | |||
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,043,639 and $924,987 as of September 30, 2019 and December 31, 2018, respectively) | $ 1,073,176 | $ 911,490 | |
Cash and cash equivalents (including restricted cash of $2,933 and $1,414 as of September 30, 2019 and December 31, 2018, respectively) | 45,889 | 25,294 | |
Premiums receivable | 45,730 | 36,007 | |
Accrued investment income | 6,885 | 5,694 | |
Prepaid expenses | 4,518 | 3,241 | |
Deferred policy acquisition costs, net | 56,642 | 46,840 | |
Software and equipment, net | 26,303 | 24,765 | |
Intangible assets and goodwill | 3,634 | 3,634 | |
Prepaid reinsurance premiums | 17,917 | 30,370 | |
Other assets | 20,768 | 4,708 | |
Total assets | 1,301,462 | 1,092,043 | |
Liabilities | |||
Term loan | 146,007 | 146,757 | |
Unearned premiums | 145,146 | 158,893 | |
Accounts payable and accrued expenses | 39,296 | 31,141 | |
Reserve for insurance claims and claim expenses | 20,505 | 12,811 | |
Reinsurance funds withheld | 16,072 | 27,114 | |
Warrant liability, at fair value | 6,364 | 7,296 | |
Deferred tax liability, net | 43,769 | 2,740 | |
Other liabilities | [1] | 10,816 | 3,791 |
Total liabilities | 427,975 | 390,543 | |
Commitments and contingencies | |||
Shareholders' equity | |||
Common stock - class A shares, $0.01 par value; 67,927,370 and 66,318,849 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively (250,000,000 shares authorized) | 679 | 663 | |
Additional paid-in capital | 698,393 | 682,181 | |
Accumulated other comprehensive income (loss), net of tax | 19,165 | (14,832) | |
Retained earnings | 155,250 | 33,488 | |
Total shareholders' equity | 873,487 | 701,500 | |
Total liabilities and shareholders' equity | $ 1,301,462 | $ 1,092,043 | |
[1] | Deferred Ceding Commissions have been reclassified to "Other liabilities" in prior periods. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available-for-sale, amortized cost | $ 1,043,639 | $ 924,987 |
Restricted cash | $ 2,933 | $ 1,414 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 67,927,370 | 66,318,849 |
Common stock, outstanding (in shares) | 67,927,370 | 66,318,849 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | ||||
Net premiums earned | $ 92,381 | $ 65,407 | $ 249,499 | $ 181,936 |
Net investment income | 7,882 | 6,277 | 22,894 | 16,586 |
Net realized investment gains (losses) | 81 | (8) | (219) | 51 |
Other revenues | 1,244 | 85 | 1,700 | 193 |
Total revenues | 101,588 | 71,761 | 273,874 | 198,766 |
Expenses | ||||
Insurance claims and claim expenses | 2,572 | 1,099 | 8,238 | 3,311 |
Underwriting and operating expenses | 33,244 | 30,379 | 96,636 | 87,852 |
Total expenses | 35,816 | 31,478 | 104,874 | 91,163 |
Other expense | ||||
Gain (loss) from change in fair value of warrant liability | 1,139 | (5,464) | (6,025) | (4,935) |
Interest expense | (2,979) | (2,972) | (9,111) | (11,951) |
Total other expense | (1,840) | (8,436) | (15,136) | (16,886) |
Income before income taxes | 63,932 | 31,847 | 153,864 | 90,717 |
Income tax expense | 14,169 | 7,036 | 32,102 | 18,310 |
Net income | $ 49,763 | $ 24,811 | $ 121,762 | $ 72,407 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.73 | $ 0.38 | $ 1.81 | $ 1.12 |
Diluted (in dollars per share) | $ 0.69 | $ 0.36 | $ 1.75 | $ 1.07 |
Weighted average common shares outstanding | ||||
Basic (in shares) | 67,849 | 65,948 | 67,381 | 64,584 |
Diluted (in shares) | 70,137 | 68,844 | 69,520 | 67,512 |
Comprehensive income: | ||||
Net income | $ 49,763 | $ 24,811 | $ 121,762 | $ 72,407 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gains (losses) in accumulated other comprehensive income, net of tax expense (benefit) of $1,376 and ($337) for the three months ended September 30, 2019 and 2018, respectively and $8,991 and ($3,676) for the nine months ended September 30, 2019 and 2018, respectively | 5,177 | (1,267) | 33,824 | (13,828) |
Reclassification adjustment for realized (gains) losses included in net income, net of tax expense (benefit) of $17 and ($2) for the three months ended September 30, 2019 and 2018, respectively and ($46) and ($27) for the nine months ended September 30, 2019 and 2018, respectively | (64) | 7 | 173 | 102 |
Other comprehensive income (loss), net of tax | 5,113 | (1,260) | 33,997 | (13,726) |
Comprehensive income | $ 54,876 | $ 23,551 | $ 155,759 | $ 58,681 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net unrealized (losses) gains in accumulated other comprehensive income, tax (benefit) expense | $ 1,376 | $ (337) | $ 8,991 | $ (3,676) |
Reclassification adjustment for realized losses (gains) included in net income, tax expense (benefit) | $ 17 | $ (2) | $ (46) | $ (27) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common Stock - Class A | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumuated Deficit) |
Beginning balance at Dec. 31, 2017 | $ 509,077 | $ 605 | $ 585,488 | $ (2,859) | $ (74,157) |
Beginning balance (in shares) at Dec. 31, 2017 | 60,518,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to public offering | 79,165 | $ 43 | 79,122 | ||
Common stock: class A shares issued related to public offering (in shares) | 4,255,000 | ||||
Common stock: class A shares issued related to warrants | $ 489 | 489 | |||
Common stock: class A shares issued related to warrants (in shares) | 25,686 | 26,000 | |||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ (991) | $ 8 | (999) | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 770,000 | ||||
Share-based compensation expense | 2,805 | 2,805 | |||
Change in unrealized investment gains/losses, net of tax benefit/expense | (10,956) | (10,956) | |||
Net income | 22,355 | 22,355 | |||
Ending balance at Mar. 31, 2018 | 601,944 | $ 656 | 666,905 | (13,533) | (52,084) |
Ending balance (in shares) at Mar. 31, 2018 | 65,569,000 | ||||
Beginning balance at Dec. 31, 2017 | $ 509,077 | $ 605 | 585,488 | (2,859) | (74,157) |
Beginning balance (in shares) at Dec. 31, 2017 | 60,518,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to warrants (in shares) | 87,000 | ||||
Net income | $ 72,407 | ||||
Ending balance at Sep. 30, 2018 | 660,493 | $ 663 | 678,165 | (16,303) | (2,032) |
Ending balance (in shares) at Sep. 30, 2018 | 66,286,000 | ||||
Beginning balance at Mar. 31, 2018 | 601,944 | $ 656 | 666,905 | (13,533) | (52,084) |
Beginning balance (in shares) at Mar. 31, 2018 | 65,569,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to warrants | $ 63 | 63 | |||
Common stock: class A shares issued related to warrants (in shares) | 3,751 | 3,000 | |||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ 887 | $ 2 | 885 | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 182,000 | ||||
Share-based compensation expense | 3,017 | 3,017 | |||
Change in unrealized investment gains/losses, net of tax benefit/expense | (1,510) | (1,510) | |||
Net income | 25,241 | 25,241 | |||
Ending balance at Jun. 30, 2018 | 629,642 | $ 658 | 670,870 | (15,043) | (26,843) |
Ending balance (in shares) at Jun. 30, 2018 | 65,754,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to warrants | $ 1,245 | $ 1 | 1,244 | ||
Common stock: class A shares issued related to warrants (in shares) | 57,000 | 57,000 | |||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ 3,096 | $ 4 | 3,092 | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 475,000 | ||||
Share-based compensation expense | 2,959 | 2,959 | |||
Change in unrealized investment gains/losses, net of tax benefit/expense | (1,260) | (1,260) | |||
Net income | 24,811 | 24,811 | |||
Ending balance at Sep. 30, 2018 | 660,493 | $ 663 | 678,165 | (16,303) | (2,032) |
Ending balance (in shares) at Sep. 30, 2018 | 66,286,000 | ||||
Beginning balance at Dec. 31, 2018 | 701,500 | $ 663 | 682,181 | (14,832) | 33,488 |
Beginning balance (in shares) at Dec. 31, 2018 | 66,319,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to warrants | $ 944 | 944 | |||
Common stock: class A shares issued related to warrants (in shares) | 39,195 | 39,000 | |||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ (1,459) | $ 12 | (1,471) | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 1,144,000 | ||||
Share-based compensation expense | 2,981 | 2,981 | |||
Change in unrealized investment gains/losses, net of tax benefit/expense | 15,016 | 15,016 | |||
Net income | 32,899 | 32,899 | |||
Ending balance at Mar. 31, 2019 | 751,881 | $ 675 | 684,635 | 184 | 66,387 |
Ending balance (in shares) at Mar. 31, 2019 | 67,502,000 | ||||
Beginning balance at Dec. 31, 2018 | $ 701,500 | $ 663 | 682,181 | (14,832) | 33,488 |
Beginning balance (in shares) at Dec. 31, 2018 | 66,319,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to warrants (in shares) | 249,000 | ||||
Net income | $ 121,762 | ||||
Ending balance at Sep. 30, 2019 | 873,487 | $ 679 | 698,393 | 19,165 | 155,250 |
Ending balance (in shares) at Sep. 30, 2019 | 67,927,000 | ||||
Beginning balance at Mar. 31, 2019 | 751,881 | $ 675 | 684,635 | 184 | 66,387 |
Beginning balance (in shares) at Mar. 31, 2019 | 67,502,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to warrants | 3,836 | $ 1 | 3,835 | ||
Common stock: class A shares issued related to warrants (in shares) | 128,000 | ||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | 219 | $ 1 | 218 | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 138,000 | ||||
Share-based compensation expense | 3,475 | 3,475 | |||
Change in unrealized investment gains/losses, net of tax benefit/expense | 13,868 | 13,868 | |||
Net income | 39,100 | 39,100 | |||
Ending balance at Jun. 30, 2019 | 812,379 | $ 677 | 692,163 | 14,052 | 105,487 |
Ending balance (in shares) at Jun. 30, 2019 | 67,768,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock: class A shares issued related to warrants | $ 2,177 | $ 1 | 2,176 | ||
Common stock: class A shares issued related to warrants (in shares) | 82,000 | 82,000 | |||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ 656 | $ 1 | 655 | ||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 77,000 | ||||
Share-based compensation expense | 3,399 | 3,399 | |||
Change in unrealized investment gains/losses, net of tax benefit/expense | 5,113 | 5,113 | |||
Net income | 49,763 | 49,763 | |||
Ending balance at Sep. 30, 2019 | $ 873,487 | $ 679 | $ 698,393 | $ 19,165 | $ 155,250 |
Ending balance (in shares) at Sep. 30, 2019 | 67,927,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||||
Change in unrealized investment gains/losses, tax expense (benefit) | $ 1,359 | $ 3,686 | $ 3,992 | $ (335) | $ (2,891) | $ (423) |
Stock issued upon exercise of warrants (in shares) | 82,000 | 39,195 | 57,000 | 3,751 | 25,686 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net income | $ 121,762 | $ 72,407 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Net realized investment losses (gains) | 219 | (51) |
Loss from change in fair value of warrant liability | 6,025 | 4,935 |
Depreciation and amortization | 6,661 | 5,825 |
Net amortization of premium on investment securities | 943 | 1,176 |
Amortization of debt discount and debt issuance costs | 754 | 3,141 |
Share-based compensation expense | 9,855 | 8,781 |
Deferred income taxes | 31,991 | 16,698 |
Changes in operating assets and liabilities: | ||
Premiums receivable | (9,723) | (9,496) |
Accrued investment income | (1,191) | (1,669) |
Prepaid expenses | (1,472) | (980) |
Deferred policy acquisition costs, net | (9,802) | (6,512) |
Other assets | (8,428) | 927 |
Unearned premiums | (13,747) | (273) |
Reserve for insurance claims and claim expenses | 7,694 | 2,147 |
Reinsurance balances, net | (779) | 565 |
Accounts payable and accrued expenses | (1,195) | 1,728 |
Net cash provided by operating activities | 139,567 | 99,349 |
Cash flows from investing activities | ||
Purchase of short-term investments | (190,122) | (168,751) |
Purchase of fixed-maturity investments, available-for-sale | (186,793) | (310,286) |
Proceeds from maturity of short-term investments | 200,105 | 148,997 |
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 66,996 | 154,438 |
Additions to software and equipment | (7,449) | (5,326) |
Net cash used in investing activities | (117,263) | (180,928) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock related to public offering, net of issuance costs | 0 | 79,165 |
Proceeds from issuance of common stock related to employee equity plans | 13,733 | 12,557 |
Proceeds from issuance of common stock related to warrants | 0 | 320 |
Taxes paid related to net share settlement of equity awards | (14,317) | (10,113) |
Proceeds from senior note, net | 0 | 149,250 |
Repayments of term loan | (1,125) | (147,000) |
Payments of debt issuance/modification costs | 0 | (3,609) |
Net cash (used in) provided by financing activities | (1,709) | 80,570 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 20,595 | (1,009) |
Cash, cash equivalents and restricted cash, beginning of period | 25,294 | 19,196 |
Cash, cash equivalents and restricted cash, end of period | 45,889 | 18,187 |
Supplemental disclosures of cash flow information | ||
Interest paid | 8,060 | 9,233 |
Income tax (refunded) paid, net | $ (119) | |
Income tax (refunded) paid, net | $ 687 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Summary of Accounting Principles | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Summary of Accounting Principles | Organization, Basis of Presentation and Summary of Accounting Principles 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). Our common stock is listed on the NASDAQ exchange under the ticker 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 unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2018 , included in our 2018 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to our previously reported financial information have been made to conform to current period presentation. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2019 . Significant Accounting Principles There have been no changes to our significant accounting principles as described in Item 8, " Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Summary of Accounting Principles " of our 2018 10-K, other than as noted in " Variable interest entities " and " Recent Accounting Pronouncements - Adopted " below. Variable Interest Entities NMIC is a party to reinsurance agreements with three special purpose reinsurance entities - Oaktown Re Ltd., Oaktown Re II Ltd. and Oaktown Re III Ltd. - respectively dated May 2, 2017, July 25, 2018 and July 30, 2019. At inception of the respective reinsurance agreements, we determined that Oaktown Re Ltd., Oaktown Re II, Ltd. and Oaktown Re III, Ltd, were variable interest entities (VIEs), as defined under GAAP Accounting Standards Codification (ASC) 810, because they did not have sufficient equity at risk to finance their respective activities. We evaluated the VIEs at inception to determine whether NMIC was the primary beneficiary under each deal and, if so, whether we were required to consolidate the assets and liabilities of each 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 each VIE and as such, we do not consolidate them in our consolidated financial statements. Recent Accounting Pronouncements - Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. We adopted this ASU on January 1, 2019 using the modified-retrospective method and applied it prospectively as of the effective date, without adjusting comparative periods presented as permitted by ASU 2018-11, Leases (Topic 842), Targeted Improvements . Adoption of this new standard increased our assets and liabilities by $7.6 million in connection with the recognition of right-of-use (ROU) assets and lease liabilities, primarily related to the operating lease on our corporate headquarters. Adoption of this standard did not impact our consolidated statements of operations or cash flows. See Note 10, " Leases " for additional information related to our leases. 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. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This update expands the scope of Topic 718 to include share-based payments made to non-employees in connection with the acquisition of goods and services. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our financial results as we have not made any share-based grants to non-employees as defined in ASC 718-10-20. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and subsequently issued amendments to the initial guidance: ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Financial Instruments – Credit Losses: Targeted Transition Relief . These updates will require companies to measure and establish reserves for lifetime expected credit losses on many financial assets held at a given reporting date. Under the guidance, the methodology for measuring lifetime credit losses will generally shift from an incurred loss model, whereby losses are only recognized once probable and estimable, to a current expected credit loss (CECL) model, whereby losses are recognized upfront based on a future economic forecast. Credit losses relating to available-for-sale fixed maturity securities will be recorded through an allowance for credit losses, rather than a write-down of the asset as is currently required, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. The length of time an available-for sale fixed maturity security has been held in an unrealized loss position will no longer impact its credit loss determination. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The impact of this guidance and the extent of the impact will depend on, among other things, economic conditions and the composition and credit quality of our financial assets as of the date of adoption. While we are still evaluating the impact of this guidance, we do not expect it to have a material impact on our consolidated financial statements. This standard will not impact our accounting for insurance claims and claim expenses as these items are not in the scope of this ASU. In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts . This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This update modifies the fair value measurement disclosure requirements of ASC 820. 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 do not expect the revised disclosure requirements to have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This update applies to cloud computing arrangements structured as service contracts, and provides companies with guidance on the criteria for capitalizing implementation, set-up and other up-front costs incurred in association with these arrangements. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and we have elected to adopt this ASU prospectively for eligible costs incurred after the effective date of January 1, 2020. While we are still finalizing our analysis of this guidance, we do not expect it to have a material impact on our consolidated financial statements. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2019 | |
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 earnings based on specific identification of securities sold or other-than-temporarily impaired. Fair Values and Gross Unrealized Gains and Losses on Investments Amortized Gross Unrealized Fair Gains Losses As of September 30, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,198 $ 1,095 $ (40 ) $ 49,253 Municipal debt securities 103,974 1,790 (133 ) 105,631 Corporate debt securities 663,066 23,432 (520 ) 685,978 Asset-backed securities 179,651 3,765 (31 ) 183,385 Total bonds 994,889 30,082 (724 ) 1,024,247 Short-term investments 48,750 179 — 48,929 Total investments $ 1,043,639 $ 30,261 $ (724 ) $ 1,073,176 Amortized Gross Unrealized Fair Gains Losses As of December 31, 2018 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,171 $ 35 $ (1,376 ) $ 46,830 Municipal debt securities 92,014 206 (963 ) 91,257 Corporate debt securities 554,079 847 (11,688 ) 543,238 Asset-backed securities 171,990 792 (1,457 ) 171,325 Total bonds 866,254 1,880 (15,484 ) 852,650 Short-term investments 58,733 107 — 58,840 Total investments $ 924,987 $ 1,987 $ (15,484 ) $ 911,490 We did not own any mortgage-backed securities in our asset-backed securities portfolio at September 30, 2019 or December 31, 2018 . The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of September 30, 2019 and December 31, 2018 : September 30, 2019 December 31, 2018 Financial 38 % 38 % Consumer 27 27 Communications 10 12 Utilities 10 7 Industrial 8 7 Technology 5 6 Energy 2 2 Other — 1 Total 100 % 100 % As of September 30, 2019 and December 31, 2018 , approximately $5.5 million and $5.3 million , respectively, 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 September 30, 2019 and December 31, 2018 , 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 September 30, 2019 Amortized Fair (In Thousands) Due in one year or less $ 102,581 $ 102,787 Due after one through five years 424,455 434,248 Due after five through ten years 313,804 329,061 Due after ten years 23,148 23,695 Asset-backed securities 179,651 183,385 Total investments $ 1,043,639 $ 1,073,176 As of December 31, 2018 Amortized Fair (In Thousands) Due in one year or less $ 76,087 $ 76,104 Due after one through five years 352,282 347,701 Due after five through ten years 318,728 310,633 Due after ten years 5,900 5,727 Asset-backed securities 171,990 171,325 Total investments $ 924,987 $ 911,490 Aging of Unrealized Losses As of September 30, 2019 , the investment portfolio had gross unrealized losses of $0.7 million , of which $0.4 million had 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 September 30, 2019 . We based our conclusion that these investments were not other-than-temporarily impaired as of September 30, 2019 on the following facts: (i) the unrealized losses were primarily caused by interest rate movements and market fluctuations in credit spreads 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 September 30, 2019 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 5 $ 13,822 $ (40 ) — $ — $ — 5 $ 13,822 $ (40 ) Municipal debt securities 4 15,720 (102 ) 4 4,337 (31 ) 8 20,057 (133 ) Corporate debt securities 10 26,812 (122 ) 20 30,812 (398 ) 30 57,624 (520 ) Asset-backed securities 3 13,451 (20 ) 2 3,583 (11 ) 5 17,034 (31 ) Short-term investments (1) 1 9,999 — — — — 1 9,999 — Total 23 $ 79,804 $ (284 ) 26 $ 38,732 $ (440 ) 49 $ 118,536 $ (724 ) (1) Includes securities with unrealized losses of less than 12 months which are not identifiable in the schedule due to rounding. 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, 2018 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies — $ — $ — 19 $ 41,817 $ (1,376 ) 19 $ 41,817 $ (1,376 ) Municipal debt securities 4 7,409 (11 ) 31 58,658 (952 ) 35 66,067 (963 ) Corporate debt securities 118 226,477 (3,952 ) 126 221,675 (7,736 ) 244 448,152 (11,688 ) Asset-backed securities 25 36,017 (1,136 ) 22 33,988 (321 ) 47 70,005 (1,457 ) Total 147 $ 269,903 $ (5,099 ) 198 $ 356,138 $ (10,385 ) 345 $ 626,041 $ (15,484 ) Net Investment Income The following table presents the components of net investment income: For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands) Investment income $ 8,003 $ 6,473 $ 23,240 $ 17,192 Investment expenses (121 ) (196 ) (346 ) (606 ) Net investment income $ 7,882 $ 6,277 $ 22,894 $ 16,586 The following table presents the components of net realized investment losses: For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands) Gross realized investment gains $ 81 $ 461 $ 297 $ 520 Gross realized investment losses — (469 ) (516 ) (469 ) Net realized investment gains (losses) $ 81 $ (8 ) $ (219 ) $ 51 Investment Securities - Other-than-Temporary Impairment (OTTI) As of September 30, 2019 , we held no other-than-temporarily impaired securities. During the nine months ended September 30, 2019 , we recognized a $0.4 million OTTI loss in earnings related to the planned sale of a security in a loss position that was disposed of in April 2019. We did not recognize any OTTI losses for the three months ended September 30, 2019 or the three and nine months ended September 30, 2018 . 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 three or nine months ended September 30, 2019 . |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 49,253 $ — $ — $ 49,253 Municipal debt securities — 105,631 — 105,631 Corporate debt securities — 685,978 — 685,978 Asset-backed securities — 183,385 — 183,385 Cash, cash equivalents and short-term investments 94,818 — — 94,818 Total assets $ 144,071 $ 974,994 $ — $ 1,119,065 Warrant liability — — 6,364 6,364 Total liabilities $ — $ — $ 6,364 $ 6,364 Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2018 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 46,830 $ — $ — $ 46,830 Municipal debt securities — 91,257 — 91,257 Corporate debt securities — 543,238 — 543,238 Asset-backed securities — 171,325 — 171,325 Cash, cash equivalents and short-term investments 84,134 — — 84,134 Total assets $ 130,964 $ 805,820 $ — $ 936,784 Warrant liability — — 7,296 7,296 Total liabilities $ — $ — $ 7,296 $ 7,296 There were no transfers between Level 1 and Level 2, nor any transfers in or out of Level 3, of the fair value hierarchy during the nine months ended September 30, 2019 and the year ended December 31, 2018 . The following is a roll-forward of Level 3 liabilities measured at fair value: For the nine months ended September 30, Warrant Liability 2019 2018 (In Thousands) Balance, January 1 $ 7,296 $ 7,472 Change in fair value of warrant liability included in earnings 6,025 4,935 Issuance of common stock on warrant exercise (6,957 ) (1,477 ) Balance, September 30 $ 6,364 $ 10,930 The following table outlines the key inputs and assumptions used to calculate the fair value of the warrant liability in the Black-Scholes option-pricing model as of the dates indicated. As of September 30, 2019 2018 Common stock price $ 26.26 $ 22.65 Risk free interest rate 1.76 % 2.86 - 2.90% Expected life 0.92 years 2.50 - 3.56 years Expected volatility 33.5 % 39.9 - 41.5% Dividend yield 0 % 0 % The changes in fair value of the warrant liability for the nine months ended September 30, 2019 and 2018 are primarily attributable to changes in the price of our common stock and exercises of outstanding warrants during the respective periods, with additional impact related to changes in other Black-Scholes model inputs. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt On May 24, 2018, we entered into a credit agreement (2018 Credit Agreement), which provides for (i) a $150 million 5-year senior secured term loan facility (2018 Term Loan) that matures on May 24, 2023; and (ii) a $85 million three-year secured revolving credit facility (2018 Revolving Credit Facility) that matures on May 24, 2021. Proceeds from the 2018 Term Loan were used to repay in full the outstanding amount due under our $150 million amended term loan (2015 Term Loan) due on November 10, 2019, and to pay fees and expenses incurred in connection with the 2018 Credit Agreement. 2018 Term Loan The 2018 Term Loan bears interest at the Eurodollar Rate, as defined in the 2018 Credit Agreement and subject to a 1.00% floor, plus an annual margin rate of 4.75% , representing an all-in rate of 6.95% as of September 30, 2019 , payable quarterly based on our current interest period election. Quarterly principal payments of $375 thousand are also required. As of September 30, 2019 , the outstanding principal balance of the 2018 Term Loan was $148.1 million . Interest expense for the 2018 Term Loan includes interest and the amortization of issuance costs, an original issue discount and capitalized modification costs related to the 2015 Term Loan. For the three and nine months ended September 30, 2019 , interest expense was $2.8 million and $8.4 million , respectively. Remaining unamortized issuance costs and original issue discount were $2.1 million as of September 30, 2019 and are being amortized to interest expense using the effective interest method over the contractual life of the 2018 Term Loan. We are subject to certain covenants under the 2018 Term Loan (as defined in the 2018 Credit Agreement), including (but not limited to) a maximum debt-to-total capitalization ratio (as defined in the 2018 Credit Agreement) of 35% under the 2018 Term Loan. We were in compliance with all covenants as of September 30, 2019 . Future principal payments due under the 2018 Term Loan as of September 30, 2019 are as follows: As of September 30, 2019 Principal (In thousands) 2019 $ 375 2020 1,500 2021 1,500 2022 1,500 2023 143,250 Total $ 148,125 2018 Revolving Credit Facility Borrowings under the 2018 Revolving Credit Facility may be used for general corporate purposes and will accrue interest at a variable rate equal to, at our discretion, (i) a base rate (as defined in the 2018 Credit Agreement, subject to a floor of 1.00% per annum) plus a margin of 1.00% to 2.50% per annum, based on the applicable corporate credit rating at the time, or (ii) the Eurodollar Rate (subject to a floor of 0.00% per annum) plus a margin of 2.00% to 3.50% per annum, based on the applicable corporate credit rating at the time. As of September 30, 2019 , no borrowings had been made under the 2018 Revolving Credit Facility. We are required to pay a quarterly commitment fee on the average daily undrawn amount of the 2018 Revolving Credit Facility, which ranges from 0.30% to 0.60% , based on the applicable corporate credit rating at the time. As of September 30, 2019 , the applicable commitment fee was 0.40% . For the three and nine months ended September 30, 2019 , we recorded $0.1 million and $0.3 million of commitment fees in interest expense, respectively. We incurred issuance costs of $1.5 million in connection with the establishment of the 2018 Revolving Credit Facility, which were deferred and recorded within "Other assets". These costs are being amortized through interest expense over the three-year life of the 2018 Revolving Credit Facility on a straight-line basis. For the three and nine months ended September 30, 2019 , we recognized $0.1 million and $0.4 million , respectively, of interest expense from the amortization of deferred issuance costs. At September 30, 2019 , remaining deferred issuance costs were $0.8 million , net of accumulated amortization. We are subject to certain covenants under the 2018 Revolving Credit Facility, including (but not limited to) the following: a maximum debt-to-total capitalization ratio of 35% , a minimum liquidity requirement, compliance with the PMIERs financial requirements (subject to any GSE-approved waivers), and minimum consolidated net worth and statutory capital requirements (respectively, as defined therein). We were in compliance with all covenants as of September 30, 2019 . |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2019 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance We enter into third-party reinsurance transactions to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements, and support the growth of our business. The GSEs and the Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) have approved all such transactions (subject to certain conditions and ongoing review, including levels of approved capital credit). The effect of our reinsurance agreements on premiums written and earned is as follows: For the three months ended For the nine months ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 (In Thousands) Net premiums written Direct $ 100,475 $ 73,748 $ 274,418 $ 210,452 Ceded (1) (11,796 ) (8,367 ) (31,207 ) (21,598 ) Net premiums written $ 88,679 $ 65,381 $ 243,211 $ 188,854 Net premiums earned Direct $ 106,687 $ 76,513 $ 288,165 $ 210,725 Ceded (1) (14,306 ) (11,106 ) (38,666 ) (28,789 ) Net premiums earned $ 92,381 $ 65,407 $ 249,499 $ 181,936 (1) Net of profit commission. Excess-of-loss reinsurance NMIC entered into excess-of-loss reinsurance agreements with Oaktown Re Ltd., Oaktown Re II Ltd. and Oaktown Re III Ltd. (special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective May 2, 2017, July 25, 2018 and July 30, 2019, respectively. Each agreement provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies written during a discrete period. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the respective Oaktown Re Vehicle then provides second layer loss protection up to a defined reinsurance coverage amount. NMIC then retains losses in excess of the respective reinsurance coverage amounts. The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease from the inception of each agreement over a ten-year period as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled. The respective outstanding reinsurance coverage amounts stop amortizing if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered. NMIC makes risk premium payments to the Oaktown Re Vehicles for the applicable outstanding reinsurance coverage amount and pays an additional premium amount for anticipated operating expenses (capped at $300 thousand per year to Oaktown Re Ltd. and $250 thousand per year to Oaktown Re II, Ltd. and Oaktown Re III, Ltd.). NMIC ceded aggregate premiums to the Oaktown Re Vehicles of $4.4 million and $10.3 million during the three and nine months ended September 30, 2019 , respectively, and $3.1 million and $6.4 million during the three and nine months ended September 30, 2018 . NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure under each excess-of-loss agreement. NMIC did not cede any incurred losses on covered policies to the Oaktown Re Vehicles during the three and nine months ended September 30, 2019 and 2018, as the aggregate first layer risk retention was not exhausted for each agreement during such periods. Under the terms of each excess-of-loss reinsurance agreement, the Oaktown Re Vehicles are required to fully collateralize their outstanding reinsurance coverage amount to NMIC with funds deposited into segregated reinsurance trusts. Such trust funds are required to be invested in short-term U.S. Treasury money market funds at all times. Each Oaktown Re Vehicle financed its respective collateral requirement through the issuance of mortgage insurance-linked notes to unaffiliated investors. Such insurance-linked notes mature ten years from the inception date of each reinsurance agreement. We refer to NMIC's reinsurance agreements with and the insurance-linked note issuances by Oaktown Re Ltd., Oaktown Re II, Ltd. and Oaktown Re III, Ltd. individually as the 2017 ILN Transaction, 2018 ILN Transaction and 2019 ILN Transaction, and collectively as the ILN Transactions. The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each of the ILN Transactions. ( $ values in thousands) Inception Date Covered Production Initial Reinsurance Coverage Current Reinsurance Coverage Initial First Layer Retained Loss Current First Layer Retained Loss 2017 ILN Transaction May 2, 2017 1/1/2013 - 12/31/2016 $ 211,320 $ 75,639 $ 126,793 $ 124,074 2018 ILN Transaction July 25, 2018 1/1/2017 - 5/31/2018 264,545 231,604 125,312 125,025 2019 ILN Transaction July 30, 2019 6/1/2018 - 6/30/2019 326,905 326,905 123,424 123,424 NMIC holds optional termination rights under each ILN Transaction in the event of certain occurrences, including, among others, an optional call feature which provides NMIC the discretion to terminate the transaction on or after a prescribed date, and 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 a given agreement. In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC's failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others. Under the terms of the 2018 ILN Transaction and the 2019 ILN Transaction, we are required to maintain a certain level of restricted funds in premium deposit accounts with Bank of New York Mellon until the respective notes have been redeemed in full. "Cash and cash equivalents" on our condensed consolidated balance sheet includes restricted amounts of $2.9 million as of September 30, 2019 . We are not required to deposit additional funds into the premium deposit accounts in the future and the restricted balances will decrease over time as the outstanding principal balances of the respective insurance-linked notes decline. The amount of reinsurance premiums ceded under each ILN Transaction fluctuates based on changes in one-month LIBOR and changes in the earned rate on the money market funds in which the assets of the reinsurance trusts are invested. As the reinsurance premiums will vary based on changes in these rates, we have concluded that the ILN Transactions each contain an embedded derivative that must be treated separately as a freestanding derivative. The total fair value of such derivatives at September 30, 2019 and December 31, 2018 , and the change in fair value of the derivatives during the three and nine months ended September 30, 2019 and 2018 , were not material to our condensed consolidated financial statements. Quota share reinsurance NMIC entered into quota share reinsurance treaties effective September 1, 2016 (the 2016 QSR Transaction) and January 1, 2018 (the 2018 QSR Transaction), which we refer to collectively as the QSR Transactions. Under each of the QSR Transactions, NMIC cedes a proportional share of its risk on eligible policies written during a discrete period to panels of third-party reinsurance providers. Each of the third-party reinsurance providers has an insurer financial strength rating of A- or better by Standard & Poor’s Rating Service (S&P), A.M. Best Company, Inc. (A.M.Best) or both. Under the 2016 QSR Transaction, NMIC cedes premiums written related to 25% of the risk on eligible primary policies written for all periods through December 31, 2017 and 100% of the risk under our pool agreement with Fannie Mae. The 2016 QSR Transaction 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. 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. Under the 2018 QSR Transaction, NMIC cedes premiums earned related to 25% of the risk on eligible policies written in 2018 and 20% of the risk on eligible policies written in 2019. The 2018 QSR Transaction is scheduled to terminate on December 31, 2029. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2022, or at the end of any calendar quarter thereafter, which would result in NMIC reassuming the related risk. NMIC may terminate either or both of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the risk-in-force (RIF) ceded under the respective agreements. Additionally, under the terms of the QSR Transactions, NMIC may elect to selectively terminate its engagement with individual reinsurers on a run-off basis ( i.e. , reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis ( i.e. , the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement. Effective April 1, 2019, NMIC elected to terminate its engagement with one reinsurer under the 2016 QSR Transaction on a cut-off basis. In connection with the termination, NMIC recaptured approximately $500 million of previously ceded primary RIF and stopped ceding new premiums earned or written with respect to the recaptured risk. With the termination, ceded premiums written under the 2016 QSR Transaction decreased from 25% to 20.5% on eligible policies. The termination has no effect on the cession of pool risk under the 2016 QSR Transaction. The following table shows the amounts related to the QSR Transactions: For the three months ended For the nine months ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 (In Thousands) Ceded risk-in-force $ 4,901,809 $ 3,960,461 $ 4,901,809 $ 3,960,461 Ceded premiums earned (23,151 ) (19,286 ) (65,538 ) (53,581 ) Ceded claims and claim expenses 766 337 2,435 1,053 Ceding commission earned 4,584 3,814 12,961 10,501 Profit commission 13,254 11,272 37,199 31,180 Ceded premiums written under the 2016 QSR Transaction are recorded on the balance sheet as prepaid reinsurance premiums and amortized to ceded premiums earned in a manner consistent with the recognition of revenue on direct premiums. Under the 2018 QSR Transaction, premiums are ceded on an earned basis as defined in the agreement. NMIC receives a 20% ceding commission for premiums ceded under the QSR Transactions. NMIC also receives a profit commission under each of the QSR Transactions, provided that the loss ratios on loans covered under the 2016 QSR Transaction and 2018 QSR Transaction generally remain below 60% and 61% , respectively, as measured annually. Ceded claims and claim expenses under each of the QSR Transactions reduce the respective profit commission received by NMIC 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 $2.6 million as of September 30, 2019 . In accordance with the terms of the 2018 QSR Transaction, cash payments for ceded premiums earned are settled on a quarterly basis, offset by amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC are also settled quarterly. NMIC's reinsurance recoverable balance is 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 2018 QSR Transaction was $1.7 million as of September 30, 2019 . |
Reserves for Insurance Claims a
Reserves for Insurance Claims and Claim Expenses | 9 Months Ended |
Sep. 30, 2019 | |
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 incurred but not reported (IBNR) reserves. We also establish claim 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 September 30, 2019 , we had reserves for insurance claims and claim expenses of $20.5 million for 1,230 primary loans in default. During the nine months ended September 30, 2019 , we paid 98 claims totaling $3.0 million , including 91 claims covered under the QSR Transactions representing $0.6 million of ceded claims and claim 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 September 30, 2019 , 49 loans in the pool were past due by 60 days or more. These 49 loans represented approximately $3.4 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 September 30, 2019 and the expected severity (all loans in the pool have loan-to-value ratios (LTV) ratios under 80% ), we did not establish any case or IBNR reserves for pool risk at September 30, 2019 . In connection with the settlement of pool claims, we applied $0.8 million to the pool deductible through September 30, 2019 . At September 30, 2019 , the remaining pool deductible was $9.6 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 nine months ended September 30, 2019 2018 (In Thousands) Beginning balance $ 12,811 $ 8,761 Less reinsurance recoverables (1) (3,001 ) (1,902 ) Beginning balance, net of reinsurance recoverables 9,810 6,859 Add claims incurred: Claims and claim expenses incurred: Current year (2) 10,948 5,090 Prior years (3) (2,710 ) (1,779 ) Total claims and claim expenses incurred 8,238 3,311 Less claims paid: Claims and claim expenses paid: Current year (2) — 37 Prior years (3) 2,401 1,742 Reinsurance terminations (4) (549 ) — Total claims and claim expenses paid 1,852 1,779 Reserve at end of period, net of reinsurance recoverables 16,196 8,391 Add reinsurance recoverables (1) 4,309 2,517 Ending balance $ 20,505 $ 10,908 (1) Related to ceded losses recoverable under the QSR Transactions, included in "Other assets" on the condensed consolidated balance sheets. See Note 5, "Reinsurance" for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year. Amounts are presented net of reinsurance. (3) Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance. (4) Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016 QSR Transaction on a cut-off basis. See Note 5, " Reinsurance " for additional information. The "claims incurred" section of the table above shows claims and claim expenses incurred on NODs for current and prior years, including IBNR reserves and is presented net of reinsurance. The amount of claims incurred relating to current year NODs represents the estimated amount of claims and claim expenses to be ultimately paid on such loans in default. We recognized $2.7 million and $1.8 million of favorable prior year development during the nine months ended September 30, 2019 and 2018 , 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 $6.6 million related to prior year defaults remained as of September 30, 2019 . |
Earnings per Share (EPS)
Earnings per Share (EPS) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Share (EPS) | Earnings per Share (EPS) Basic earnings per share is based on the weighted average number of shares of common stock outstanding. Diluted earnings 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 and performance and service based restricted stock units (RSUs), and the exercise of vested and unvested stock options and outstanding warrants. The number of shares issuable for RSUs subject to performance and service based vesting requirements are only included in diluted shares if the relevant performance measurement period has commenced and results during such period meet the necessary performance criteria. The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings per share of common stock. For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands, except for per share data) Net income $ 49,763 $ 24,811 $ 121,762 $ 72,407 Basic weighted average shares outstanding 67,849 65,948 67,381 64,584 Basic earnings per share $ 0.73 $ 0.38 $ 1.81 $ 1.12 Net income $ 49,763 $ 24,811 $ 121,762 $ 72,407 Gain from change in fair value of warrant liability (1,139 ) — — — Diluted net income $ 48,624 $ 24,811 $ 121,762 $ 72,407 Basic weighted average shares outstanding 67,849 65,948 67,381 64,584 Dilutive effect of issuable shares 2,288 2,896 2,139 2,928 Diluted weighted average shares outstanding 70,137 68,844 69,520 67,512 Diluted earnings per share $ 0.69 $ 0.36 $ 1.75 $ 1.07 Anti-dilutive shares 6 — 642 252 |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Warrants | Warrants We issued 992 thousand warrants in connection with a private placement of our common stock in April 2012. 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 three months ended September 30, 2019, 130 thousand warrants were exercised resulting in the issuance of 82 thousand shares of common stock. Upon exercise, we reclassified approximately $2.2 million of warrant fair value from warrant liability to additional paid-in capital, of which $0.9 million related to changes in fair value during the three months ended September 30, 2019. During the nine months ended September 30, 2019 , 390 thousand warrants were exercised resulting in the issuance of 249 thousand shares of common stock. Upon exercise, we reclassified approximately $7.0 million of warrant fair value from warrant liability to additional paid-in capital, of which $3.2 million related to changes in fair value during the nine months ended September 30, 2019 . During the three months ended September 30, 2018, 79 thousand warrants were exercised resulting in the issuance of 57 thousand shares of common stock. Upon exercise, we reclassified approximately $0.9 million of warrant fair value from warrant liability to additional paid-in capital, of which $0.3 million related to changes in fair value during the three months ended September 30, 2018. During the nine months ended September 30, 2018 , 142 thousand warrants were exercised resulting in the issuance of 87 thousand shares of common stock. Upon exercise, we reclassified approximately $1.5 million of warrant fair value from warrant liability to additional paid-in capital, of which $0.3 million related to changes in fair value during the nine months ended September 30, 2018 . We account for these warrants to purchase our common shares in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 21%. NMIH files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries. Our effective tax rate on our pre-tax income was 22.2% and 20.9% for the three and nine months ended September 30, 2019 , respectively, compared to 22.1% and 20.2% for the three and nine months ended September 30, 2018 , respectively. Our provision for income taxes for interim reporting periods is established based on our estimated annual effective tax rate for a given year. Our effective tax rate may fluctuate between interim periods due to the impact of discrete items not included in our estimated annual effective tax rate, including the tax effects associated with the vesting of RSUs and exercise of options, and the change in fair value of our warrant liability. Such items are treated on a discrete basis in the reporting period in which they occur. As a mortgage guaranty insurance company, we are eligible to claim a tax deduction for our statutory contingency reserve balance, subject to certain limitations outlined under IRC Section 832(e), and only to the extent we acquire tax and loss bonds in an amount equal to the tax benefit derived from the claimed deduction, which is our intent. As a result, our interim provision for income taxes for the three and nine months ended September 30, 2019 represents a change in our net deferred tax liability. During the three and nine months ended September 30, 2019, we had net purchases of $7.6 million of tax and loss bonds, and, as of September 30, 2019 , we held $7.6 million |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases We have two operating lease agreements related to our corporate headquarters and a data center facility for which we recognized operating ROU assets and lease liabilities of $6.9 million and $7.9 million , which are included in "Other assets" and "Other liabilities" on the condensed consolidated balance sheet, respectively, as of September 30, 2019 . As of September 30, 2019 , we did not have any finance leases. We recognize ROU assets and lease liabilities in connection with the adoption of ASU 2016-02, Leases (Topic 842). ROU assets and lease liabilities are established based on the estimated present value of lease payments over the relevant lease term. We estimate a discount rate for each lease based on our estimated incremental borrowing rate at the commencement date of the relevant lease. ROU assets obtained in exchange for new operating lease liabilities for the nine months ended September 30, 2019 were $8.1 million . The following table provides a summary of our ROU asset and lease liability assumptions as of September 30, 2019 : Weighted-average remaining lease term 3.5 years Weighted-average discount rate 6.21 % Cash paid on our operating lease liabilities for the three and nine months ended September 30, 2019 was $0.6 million and $1.8 million , respectively. Lease expenses recognized on our operating lease liabilities for the three and nine months ended September 30, 2019 were $0.6 million and $1.7 million , respectively. Future payments due under our existing operating leases as of September 30, 2019 are as follows: As of September 30, 2019 (In Thousands) 2019 $ 625 2020 2,537 2021 2,609 2022 2,574 2023 462 Total undiscounted lease payments 8,807 Less effects of discounting (900 ) Present value of lease payments $ 7,907 Lease expense is recorded in underwriting and operating expenses on the consolidated statements of operations. Our existing operating leases have terms that range from three to five years . The lease for our corporate headquarters includes an option to renew for an additional five years at prevailing market rates at time of renewal. We have not included this renewal option in our calculation of minimum lease payments as it is not reasonably certain to be exercised. As of December 31, 2018, the future minimum lease payments as accounted for prior to our adoption of ASU 2016-02, Leases (Topic 842) are as follows: Year ending December 31, 2018 (In Thousands) 2019 $ 2,346 2020 2,417 2021 2,489 2022 2,564 2023 463 Totals $ 10,279 |
Regulatory Information
Regulatory Information | 9 Months Ended |
Sep. 30, 2019 | |
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 income (loss) was as follows: For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands) Statutory net income (loss) $ 8,055 $ (17,274 ) $ 13,594 $ (22,022 ) NMIC and Re One's combined statutory surplus, contingency reserve and risk-to-capital (RTC) ratio were as follows: September 30, 2019 December 31, 2018 (Dollars In Thousands) Statutory surplus $ 447,304 $ 430,785 Contingency reserve 476,756 332,702 RTC ratio 14.3:1 13.1:1 NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware corporate law provides that dividends are only payable out of a corporation's capital surplus or, subject to certain limitations, recent net profits. NMIC and Re One's ability to pay dividends to NMIH is subject to Wisconsin OCI notice or approval. Certain other states in which NMIC is licensed also have statutes or regulations that restrict its ability to pay dividends. Since inception, NMIC and Re One have not paid any dividends to NMIH. |
Organization, Basis of Presen_2
Organization, Basis of Presentation and Summary of Accounting Principles (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2018 , included in our 2018 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to our previously reported financial information have been made to conform to current period presentation. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2019 . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. We adopted this ASU on January 1, 2019 using the modified-retrospective method and applied it prospectively as of the effective date, without adjusting comparative periods presented as permitted by ASU 2018-11, Leases (Topic 842), Targeted Improvements . Adoption of this new standard increased our assets and liabilities by $7.6 million in connection with the recognition of right-of-use (ROU) assets and lease liabilities, primarily related to the operating lease on our corporate headquarters. Adoption of this standard did not impact our consolidated statements of operations or cash flows. See Note 10, " Leases " for additional information related to our leases. 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. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This update expands the scope of Topic 718 to include share-based payments made to non-employees in connection with the acquisition of goods and services. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our financial results as we have not made any share-based grants to non-employees as defined in ASC 718-10-20. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and subsequently issued amendments to the initial guidance: ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Financial Instruments – Credit Losses: Targeted Transition Relief . These updates will require companies to measure and establish reserves for lifetime expected credit losses on many financial assets held at a given reporting date. Under the guidance, the methodology for measuring lifetime credit losses will generally shift from an incurred loss model, whereby losses are only recognized once probable and estimable, to a current expected credit loss (CECL) model, whereby losses are recognized upfront based on a future economic forecast. Credit losses relating to available-for-sale fixed maturity securities will be recorded through an allowance for credit losses, rather than a write-down of the asset as is currently required, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. The length of time an available-for sale fixed maturity security has been held in an unrealized loss position will no longer impact its credit loss determination. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The impact of this guidance and the extent of the impact will depend on, among other things, economic conditions and the composition and credit quality of our financial assets as of the date of adoption. While we are still evaluating the impact of this guidance, we do not expect it to have a material impact on our consolidated financial statements. This standard will not impact our accounting for insurance claims and claim expenses as these items are not in the scope of this ASU. In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts . This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This update modifies the fair value measurement disclosure requirements of ASC 820. 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 do not expect the revised disclosure requirements to have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This update applies to cloud computing arrangements structured as service contracts, and provides companies with guidance on the criteria for capitalizing implementation, set-up and other up-front costs incurred in association with these arrangements. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and we have elected to adopt this ASU prospectively for eligible costs incurred after the effective date of January 1, 2020. While we are still finalizing our analysis of this guidance, we do not expect it to have a material impact on our consolidated financial statements. |
Earnings Per Share | Basic earnings per share is based on the weighted average number of shares of common stock outstanding. Diluted earnings 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 and performance and service based restricted stock units (RSUs), and the exercise of vested and unvested stock options and outstanding warrants. The number of shares issuable for RSUs subject to performance and service based vesting requirements are only included in diluted shares if the relevant performance measurement period has commenced and results during such period meet the necessary performance criteria. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,198 $ 1,095 $ (40 ) $ 49,253 Municipal debt securities 103,974 1,790 (133 ) 105,631 Corporate debt securities 663,066 23,432 (520 ) 685,978 Asset-backed securities 179,651 3,765 (31 ) 183,385 Total bonds 994,889 30,082 (724 ) 1,024,247 Short-term investments 48,750 179 — 48,929 Total investments $ 1,043,639 $ 30,261 $ (724 ) $ 1,073,176 Amortized Gross Unrealized Fair Gains Losses As of December 31, 2018 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,171 $ 35 $ (1,376 ) $ 46,830 Municipal debt securities 92,014 206 (963 ) 91,257 Corporate debt securities 554,079 847 (11,688 ) 543,238 Asset-backed securities 171,990 792 (1,457 ) 171,325 Total bonds 866,254 1,880 (15,484 ) 852,650 Short-term investments 58,733 107 — 58,840 Total investments $ 924,987 $ 1,987 $ (15,484 ) $ 911,490 |
Schedule of Investments by Industry Group | The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of September 30, 2019 and December 31, 2018 : September 30, 2019 December 31, 2018 Financial 38 % 38 % Consumer 27 27 Communications 10 12 Utilities 10 7 Industrial 8 7 Technology 5 6 Energy 2 2 Other — 1 Total 100 % 100 % |
Schedule of Investments by Maturity | The amortized cost and fair values of available-for-sale securities as of September 30, 2019 and December 31, 2018 , 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 September 30, 2019 Amortized Fair (In Thousands) Due in one year or less $ 102,581 $ 102,787 Due after one through five years 424,455 434,248 Due after five through ten years 313,804 329,061 Due after ten years 23,148 23,695 Asset-backed securities 179,651 183,385 Total investments $ 1,043,639 $ 1,073,176 As of December 31, 2018 Amortized Fair (In Thousands) Due in one year or less $ 76,087 $ 76,104 Due after one through five years 352,282 347,701 Due after five through ten years 318,728 310,633 Due after ten years 5,900 5,727 Asset-backed securities 171,990 171,325 Total investments $ 924,987 $ 911,490 |
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 September 30, 2019 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 5 $ 13,822 $ (40 ) — $ — $ — 5 $ 13,822 $ (40 ) Municipal debt securities 4 15,720 (102 ) 4 4,337 (31 ) 8 20,057 (133 ) Corporate debt securities 10 26,812 (122 ) 20 30,812 (398 ) 30 57,624 (520 ) Asset-backed securities 3 13,451 (20 ) 2 3,583 (11 ) 5 17,034 (31 ) Short-term investments (1) 1 9,999 — — — — 1 9,999 — Total 23 $ 79,804 $ (284 ) 26 $ 38,732 $ (440 ) 49 $ 118,536 $ (724 ) (1) Includes securities with unrealized losses of less than 12 months which are not identifiable in the schedule due to rounding. 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, 2018 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies — $ — $ — 19 $ 41,817 $ (1,376 ) 19 $ 41,817 $ (1,376 ) Municipal debt securities 4 7,409 (11 ) 31 58,658 (952 ) 35 66,067 (963 ) Corporate debt securities 118 226,477 (3,952 ) 126 221,675 (7,736 ) 244 448,152 (11,688 ) Asset-backed securities 25 36,017 (1,136 ) 22 33,988 (321 ) 47 70,005 (1,457 ) Total 147 $ 269,903 $ (5,099 ) 198 $ 356,138 $ (10,385 ) 345 $ 626,041 $ (15,484 ) |
Schedule of Components of Net Investment Income | The following table presents the components of net investment income: For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands) Investment income $ 8,003 $ 6,473 $ 23,240 $ 17,192 Investment expenses (121 ) (196 ) (346 ) (606 ) Net investment income $ 7,882 $ 6,277 $ 22,894 $ 16,586 |
Schedule of Net Realized Investment Gains (Losses) | The following table presents the components of net realized investment losses: For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands) Gross realized investment gains $ 81 $ 461 $ 297 $ 520 Gross realized investment losses — (469 ) (516 ) (469 ) Net realized investment gains (losses) $ 81 $ (8 ) $ (219 ) $ 51 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 49,253 $ — $ — $ 49,253 Municipal debt securities — 105,631 — 105,631 Corporate debt securities — 685,978 — 685,978 Asset-backed securities — 183,385 — 183,385 Cash, cash equivalents and short-term investments 94,818 — — 94,818 Total assets $ 144,071 $ 974,994 $ — $ 1,119,065 Warrant liability — — 6,364 6,364 Total liabilities $ — $ — $ 6,364 $ 6,364 Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2018 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 46,830 $ — $ — $ 46,830 Municipal debt securities — 91,257 — 91,257 Corporate debt securities — 543,238 — 543,238 Asset-backed securities — 171,325 — 171,325 Cash, cash equivalents and short-term investments 84,134 — — 84,134 Total assets $ 130,964 $ 805,820 $ — $ 936,784 Warrant liability — — 7,296 7,296 Total liabilities $ — $ — $ 7,296 $ 7,296 |
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 nine months ended September 30, Warrant Liability 2019 2018 (In Thousands) Balance, January 1 $ 7,296 $ 7,472 Change in fair value of warrant liability included in earnings 6,025 4,935 Issuance of common stock on warrant exercise (6,957 ) (1,477 ) Balance, September 30 $ 6,364 $ 10,930 |
Schedule of Key Inputs and Assumptions in Option-Pricing Model | The following table outlines the key inputs and assumptions used to calculate the fair value of the warrant liability in the Black-Scholes option-pricing model as of the dates indicated. As of September 30, 2019 2018 Common stock price $ 26.26 $ 22.65 Risk free interest rate 1.76 % 2.86 - 2.90% Expected life 0.92 years 2.50 - 3.56 years Expected volatility 33.5 % 39.9 - 41.5% Dividend yield 0 % 0 % |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Future Principal Payments | Future principal payments due under the 2018 Term Loan as of September 30, 2019 are as follows: As of September 30, 2019 Principal (In thousands) 2019 $ 375 2020 1,500 2021 1,500 2022 1,500 2023 143,250 Total $ 148,125 |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Reinsurance Disclosures [Abstract] | |
Schedule of Effects of Reinsurance | The effect of our reinsurance agreements on premiums written and earned is as follows: For the three months ended For the nine months ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 (In Thousands) Net premiums written Direct $ 100,475 $ 73,748 $ 274,418 $ 210,452 Ceded (1) (11,796 ) (8,367 ) (31,207 ) (21,598 ) Net premiums written $ 88,679 $ 65,381 $ 243,211 $ 188,854 Net premiums earned Direct $ 106,687 $ 76,513 $ 288,165 $ 210,725 Ceded (1) (14,306 ) (11,106 ) (38,666 ) (28,789 ) Net premiums earned $ 92,381 $ 65,407 $ 249,499 $ 181,936 (1) Net of profit commission. The following table shows the amounts related to the QSR Transactions: For the three months ended For the nine months ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 (In Thousands) Ceded risk-in-force $ 4,901,809 $ 3,960,461 $ 4,901,809 $ 3,960,461 Ceded premiums earned (23,151 ) (19,286 ) (65,538 ) (53,581 ) Ceded claims and claim expenses 766 337 2,435 1,053 Ceding commission earned 4,584 3,814 12,961 10,501 Profit commission 13,254 11,272 37,199 31,180 |
Schedule of ILN Transactions | The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each of the ILN Transactions. ( $ values in thousands) Inception Date Covered Production Initial Reinsurance Coverage Current Reinsurance Coverage Initial First Layer Retained Loss Current First Layer Retained Loss 2017 ILN Transaction May 2, 2017 1/1/2013 - 12/31/2016 $ 211,320 $ 75,639 $ 126,793 $ 124,074 2018 ILN Transaction July 25, 2018 1/1/2017 - 5/31/2018 264,545 231,604 125,312 125,025 2019 ILN Transaction July 30, 2019 6/1/2018 - 6/30/2019 326,905 326,905 123,424 123,424 |
Reserves for Insurance Claims_2
Reserves for Insurance Claims and Claim Expenses (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Insurance [Abstract] | |
Reconciliation of Liability for Insurance Claims and Claim Expenses | The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim expenses: For the nine months ended September 30, 2019 2018 (In Thousands) Beginning balance $ 12,811 $ 8,761 Less reinsurance recoverables (1) (3,001 ) (1,902 ) Beginning balance, net of reinsurance recoverables 9,810 6,859 Add claims incurred: Claims and claim expenses incurred: Current year (2) 10,948 5,090 Prior years (3) (2,710 ) (1,779 ) Total claims and claim expenses incurred 8,238 3,311 Less claims paid: Claims and claim expenses paid: Current year (2) — 37 Prior years (3) 2,401 1,742 Reinsurance terminations (4) (549 ) — Total claims and claim expenses paid 1,852 1,779 Reserve at end of period, net of reinsurance recoverables 16,196 8,391 Add reinsurance recoverables (1) 4,309 2,517 Ending balance $ 20,505 $ 10,908 (1) Related to ceded losses recoverable under the QSR Transactions, included in "Other assets" on the condensed consolidated balance sheets. See Note 5, "Reinsurance" for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year. Amounts are presented net of reinsurance. (3) Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance. (4) Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016 QSR Transaction on a cut-off basis. See Note 5, " Reinsurance " for additional information. |
Earnings per Share (EPS) (Table
Earnings per Share (EPS) (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings per Share, Basic and Diluted | The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings per share of common stock. For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands, except for per share data) Net income $ 49,763 $ 24,811 $ 121,762 $ 72,407 Basic weighted average shares outstanding 67,849 65,948 67,381 64,584 Basic earnings per share $ 0.73 $ 0.38 $ 1.81 $ 1.12 Net income $ 49,763 $ 24,811 $ 121,762 $ 72,407 Gain from change in fair value of warrant liability (1,139 ) — — — Diluted net income $ 48,624 $ 24,811 $ 121,762 $ 72,407 Basic weighted average shares outstanding 67,849 65,948 67,381 64,584 Dilutive effect of issuable shares 2,288 2,896 2,139 2,928 Diluted weighted average shares outstanding 70,137 68,844 69,520 67,512 Diluted earnings per share $ 0.69 $ 0.36 $ 1.75 $ 1.07 Anti-dilutive shares 6 — 642 252 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Summary of Right-of-Use Asset and Lease Liability Activity and Assumptions | The following table provides a summary of our ROU asset and lease liability assumptions as of September 30, 2019 : Weighted-average remaining lease term 3.5 years Weighted-average discount rate 6.21 % |
Schedule of Future Payments Due Under Operating Leases | Future payments due under our existing operating leases as of September 30, 2019 are as follows: As of September 30, 2019 (In Thousands) 2019 $ 625 2020 2,537 2021 2,609 2022 2,574 2023 462 Total undiscounted lease payments 8,807 Less effects of discounting (900 ) Present value of lease payments $ 7,907 |
Schedule of Future Minimum Lease Payments as Accounted For Prior to Adoption of ASU 2016-02 | As of December 31, 2018, the future minimum lease payments as accounted for prior to our adoption of ASU 2016-02, Leases (Topic 842) are as follows: Year ending December 31, 2018 (In Thousands) 2019 $ 2,346 2020 2,417 2021 2,489 2022 2,564 2023 463 Totals $ 10,279 |
Regulatory Information (Tables)
Regulatory Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Insurance [Abstract] | |
Schedule of Statutory Net Income (Loss), Surplus, Contingency Reserve and Risk-to-Capital Ratio | NMIC and Re One's combined statutory net income (loss) was as follows: For the three months ended September 30, For the nine months ended September 30, 2019 2018 2019 2018 (In Thousands) Statutory net income (loss) $ 8,055 $ (17,274 ) $ 13,594 $ (22,022 ) NMIC and Re One's combined statutory surplus, contingency reserve and risk-to-capital (RTC) ratio were as follows: September 30, 2019 December 31, 2018 (Dollars In Thousands) Statutory surplus $ 447,304 $ 430,785 Contingency reserve 476,756 332,702 RTC ratio 14.3:1 13.1:1 |
Organization, Basis of Presen_3
Organization, Basis of Presentation and Summary of Accounting Principles - Narrative (Details) | 9 Months Ended |
Sep. 30, 2019entitystate | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of special purpose reinsurance entities | entity | 3 |
Number of states in which the entity operates | state | 50 |
Organization, Basis of Presen_4
Organization, Basis of Presentation and Summary of Accounting Principles - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements [Line Items] | ||
Right-of-use assets | $ 6,900 | |
Lease liabilities | $ 7,907 | |
ASU No. 2016-02 | ||
New Accounting Pronouncements [Line Items] | ||
Right-of-use assets | $ 7,600 | |
Lease liabilities | $ 7,600 |
Investments - Fair Values and G
Investments - Fair Values and Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 1,043,639 | $ 924,987 |
Gross Unrealized Gains | 30,261 | 1,987 |
Gross Unrealized Losses | (724) | (15,484) |
Fair Value | 1,073,176 | 911,490 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 48,198 | 48,171 |
Gross Unrealized Gains | 1,095 | 35 |
Gross Unrealized Losses | (40) | (1,376) |
Fair Value | 49,253 | 46,830 |
Municipal debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 103,974 | 92,014 |
Gross Unrealized Gains | 1,790 | 206 |
Gross Unrealized Losses | (133) | (963) |
Fair Value | 105,631 | 91,257 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 663,066 | 554,079 |
Gross Unrealized Gains | 23,432 | 847 |
Gross Unrealized Losses | (520) | (11,688) |
Fair Value | 685,978 | 543,238 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 179,651 | 171,990 |
Gross Unrealized Gains | 3,765 | 792 |
Gross Unrealized Losses | (31) | (1,457) |
Fair Value | 183,385 | 171,325 |
Total bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 994,889 | 866,254 |
Gross Unrealized Gains | 30,082 | 1,880 |
Gross Unrealized Losses | (724) | (15,484) |
Fair Value | 1,024,247 | 852,650 |
Short-term investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 48,750 | 58,733 |
Gross Unrealized Gains | 179 | 107 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 48,929 | $ 58,840 |
Investments - Corporate Debt Se
Investments - Corporate Debt Securities by Industry Group (Details) | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 100.00% | 100.00% |
Financial | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 38.00% | 38.00% |
Consumer | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 27.00% | 27.00% |
Communications | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 10.00% | 12.00% |
Utilities | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 10.00% | 7.00% |
Industrial | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 8.00% | 7.00% |
Technology | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 5.00% | 6.00% |
Energy | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 2.00% | 2.00% |
Other | ||
Debt Securities By Industry [Line Items] | ||
Corporate debt securities as component of total (percent) | 0.00% | 1.00% |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale [Line Items] | |||||
Unrealized loss position, accumulated loss | $ 724,000 | $ 724,000 | $ 15,484,000 | ||
Unrealized loss position, 12 months or greater | 440,000 | 440,000 | 10,385,000 | ||
Other-than-temporary impairment | 0 | $ 0 | 400,000 | $ 0 | |
U.S. Treasury securities and obligations of U.S. government agencies | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Cash and investments held with various state insurance departments | 5,500,000 | 5,500,000 | 5,300,000 | ||
Unrealized loss position, accumulated loss | 40,000 | 40,000 | 1,376,000 | ||
Unrealized loss position, 12 months or greater | $ 0 | $ 0 | $ 1,376,000 |
Investments - Scheduled Maturit
Investments - Scheduled Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due in one year or less | $ 102,581 | $ 76,087 |
Due after one through five years | 424,455 | 352,282 |
Due after five through ten years | 313,804 | 318,728 |
Due after ten years | 23,148 | 5,900 |
Asset-backed securities | 179,651 | 171,990 |
Amortized Cost | 1,043,639 | 924,987 |
Fair Value | ||
Due in one year or less | 102,787 | 76,104 |
Due after one through five years | 434,248 | 347,701 |
Due after five through ten years | 329,061 | 310,633 |
Due after ten years | 23,695 | 5,727 |
Asset-backed securities | 183,385 | 171,325 |
Fair Value | $ 1,073,176 | $ 911,490 |
Investments - Aging of Unrealiz
Investments - Aging of Unrealized Losses (Details) $ in Thousands | Sep. 30, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 23 | 147 |
Fair value, less than 12 months | $ 79,804 | $ 269,903 |
Unrealized losses, less than 12 months | $ (284) | $ (5,099) |
Number of securities,12 months or greater | security | 26 | 198 |
Fair value, 12 months or greater | $ 38,732 | $ 356,138 |
Unrealized losses, 12 months or greater | $ (440) | $ (10,385) |
Number of securities, total | security | 49 | 345 |
Fair value | $ 118,536 | $ 626,041 |
Unrealized Losses | $ (724) | $ (15,484) |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 5 | 0 |
Fair value, less than 12 months | $ 13,822 | $ 0 |
Unrealized losses, less than 12 months | $ (40) | $ 0 |
Number of securities,12 months or greater | security | 0 | 19 |
Fair value, 12 months or greater | $ 0 | $ 41,817 |
Unrealized losses, 12 months or greater | $ 0 | $ (1,376) |
Number of securities, total | security | 5 | 19 |
Fair value | $ 13,822 | $ 41,817 |
Unrealized Losses | $ (40) | $ (1,376) |
Municipal debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 4 | 4 |
Fair value, less than 12 months | $ 15,720 | $ 7,409 |
Unrealized losses, less than 12 months | $ (102) | $ (11) |
Number of securities,12 months or greater | security | 4 | 31 |
Fair value, 12 months or greater | $ 4,337 | $ 58,658 |
Unrealized losses, 12 months or greater | $ (31) | $ (952) |
Number of securities, total | security | 8 | 35 |
Fair value | $ 20,057 | $ 66,067 |
Unrealized Losses | $ (133) | $ (963) |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 10 | 118 |
Fair value, less than 12 months | $ 26,812 | $ 226,477 |
Unrealized losses, less than 12 months | $ (122) | $ (3,952) |
Number of securities,12 months or greater | security | 20 | 126 |
Fair value, 12 months or greater | $ 30,812 | $ 221,675 |
Unrealized losses, 12 months or greater | $ (398) | $ (7,736) |
Number of securities, total | security | 30 | 244 |
Fair value | $ 57,624 | $ 448,152 |
Unrealized Losses | $ (520) | $ (11,688) |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 3 | 25 |
Fair value, less than 12 months | $ 13,451 | $ 36,017 |
Unrealized losses, less than 12 months | $ (20) | $ (1,136) |
Number of securities,12 months or greater | security | 2 | 22 |
Fair value, 12 months or greater | $ 3,583 | $ 33,988 |
Unrealized losses, 12 months or greater | $ (11) | $ (321) |
Number of securities, total | security | 5 | 47 |
Fair value | $ 17,034 | $ 70,005 |
Unrealized Losses | $ (31) | $ (1,457) |
Short-term investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities, less than 12 months | security | 1 | |
Fair value, less than 12 months | $ 9,999 | |
Unrealized losses, less than 12 months | $ 0 | |
Number of securities,12 months or greater | security | 0 | |
Fair value, 12 months or greater | $ 0 | |
Unrealized losses, 12 months or greater | $ 0 | |
Number of securities, total | security | 1 | |
Fair value | $ 9,999 | |
Unrealized Losses | $ 0 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Investment Income, Net [Abstract] | ||||
Investment income | $ 8,003 | $ 6,473 | $ 23,240 | $ 17,192 |
Investment expenses | (121) | (196) | (346) | (606) |
Net investment income | $ 7,882 | $ 6,277 | $ 22,894 | $ 16,586 |
Investments - Net Realized Inve
Investments - Net Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Gross realized investment gains | $ 81 | $ 461 | $ 297 | $ 520 |
Gross realized investment losses | 0 | (469) | (516) | (469) |
Net realized investment gains (losses) | $ 81 | $ (8) | $ (219) | $ 51 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | $ 1,073,176 | $ 911,490 |
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 of securities | 49,253 | 46,830 |
Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 105,631 | 91,257 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 685,978 | 543,238 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 183,385 | 171,325 |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 94,818 | 84,134 |
Total assets | 1,119,065 | 936,784 |
Warrant liability | 6,364 | 7,296 |
Total liabilities | 6,364 | 7,296 |
Recurring | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 49,253 | 46,830 |
Recurring | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 105,631 | 91,257 |
Recurring | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 685,978 | 543,238 |
Recurring | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 183,385 | 171,325 |
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 | 94,818 | 84,134 |
Total assets | 144,071 | 130,964 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 49,253 | 46,830 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
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 | 974,994 | 805,820 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 105,631 | 91,257 |
Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 685,978 | 543,238 |
Recurring | Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 183,385 | 171,325 |
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 | 6,364 | 7,296 |
Total liabilities | 6,364 | 7,296 |
Recurring | Significant Unobservable Inputs (Level 3) | U.S. Treasury securities and obligations of U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Rollforward of Level 3 Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Roll-forward of Level 3 liabilities: | ||
Issuance of common stock on warrant exercise | $ (6,957) | |
Significant Unobservable Inputs (Level 3) | Warrant Liability | ||
Roll-forward of Level 3 liabilities: | ||
Beginning balance | 7,296 | $ 7,472 |
Change in fair value of warrant liability included in earnings | 6,025 | 4,935 |
Issuance of common stock on warrant exercise | (1,477) | |
Ending balance | $ 6,364 | $ 10,930 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Valuation Assumptions for Warrant Liabilities (Details) - Significant Unobservable Inputs (Level 3) - Valuation Technique, Option Pricing Model | Sep. 30, 2019$ / shares | Sep. 30, 2018$ / shares |
Common stock price | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 26.26 | 22.65 |
Risk free interest rate | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.0176 | 0.0290 |
Risk free interest rate | Minimum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.0286 | |
Expected life | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, expected life | 11 months 1 day | |
Expected life | Minimum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, expected life | 2 years 6 months | |
Expected life | Maximum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, expected life | 3 years 6 months 21 days | |
Expected volatility | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.335 | |
Expected volatility | Minimum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.399 | |
Expected volatility | Maximum | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0.415 | |
Dividend yield | ||
Key Inputs and Assumptions, Valuation Techniques | ||
Warrant liability, measurement input | 0 | 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | May 24, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Debt Instrument [Line Items] | |||||
Term loan | $ 148,125,000 | $ 148,125,000 | |||
Interest expense | 2,979,000 | $ 2,972,000 | $ 9,111,000 | $ 11,951,000 | |
Revolving Credit Facility | 2018 Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Debt instrument term (years) | 3 years | ||||
Credit facility borrowing capacity | $ 85,000,000 | ||||
Debt instrument covenant, maximum debt-to-total capitalization ratio | 35.00% | ||||
Borrowings outstanding | 0 | $ 0 | |||
Commitment fee (percent) | 0.40% | ||||
Commitment fees in interest expense | 100,000 | $ 300,000 | |||
Debt issuance costs | 1,500,000 | ||||
Interest expense from amortization of debt issuance costs | 100,000 | 400,000 | |||
Remaining deferred issuance costs, net of accumulated amortization | 800,000 | $ 800,000 | |||
Revolving Credit Facility | 2018 Revolving Credit Facility | Minimum | |||||
Debt Instrument [Line Items] | |||||
Commitment fee (percent) | 0.30% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Commitment fee (percent) | 0.60% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor (percent) | 1.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 1.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.50% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor (percent) | 0.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Eurodollar | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.00% | ||||
Revolving Credit Facility | 2018 Revolving Credit Facility | Eurodollar | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 3.50% | ||||
Secured Debt | 2018 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument face amount | $ 150,000,000 | ||||
Debt instrument term (years) | 5 years | ||||
Interest rate during period (percent) | 6.95% | ||||
Frequency of periodic payment | Quarterly | ||||
Periodic payment of principal | $ 375,000 | ||||
Interest expense | 2,800,000 | 8,400,000 | |||
Unamortized issuance costs and original issue discount | $ 2,100,000 | $ 2,100,000 | |||
Debt instrument covenant, maximum debt-to-total capitalization ratio | 35.00% | ||||
Secured Debt | 2018 Term Loan | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Variable rate floor (percent) | 1.00% | ||||
Basis spread on variable rate (percent) | 4.75% | ||||
Senior Secured Debt | 2015 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument face amount | $ 150,000,000 |
Debt - Schedule of Future Princ
Debt - Schedule of Future Principal Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Future Principal Payments [Abstract] | |
2019 | $ 375 |
2020 | 1,500 |
2021 | 1,500 |
2022 | 1,500 |
2023 | 143,250 |
Total | $ 148,125 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) $ in Thousands | Apr. 01, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Ceded Credit Risk [Line Items] | |||||||||
Restricted cash | $ 2,933 | $ 2,933 | $ 2,933 | $ 1,414 | |||||
Reinsurance recoverable on unpaid claims | $ 4,309 | $ 2,517 | $ 4,309 | $ 4,309 | $ 2,517 | $ 3,001 | $ 1,902 | ||
ILN Transactions | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Reinsurance coverage amount amortized (as a percent) | 10.00% | 10.00% | 10.00% | ||||||
Third-Party Reinsurers | ILN Transactions | Maximum | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Reinsurance coverage, term of underlying mortgage amortization (in years) | 10 years | ||||||||
Third-Party Reinsurers | 2017 ILN Transaction | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Risk premiums paid | $ 4,400 | $ 3,100 | $ 10,300 | $ 6,400 | |||||
Third-Party Reinsurers | 2017 ILN Transaction | Maximum | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Anticipated payment related to annual operating expenses | 300 | ||||||||
Third-Party Reinsurers | 2018 ILN Transaction | Maximum | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Anticipated payment related to annual operating expenses | $ 250 | ||||||||
Third-Party Reinsurers | QSR Transactions | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Ceding commissions under 2016 QSR Transaction | 20.00% | ||||||||
Third-Party Reinsurers | 2018 QSR Transaction | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Threshold for loss ratio on loans to qualify for profit commission | 61.00% | ||||||||
Reinsurance recoverable on unpaid claims | 1,700 | $ 1,700 | $ 1,700 | ||||||
Third-Party Reinsurers | Risk Written Policies in 2018 | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Percent of premiums earned under 2018 QSR Transaction | 25.00% | ||||||||
Third-Party Reinsurers | Risk Written Policies in 2019 | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Percent of premiums ceded under QSR Transaction | 20.00% | ||||||||
Third-Party Reinsurers | 2016 QSR Transaction | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Percent of premiums ceded under QSR Transaction | 25.00% | 20.50% | |||||||
Previously ceded primary RIF recaptured | $ 500,000 | ||||||||
Threshold for loss ratio on loans to qualify for profit commission | 60.00% | ||||||||
Reinsurance recoverable on unpaid claims | $ 2,600 | $ 2,600 | $ 2,600 | ||||||
Third-Party Reinsurers | Risk Written Policies from September 1, 2016 through December 31, 2017 | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Percent of premiums ceded under QSR Transaction | 25.00% | ||||||||
Third-Party Reinsurers | Fannie Mae | |||||||||
Ceded Credit Risk [Line Items] | |||||||||
Percent of premiums ceded under QSR Transaction | 100.00% |
Reinsurance - Effect of Reinsur
Reinsurance - Effect of Reinsurance Agreements on Premiums Written and Earned (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Net premiums written | ||||
Direct | $ 100,475 | $ 73,748 | $ 274,418 | $ 210,452 |
Ceded | (11,796) | (8,367) | (31,207) | (21,598) |
Net premiums written | 88,679 | 65,381 | 243,211 | 188,854 |
Net premiums earned | ||||
Direct | 106,687 | 76,513 | 288,165 | 210,725 |
Ceded | (14,306) | (11,106) | (38,666) | (28,789) |
Net premiums earned | $ 92,381 | $ 65,407 | $ 249,499 | $ 181,936 |
Reinsurance - ILN Transactions
Reinsurance - ILN Transactions (Details) - USD ($) $ in Thousands | Jul. 30, 2019 | Jul. 25, 2018 | May 02, 2017 |
2017 ILN Transaction | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Initial Reinsurance Coverage | $ 211,320 | ||
Current Reinsurance Coverage | 75,639 | ||
Initial First Layer Retained Loss | 126,793 | ||
Current First Layer Retained Loss | $ 124,074 | ||
2018 ILN Transaction | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Initial Reinsurance Coverage | $ 264,545 | ||
Current Reinsurance Coverage | 231,604 | ||
Initial First Layer Retained Loss | 125,312 | ||
Current First Layer Retained Loss | $ 125,025 | ||
2019 ILN Transaction | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Initial Reinsurance Coverage | $ 326,905 | ||
Current Reinsurance Coverage | 326,905 | ||
Initial First Layer Retained Loss | 123,424 | ||
Current First Layer Retained Loss | $ 123,424 |
Reinsurance - Amounts Ceded Rel
Reinsurance - Amounts Ceded Related to QSR Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Ceded Credit Risk [Line Items] | ||||
Ceded premiums earned | $ (14,306) | $ (11,106) | $ (38,666) | $ (28,789) |
Third-Party Reinsurers | ||||
Ceded Credit Risk [Line Items] | ||||
Ceded risk-in-force | 4,901,809 | 3,960,461 | 4,901,809 | 3,960,461 |
Ceded premiums earned | (23,151) | (19,286) | (65,538) | (53,581) |
Ceded claims and claim expenses | 766 | 337 | 2,435 | 1,053 |
Ceding commission earned | 4,584 | 3,814 | 12,961 | 10,501 |
Profit commission | $ 13,254 | $ 11,272 | $ 37,199 | $ 31,180 |
Reserves for Insurance Claims_3
Reserves for Insurance Claims and Claim Expenses - Narrative (Details) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2019USD ($)loanclaim | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
IBNR, default period (at least) | 60 days | |||
Total gross liability for unpaid claims and claim adjustment expenses | $ 20,505 | $ 10,908 | $ 12,811 | $ 8,761 |
Primary loans in default | loan | 1,230 | |||
Number of claims paid | claim | 98 | |||
Claims paid, including amounts covered by insurance | $ 3,000 | |||
Favorable prior year development | (2,710) | $ (1,779) | ||
Reserve for prior year insurance claims and claim expenses | $ 6,600 | |||
Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of loans in pool past due 60 days or more | loan | 49 | |||
Risk-in-Force of loans in pool past due 60 days or more | $ 3,400 | |||
Loan-to-value ratio (less than) | 0.80 | |||
Claims applied to pool deductible | $ 800 | |||
Deductible on policy | $ 9,600 | |||
QSR Transactions | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of covered claims included in number of claims paid | claim | 91 | |||
Component of claims paid covered under QSR Transaction | $ 600 | |||
2016 QSR Transaction | Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Percent of pool RIF reinsured | 100.00% |
Reserves for Insurance Claims_4
Reserves for Insurance Claims and Claim Expenses - Reconciliation of Reserve Balances for Insurance Claims and Claim Expense (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | $ 12,811 | $ 8,761 |
Less reinsurance recoverables | 3,001 | 1,902 |
Beginning balance, net of reinsurance recoverables | 9,810 | 6,859 |
Claims and claim expenses incurred: | ||
Current year | 10,948 | 5,090 |
Prior years | (2,710) | (1,779) |
Total claims and claim expenses incurred | 8,238 | 3,311 |
Claims and claim expenses paid: | ||
Current year | 0 | 37 |
Prior years | 2,401 | 1,742 |
Reinsurance terminations | (549) | 0 |
Total claims and claim expenses paid | 1,852 | 1,779 |
Reserve at end of period, net of reinsurance recoverables | 16,196 | 8,391 |
Add reinsurance recoverables | 4,309 | 2,517 |
Ending balance | $ 20,505 | $ 10,908 |
Earnings per Share (EPS) (Detai
Earnings per Share (EPS) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings per Share, Basic [Abstract] | ||||||||
Net income | $ 49,763 | $ 39,100 | $ 32,899 | $ 24,811 | $ 25,241 | $ 22,355 | $ 121,762 | $ 72,407 |
Basic weighted average shares outstanding (in shares) | 67,849 | 65,948 | 67,381 | 64,584 | ||||
Basic earnings per share (in dollars per share) | $ 0.73 | $ 0.38 | $ 1.81 | $ 1.12 | ||||
Earnings per Share, Diluted [Abstract] | ||||||||
Net income | $ 49,763 | $ 39,100 | $ 32,899 | $ 24,811 | $ 25,241 | $ 22,355 | $ 121,762 | $ 72,407 |
Gain from change in fair value of warrant liability | (1,139) | 0 | 0 | 0 | ||||
Diluted net income | $ 48,624 | $ 24,811 | $ 121,762 | $ 72,407 | ||||
Basic weighted average shares outstanding (in shares) | 67,849 | 65,948 | 67,381 | 64,584 | ||||
Dilutive effect of issuable shares (in shares) | 2,288 | 2,896 | 2,139 | 2,928 | ||||
Dilutive weighted average shares outstanding (in shares) | 70,137 | 68,844 | 69,520 | 67,512 | ||||
Diluted earnings per share (in dollars per share) | $ 0.69 | $ 0.36 | $ 1.75 | $ 1.07 | ||||
Anti-dilutive shares (in shares) | 6 | 0 | 642 | 252 |
Warrants (Details)
Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Apr. 30, 2012 | |
Debt Disclosure [Abstract] | |||||||||
Warrants issued (in shares) | 992,000 | ||||||||
Right to purchase, number of shares per warrant (in shares) | 1 | ||||||||
Exercise price of warrants (in dollars per warrant) | $ 10 | ||||||||
Warrant liability, at fair value | $ 6,364 | $ 6,364 | $ 7,296 | $ 5,100 | |||||
Warrants exercised (in shares) | 130,000 | 79,000 | 390,000 | 142,000 | |||||
Stock issued upon exercise of warrants (in shares) | 82,000 | 39,195 | 57,000 | 3,751 | 25,686 | 249,000 | 87,000 | ||
Fair value of warrant liability reclassified to additional paid in capital upon exercise | $ 2,200 | $ 900 | $ 7,000 | $ 1,500 | |||||
Change in fair value of warrant liability in current period | $ 900 | $ 300 | $ 3,200 | $ 300 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate on pre-tax income or loss | 22.20% | 22.10% | 20.90% | 20.20% |
Purchases of T&L Bonds | $ 7.6 | $ 7.6 | ||
Tax and loss bonds | $ 7.6 | $ 7.6 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($)lease_agreement | Sep. 30, 2019USD ($)lease_agreement | |
Lessee, Lease, Description [Line Items] | ||
Number of operating leases related to corporate headquarters and data center facility | lease_agreement | 2 | 2 |
Right-of-use assets | $ 6,900 | $ 6,900 |
Lease liabilities | 7,907 | 7,907 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 8,100 | |
Cash paid for amounts included in the measurement of operating lease liabilities | 600 | 1,800 |
Operating lease expense | $ 600 | $ 1,700 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease terms | 3 years | 3 years |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease terms | 5 years | 5 years |
Corporate Headquarters | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease option to renew, term | 5 years | 5 years |
Leases - Right-of-Use Asset and
Leases - Right-of-Use Asset and Lease Liability Assumptions (Details) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted-average remaining lease term (in years) | 3 years 6 months |
Weighted-average discount rate | 6.21% |
Leases - Future Payment Due Und
Leases - Future Payment Due Under Operating Leases (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Future Payment Due Under Operating Leases | |
2019 | $ 625 |
2020 | 2,537 |
2021 | 2,609 |
2022 | 2,574 |
2023 | 462 |
Total undiscounted lease payments | 8,807 |
Less effects of discounting | (900) |
Present value of lease payments | $ 7,907 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments as Accounted for Prior to Adoption of ASU 2016-02 (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Future Minimum Lease Payments as Accounted for Prior to Adoption of ASU 2016-02 | |
2019 | $ 2,346 |
2020 | 2,417 |
2021 | 2,489 |
2022 | 2,564 |
2023 | 463 |
Totals | $ 10,279 |
Regulatory Information - Statut
Regulatory Information - Statutory Net Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Combined | ||||
Statutory Accounting Practices [Line Items] | ||||
Statutory net income (loss) | $ 8,055 | $ (17,274) | $ 13,594 | $ (22,022) |
Regulatory Information - Schedu
Regulatory Information - Schedule of Statutory Surplus, Contingency Reserve and RTC Ratio (Details) - Combined $ in Thousands | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Statutory Accounting Practices [Line Items] | ||
Statutory surplus | $ 447,304 | $ 430,785 |
Contingency reserve | $ 476,756 | $ 332,702 |
RTC ratio | 14.3 | 13.1 |
Uncategorized Items - nmihq3201
Label | Element | Value |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (282,000) |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 282,000 |