Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 22, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 001-36174 | ||
Entity Registrant Name | NMI Holdings, Inc. | ||
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, $.01 par value per share | ||
Trading Symbol | NMIH | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1,182,522,798 | ||
Entity Common Stock, Shares Outstanding | 85,302,579 | ||
Documents Incorporated by Reference | the registrant's Proxy Statement for the 2021 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, 2020. | ||
Entity Central Index Key | 0001547903 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | |
Assets | |||
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,730,835 and $1,113,779 as of December 31, 2020 and December 31, 2019, respectively) | $ 1,804,286 | $ 1,140,940 | |
Cash and cash equivalents (including restricted cash of $5,555 and $2,662 as of December 31, 2020 and December 31, 2019, respectively) | 126,937 | 41,089 | |
Premiums receivable | 49,779 | 46,085 | |
Accrued investment income | 9,862 | 6,831 | |
Prepaid expenses | 3,292 | 3,512 | |
Deferred policy acquisition costs, net | 62,225 | 59,972 | |
Software and equipment, net | 29,665 | 26,096 | |
Intangible assets and goodwill | 3,634 | 3,634 | |
Prepaid reinsurance premiums | 6,190 | 15,488 | |
Reinsurance recoverable | 17,608 | 4,939 | |
Other assets | 53,188 | 16,232 | |
Total assets | 2,166,666 | 1,364,818 | |
Liabilities | |||
Debt | 393,301 | 145,764 | |
Unearned premiums | 118,817 | 136,642 | |
Accounts payable and accrued expenses | 61,716 | 39,904 | |
Reserve for insurance claims and claim expenses | 90,567 | 23,752 | |
Reinsurance funds withheld | 8,653 | 14,310 | |
Warrant liability, at fair value | 4,409 | 7,641 | |
Deferred tax liability, net | 112,586 | 56,360 | |
Other liabilities | 7,026 | [1] | 10,025 |
Total liabilities | 797,075 | 434,398 | |
Commitments and contingencies | |||
Shareholders' equity | |||
Common stock - class A shares, $0.01 par value; 85,163,039 and 68,358,074 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively (250,000,000 shares authorized) | 852 | 684 | |
Additional paid-in capital | 937,872 | 707,003 | |
Accumulated other comprehensive income, net of tax | 53,856 | 17,288 | |
Retained earnings | 377,011 | 205,445 | |
Total shareholders' equity | 1,369,591 | 930,420 | |
Total liabilities and shareholders' equity | $ 2,166,666 | $ 1,364,818 | |
[1] | Reinsurance recoverable has been reclassified from "Other assets" in the prior period. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available-for-sale, amortized cost | $ 1,730,835 | $ 1,113,779 |
Restricted cash | $ 5,555 | $ 2,662 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 85,163,039 | 68,358,074 |
Common stock, outstanding (in shares) | 85,163,039 | 68,358,074 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | |||||||||||
Net premiums earned | $ 100,709 | $ 98,802 | $ 98,944 | $ 98,717 | $ 95,517 | $ 92,381 | $ 83,249 | $ 73,868 | $ 397,172 | $ 345,015 | $ 251,197 |
Net investment income | 8,386 | 8,337 | 7,070 | 8,104 | 7,962 | 7,882 | 7,629 | 7,383 | 31,897 | 30,856 | 23,538 |
Net realized investment gains | 295 | (4) | 711 | (72) | 264 | 81 | (113) | (187) | 930 | 45 | 57 |
Other revenues | 513 | 648 | 1,223 | 900 | 1,154 | 1,244 | 415 | 42 | 3,284 | 2,855 | 233 |
Total revenues | 433,283 | 378,771 | 275,025 | ||||||||
Expenses | |||||||||||
Insurance claims and claim expenses | 3,549 | 15,667 | 34,334 | 5,697 | 4,269 | 2,572 | 2,923 | 2,743 | 59,247 | 12,507 | 5,452 |
Underwriting and operating expenses | 34,994 | 33,969 | 30,370 | 32,277 | 31,296 | 32,335 | 32,190 | 30,800 | 131,610 | 126,621 | 116,966 |
Service expenses | 459 | 557 | 1,090 | 734 | 937 | 909 | 353 | 49 | 2,840 | 2,248 | 270 |
Interest expense | 7,906 | 7,796 | 5,941 | 2,744 | 2,974 | 2,979 | 3,071 | 3,061 | 24,387 | 12,085 | 14,979 |
(Gain) loss from change in fair value of warrant liability | 1,379 | 437 | 1,236 | (5,959) | 2,632 | (1,139) | 1,685 | 5,479 | (2,907) | 8,657 | 1,397 |
Total expenses | 215,177 | 162,118 | 139,064 | ||||||||
Income before income taxes | 61,616 | 49,357 | 34,977 | 72,156 | 62,789 | 63,932 | 50,958 | 38,974 | 218,106 | 216,653 | 135,961 |
Income tax expense | 13,348 | 11,178 | 8,129 | 13,885 | 12,594 | 14,169 | 11,858 | 6,075 | 46,540 | 44,696 | 28,034 |
Net income | $ 48,268 | $ 38,179 | $ 26,848 | $ 58,271 | $ 50,195 | $ 49,763 | $ 39,100 | $ 32,899 | $ 171,566 | $ 171,957 | $ 107,927 |
Earnings per share | |||||||||||
Basic (in dollars per share) | $ 0.57 | $ 0.45 | $ 0.36 | $ 0.85 | $ 0.74 | $ 0.73 | $ 0.58 | $ 0.49 | $ 2.20 | $ 2.54 | $ 1.66 |
Diluted (in dollars per share) | $ 0.56 | $ 0.45 | $ 0.36 | $ 0.74 | $ 0.71 | $ 0.69 | $ 0.56 | $ 0.48 | $ 2.13 | $ 2.47 | $ 1.60 |
Weighted average common shares outstanding | |||||||||||
Basic (in shares) | 84,956 | 84,805 | 73,617 | 68,563 | 68,140 | 67,849 | 67,590 | 66,692 | 78,023 | 67,573 | 65,019 |
Diluted (in shares) | 86,250 | 85,599 | 74,174 | 70,401 | 70,276 | 70,137 | 69,590 | 68,996 | 79,263 | 69,721 | 67,652 |
Other comprehensive income (loss), net of tax: | |||||||||||
Unrealized gains (losses) in accumulated other comprehensive income, net of tax expense (benefit) of $9,525, $8,548 and ($3,285) for each of the years in the three-year period ended December 31, 2020, respectively | $ 35,829 | $ 32,155 | $ (12,357) | ||||||||
Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of ($196), $9 and ($27) for each of the years in the three-years ended December 31, 2020, respectively | 739 | (35) | 102 | ||||||||
Other comprehensive income (loss), net of tax | 36,568 | 32,120 | (12,255) | ||||||||
Comprehensive income | $ 208,134 | $ 204,077 | $ 95,672 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Change in unrealized investment gains (losses), tax amount | $ 9,525 | $ 8,548 | $ (3,285) |
Reclassification adjustment from AOCI for sale of securities, tax | $ (196) | $ 9 | $ (27) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock - Class A | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss)Cumulative effect of change in accounting principle | Retained Earnings (Accumulated Deficit) | Retained Earnings (Accumulated Deficit)Cumulative effect of change in accounting principle | |||
Beginning balance at Dec. 31, 2017 | $ 509,077 | $ 605 | $ 585,488 | $ (2,859) | $ 282 | $ (74,157) | $ (282) | |||
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 warrant exercises | 1,894 | [1] | $ 1 | 1,893 | [1] | |||||
Common stock: class A shares issued related to warrant exercises (in shares) | [1] | 91,000 | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | 3,135 | $ 14 | 3,121 | |||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 1,455,000 | |||||||||
Share-based compensation expense | 12,557 | 12,557 | ||||||||
Change in unrealized investment gains/losses, net of tax ($1,307 expense in 2019, $3,258 benefit in 2018; $8,539 expense in 2017) | (12,255) | (12,255) | ||||||||
Net income | 107,927 | 107,927 | ||||||||
Ending balance at Dec. 31, 2018 | 701,500 | $ 663 | 682,181 | (14,832) | 33,488 | |||||
Ending 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 warrant exercises | $ 8,312 | $ 3 | 8,309 | |||||||
Common stock: class A shares issued related to warrant exercises (in shares) | 289,000 | 289,000 | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ 3,500 | $ 18 | 3,482 | |||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 1,750,000 | |||||||||
Share-based compensation expense | 13,031 | 13,031 | ||||||||
Change in unrealized investment gains/losses, net of tax ($1,307 expense in 2019, $3,258 benefit in 2018; $8,539 expense in 2017) | 32,120 | 32,120 | ||||||||
Net income | 171,957 | 171,957 | ||||||||
Ending balance at Dec. 31, 2019 | 930,420 | $ 684 | 707,003 | 17,288 | 205,445 | |||||
Ending balance (in shares) at Dec. 31, 2019 | 68,358,000 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Common stock: class A shares issued related to public offering | 219,687 | $ 159 | 219,528 | |||||||
Common stock: class A shares issued related to public offering (in shares) | 15,870,000 | |||||||||
Common stock: class A shares issued related to warrant exercises | $ 325 | 325 | ||||||||
Common stock: class A shares issued related to warrant exercises (in shares) | 11,000 | 11,368 | ||||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes | $ (90) | $ 9 | (99) | |||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares) | 924,000 | |||||||||
Share-based compensation expense | 11,115 | 11,115 | ||||||||
Change in unrealized investment gains/losses, net of tax ($1,307 expense in 2019, $3,258 benefit in 2018; $8,539 expense in 2017) | 36,568 | 36,568 | ||||||||
Net income | 171,566 | 171,566 | ||||||||
Ending balance at Dec. 31, 2020 | $ 1,369,591 | $ 852 | $ 937,872 | $ 53,856 | $ 377,011 | |||||
Ending balance (in shares) at Dec. 31, 2020 | 85,163,000 | |||||||||
[1] | During 2020, we issued 11,368 common shares with a par value of $0.01 in connection with the exercise of warrants, which is not identifiable in this schedule due to rounding. |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Change in unrealized investment gains/losses, tax expense (benefit) | $ 9,721 | $ 8,539 | $ (3,258) | |
Common stock: class A shares issued related to warrant exercises (in shares) | 11,000 | 289,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Common Stock - Class A | ||||
Common stock: class A shares issued related to warrant exercises (in shares) | 11,368 | 289,000 | 91,000 | [1] |
[1] | During 2020, we issued 11,368 common shares with a par value of $0.01 in connection with the exercise of warrants, which is not identifiable in this schedule due to rounding. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | |||
Net income | $ 171,566 | $ 171,957 | $ 107,927 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Net realized investment gains | (930) | (45) | (57) |
(Gain) loss from change in fair value of warrant liability | (2,907) | 8,657 | 1,397 |
Depreciation and amortization | 9,930 | 9,299 | 7,811 |
Net amortization of premium on investment securities | 3,668 | 1,252 | 1,519 |
Amortization of debt discount and debt issuance costs | 4,036 | 1,011 | 3,390 |
Deferred income taxes | 46,506 | 45,082 | 25,927 |
Share-based compensation expense | 11,115 | 13,031 | 12,557 |
Changes in operating assets and liabilities: | |||
Premiums receivable | (3,694) | (10,078) | (10,828) |
Accrued investment income | (3,031) | (1,137) | (1,482) |
Prepaid expenses | 220 | (472) | (1,090) |
Deferred policy acquisition costs, net | (2,253) | (13,132) | (8,915) |
Other assets | (38,804) | (8,831) | 1,304 |
Unearned premiums | (17,825) | (22,251) | (4,273) |
Reserve for insurance claims and claim expenses | 66,815 | 10,941 | 4,050 |
Reinsurance recoverable | (12,669) | (1,939) | (1,099) |
Reinsurance balances, net | 2,783 | 917 | 1,659 |
Accounts payable and accrued expenses | 18,072 | 3,888 | 6,064 |
Net cash provided by operating activities | 252,598 | 208,150 | 145,861 |
Cash flows from investing activities | |||
Purchase of short-term investments | (42,241) | (230,362) | (257,916) |
Purchase of fixed-maturity investments, available-for-sale | (1,065,916) | (290,533) | (356,337) |
Proceeds from maturity of short-term investments | 86,045 | 244,921 | 221,685 |
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 404,717 | 91,575 | 179,978 |
Software and equipment | (12,159) | (9,956) | (8,060) |
Net cash (used in) investing activities | (629,554) | (194,355) | (220,650) |
Cash flows from financing activities | |||
Proceeds from issuance of common stock related to public offering, net of issuance costs | 219,687 | 0 | 79,165 |
Proceeds from issuance of common stock related to employee equity plans | 8,871 | 21,748 | 12,857 |
Proceeds from issuance of common stock related to warrant exercises | 0 | 0 | 321 |
Taxes paid related to net share settlement of equity awards | (8,961) | (18,248) | (9,722) |
Proceeds from senior secured notes | 400,000 | 0 | 149,250 |
Repayments of term loan | (147,750) | (1,500) | (147,375) |
Payments of debt issuance costs | (9,043) | 0 | (3,609) |
Net cash provided by financing activities | 462,804 | 2,000 | 80,887 |
Net increase in cash, cash equivalents and restricted cash | 85,848 | 15,795 | 6,098 |
Cash, cash equivalents and restricted cash, beginning of period | 41,089 | 25,294 | 19,196 |
Cash, cash equivalents and restricted cash, end of period | 126,937 | 41,089 | 25,294 |
Supplemental disclosures of cash flow information | |||
Interest paid | 17,561 | 10,691 | 12,093 |
Income taxes (refunded) paid | $ (70) | $ (64) | $ 867 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation NMI Holdings, Inc. (NMIH) is a Delaware corporation, incorporated in May 2011 to provide private mortgage guaranty insurance (which we refer to as mortgage insurance or MI) through its wholly-owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One). Our common stock is listed on the NASDAQ exchange under the ticker symbol "NMIH." NMIC, our primary insurance subsidiary, issued its first mortgage insurance policy in April 2013. NMIC is licensed to write mortgage insurance in all 50 states and the District of Columbia (D.C.). In August 2015, NMIH capitalized a wholly-owned subsidiary, NMI Services, Inc. (NMIS), through which we offer outsourced loan review services to mortgage loan originators. Basis of Presentation The accompanying consolidated financial statements include the results of NMIH and its wholly-owned subsidiaries. All inter-company transactions have been eliminated. These financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) and our accounts are maintained in US dollars. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to previously reported financial information have been made to conform to our current period presentation. COVID-19 Developments On January 30, 2020, the World Health Organization (WHO) declared the outbreak of coronavirus (COVID-19) a global health emergency and characterized the outbreak as a global pandemic on March 11, 2020. In an effort to stem contagion and control the COVID-19 pandemic, the population at large has severely curtailed day-to-day activity and local, state and federal regulators have imposed a broad set of restrictions on personal and business conduct nationwide. The COVID-19 pandemic, along with the widespread public and regulatory response, has caused a dramatic slowdown in U.S. and global economic activity and a record number of Americans have been furloughed or laid-off. The global dislocation caused by COVID-19 is unprecedented and, while there is broad hope that the recent development, distribution and administration of new vaccines may relieve the crisis and provide for a near-term return to normalized activity, it is not known how long the dislocation will persist. In response to the COVID-19 outbreak and continuing uncertainties, we activated our disaster continuity program to ensure our employees are safe and able to manage our business without interruption. We pursued a broad series of capital and reinsurance transactions to bolster our balance sheet and provide an expanded ability to serve our customers and their borrowers, and we updated our underwriting guidelines and policy pricing in consideration for the increased level macroeconomic volatility. While the U.S. housing market has demonstrated significant resiliency since the onset of the pandemic, with record levels of demand, mortgage origination activity and house price appreciation, much uncertainty remains. Given the uncertainty that prevails, we cannot fully assess or estimate the ultimate impact of COVID-19 on the mortgage insurance market, our business performance or our financial position including our new business production, default and claims experience, and investment portfolio results. |
Summary of Accounting Policies
Summary of Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Accounting Principles | Summary of Accounting Principles Use of Estimates We use accounting principles and methods that conform to GAAP. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. Insurance Premium Revenue Recognition Premiums for primary mortgage insurance policies may be paid in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium), with such election and payment type fixed at policy inception. Premiums written at origination for single premium policies are initially deferred as unearned premiums and amortized into earnings over the estimated policy life, in accordance with the anticipated expiration of risk. Monthly premiums are recognized as revenue in the month billed and when the coverage is effective. Annual premiums are initially deferred and earned on a straight-line basis over the year of coverage. Upon cancellation of a policy, all remaining non-refundable deferred and unearned premium is immediately earned, and any refundable deferred and unearned premium is returned to the policyholder and recorded as a reduction to written premium and unearned premium reserve in the period paid. Premiums written on pool transactions are earned over the period that coverage is provided. Concentrations For the years ended December 31, 2020, December 31, 2019 and December 31, 2018 no customer accounted for more than 10% of our consolidated revenues. At December 31, 2020, December 31, 2019 and December 31, 2018 approximately 11%, 12% and 13% of our total risk-in-force (RIF) was concentrated in California. Reserves for Insurance Claims and Claim Expenses We establish reserves for claims based on our best estimate of the ultimate claim costs for defaulted loans using the general principles contained in ASC 944, Financial Services - Insurance (ASC 944). A loan is considered to be in "default" as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments. We establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, and additional loans that we estimate (based on actuarial review and other factors) to be in default that have not yet been reported to us by servicers, referred to as incurred but not reported (IBNR) reserves. We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claim settlement process. Claim expense reserves are either allocated ( i.e. , associated with a specific claim) or unallocated ( i.e. , not associated with a specific claim). The establishment of claims and claim expense reserves is subject to inherent uncertainty and requires significant judgment by management. Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of claim payment expected to be paid on each such loan in default, which is referred to as claim severity. Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, size of the loan and loan-to-value (LTV) ratios, and are strongly influenced by assumptions about the path of certain economic factors, such as house price appreciation, trends in unemployment and mortgage rates. We consider the appropriateness of such inputs at each fiscal quarter and conduct an actuarial review annually to evaluate and, if necessary, update these assumptions. Investments We have designated our investment portfolio as available-for-sale and report our invested assets at fair value. Unrealized gains and losses in the portfolio, net of related tax expense or benefit, are recognized as a component of accumulated other comprehensive income (AOCI) in shareholders' equity. We measure fair value and classify invested assets in a hierarchy for disclosure purposes consisting of three "levels" based on the observability of inputs available in the marketplace used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). See Note 4, " Fair Value of Financial Instruments " for further discussion. Purchases and sales of investments are recorded on a trade date basis. Net investment income is recognized when earned, and includes interest and dividend income together with amortization of market premiums and discounts using the effective yield method, and is net of investment management fees and other investment related expenses. For asset-backed securities and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to changes in effective yields and prepayment assumptions are recognized on a prospective basis. We recognize an impairment on a security through the statement of operations if (i) we intend to sell the impaired security; or (ii) it is more likely than not that we will be required to sell the impaired security prior to recovery of its amortized cost basis. If a sale is intended or likely to be required, we write down the amortized cost basis of the security to fair value and recognize the full amount of the impairment through the statement of operations as a " Realized Investment Loss ." For securities in an unrealized loss position where a sale is not intended or likely to be required, we further assess if the decline in fair value below amortized cost is driven by a credit related impairment, considering several items including, but not limited to: • the severity of the decline in fair value; • the financial condition of the issuer; • the failure of the issuer to make scheduled interest or principal payments; • recent rating downgrades of the applicable security or issuer by one or more nationally recognized statistical ratings organization; and • other adverse conditions related to or impacting the security or issuer. To the extent we determine that a security impairment is credit-related, an impairment loss is recognized through the statement of operations as a provision for credit loss expense, and presented as a " Realized Investment Loss. " We recognize an allowance for credit losses for the difference between the amortized cost and present value of future expected cash flows, limited by the amount the fair value of the security is below its amortized cost. Subsequent changes (favorable and unfavorable) in credit losses are recognized through the statement of operations as a provision for or a reversal of credit loss expense, and presented as a " Realized Investment Gain or Loss. " The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes. We have elected to present accrued interest receivable separately from available for sale securities on our consolidated balance sheet. Accrued interest receivable was $9.9 million as of December 31, 2020 and is included in " Accrued Investment Income. " We have elected not to measure an allowance for credit losses for accrued interest receivable on available for sale securities. Accrued interest for available for sale securities is written off against interest income when the receivable has aged 90 days past due. We did not write off any accrued interest receivable during the twelve months ended December 31, 2020, 2019 or 2018. We consider items such as commercial paper with original maturities of 90 days or less to be short-term investments. Deferred Policy Acquisition Costs (DAC) Costs directly associated with the successful acquisition of mortgage insurance policies, consisting of certain selling expenses and other policy issuance and underwriting expenses, are initially deferred and reported as DAC. DAC is reviewed periodically to determine that it does not exceed recoverable amounts. DAC is amortized to expense in proportion to estimated gross profits over the life of the associated policies. We revise the rate of amortization to reflect actual experience and any changes to persistency or loss development. Total amortization of DAC for the years ended December 31, 2020, 2019 and 2018, net of a portion of the ceding commissions earned under our quota share reinsurance agreements (see " Reinsurance ", below ) , was $19.1 million, $8.4 million and $8.1 million, respectively. Premium Deficiency Reserves We consider whether a premium deficiency exists and premium deficiency reserve is required at each fiscal quarter using best estimate assumptions as of the testing date. Per ASC 944, a premium deficiency reserve shall be recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs and maintenance costs exceeds future premiums, existing reserves and anticipated investment income. We have determined that no premium deficiency reserves were necessary for any of the years in the three-year period ended December 31, 2020. Reinsurance We account for premiums, claims and claim expenses that are ceded to reinsurers on basis consistent with that which we use to account for the original policies we issue and pursuant to the terms of our reinsurance contracts. We account for premiums ceded or otherwise paid to reinsurers as a reduction to premium revenue. NMIC entered into quota share reinsurance treaties effective September 1, 2016 (the 2016 QSR Transaction), January 1, 2018 (the 2018 QSR Transaction) and April 1, 2020 (the 2020 QSR Transaction), which we refer to collectively as the QSR Transactions. We earn profit and ceding commissions in connection with the QSR Transactions (see Note 6, " Reinsurance "). Profit commissions represent a percentage of the profits recognized by reinsurers that are returned to us, based on the level of claims and claim expenses that we cede. We recognize any profit commissions we earn as an increase to premium revenue. Ceding commissions are calculated as a percentage of ceded written premiums under the 2016 QSR Transaction and as a percentage of ceded earned premiums under the 2018 and 2020 QSR Transactions, and are intended to cover our costs of acquiring and servicing direct policies. We recognize any ceding commissions generated under the QSR Transactions in a manner consistent with our recognition of earnings on the underlying reinsured policies. We account for ceding commissions earned as a reduction to underwriting and operating expenses. Under the QSR Transactions, we cede a portion of claims and claim expenses and reserves to our reinsurers, and account for such ceded reserves as "Reinsurance Recoverables" on the consolidated balance sheets and such ceded expenses as reductions to claims and claim expenses on the consolidated statements of operations. As of December 31, 2020, we had $17.6 million of reinsurance recoverables under the QSR Transactions. We remain directly liable for all claim payments if we are unable to collect the recoverables due from our reinsurers and, as such, we actively monitor and manage our counterparty credit exposure to our reinsurance providers. We establish an allowance for expected credit loss against our reinsurance recoverables if we do not expect to recover amounts due from one or more of our reinsurance counterparties, and report our reinsurance recoverables net of such allowance, if any. We actively monitor the counterparty credit profiles of our reinsurers and each is required to partially collateralize its obligations under the terms of our QSR Transactions. As of December 31, 2020, we did not recognize any allowance for credit loss with respect to our reinsurance recoverables. Income Taxes We account for income taxes using the liability method in accordance with ASC Topic 740, Income Taxes . The liability method measures the expected future tax effects of temporary differences at the enacted tax rates applicable for the period in which the deferred asset or liability is expected to be realized or settled. Temporary differences are differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements that would result in future increases or decreases in taxes owed on a cash basis compared to amounts already recognized as tax expense in the consolidated statement of operations. Warrants We account for warrants to purchase our common shares in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815-40 Derivatives and Hedging - Contracts in Entity's Own Equity . Our outstanding warrants may be settled through either (i) physical settlement method, or (ii) cashless exercise, where the number of shares issued upon exercise of the warrants is reduced to cover the cost of the exercise in lieu of the holder remitting a cash payment for the exercise price. The warrants expire and are not exercisable after the 10th anniversary of the date issued. The number of warrants and exercise price are subject to anti-dilution provisions whereby the number of warrants may be increased and their exercise price may be adjusted downward under certain circumstances. The anti-dilutive adjustments may be in excess of any dilution incurred by the warrant holders, and may be triggered by events that are not dilutive. As a result, the warrants are classified as a liability. We revalue the warrants at the end of each reporting period, and any change in fair value is reported in the statements of operations in the period in which the change occurred. We calculated the fair value of the warrants using a Black-Scholes option-pricing model in combination with a binomial model. Share-Based Compensation We account for stock compensation in accordance with ASC 718, Compensation - Stock Compensation , which addresses accounting for share-based awards and recognition of compensation expense, measured using grant date fair value, over the requisite service or performance period of the award. Share-based compensation includes restricted stock units (RSUs) and stock option grants under our Stock Plans. We calculate the fair value of stock option grants using a Black-Scholes option pricing model, which takes into account various subjective assumptions. Key assumptions used in the model include the expected volatility of our stock price, dividend yield and the risk-free interest rate, as well as the expected option term, giving consideration to the contractual terms of any award. RSU grants may contain a service condition, or performance and service conditions. RSU grants are valued at our stock price on the date of grant less the present value of anticipated dividends. We account for stock option and RSU forfeitures as they occur. Earnings per Share (EPS) Basic earnings (loss) per share is based on the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted-average number of common shares outstanding and common share equivalents that would be issuable upon the vesting of existing service based and certain performance and service based RSUs, and exercise of vested and unvested stock options and outstanding warrants. Cash and Cash Equivalents We consider items such as certificates of deposit and money market funds with original maturities of 90 days or less to be cash equivalents. Software and Equipment We capitalize certain costs associated with the development of internal-use software and equipment. Software and equipment are stated at cost, less accumulated amortization and depreciation. Amortization of software and depreciation of equipment commences at the beginning of the month following our placement of the assets into use. Amortization and depreciation are calculated on a straight-line basis over the estimated useful life of the respective assets, typically from three Software and Equipment. " Leases We recognize right-of-use (ROU) assets and corresponding lease liabilities for our lease arrangements. 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. Estimated lease terms includes optional renewal periods and early termination payments when it is reasonably certain we will exercise those rights. ROU assets are measured as the associated lease liability plus any direct costs incurred in connection with the initial establishment of the lease, less any lease incentives received. Business Combinations, Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired from a business combination. In accordance with ASC 350, Intangibles - Goodwill and Other , we test goodwill for impairment during the third quarter each year, or more frequently if we believe indicators of impairment exist. We have not identified any impairments of goodwill through December 31, 2020. Our intangible assets consist of state licenses and Fannie Mae and Freddie Mac (collectively, the GSEs) applications which have indefinite lives. We test indefinite-lived intangible assets for impairment during the fourth quarter of each year or more frequently if we believe indicators of impairment exist. We have not identified any impairments of indefinite-lived intangible assets through December 31, 2020. Premiums Receivable Premiums receivable consists of premiums due on our mortgage insurance policies. If a mortgage insurance premium is unpaid for more than 120 days, the associated receivable is written off against earned premium and the related insurance policy is canceled. We recognize an allowance for credit losses for premiums receivable based on credit losses expected to arise over the life of the receivable. Due to the nature of our insurance policies (a necessary precondition for access to mortgage credit for covered borrowers) and the short duration of the related receivables, we do not typically experience credit losses against our premium receivables and did not establish an allowance for credit loss at December 31, 2020. Premiums receivable may be written off prior to 120 days in the ordinary course of business for non-credit events including, but not limited to, the modification or refinancing of an underlying insured loan. We have established a reserve for premium write-offs based on historical experience; such reserve was deemed to be immaterial at December 31, 2020 and December 31, 2019. Variable Interest Entities NMIC is a party to reinsurance agreements with Oaktown Re Ltd., Oaktown Re II Ltd., Oaktown Re III Ltd., Oaktown Re IV Ltd. and Oaktown Re V Ltd. (special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective May 2, 2017, July 25, 2018, July 30, 2019, July 30, 2020 and October 29, 2020, respectively. At inception of the respective reinsurance agreements, we determined that each of the Oaktown Re Vehicles 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. See Note 6, " Reinsurance " for further discussion of the reinsurance arrangements. Other Revenues Other revenues represent underwriting fee revenue from our subsidiary, NMIS, which provides outsourced loan review services to mortgage loan originators. NMIS fees are earned and recognized as services are provided. Recent Accounting Pronouncements - Adopted In June 2016, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (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 , ASU 2019-05, Financial Instruments-Credit Losses: Targeted Transition Relief , and ASU 2019-11, C odification Improvements to Topic 326, Financial Instruments-Credit Losses . 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 shifts 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 are recorded through an allowance for credit losses, rather than a write-down of the asset as was 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. We adopted these updates on January 1, 2020. Adoption of the updated standards did not have a material impact on our consolidated financial statements, and had no impact on our accounting for insurance claims and claim expenses as these items are not in scope of the guidance. 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. We adopted this ASU on January 1, 2020 and determined it did not 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. We adopted this ASU on January 1, 2020 and applied it on a prospective basis for eligible costs incurred after the effective date. The adoption of this ASU did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements - Not Yet Adopted In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The FASB subsequently issued ASU 2019-09 in November 2019 and ASU 2020-11 in November 2020, which amended the effective date for this standard and provided transition relief to facilitate early application for long duration contracts. The standard will now take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) . This update eliminates certain exceptions for recognizing deferred taxes for investments, performing intra-period allocations and calculating income taxes in interim periods. The ASU also includes guidance to reduce complexity in certain income tax areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. 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 adopted this ASU on January 1, 2021 and and it did not have a material impact on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This update with updates subsequently issued in January 2021 in ASU 2021-01. These updates provide optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. Reference rate reform refers to the global transition away from referencing the London Interbank Offered Rate (LIBOR) in financial contracts, which is expected to be discontinued in 2021.The ASU includes optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. These standards are effective immediately through December 31, 2022 for all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. We are currently evaluating the impact the adoption of the ASUs would have, if any, to our contract modifications that are affected by the discontinuation of LIBOR. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity's Own Equity (Subtopic 815-40 ). This update simplifies the accounting for convertible instruments and contracts on an entity's own equity, including warrants, eliminating certain triggers for derivative accounting. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted, but no earlier than 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, including our warrant liability. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | InvestmentsWe hold all investments on an available-for-sale basis and evaluate each position quarterly for impairment. We recognize an impairment on a security through the statement of operations if (i) we intend to sell the impaired security; or (ii) it is more likely than not that we will be required to sell the impaired security prior to recovery of its amortized cost basis. If a sale is intended or likely to be required, we write down the amortized cost basis of the security to fair value and recognize the full amount of the impairment through the statement of operations as a "Realized Investment Loss." To the extent we determine that a security impairment is credit-related, an impairment loss is recognized through the statement of operations as a provision for credit loss expense. The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes. Fair Values and Gross Unrealized Gains and Losses on Investments Amortized Gross Unrealized Fair Gains Losses As of December 31, 2020 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 29,412 $ 2,186 $ — $ 31,598 Municipal debt securities 407,323 14,027 (2) 421,348 Corporate debt securities 1,165,260 55,014 (483) 1,219,791 Asset-backed securities 128,471 2,736 (27) 131,180 Total bonds 1,730,466 73,963 (512) 1,803,917 Short-term investments 369 — — 369 Total investments $ 1,730,835 $ 73,963 $ (512) $ 1,804,286 Amortized Gross Unrealized Fair Gains Losses As of December 31, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,203 $ 784 $ (58) $ 48,929 Municipal debt securities 189,530 1,721 (1,035) 190,216 Corporate debt securities 661,719 23,373 (211) 684,881 Asset-backed securities 170,153 2,603 (114) 172,642 Total bonds 1,069,605 28,481 (1,418) 1,096,668 Short-term investments 44,174 98 — 44,272 Total investments $ 1,113,779 $ 28,579 $ (1,418) $ 1,140,940 We did not own any mortgage-backed securities in our asset-backed securities portfolio at December 31, 2020 or 2019. The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Financial 37 % 38 % Consumer 23 26 Communications 10 10 Utilities 11 9 Industrial 9 8 Technology 10 7 Energy — 2 Total 100 % 100 % As of December 31, 2020 and 2019, approximately $5.7 million and $5.5 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 value of available-for-sale securities as of December 31, 2020 and 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category. As of December 31, 2020 Amortized Fair (In Thousands) Due in one year or less $ 57,429 $ 57,949 Due after one through five years 507,444 536,520 Due after five through ten years 1,016,230 1,056,098 Due after ten years 21,261 22,539 Asset-backed securities 128,471 131,180 Total investments $ 1,730,835 $ 1,804,286 As of December 31, 2019 Amortized Fair (In Thousands) Due in one year or less $ 138,776 $ 139,113 Due after one through five years 406,986 417,208 Due after five through ten years 380,737 394,180 Due after ten years 17,127 17,797 Asset-backed securities 170,153 172,642 Total investments $ 1,113,779 $ 1,140,940 Aging of Unrealized Losses As of December 31, 2020, the investment portfolio had gross unrealized losses of $0.5 million, of which $8 thousand had been in an unrealized loss position for a period of twelve months or longer. As of December 31, 2019, the investment portfolio had gross unrealized losses of $1.4 million, of which $84 thousand had been in an unrealized loss position for a period of twelve months or longer. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows: Less Than Twelve Months Twelve 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, 2020 (Dollars in Thousands) Municipal debt securities 4 3,548 (2) — — — 4 3,548 (2) Corporate debt securities 9 40,081 (483) 1 33 — 10 40,114 (483) Asset-backed securities 2 5,191 (19) 1 2,495 (8) 3 7,686 (27) Total 15 $ 48,820 $ (504) 2 $ 2,528 $ (8) 17 $ 51,348 $ (512) Less Than Twelve Months Twelve 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, 2019 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 4 $ 12,001 $ (58) — $ — $ — 4 $ 12,001 $ (58) Municipal debt securities 26 92,844 (1,034) 1 999 (1) 27 93,843 (1,035) Corporate debt securities 10 30,481 (140) 14 23,976 (71) 24 54,457 (211) Asset-backed securities 9 19,236 (102) 1 2,988 (12) 10 22,224 (114) Total 49 $ 154,562 $ (1,334) 16 $ 27,963 $ (84) 65 $ 182,525 $ (1,418) Allowance for credit losses As of December 31, 2020, we did not recognize an allowance for credit loss for any security in the investment portfolio and we did not record any provision for credit loss for investment securities during the year ended December 31, 2020. Based on current facts and circumstances, we believe the unrealized losses as of December 31, 2020 are not indicative of the ultimate collectability of the current amortized cost of the securities. During the year ended December 31, 2019, we recognized $0.4 million other-than-temporarily impaired (OTTI) losses in earnings. For the year ended December 31, 2018, we did not recognize any OTTI losses. Net Investment Income The following table presents the components of net investment income: For the year ended December 31, 2020 2019 2018 (In Thousands) Investment income $ 33,140 $ 31,332 $ 24,342 Investment expenses (1,243) (476) (804) Net investment income $ 31,897 $ 30,856 $ 23,538 The following table presents the components of net realized investment gains: For the year ended December 31, 2020 2019 2018 (In Thousands) Gross realized investment gains $ 5,572 $ 561 $ 525 Gross realized investment losses (4,642) (516) (468) Net realized investment gains $ 930 $ 45 $ 57 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following describes the valuation techniques used by us to determine the fair value of our financial instruments: We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this standard are described below: Level 1 - Fair value measurements based on quoted prices in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments. Level 2 - Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 - Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions, which require significant management judgment or estimation about the inputs a hypothetical market participant would use to value that asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assets classified as Level 1 and Level 2 To determine the fair value of securities available-for-sale in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including data published in market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. This model combines all inputs to arrive at a value assigned to each security. We have not made any adjustments to the prices obtained from the independent pricing sources. Liabilities classified as Level 3 We calculate the fair value of outstanding warrants utilizing Level 3 inputs, including a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. Variables in the model include the risk-free rate of return, dividend yield, expected life and expected volatility of our stock price. The following tables present the level within the fair value hierarchy at which our financial instruments were measured: Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2020 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 31,598 $ — $ — $ 31,598 Municipal debt securities — 421,348 — 421,348 Corporate debt securities — 1,219,791 — 1,219,791 Asset-backed securities — 131,180 — 131,180 Cash, cash equivalents and short-term investments 127,306 — — 127,306 Total assets $ 158,904 $ 1,772,319 $ — $ 1,931,223 Warrant liability — — 4,409 4,409 Total liabilities $ — $ — $ 4,409 $ 4,409 Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,929 $ — $ — $ 48,929 Municipal debt securities — 190,216 — 190,216 Corporate debt securities — 684,881 — 684,881 Asset-backed securities — 172,642 — 172,642 Cash, cash equivalents and short-term investments 85,361 — — 85,361 Total assets $ 134,290 $ 1,047,739 $ — $ 1,182,029 Warrant liability — — 7,641 7,641 Total liabilities $ — $ — $ 7,641 $ 7,641 There were no transfers between Level 2 and Level 3 of the fair value hierarchy during the years ended December 31, 2020 or 2019. The following is a roll-forward of Level 3 liabilities measured at fair value: For the year ended December 31, Warrant Liability 2020 2019 2018 (In Thousands) Balance, January 1 $ 7,641 $ 7,296 $ 7,472 Change in fair value of warrant liability included in earnings (2,907) 8,657 1,397 Issuance of common stock on warrant exercise (325) (8,312) (1,573) Balance, December 31 $ 4,409 $ 7,641 $ 7,296 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 December 31, 2020 2019 2018 Common stock price $ 22.65 $ 33.18 $ 17.85 Risk free interest rate 0.11 % 1.59 % 2.46 - 2.47% Expected life 1.31 years 2.31 years 2.58 - 3.31 years Expected volatility 83.7 % 41.4 % 41.1 - 42.5% Dividend yield — % — % — % The changes in fair value of the warrant liability for the years ended December 31, 2020, 2019, and 2018 are primarily attributable to changes in the price of our common stock during the respective periods, with additional impact related to changes in other Black-Scholes model inputs and the exercise of outstanding warrants. Financial Instruments not Measured at Fair Value On June 19, 2020, we issued $400 million aggregate principal amount of senior secured notes that mature on June 1, 2025 (the Notes) and used a portion of the proceeds from the Notes offering to repay the outstanding amount due under our $150 million term loan (2018 Term Loan). At December 31, 2020, the Notes were carried at a cost of $393.3 million, net of unamortized debt issuance costs of $6.7 million, and had a fair value of $447.1 million as assessed under our Level 2 hierarchy. At December 31, 2019, the 2018 Term Loan was carried at a cost of $145.8 million, net of unamortized debt issuance costs of $2.0 million, and had a fair value of $147.8 million. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Senior Secured Notes At December 31, 2020, we had $400 million aggregate principal amount of senior secured notes outstanding. The Notes were issued pursuant to an indenture dated June 19, 2020 (the Indenture) and bear interest at a rate of 7.375%, payable semi-annually on June 1 and December 1. $244.4 million of proceeds from the Notes offering were contributed to our lead operating subsidiary, NMIC and remaining proceeds were used to repay the outstanding amount due under the 2018 Term Loan due on May 24, 2023 and to pay underwriting fees incurred connection with the offering. The Notes mature on June 1, 2025. At any time, or from time to time, prior to March 1, 2025, we may elect to redeem the Notes in whole or in part at a price based on 100% of the aggregate principal amount of any Notes redeemed plus the "Applicable Premium," plus accrued and unpaid interest thereon. Applicable Premium is defined as the greater of (1) 1.0% of the principal amount of the Notes, or (2) the principal value of the Notes plus the present value of all future interest payments. At any time on or after March 1, 2025, we may elect to redeem the Notes in whole or in part at a price equal to 100% of the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon. From time to time prior to June 1, 2022, we may also elect to use proceeds raised from one or more equity offerings to redeem up to 40% of the aggregate principal amount of the Notes at a price equal to 107.375% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, subject to certain exceptions. Interest expense for the Notes includes interest and the amortization of capitalized debt issuance costs. In connection with the Notes offering, we recorded capitalized debt issuance costs of $7.4 million. Such amounts will be amortized over the contractual life of the Notes using the effective interest method. At December 31, 2020, $6.7 million of unamortized debt issuance costs remained. Interest expense for the year ended December 31, 2020 includes $2.6 million of costs related to the extinguishment of the 2018 Term Loan and issuance of the Notes. At December 31, 2020, $2.5 million of accrued and unpaid interest on the Notes is included in "Accounts Payable and Accrued Expenses" on the Consolidated Balance Sheet. 2020 Revolving Credit Facility On March 20, 2020, we amended our $85 million three-year secured revolving credit facility (the 2018 Revolving Credit Facility), increasing borrowing capacity under the facility to $100 million, extending its maturity date from May 24, 2021 to February 22, 2023, and reducing the interest cost related to both undrawn commitments and drawn borrowings under the facility (as amended, the 2020 Revolving Credit Facility). Borrowings under the 2020 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations, and accrue interest at a variable rate equal to, at our discretion, (i) a base rate (as defined in our existing credit agreement (the Credit Agreement), subject to a floor of 1.00% per annum) plus a margin of 0.375% to 1.875% per annum or (ii) the Eurodollar Rate plus a margin of 1.375% to 2.875% per annum, based on the applicable corporate credit rating at the time. On October 30, 2020, we entered into a Joinder Agreement to the Credit Agreement, increasing the aggregate principal amount of commitments under the 2020 Revolving Credit Facility from $100 million to $110 million. All other terms remained unchanged. As of December 31, 2020, no amounts were drawn under the 2020 Revolving Credit Facility. Under the 2020 Revolving Credit Facility, we are required to pay a quarterly commitment fee on the average daily undrawn amount of 0.175% to 0.525%, based on the applicable corporate credit rating at the time. As of December 31, 2020, the applicable commitment fee was 0.35%. For the year ended December 31, 2020, we recorded $0.4 million of commitment fees in interest expense, respectively. We incurred debt issuance costs of $0.8 million in connection with the 2020 Revolving Credit Facility and had $0.6 million of unamortized debt issuance costs associated with the 2018 Revolving Credit Facility remaining at the time of its amendment and replacement. Combined unamortized debt issuance will be amortized through interest expense on a straight-line basis over the contractual life of the 2020 Revolving Credit Facility. At December 31, 2020, remaining unamortized deferred debt issuance costs were $1.1 million. We are subject to certain covenants under the 2020 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 private mortgage insurer eligibility requirements (PMIERs) financial requirements (subject to any GSE approved waivers), and minimum |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2020 | |
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, (respectively, as defined therein), and support the growth of our business. The Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) has approved and the GSEs have indicated their non-objection to 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 year ended December 31, 2020 December 31, 2019 December 31, 2018 (In Thousands) Net premiums written Direct $ 455,172 $ 376,052 $ 287,791 Ceded (1) (66,528) (43,400) (30,988) Net premiums written $ 388,644 $ 332,652 $ 256,803 Net premiums earned Direct $ 472,998 $ 398,303 $ 292,064 Ceded (1) (75,826) (53,288) (40,867) Net premiums earned $ 397,172 $ 345,015 $ 251,197 (1) Net of profit commission. Excess-of-loss reinsurance NMIC entered into excess-of-loss reinsurance agreements with the Oaktown Re Vehicles. 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. NMIC makes risk premium payments to the Oaktown Re Vehicles for the applicable outstanding reinsurance coverage amount and pays an additional 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., Oaktown Re III Ltd., Oaktown Re IV Ltd. and Oaktown Re V Ltd.). NMIC ceded aggregate premiums to the Oaktown Re Vehicles of $22.8 million, $14.6 million and $9.6 million during the years ended December 31, 2020, 2019 and 2018, respectively. 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 years ended December 31, 2020, 2019 and 2018, respectively, as the aggregate first layer risk retention was not exhausted for each applicable 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., Oaktown Re III Ltd., Oaktown Re IV Ltd. and Oaktown Re V Ltd., individually as the 2017 ILN Transaction, 2018 ILN Transaction, 2019 ILN Transaction, 2020-1 ILN Transaction and 2020-2 ILN Transaction, and collectively as the ILN Transactions. 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. As the reinsurance coverage decreases, a prescribed amount of collateral held in trust by the Oaktown Re Vehicles is distributed to ILN Transaction noteholders as amortization of the outstanding insurance-linked note principal balances. The outstanding reinsurance coverage amounts stop amortizing, and the collateral distribution to ILN Transaction noteholders and amortization of insurance-linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event). Effective June 25, 2020, a Lock-Out Event was deemed to have occurred for each of the 2017, 2018 and 2019 ILN Transactions and the amortization of reinsurance coverage, and distribution of collateral assets and amortization of insurance-linked notes was suspended for each ILN Transaction. The amortization of reinsurance coverage, distribution of collateral assets and amortization of insurance-linked notes will remain suspended for the duration of the Lock-Out Event for each ILN Transaction, and during such period assets will be preserved in the applicable reinsurance trust account to collateralize the excess-of-loss reinsurance coverage provided to NMIC. 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. Current amounts are presented as of December 31, 2020. ( $ values in thousands) Inception Date Covered Production Initial Reinsurance Coverage Current Reinsurance Coverage Initial First Layer Retained Loss Current First Layer Retained Loss (1) 2017 ILN Transaction May 2, 2017 1/1/2013 - 12/31/2016 $ 211,320 $ 40,226 $ 126,793 $ 121,423 2018 ILN Transaction July 25, 2018 1/1/2017 - 5/31/2018 264,545 158,489 125,312 123,234 2019 ILN Transaction July 30, 2019 6/1/2018 - 6/30/2019 326,905 231,877 123,424 122,874 2020-1 ILN Transaction July 30, 2020 7/1/2019 - 3/31/2020 322,076 250,685 169,514 169,514 2020-2 ILN Transaction October 29, 2020 4/1/2020 - 9/30/2020 (2) 242,351 242,351 121,777 121,177 (1) NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claims expenses to each applicable ILN Transaction and recognizes a reinsurance recoverable if such incurred claims and claims expenses exceed its current first layer retained loss. (2) Less than 1% of the production covered by the 2020-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2020. NMIC holds optional termination rights under each ILN Transaction, 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, 2019, 2020-1 and 2020-2 ILN Transactions, 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 consolidated balance sheet includes restricted amounts of $5.6 million as of December 31, 2020. We are not required to deposit additional funds into the premium deposit accounts in the future and the restricted balances required under these transactions will decline over time as the outstanding principal balance of the respective insurance-linked notes are amortized. Quota share reinsurance NMIC is a party to three outstanding quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016, the 2018 QSR Transaction, effective January 1, 2018 and the 2020 QSR Transaction, effective April 1, 2020. 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 terms of 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 recapturing the related risk. Under the terms of 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 recapturing the related risk. Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21% of the risk on eligible policies written from April 1, 2020 to December 31, 2020. The 2020 QSR Transaction is scheduled to terminate on December 31, 2030. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2023, or at the end of any calendar quarter thereafter, which would result in NMIC recapturing the related risk. NMIC may terminate any or all 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 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 amounts related to the QSR Transactions: For the year ended December 31, 2020 December 31, 2019 December 31, 2018 (In Thousands) Ceded risk-in-force $ 5,543,969 $ 5,137,249 $ 4,292,450 Ceded premiums earned (94,899) (89,211) (74,068) Ceded claims and claim expenses 14,002 3,465 1,763 Ceding commission earned 18,526 17,652 14,585 Profit commission 41,902 50,513 42,846 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 and 2020 QSR Transactions, 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, 2018 QSR Transaction and 2020 QSR Transaction, generally remain below 60%, 61% and 50%, 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 the 2016 QSR Transaction was $4.5 million as of December 31, 2020. In accordance with the terms of the 2018 and 2020 QSR Transactions, 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 recognized 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 the 2018 QSR Transaction was $12.6 million as of December 31, 2020. The reinsurance recoverable on loss reserves related to the 2020 QSR Transaction was $0.5 million as of December 31, 2020. |
Reserve for Insurance Claims an
Reserve for Insurance Claims and Claim Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
Reserves for Insurance Claims and Claim Expenses | Reserves for Insurance Claims and Claim Expenses We hold gross reserves in an amount equal to the estimated liability for insurance claims and claim expenses related to defaults on insured mortgage loans. A loan is considered to be in "default" as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments. We establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, and additional loans that we estimate (based on actuarial review and other factors) to be in default that have not yet been reported to us by servicers, referred to as incurred but not reported (IBNR) reserves. We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claim settlement process. As of December 31, 2020, we had 12,209 primary loans in default and held gross reserves for insurance claims and claim expenses of $90.6 million. During the year ended December 31, 2020, we paid 143 claims totaling $6.4 million, including 137 claims covered under the QSR Transactions representing $1.3 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 December 31, 2020, 219 loans in the pool were in default. These 219 loans represented approximately $17.6 million of RIF. Due to the size of the remaining deductible, our expectation that a limited number of loans in default will progress to a claim and the expected severity on such claim submissions (all loans in the pool have LTV ratios under 80%), we did not establish any case or IBNR reserves for pool risk at December 31, 2020. In connection with the settlement of pool claims, we applied $1.0 million to the pool deductible through December 31, 2020. At December 31, 2020, the remaining pool deductible was $9.4 million. We have not paid any pool claims to date. 100% of our pool RIF is reinsured under the 2016 QSR Transaction. We had 12,209 loans in default in our primary insured portfolio as of December 31, 2020 which represented a 3.06% default rate against 399,429 total policies in-force. We had 1,448 loans in default in our primary insured portfolio as of December 31, 2019, which represented a 0.40% default rate against 366,039 total policies in-force. The increase in our default population is primarily due to challenges borrowers are facing related to the COVID-19 outbreak and their decision to access the forbearance program for federally backed loans codified under the Coronavirus Aid, Relief, and Economic Security (CARES) Act or similar programs made available by private lenders. The size of the reserve we establish for each defaulted loan (and by extension our aggregate reserve for claims and claim expenses) reflects our best estimate of the future claim payment to be made for each individual loan in default. Our future claims exposure is a function of the number of defaulted loans that progress to claim payment (which we refer to as frequency) and the amount to be paid to settle such claims (which we refer to as severity). Our estimates of claims frequency and severity are not formulaic, rather they are broadly synthesized based on historical observed experience for similarly situated loans and assumptions about future macroeconomic factors. We generally observe that forbearance programs are an effective tool to bridge dislocated borrowers from a time of acute stress to a future date when they can resume timely payment of their mortgage obligations. The effectiveness of forbearance programs is enhanced by the availability of various repayment and loan modification options which allow borrowers to amortize or, in certain instances, outright defer payments otherwise due during the forbearance period over an extended length of time. In response to the COVID-19 outbreak, the Federal Housing Financing Agency (FHFA) and GSEs have introduced new repayment and loan modification options to further assist borrowers with their transition out of forbearance programs and default status. Our reserve setting process considers the beneficial impact of forbearance, foreclosure moratorium and other assistance programs available to defaulted borrowers. At December 31, 2020, we established lower reserves for defaults that we consider to be connected to the COVID-19 outbreak given our expectation that forbearance, repayment and modification, and other assistance programs will aid affected borrowers and drive higher cure rates on such defaults than we would otherwise expect to experience on similarly situated loans that did not benefit from broad-based assistance programs. While we established lower reserves per defaulted loan at December 31, 2020, our total reserve position and claims and claim expenses increased as of and during the year ended December 31, 2020 due to the growth in the size of our default population. The following table provides a reconciliation of the beginning and ending gross reserve balances for primary insurance claims and claim expenses: For the year ended December 31, 2020 December 31, 2019 December 31, 2018 (In Thousands) Beginning balance $ 23,752 $ 12,811 $ 8,761 Less reinsurance recoverables (1) (4,939) (3,001) (1,902) Beginning balance, net of reinsurance recoverables 18,813 9,810 6,859 Add claims incurred: Claims and claim expenses incurred: Current year (2) 66,943 14,737 7,860 Prior years (3) (7,696) (2,230) (2,408) Total claims and claim expenses incurred 59,247 12,507 5,452 Less claims paid: Claims and claim expenses paid: Current year (2) 586 204 130 Prior years (3) 4,515 3,849 2,371 Reinsurance terminations (4) — (549) — Total claims and claim expenses paid 5,101 3,504 2,501 Reserve at end of period, net of reinsurance recoverables 72,959 18,813 9,810 Add reinsurance recoverables (1) 17,608 4,939 3,001 Ending balance $ 90,567 $ 23,752 $ 12,811 (1) Related to ceded losses recoverable under the QSR Transactions. See Note 6, " Reinsurance " for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the 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 6, " Reinsurance " for additional information. The "claims incurred" section of the table above shows claims and claim expenses incurred on defaults occurring in current and prior years, including IBNR reserves and is presented net of reinsurance. The amount of claims incurred relating to current year defaults represents the estimated amount of claims and claim expenses to ultimately be paid on such loans. We recognized $7.7 million, $2.2 million, and $2.4 million of favorable prior year development during the years ended December 31, 2020, 2019 and 2018, respectively, primarily due to the curing of previously reported defaults. We may increase or decrease our claim estimates and reserves as we learn additional information about individual defaulted loans, and continue to observe and analyze loss development trends in our portfolio. Gross reserves of $8.3 million related to prior year defaults remained as of December 31, 2020. The following tables provide claim development data by accident year and a reconciliation to the reserve for insurance claims and claim expenses. Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance (1) As of December 31, 2020 Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 Total of IBNR Defaults (2) ($ Values In Thousands) 2013 $ — $ — $ — $ — $ — $ — $ — $ — $ — — 2014 83 34 4 4 4 4 4 — — 2015 699 664 743 764 894 894 — — 2016 2,394 1,568 1,790 1,934 1,936 8 5 2017 6,028 3,475 3,570 3,807 20 16 2018 7,779 5,271 4,709 88 77 2019 14,391 7,229 364 422 2020 65,769 4,514 11,689 Total $ 84,348 $ 4,994 12,209 (1) Amounts include case and IBNR reserves. (2) Number of defaults outstanding as of December 31, 2020. Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 (In Thousands) 2013 $ — $ — $ — $ — $ — $ — $ — $ — 2014 — 4 4 4 4 4 4 2015 50 246 684 720 804 894 2016 171 890 1,596 1,826 1,827 2017 27 1,655 2,925 3,494 2018 130 1,981 3,537 2019 69 2,368 2020 586 Total $ 12,710 Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses (In Thousands) As of December 31, 2020 Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance $ 84,348 Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance 12,710 Liabilities for unpaid claims and allocated claims adjustment expenses, net of reinsurance 71,638 Reinsurance recoverable on unpaid claims 17,608 Unallocated claims adjustment expenses 1,321 Total gross liability for unpaid claims and claim adjustment expenses $ 90,567 The following table shows the average percentage of claims and allocated claims adjustment expenses paid in the years following the incurrence of a claim. Average annual percentage payout of incurred claims and allocated claims adjustment expenses by age, net of reinsurance Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Claims duration disclosure 3% 37% 88% 95% 95% 100% 100% |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic EPS is based on the weighted average number of shares of common stock outstanding. Diluted EPS 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 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 EPS of common stock. For the year ended December 31, 2020 2019 2018 (In Thousands, except for per share data) Net income $ 171,566 $ 171,957 $ 107,927 Basic weighted average shares outstanding 78,023 67,573 65,019 Basic earnings per share $ 2.20 $ 2.54 $ 1.66 Net income $ 171,566 $ 171,957 $ 107,927 Gain from change in fair value of warrant liability (2,907) — — Diluted net income $ 168,659 $ 171,957 $ 107,927 Basic weighted average shares outstanding 78,023 67,573 65,019 Dilutive effect of issuable shares 1,240 2,148 2,633 Diluted weighted average shares outstanding 79,263 69,721 67,652 Diluted earnings per share $ 2.13 $ 2.47 $ 1.60 Anti-dilutive shares 58 565 843 |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Warrants | Warrants We issued 992 thousand warrants in connection with a private placement of our common stock in April 2012, of which 312 thousand remained outstanding available for exercise at December 31, 2020. Each warrant gives the holder thereof the right to purchase one share of common stock at an exercise price equal to $10.00. The warrants were issued with an aggregate fair value of $5.1 million. During the year ended December 31, 2020, 18 thousand warrants were exercised resulting in the issuance of 11 thousand shares of common stock. Upon exercise, we reclassified approximately $0.3 million of warrant fair value from warrant liability to additional paid-in capital. During the year ended December 31, 2019, 448 thousand warrants were exercised resulting in the issuance of 289 thousand shares of common stock. Upon exercise, we reclassified approximately $8.3 million of warrant fair value from warrant liability to additional paid-in capital. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation Share-based compensation includes stock options, service-based RSUs and performance and service based RSUs granted under our 2012 Stock Incentive Plan (2012 Plan) and our Amended and Restated 2014 Omnibus Incentive Plan (2014 Plan, and together with the 2012 Plan, the Stock Plans). The 2012 Plan was approved by the Board on April 16, 2012 and authorized 5.5 million shares of common stock to be reserved for issuance, with limits of 3.85 million shares available for stock option issuance and 1.65 million shares available for RSU issuance. Options granted under the 2012 Plan are non-qualified stock options and may be granted to employees, directors and other key persons. The exercise price per share for options covered by the 2012 Plan is determined by the Board at the time of grant, but shall not be less than the fair market value of our common stock, defined as the closing price of our common stock, on the date of the grant. The term of the stock option grants is established by the Board, but no stock option shall be exercisable more than ten years after the date the stock option is granted. The vesting period of the stock option grants is also established by the Board at the time of grant and is generally a three-year period. Upon the exercise of stock options, we issue shares from the authorized, unissued share reserve. The 2014 Plan was originally approved by our stockholders at our annual meeting on May 8, 2014 and authorized 4.0 million shares of common stock to be reserved for issuance. On May 11, 2017, our stockholders approved amendments to the 2014 Plan at our annual stockholder meeting, authorizing an additional 2.0 million shares of common stock for issuance, increasing the total shares of common stock reserved for issuance under the plan to 6.0 million. These shares may be either authorized but unissued shares or treasury shares. For the years ended December 31, 2020, 2019 and 2018, we incurred $11.1 million, $13.0 million and $12.6 million, respectively, of expenses related to awards granted under our Stock Plans. We recognized related income tax benefits of $2.3 million, $2.7 million and $2.6 million for the years ended December 31, 2020, 2019 and 2018, respectively. A summary of option activity during the years ended December 31, 2020, 2019 and 2018, is as follows: For the year ended December 31, 2020 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2019 1,928 $ 4.84 $ 13.04 Options granted — — — Options exercised (435) 4.21 11.17 Options forfeited — — — Options expired — — — Options outstanding at December 31, 2020 1,493 $ 5.02 $ 13.59 For the year ended December 31, 2019 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2018 2,882 $ 4.24 $ 11.42 Options granted 163 8.85 22.19 Options exercised (1,117) 3.88 10.19 Options forfeited — — — Options expired — — — Options outstanding at December 31, 2019 1,928 $ 4.84 $ 13.04 For the Year Ended December 31, 2018 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2017 3,311 $ 3.95 $ 10.41 Options granted 383 6.32 18.08 Options exercised (803) 4.06 10.43 Options forfeited — — — Options expired (9) 4.05 10.51 Options outstanding at December 31, 2018 2,882 $ 4.24 $ 11.42 As of December 31, 2020, there were approximately 1.3 million fully vested and exercisable options. There were 0.4 million exercises during the year with an aggregate intrinsic value of $6.0 million. The weighted average exercise price for the fully vested and exercisable options was $12.39. The remaining weighted average contractual life of fully vested and exercisable options as of December 31, 2020 was 4.85 years. The aggregate grant date intrinsic value of fully vested and exercisable options was $12.9 million as of December 31, 2020. As of December 31, 2020, there was $0.2 million of total unrecognized compensation cost related to non-vested stock options. The weighted-average period over which total remaining compensation costs related to non-vested stock options will be recognized is 0.86 years. No stock options were granted during the year ended December 31, 2020. The estimated grant date fair values of the stock options granted during the years ended December 31, 2019 and 2018 were calculated using the Black-Scholes valuation model based on the following assumptions. For the years ended December 31, 2019 2018 Expected life 6 years 6 years Risk free interest rate 2.57 % 2.66-2.89% Dividend yield — % — % Expected stock price volatility 36.8 % 30.1-30.6% Expected life - is the period of time over which the options granted are expected to remain outstanding giving consideration to vesting schedules, historical exercise and forfeiture patterns. We use the simplified method outlined in SEC Staff Accounting Bulletin No. 107 to estimate expected life for options granted during the period as sufficient historical exercise data is not available and the options meet the requirements set out in the Bulletin. Options granted have a maximum term of 10 years. Risk-free interest rate - is the U.S. Treasury rate on the date of the grant having a term approximating the expected life of the option. Dividend yield - is calculated by dividing the expected annual dividend by our stock price at the valuation date. Expected price volatility - is a measure of the amount by which a price has fluctuated or is expected to fluctuate. A summary of RSU activity during the years ended December 31, 2020, 2019 and 2018 is as follows: For the year ended December 31, 2020 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2019 1,202 $ 18.67 Restricted stock units granted 646 22.67 Restricted stock units vested (664) 17.68 Restricted stock units forfeited (122) 19.55 Non-vested restricted stock units at December 31, 2020 1,062 $ 21.61 For the year ended December 31, 2019 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2018 1,753 $ 12.06 Restricted stock units granted 470 24.42 Restricted stock units vested (970) 9.71 Restricted stock units forfeited (51) 15.06 Non-vested restricted stock units at December 31, 2019 1,202 $ 18.67 For the Year Ended December 31, 2018 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2017 2,065 $ 8.15 Restricted stock units granted 701 17.22 Restricted stock units vested (913) 7.42 Restricted stock units forfeited (100) 9.89 Non-vested restricted stock units at December 31, 2018 1,753 $ 12.06 At December 31, 2020, we had 1.1 million granted and non-vested RSUs, consisting of 1.0 million RSUs that are subject to service condition vesting requirements and 0.1 million RSUs that are subject to performance and service condition vesting requirements. The total fair value of RSUs vested during the year ended December 31, 2020 was $11.7 million. The remaining weighted average contractual life of non-vested RSUs was 1.44 years. As of December 31, 2020, there was $8.8 million of total unrecognized compensation costs related to non-vested RSUs, compared to $7.2 million as of December 31, 2019. The weighted-average period over which total remaining compensation costs related to non-vested RSUs will be recognized is 1.49 years. Non-vested RSUs subject to service condition vesting requirements vest over a period ranging from one The fair value of non-vested RSUs is measured as the closing price of our common stock on the date of grant less the present value of anticipated dividends to be paid during the vesting period. 401(k) Savings Plan We offer our employees a 401(k) Savings Plan (401(k) Plan) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code (IRC). Under the 401(k) Plan, we match up to 100% of eligible employees' pre-tax contributions up to 5% of eligible compensation. During the years ended December 31, 2020, 2019 and 2018, we incurred approximately $2.2 million, $2.5 million and $1.6 million of expense related to our matching 401(k) Plan contributions, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
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. Total income tax expense consists of the following components: For the year ended December 31, 2020 2019 2018 (In Thousands) Current $ 34 $ (386) $ 1,677 Deferred 46,506 45,082 26,357 Total income tax expense $ 46,540 $ 44,696 $ 28,034 For the years ended December 31, 2020, 2019 and 2018, we had income tax expenses of $46.5 million, $44.7 million, and $28.0 million, respectively, including amounts related to current state income taxes and changes to our federal and state net deferred tax liability. The following table presents a reconciliation between the federal statutory income tax rate and our effective income tax rate: For the year ended December 31, 2020 2019 2018 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State provision 0.5 0.5 0.7 Share-based and other compensation 0.1 (1.7) (1.4) Warrant gain/loss (0.3) 0.9 0.2 Other — (0.1) 0.1 Effective income tax rate 21.3 % 20.6 % 20.6 % The components of our net deferred tax asset are summarized as follows: As of December 31, 2020 2019 Deferred tax asset (In Thousands) Net operating loss carry forwards $ 7,938 $ 9,244 Share-based compensation 5,067 5,959 Unearned premium reserve 4,844 5,213 Accrued expenses 3,198 4,539 Other (1) 1,592 1,972 Total gross deferred tax asset 22,639 26,927 Less: valuation allowance (7,610) (7,857) Total deferred tax asset 15,029 19,070 Deferred tax liability Contingency reserve (91,429) (47,730) Deferred acquisition costs (13,381) (12,902) Unrealized gain on investments (15,432) (7,634) Capitalized software (5,569) (5,107) Other (1) (1,804) (2,057) Total deferred tax liability (127,615) (75,430) Net deferred income tax (liability) $ (112,586) $ (56,360) (1) Prior periods have been reclassified for consistency and presentation purposes. 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), 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. During the years ended December 31, 2020 and 2019, we purchased $38.8 million and $7.6 million of tax and loss bonds, respectively. As a result, we had no current federal income tax provision for the years ended December 31, 2020 and 2019. As of December 31, 2020 and 2019, we held $46.4 million and $7.6 million of tax and loss bonds, respectively, in "Other assets" in our consolidated balance sheet. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220). This update permits the reclassification of the disproportionate income tax effects, commonly referred to as "stranded tax," that result from the TCJA on items within AOCI to retained earnings. We adopted this update effective January 1, 2018, resulting in a $0.3 million reduction to retained earnings as of January 1, 2018. The remaining $4.2 million of stranded tax that remains in AOCI relates to our available-for-sale fixed income holdings. At December 31, 2020, we had a federal net operating loss carryforward of $2.1 million which expires in varying amounts in 2030 and 2031, and state net operating loss carryforward of $111.6 million which expire in varying amounts from 2031 to 2041. Section 382 of the IRC imposes annual limitations on a corporation's ability to utilize its net operating loss carryforwards if it experiences an "ownership change." As a result of the acquisition of our insurance subsidiaries in 2012, $7.3 million of federal net operating losses were subject to annual limitations of $0.8 million through 2016, and $0.3 million, thereafter, through 2028. Our federal net operating loss carryforward arises from this limitation and the constraint on our ability to utilize the net operating loss carryforward in full during the current period. At December 31, 2020 and 2019, we recorded valuation allowances of $7.6 million and $7.9 million, respectively against state net deferred tax assets that may not be realized in future periods. The valuation allowances for both years primarily relate to state net operating losses generated by NMIH, as NMIH operates at a loss and currently only generates revenue from its investment portfolio. As of December 31, 2020 and 2019, we had no reserves for unrecognized tax benefits as we have taken no material uncertain tax positions that would have required a reserve to be measured and recognized. |
Software and Equipment
Software and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Software and Equipment | Software and Equipment Software and equipment consist largely of capitalized software developed to support our mortgage insurance operations. Software and equipment, net of accumulated amortization and depreciation, as of December 31, 2020 and 2019, consists of the following: December 31, 2020 December 31, 2019 (In Thousands) Software $ 59,678 $ 46,522 Equipment 9,123 8,992 Leasehold improvements 3,402 3,442 Subtotal 72,203 58,956 Accumulated amortization and depreciation (42,538) (32,860) Software and equipment, net $ 29,665 $ 26,096 Capitalized costs for software, equipment, and leasehold improvements during the years ended December 31, 2020, 2019 and 2018, were $14.5 million, $10.6 million, and $9.8 million, respectively. Amortization and depreciation expense for software, equipment, and leasehold improvements for the years ended December 31, 2020, 2019, and 2018 were $9.9 million, $9.3 million, and $7.8 million, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible assets and goodwill consist of identifiable intangible assets and goodwill purchased in connection with the acquisition of our insurance subsidiaries. Intangible assets and goodwill as of both December 31, 2020 and 2019 were as follows: (In Thousands) Expected Lives Goodwill $ 3,244 Indefinite State licenses 260 Indefinite GSE applications 130 Indefinite Total intangible assets and goodwill $ 3,634 We test goodwill and intangible assets for impairment in the third and fourth quarter, respectively, of every year, or more frequently if we believe indicators of impairment exist. No impairments of indefinite-lived intangibles or goodwill were identified during the years ended December 31, 2020, 2019 and 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies PMIERs As an approved insurer , NMIC is subject to ongoing compliance with the PMIERs established by each of the GSEs ( italicized terms have the same meaning that such terms have in the PMIERs, as described below). The PMIERs establish operational, business, remedial and financial requirements applicable to approved insurers . The PMIERs financial requirements prescribe a risk-based methodology whereby the amount of assets required to be held against each insured loan is determined based on certain loan-level risk characteristics, such as FICO, vintage (year of origination), performing vs. non-performing ( i.e. , current vs. delinquent), LTV and other risk features. In general, higher quality loans carry lower charges. Under the PMIERs, approved insurers must maintain available assets that equal or exceed minimum required assets , which is an amount equal to the greater of (i) $400 million or (ii) a total risk-based required asset amount . The risk-based required asset amount is a function of the risk profile of an approved insurer's net RIF, assessed on a loan-by-loan basis and considered against certain risk-based factors derived from tables set out in the PMIERs to gross RIF, which is then adjusted on an aggregate basis for reinsurance transactions approved by the GSEs, such as with respect to our ILN Transactions and QSR Transactions. The aggregate gross risk-based required asset amount for performing, primary insurance is subject to a floor of 5.6% of performing, primary adjusted RIF , and the risk-based required asset amount for pool insurance considers both factors in the PMIERs tables and the net remaining stop loss for each pool insurance policy. By April 15th of each year, NMIC must certify it met all PMIERs requirements as of December 31st of the prior year. We certified to the GSEs by April 15, 2020, that NMIC was in full compliance with the PMIERs as of December 31, 2019. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of a failure to meet one or more of the PMIERs requirements. We continuously monitor NMIC's compliance with the PMIERs. 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 $4.6 million and $5.3 million in " Other assets Other liabilities We did not enter any new operating leases or recognize any new ROU assets or lease liabilities during the year ended December 31, 2020. ROU assets exchanged for new operating lease liabilities for the year ended December 31, 2019 were $8.1 million, primarily in connection with our initial adoption of ASU 2016-02, Leases (Topic 842). The following table provides a summary of our ROU asset and lease liability assumptions as of December 31, 2020: Weighted-average remaining lease term 2.2 years Weighted-average discount rate 6.21 % Cash paid on our operating leases for the years ended December 31, 2020, 2019 and 2018 was $2.5 million, $2.5 million and $2.3 million and lease expense incurred was $2.3 million, $2.2 million and $2.1 million during each respective period, reflecting the net benefit of incentives received at inception of the lease. Future payments due under our existing operating leases as of December 31, 2020 are as follows: Years ending December 31, (In Thousands) 2021 $ 2,609 2022 2,574 2023 462 Total undiscounted lease payments 5,645 Less effects of discounting (391) Present value of lease payments $ 5,254 Lease expense is recorded in underwriting and operating expenses on our consolidated statements of operations. Our existing operating leases have original terms that range from three |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Common Stock | Common Stock As of December 31, 2020, we had 85.2 million outstanding shares of Class A common stock. Holders of our common stock have no preemptive or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock. Each holder of our common stock is entitled to one vote per share on all matters to be voted upon by stockholders, and there are no cumulative voting rights. Holders of common stock are entitled to receive dividends ratably if any are declared. On June 8, 2020, we completed the sale of 13.8 million shares of common stock and granted the underwriters on the transaction a 15% overallotment option to purchase additional shares. The overallotment option was exercised in full, resulting in a total of 15.9 million shares of common stock issued. The common stock offering generated proceeds of $219.7 million, net of underwriting discounts, commissions and other direct offering expenses. |
Regulatory Information
Regulatory Information | 12 Months Ended |
Dec. 31, 2020 | |
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 (NAIC). 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. The Wisconsin OCI has imposed a prescribed accounting practice for the treatment of statutory contingency reserves that differs from the treatment promulgated by the NAIC. Under Wisconsin OCI's prescribed practice mortgage guaranty insurers are required to reflect changes in their contingency reserves through statutory income. Such approach contrasts with the NAIC's treatment, which records changes to contingency reserves directly to unassigned funds. As a Wisconsin-domiciled insurer, NMIC's statutory net income reflects an expense associated with the change in its contingency reserve. While such treatment impacts NMIC's statutory net income, it does not have an effect on the company's statutory capital position. NMIC and Re One's combined statutory net income (loss), statutory surplus, contingency reserve, statutory capital and risk-to-capital (RTC) ratios as of and for the years ended December 31, 2020, 2019 and 2018 were as follows: As of and for the year ended December 31, 2020 2019 2018 (In Thousands) Statutory net (loss) gain $ (20,136) $ 15,233 $ (19,784) Statutory surplus 894,331 449,602 430,785 Contingency reserve 768,324 531,825 332,702 Statutory capital (1) 1,662,655 981,427 763,487 Risk-to-capital 11.7:1 15.8:1 13.1:1 (1) Represents the total of the statutory surplus and contingency reserve. In June 2020, NMIH contributed approximately $445 million of capital to NMIC following completion of its common stock and senior notes offerings. Under applicable law in Wisconsin and 15 other states, mortgage insurers must maintain minimum amounts of statutory capital relative to RIF to continue writing new business. While formulations of minimum statutory capital may vary in each state, the most common measure allows for a maximum permitted RTC ratio of 25:1. Wisconsin and certain other states, including California and Illinois, apply a substantially similar requirement referred to as minimum policyholders' position. The NAIC formed a Mortgage Guaranty Insurance Working Group (the Working Group) in 2012 to discuss, develop and recommend changes to the regulatory oversight and solvency standards of the mortgage insurance industry, including changes to the Mortgage Guaranty Insurance Model Act (Model Act). The Working Group has proposed amendments to the Model Act that include, among other changes, adoption of a risk-based capital model. If adopted by the NAIC, some or all of the 16 states that currently have minimum statutory capital requirements, and potentially others that do not, are expected to enact a portion or all of the revised Model Act, including the loan-level capital model. As of December 31, 2020, NMIC's performing primary RIF, net of reinsurance, was approximately $19.4 billion and its RTC ratio was 12.0:1, significantly below applicable limits. As of December 31, 2019, NMIC's performing primary RIF, net of reinsurance, was approximately $15.4 billion and its RTC ratio was 16.3:1. Reinsurance Prior to January 10, 2019, Ohio regulation limited the amount of risk a mortgage insurer was permitted to retain on a single loan to 25% of the borrower's indebtedness (after giving effect to third-party reinsurance) and, as a result, the portion of such insurance in excess of 25% was required to be reinsured. Ohio repealed this requirement for future periods beginning January 10, 2019. Several other states previously imposed similar coverage restrictions and repealed these measures prior to 2018. To comply with these previous state coverage limits, NMIC and Re One have reinsurance agreements in place under which Re One provides reinsurance to NMIC on certain insured loans with coverage levels in excess of 25%, after giving effect to third-party reinsurance. Dividend Restrictions NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. 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 are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate and the GSEs that may restrict their ability to pay dividends to NMIH. Under Wisconsin law, NMIC and Re One may pay dividends up to specified levels ( i.e. , "ordinary" dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts ( i.e .,"extraordinary" dividends), are subject to the Wisconsin OCI's prior approval. Under Wisconsin law, an extraordinary dividend is defined as any payment or distribution that together with other dividends and distributions made within the preceding twelve months exceeds the lesser of (i) 10% of the insurer's statutory policyholders' surplus as of the preceding December 31 or (ii) adjusted statutory net income for the twelve-month period ending the preceding December 31. NMIC and Re One have never paid dividends to NMIH. Re One has the capacity to pay aggregate ordinary dividends of $1.6 million to NMIH during the twelve-month period ending December 31, 2021. NMIC reported a statutory net loss for the year ended December 31, 2020 and does not have the capacity to pay dividends to NMIH during the twelve-month period ended December 31, 2021 without prior approval from the Wisconsin OCI. The Wisconsin OCI has approved the allocation of interest expense on the $400 million Notes and $110 million 2020 Revolving Credit Facility to NMIC, to the extent proceeds from such offering and facility are distributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC. As an approved insurer under PMIERs, NMIC would generally be subject to prior GSE approval of its ability to pay dividends to NMIH if it failed to meet the financial requirements prescribed by PMIERs. In response to the COVID pandemic, the GSEs issued temporary PMIERs guidance, effective for the period from June 30, 2020 to June 30, 2021, that requires approved insurers to secure approval from the GSEs prior to paying any dividends, even if the approved insurer otherwise satisfies the financial requirements prescribed by PMIERs. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) 2020 Quarters 2020 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 98,717 $ 98,944 $ 98,802 $ 100,709 $ 397,172 Net investment income 8,104 7,070 8,337 8,386 31,897 Net realized investment (losses) gains (72) 711 (4) 295 930 Other revenues 900 1,223 648 513 3,284 Insurance claims and claim expenses 5,697 34,334 15,667 3,549 59,247 Underwriting and operating expenses 32,277 30,370 33,969 34,994 131,610 Service expenses 734 1,090 557 459 2,840 Interest expense 2,744 5,941 7,796 7,906 24,387 (Gain) loss from change in fair value of warrant liability (5,959) 1,236 437 1,379 (2,907) Pre-tax income 72,156 34,977 49,357 61,616 218,106 Income tax expense 13,885 8,129 11,178 13,348 46,540 Net income $ 58,271 $ 26,848 $ 38,179 $ 48,268 $ 171,566 Basic earnings per share (1) $ 0.85 $ 0.36 $ 0.45 $ 0.57 $ 2.20 Diluted earnings per share (1) $ 0.74 $ 0.36 $ 0.45 $ 0.56 $ 2.13 Weighted average common shares outstanding - basic 68,563 73,617 84,805 84,956 78,023 Weighted average common shares outstanding - diluted 70,401 74,174 85,599 86,250 79,263 (1) Due to the use of weighted average shares outstanding when calculating EPS, the sum of quarterly per share data may not equal the per share data for the year. 2019 Quarters 2019 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 73,868 $ 83,249 $ 92,381 $ 95,517 $ 345,015 Net investment income 7,383 7,629 7,882 7,962 $ 30,856 Net realized investment (losses) gains (187) (113) 81 264 $ 45 Other revenues 42 415 1,244 1,154 $ 2,855 Insurance claims and claim expenses 2,743 2,923 2,572 4,269 $ 12,507 Underwriting and operating expenses 30,800 32,190 32,335 31,296 $ 126,621 Service expenses 49 353 909 937 $ 2,248 Interest expense 3,061 3,071 2,979 2,974 $ 12,085 Loss (gain) from change in fair value of warrant liability 5,479 1,685 (1,139) 2,632 $ 8,657 Pre-tax income 38,974 50,958 63,932 62,789 $ 216,653 Income tax expense 6,075 11,858 14,169 12,594 $ 44,696 Net income $ 32,899 $ 39,100 $ 49,763 $ 50,195 $ 171,957 Basic earnings per share (1) $ 0.49 $ 0.58 $ 0.73 $ 0.74 $ 2.54 Diluted earnings per share (1) $ 0.48 $ 0.56 $ 0.69 $ 0.71 $ 2.47 Weighted average common shares outstanding - basic 66,692 67,590 67,849 68,140 67,573 Weighted average common shares outstanding - diluted 68,996 69,590 70,137 70,276 69,721 (1) Due to the use of weighted average shares outstanding when calculating EPS, the sum of quarterly per share data may not equal the per share data for the year. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Quota share reinsurance Effective January 1, 2021, NMIC entered into its fourth quota share reinsurance treaty with a broad panel of highly rated reinsurers (2021 QSR Transaction). Under the 2021 QSR Transaction, NMIC will cede premiums earned related to 22.5% of the risk on eligible policies written from January 1, 2021 through December 31, 2021, in exchange for reimbursement of ceded claims and claims expenses on covered policies, a 20% ceding commission, and a profit commission of up to 57.5% that varies directly and inversely with ceded claims. The 2021 QSR Transaction is scheduled to terminate on December 31, 2031. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement at December 31, 2026, or at the end of any calendar quarter thereafter, which would result in NMIC recapturing the reinsured risk. |
SCHEDULE I - SUMMARY OF INVESTM
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract] | |
Summary of Investments - Other than Investments in Related Parties | December 31, 2020 Amortized Cost Fair Value Amount Reflected on Balance Sheet (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 29,412 $ 31,598 $ 31,598 Municipal debt securities 407,323 421,348 421,348 Corporate debt securities 1,165,260 1,219,791 1,219,791 Asset-backed securities 128,471 131,180 131,180 Total bonds 1,730,466 1,803,917 1,803,917 Short-term investments 369 369 369 Total investments $ 1,730,835 $ 1,804,286 $ 1,804,286 |
SCHEDULE II - FINANCIAL INFORMA
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY | 12 Months Ended |
Dec. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
Financial Information of Registrant Parent Company Only | December 31, 2020 December 31, 2019 (In Thousands, except for share data) Assets Fixed maturities, available-for-sale, at fair value $ 52,867 $ 41,220 Cash and cash equivalents 19,146 13,431 Investment in subsidiaries, at equity in net assets 1,724,360 1,025,286 Accrued investment income 263 219 Prepaid expenses 2,912 3,332 Due from affiliates, net 76,892 62,241 Software and equipment, net 29,665 26,096 Other assets 5,676 7,188 Total assets $ 1,911,781 $ 1,179,013 Liabilities Debt $ 393,301 $ 145,764 Accounts payable and accrued expenses 30,802 24,871 Warrant liability, at fair value 4,409 7,641 Deferred tax liability, net 108,424 62,921 Other liabilities 5,254 7,396 Total liabilities 542,190 248,593 Shareholders' equity Common stock - class A shares, $0.01 par value; 85,163,039 and 68,358,074 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively (250,000,000 shares authorized) 852 684 Additional paid-in capital 937,872 707,003 Accumulated other comprehensive income, net of tax 53,856 17,288 Retained earnings 377,011 205,445 Total shareholders' equity 1,369,591 930,420 Total liabilities and shareholders' equity $ 1,911,781 $ 1,179,013 For the year ended December 31, 2020 2019 2018 (In Thousands) Revenues Net investment income $ 398 $ 1,124 $ 1,145 Net realized investment gains 23 1 5 Total revenues 421 1,125 1,150 Expenses Other operating expenses 9,262 11,714 21,095 Interest expense — — 2,227 (Gain) loss from change in fair value of warrant liability (2,907) 8,657 1,397 Total expenses 6,355 20,371 24,719 Equity in net income of subsidiaries 217,134 226,480 134,127 Income before income taxes 211,200 207,234 110,558 Income tax expense 39,634 35,277 2,631 Net income $ 171,566 $ 171,957 $ 107,927 Other comprehensive income (loss), net of tax: Unrealized gains (losses) in accumulated other comprehensive loss, net of tax expense (benefit) of $25, $82, and ($34) for each of the years in the three-year period ended December 31, 2020, respectively 94 308 (128) Reclassification adjustment for (gains) losses included in net loss, net of tax expense (benefit) of $5, $0 and ($1) for each of the years in the three-year period ended December 31, 2020, respectively (18) — 2 Equity in other comprehensive income (loss) of subsidiaries 36,492 31,812 (12,129) Other comprehensive income (loss), net of tax 36,568 32,120 (12,255) Comprehensive income $ 208,134 $ 204,077 $ 95,672 For the year ended December 31, 2020 2019 2018 Cash flows from operating activities (In Thousands) Net income $ 171,566 $ 171,957 $ 107,927 Adjustments to reconcile net income to net cash (used in) provided by operating activities: (Gain) loss from change in fair value of warrant liability (2,907) 8,657 1,397 Net realized investment gains (23) (1) (5) Depreciation and amortization 807 286 274 Amortization of debt discount and debt issuance costs 4,036 1,011 3,390 Deferred income taxes 45,483 44,030 25,163 Share-based compensation expense 11,115 13,031 12,557 Changes in operating assets and liabilities: Equity in net income of subsidiaries (1) (217,134) (226,480) (133,837) Accrued investment income (44) (3) (14) Receivable from affiliates (14,651) (20,902) (18,932) Prepaid expenses 420 (409) (1,010) Other assets (336) 165 1,258 Accounts payable and accrued expenses 4,592 (1,640) 5,393 Net cash provided by (used in) operating activities 2,924 (10,298) 3,561 Cash flows from investing activities Capitalization of subsidiaries (445,448) (800) (70,500) Purchase of short-term investments (19,897) (104,192) (134,376) Purchase of fixed-maturity investments, available-for-sale (53,504) (2,186) (12,906) Proceeds from maturity of short-term investments 41,228 111,539 122,612 Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale 20,241 5,877 22,954 Software and equipment (2,633) (854) (415) Net cash (used in) provided by investing activities (460,013) 9,384 (72,631) Cash flows from financing activities Proceeds from issuance of common stock related to public offering, net of issuance costs 219,687 — 79,165 Proceeds from issuance of common stock related to employee equity plans 8,871 21,748 12,857 Proceeds from issuance of common stock related to warrant exercises — — 321 Taxes paid related to net share settlement of equity awards (8,961) (18,248) (9,722) Proceeds from senior secured notes 400,000 — 149,250 Repayments of term loan (147,750) (1,500) (147,375) Payments of debt issuance costs (9,043) — (3,609) Net cash provided by financing activities 462,804 2,000 80,887 Net increase in cash, cash equivalents and restricted cash 5,715 1,086 11,817 Cash, cash equivalents and restricted cash, beginning of period 13,431 12,345 528 Cash, cash equivalents and restricted cash, end of period 19,146 $ 13,431 $ 12,345 (1) Amount in 2018 includes $0.3 million reduction to retained earnings as of January 1, 2018 as a result of the adoption of ASU 2018-02. For more information related to this adjustment, See Item 8, " Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 11, Income Taxes ." Note A The NMI Holdings, Inc. (Parent Company) financial statements represent the stand-alone financial statements of the Parent Company. These financial statements have been prepared on the same basis and using the same accounting policies as described in the consolidated financial statements included herein. Refer to the Parent Company's consolidated financial statements for additional information. Note B NMIC and Re One are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate and the GSEs that may restrict their ability to pay dividends to NMIH. Under Wisconsin law, NMIC and Re One may pay dividends up to specified levels ( i.e ., "ordinary" dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts ( i.e. ,"extraordinary" dividends), are subject to the Wisconsin OCI's prior approval. Under Wisconsin law, an extraordinary dividend is defined as any payment or distribution that together with other dividends and distributions made within the preceding twelve months exceeds the lesser of (i) 10% of the insurer's statutory policyholders' surplus as of the preceding December 31 or (ii) adjusted statutory net income for the twelve-month period ending the preceding December 31. Re One has the capacity to pay aggregate ordinary dividends of $1.6 million to NMIH during the twelv e-month period ending December 31, 2021. NMIC reported a statutory net loss for the year ended December 31, 2020 and does not have the capacity to pay dividends to NMIH during the twelve-month period ended December 31, 2021 without prior approval from the Wisconsin OCI. The remaining net assets from dividend capacity are considered restricted. As of December 31, 2020, the amount of restricted net assets held by our consolidated insurance subsidiaries, which represents our equity investment in those insurance subsidiaries less their aggregate dividend capacity, totaled $1.7 billion, compared to $1.0 billion as of December 31, 2019. Note C The Parent Company provides certain services to its subsidiaries. The Parent Company allocates to its subsidiaries corporate expense it incurs in the capacity of supporting those subsidiaries, based on either an allocated percentage of time spent or internally allocated capital. Total operating expenses allocated to subsidiaries for each of the years in the three year period ended December 31, 2020 were $152.9 million, $117.1 million and $111.6 million, respectively. Amounts charged to the subsidiaries for operating expenses are based on actual cost, without any mark-up. The Parent Company considers these charges fair and reasonable. The subsidiaries reimburse the Parent Company for these costs in a timely manner, which has the impact of improving the cash flows of the Parent Company. |
SCHEDULE IV - FINANCIAL INFORMA
SCHEDULE IV - FINANCIAL INFORMATION OF REGISTRANT REINSURANCE | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract] | |
Financial Information of Registrant Reinsurance | Gross Amount Ceded to Other Companies Assumed from Other Companies Net Amount Percentage of Amount Assumed to Net For the years ended December 31, (In thousands) 2020 $ 472,998 $ 75,826 $ — $ 397,172 — % 2019 398,303 53,288 — 345,015 — % 2018 292,064 40,867 — 251,197 — % |
Summary of Accounting Policies
Summary of Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the results of NMIH and its wholly-owned subsidiaries. All inter-company transactions have been eliminated. These financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) and our accounts are maintained in US dollars. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to previously reported financial information have been made to conform to our current period presentation. |
Use of Estimates | Use of Estimates We use accounting principles and methods that conform to GAAP. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. |
Insurance Premium Revenue Recognition | Insurance Premium Revenue Recognition Premiums for primary mortgage insurance policies may be paid in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium), with such election and payment type fixed at policy inception. Premiums written at origination for single premium policies are initially deferred as unearned premiums and amortized into earnings over the estimated policy life, in accordance with the anticipated expiration of risk. Monthly premiums are recognized as revenue in the month billed and when the coverage is effective. Annual premiums are initially deferred and earned on a straight-line basis over the year of coverage. Upon cancellation of a policy, all remaining non-refundable deferred and unearned premium is immediately earned, and any refundable deferred and unearned premium is returned to the policyholder and recorded as a reduction to written premium and unearned premium reserve in the period paid. Premiums written on pool transactions are earned over the period that coverage is provided. |
Reserve for Insurance Claims and Claims Expenses | Reserves for Insurance Claims and Claim Expenses We establish reserves for claims based on our best estimate of the ultimate claim costs for defaulted loans using the general principles contained in ASC 944, Financial Services - Insurance (ASC 944). A loan is considered to be in "default" as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments. We establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, and additional loans that we estimate (based on actuarial review and other factors) to be in default that have not yet been reported to us by servicers, referred to as incurred but not reported (IBNR) reserves. We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claim settlement process. Claim expense reserves are either allocated ( i.e. , associated with a specific claim) or unallocated ( i.e. , not associated with a specific claim). The establishment of claims and claim expense reserves is subject to inherent uncertainty and requires significant judgment by management. Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of claim payment expected to be paid on each such loan in default, which is referred to as claim severity. Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, size of the loan and loan-to-value (LTV) ratios, and are strongly influenced by assumptions about the path of certain economic factors, such as house price appreciation, trends in unemployment and mortgage rates. We consider the appropriateness of such inputs at each fiscal quarter and conduct an actuarial review annually to evaluate and, if necessary, update these assumptions. |
Investments | Investments We have designated our investment portfolio as available-for-sale and report our invested assets at fair value. Unrealized gains and losses in the portfolio, net of related tax expense or benefit, are recognized as a component of accumulated other comprehensive income (AOCI) in shareholders' equity. We measure fair value and classify invested assets in a hierarchy for disclosure purposes consisting of three "levels" based on the observability of inputs available in the marketplace used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). See Note 4, " Fair Value of Financial Instruments " for further discussion. Purchases and sales of investments are recorded on a trade date basis. Net investment income is recognized when earned, and includes interest and dividend income together with amortization of market premiums and discounts using the effective yield method, and is net of investment management fees and other investment related expenses. For asset-backed securities and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to changes in effective yields and prepayment assumptions are recognized on a prospective basis. We recognize an impairment on a security through the statement of operations if (i) we intend to sell the impaired security; or (ii) it is more likely than not that we will be required to sell the impaired security prior to recovery of its amortized cost basis. If a sale is intended or likely to be required, we write down the amortized cost basis of the security to fair value and recognize the full amount of the impairment through the statement of operations as a " Realized Investment Loss ." For securities in an unrealized loss position where a sale is not intended or likely to be required, we further assess if the decline in fair value below amortized cost is driven by a credit related impairment, considering several items including, but not limited to: • the severity of the decline in fair value; • the financial condition of the issuer; • the failure of the issuer to make scheduled interest or principal payments; • recent rating downgrades of the applicable security or issuer by one or more nationally recognized statistical ratings organization; and • other adverse conditions related to or impacting the security or issuer. To the extent we determine that a security impairment is credit-related, an impairment loss is recognized through the statement of operations as a provision for credit loss expense, and presented as a " Realized Investment Loss. " We recognize an allowance for credit losses for the difference between the amortized cost and present value of future expected cash flows, limited by the amount the fair value of the security is below its amortized cost. Subsequent changes (favorable and unfavorable) in credit losses are recognized through the statement of operations as a provision for or a reversal of credit loss expense, and presented as a " Realized Investment Gain or Loss. " The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes. We have elected to present accrued interest receivable separately from available for sale securities on our consolidated balance sheet. Accrued interest receivable was $9.9 million as of December 31, 2020 and is included in " Accrued Investment Income. " We have elected not to measure an allowance for credit losses for accrued interest receivable on available for sale securities. Accrued interest for available for sale securities is written off against interest income when the receivable has aged 90 days past due. We did not write off any accrued interest receivable during the twelve months ended December 31, 2020, 2019 or 2018. We consider items such as commercial paper with original maturities of 90 days or less to be short-term investments. |
Deferred Policy Acquisition Costs (DAC) | Deferred Policy Acquisition Costs (DAC)Costs directly associated with the successful acquisition of mortgage insurance policies, consisting of certain selling expenses and other policy issuance and underwriting expenses, are initially deferred and reported as DAC. DAC is reviewed periodically to determine that it does not exceed recoverable amounts. DAC is amortized to expense in proportion to estimated gross profits over the life of the associated policies. We revise the rate of amortization to reflect actual experience and any changes to persistency or loss development. |
Premium Deficiency Reserves | Premium Deficiency ReservesWe consider whether a premium deficiency exists and premium deficiency reserve is required at each fiscal quarter using best estimate assumptions as of the testing date. Per ASC 944, a premium deficiency reserve shall be recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs and maintenance costs exceeds future premiums, existing reserves and anticipated investment income. |
Reinsurance | Reinsurance We account for premiums, claims and claim expenses that are ceded to reinsurers on basis consistent with that which we use to account for the original policies we issue and pursuant to the terms of our reinsurance contracts. We account for premiums ceded or otherwise paid to reinsurers as a reduction to premium revenue. NMIC entered into quota share reinsurance treaties effective September 1, 2016 (the 2016 QSR Transaction), January 1, 2018 (the 2018 QSR Transaction) and April 1, 2020 (the 2020 QSR Transaction), which we refer to collectively as the QSR Transactions. We earn profit and ceding commissions in connection with the QSR Transactions (see Note 6, " Reinsurance "). Profit commissions represent a percentage of the profits recognized by reinsurers that are returned to us, based on the level of claims and claim expenses that we cede. We recognize any profit commissions we earn as an increase to premium revenue. Ceding commissions are calculated as a percentage of ceded written premiums under the 2016 QSR Transaction and as a percentage of ceded earned premiums under the 2018 and 2020 QSR Transactions, and are intended to cover our costs of acquiring and servicing direct policies. We recognize any ceding commissions generated under the QSR Transactions in a manner consistent with our recognition of earnings on the underlying reinsured policies. We account for ceding commissions earned as a reduction to underwriting and operating expenses. Under the QSR Transactions, we cede a portion of claims and claim expenses and reserves to our reinsurers, and account for such ceded reserves as "Reinsurance Recoverables" on the consolidated balance sheets and such ceded expenses as reductions to claims and claim expenses on the consolidated statements of operations. As of December 31, 2020, we had $17.6 million of reinsurance recoverables under the QSR Transactions. We remain directly liable for all claim payments if we are unable to collect the recoverables due from our reinsurers and, as such, we actively monitor and manage our counterparty credit exposure to our reinsurance providers. We establish an allowance for expected credit loss against our reinsurance recoverables if we do not expect to recover amounts due from one or more of our reinsurance counterparties, and report our reinsurance recoverables net of such allowance, if any. We actively monitor the counterparty credit profiles of our reinsurers and each is required to partially collateralize its obligations under the terms of our QSR Transactions. As of December 31, 2020, we did not recognize any allowance for credit loss with respect to our reinsurance recoverables. |
Income Taxes | Income Taxes We account for income taxes using the liability method in accordance with ASC Topic 740, Income Taxes . The liability method measures the expected future tax effects of temporary differences at the enacted tax rates applicable for the period in which the deferred asset or liability is expected to be realized or settled. Temporary differences are differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements that would result in future increases or decreases in taxes owed on a cash basis compared to amounts already recognized as tax expense in the consolidated statement of operations. |
Warrants | Warrants We account for warrants to purchase our common shares in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815-40 Derivatives and Hedging - Contracts in Entity's Own Equity . Our outstanding warrants may be settled through either (i) physical settlement method, or (ii) cashless exercise, where the number of shares issued upon exercise of the warrants is reduced to cover the cost of the exercise in lieu of the holder remitting a cash payment for the exercise price. The warrants expire and are not exercisable after the 10th anniversary of the date issued. The number of warrants and exercise price are subject to anti-dilution provisions whereby the number of warrants may be increased and their exercise price may be adjusted downward under certain circumstances. The anti-dilutive adjustments may be in excess of any dilution incurred by the warrant holders, and may be triggered by events that are not dilutive. As a result, the warrants are classified as a liability. We revalue the warrants at the end of each reporting period, and any change in fair value is reported in the statements of operations in the period in which the change occurred. We calculated the fair value of the warrants using a Black-Scholes option-pricing model in combination with a binomial model. |
Share-Based Compensation | Share-Based Compensation We account for stock compensation in accordance with ASC 718, Compensation - Stock Compensation |
Earnings per Share (EPS) | Earnings per Share (EPS) Basic earnings (loss) per share is based on the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted-average number of common shares outstanding and common share equivalents that would be issuable upon the vesting of existing service based and certain performance and service based RSUs, and exercise of vested and unvested stock options and outstanding warrants. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider items such as certificates of deposit and money market funds with original maturities of 90 days or less to be cash equivalents. |
Software and Equipment | Software and EquipmentWe capitalize certain costs associated with the development of internal-use software and equipment. Software and equipment are stated at cost, less accumulated amortization and depreciation. Amortization of software and depreciation of equipment commences at the beginning of the month following our placement of the assets into use. Amortization and depreciation are calculated on a straight-line basis over the estimated useful life of the respective assets, typically from three |
Leases | LeasesWe recognize right-of-use (ROU) assets and corresponding lease liabilities for our lease arrangements. 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. Estimated lease terms includes optional renewal periods and early termination payments when it is reasonably certain we will exercise those rights. ROU assets are measured as the associated lease liability plus any direct costs incurred in connection with the initial establishment of the lease, less any lease incentives received. |
Business Combinations, Goodwill and Intangible Assets | Business Combinations, Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired from a business combination. In accordance with ASC 350, Intangibles - Goodwill and Other , we test goodwill for impairment during the third quarter each year, or more frequently if we believe indicators of impairment exist. We have not identified any impairments of goodwill through December 31, 2020. |
Premiums Receivable | Premiums Receivable Premiums receivable consists of premiums due on our mortgage insurance policies. If a mortgage insurance premium is unpaid for more than 120 days, the associated receivable is written off against earned premium and the related insurance policy is canceled. We recognize an allowance for credit losses for premiums receivable based on credit losses expected to arise over the life of the receivable. Due to the nature of our insurance policies (a necessary precondition for access to mortgage credit for covered borrowers) and the short duration of the related receivables, we do not typically experience credit losses against our premium receivables and did not establish an allowance for credit loss at December 31, 2020. |
Variable Interest Entities | Variable Interest Entities NMIC is a party to reinsurance agreements with Oaktown Re Ltd., Oaktown Re II Ltd., Oaktown Re III Ltd., Oaktown Re IV Ltd. and Oaktown Re V Ltd. (special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective May 2, 2017, July 25, 2018, July 30, 2019, July 30, 2020 and October 29, 2020, respectively. At inception of the respective reinsurance agreements, we determined that each of the Oaktown Re Vehicles 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. |
Other Revenues | Other Revenues Other revenues represent underwriting fee revenue from our subsidiary, NMIS, which provides outsourced loan review services to mortgage loan originators. NMIS fees are earned and recognized as services are provided. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - Adopted In June 2016, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (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 , ASU 2019-05, Financial Instruments-Credit Losses: Targeted Transition Relief , and ASU 2019-11, C odification Improvements to Topic 326, Financial Instruments-Credit Losses . 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 shifts 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 are recorded through an allowance for credit losses, rather than a write-down of the asset as was 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. We adopted these updates on January 1, 2020. Adoption of the updated standards did not have a material impact on our consolidated financial statements, and had no impact on our accounting for insurance claims and claim expenses as these items are not in scope of the guidance. 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. We adopted this ASU on January 1, 2020 and determined it did not 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. We adopted this ASU on January 1, 2020 and applied it on a prospective basis for eligible costs incurred after the effective date. The adoption of this ASU did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements - Not Yet Adopted In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The FASB subsequently issued ASU 2019-09 in November 2019 and ASU 2020-11 in November 2020, which amended the effective date for this standard and provided transition relief to facilitate early application for long duration contracts. The standard will now take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) . This update eliminates certain exceptions for recognizing deferred taxes for investments, performing intra-period allocations and calculating income taxes in interim periods. The ASU also includes guidance to reduce complexity in certain income tax areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. 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 adopted this ASU on January 1, 2021 and and it did not have a material impact on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This update with updates subsequently issued in January 2021 in ASU 2021-01. These updates provide optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. Reference rate reform refers to the global transition away from referencing the London Interbank Offered Rate (LIBOR) in financial contracts, which is expected to be discontinued in 2021.The ASU includes optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. These standards are effective immediately through December 31, 2022 for all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. We are currently evaluating the impact the adoption of the ASUs would have, if any, to our contract modifications that are affected by the discontinuation of LIBOR. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity's Own Equity (Subtopic 815-40 ). This update simplifies the accounting for convertible instruments and contracts on an entity's own equity, including warrants, eliminating certain triggers for derivative accounting. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted, but no earlier than 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, including our warrant liability. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Fair Values and Gross Unrealized Gains and Losses | Fair Values and Gross Unrealized Gains and Losses on Investments Amortized Gross Unrealized Fair Gains Losses As of December 31, 2020 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 29,412 $ 2,186 $ — $ 31,598 Municipal debt securities 407,323 14,027 (2) 421,348 Corporate debt securities 1,165,260 55,014 (483) 1,219,791 Asset-backed securities 128,471 2,736 (27) 131,180 Total bonds 1,730,466 73,963 (512) 1,803,917 Short-term investments 369 — — 369 Total investments $ 1,730,835 $ 73,963 $ (512) $ 1,804,286 Amortized Gross Unrealized Fair Gains Losses As of December 31, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,203 $ 784 $ (58) $ 48,929 Municipal debt securities 189,530 1,721 (1,035) 190,216 Corporate debt securities 661,719 23,373 (211) 684,881 Asset-backed securities 170,153 2,603 (114) 172,642 Total bonds 1,069,605 28,481 (1,418) 1,096,668 Short-term investments 44,174 98 — 44,272 Total investments $ 1,113,779 $ 28,579 $ (1,418) $ 1,140,940 |
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 December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Financial 37 % 38 % Consumer 23 26 Communications 10 10 Utilities 11 9 Industrial 9 8 Technology 10 7 Energy — 2 Total 100 % 100 % |
Schedule of Investments by Maturity | The amortized cost and fair value of available-for-sale securities as of December 31, 2020 and 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category. As of December 31, 2020 Amortized Fair (In Thousands) Due in one year or less $ 57,429 $ 57,949 Due after one through five years 507,444 536,520 Due after five through ten years 1,016,230 1,056,098 Due after ten years 21,261 22,539 Asset-backed securities 128,471 131,180 Total investments $ 1,730,835 $ 1,804,286 As of December 31, 2019 Amortized Fair (In Thousands) Due in one year or less $ 138,776 $ 139,113 Due after one through five years 406,986 417,208 Due after five through ten years 380,737 394,180 Due after ten years 17,127 17,797 Asset-backed securities 170,153 172,642 Total investments $ 1,113,779 $ 1,140,940 |
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 Twelve Months Twelve 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, 2020 (Dollars in Thousands) Municipal debt securities 4 3,548 (2) — — — 4 3,548 (2) Corporate debt securities 9 40,081 (483) 1 33 — 10 40,114 (483) Asset-backed securities 2 5,191 (19) 1 2,495 (8) 3 7,686 (27) Total 15 $ 48,820 $ (504) 2 $ 2,528 $ (8) 17 $ 51,348 $ (512) Less Than Twelve Months Twelve 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, 2019 (Dollars in Thousands) U.S. Treasury securities and obligations of U.S. government agencies 4 $ 12,001 $ (58) — $ — $ — 4 $ 12,001 $ (58) Municipal debt securities 26 92,844 (1,034) 1 999 (1) 27 93,843 (1,035) Corporate debt securities 10 30,481 (140) 14 23,976 (71) 24 54,457 (211) Asset-backed securities 9 19,236 (102) 1 2,988 (12) 10 22,224 (114) Total 49 $ 154,562 $ (1,334) 16 $ 27,963 $ (84) 65 $ 182,525 $ (1,418) |
Schedule of Net Investment Income | The following table presents the components of net investment income: For the year ended December 31, 2020 2019 2018 (In Thousands) Investment income $ 33,140 $ 31,332 $ 24,342 Investment expenses (1,243) (476) (804) Net investment income $ 31,897 $ 30,856 $ 23,538 |
Schedule of Net Realized Investment Gains (Losses) | The following table presents the components of net realized investment gains: For the year ended December 31, 2020 2019 2018 (In Thousands) Gross realized investment gains $ 5,572 $ 561 $ 525 Gross realized investment losses (4,642) (516) (468) Net realized investment gains $ 930 $ 45 $ 57 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements of Financial Instruments | The following tables present the level within the fair value hierarchy at which our financial instruments were measured: Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2020 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 31,598 $ — $ — $ 31,598 Municipal debt securities — 421,348 — 421,348 Corporate debt securities — 1,219,791 — 1,219,791 Asset-backed securities — 131,180 — 131,180 Cash, cash equivalents and short-term investments 127,306 — — 127,306 Total assets $ 158,904 $ 1,772,319 $ — $ 1,931,223 Warrant liability — — 4,409 4,409 Total liabilities $ — $ — $ 4,409 $ 4,409 Fair Value Measurements Using Quoted Prices in Significant Other Significant Fair Value As of December 31, 2019 (In Thousands) U.S. Treasury securities and obligations of U.S. government agencies $ 48,929 $ — $ — $ 48,929 Municipal debt securities — 190,216 — 190,216 Corporate debt securities — 684,881 — 684,881 Asset-backed securities — 172,642 — 172,642 Cash, cash equivalents and short-term investments 85,361 — — 85,361 Total assets $ 134,290 $ 1,047,739 $ — $ 1,182,029 Warrant liability — — 7,641 7,641 Total liabilities $ — $ — $ 7,641 $ 7,641 |
Roll-Forward of Level 3 Liabilities Measured at Fair Value | The following is a roll-forward of Level 3 liabilities measured at fair value: For the year ended December 31, Warrant Liability 2020 2019 2018 (In Thousands) Balance, January 1 $ 7,641 $ 7,296 $ 7,472 Change in fair value of warrant liability included in earnings (2,907) 8,657 1,397 Issuance of common stock on warrant exercise (325) (8,312) (1,573) Balance, December 31 $ 4,409 $ 7,641 $ 7,296 |
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 December 31, 2020 2019 2018 Common stock price $ 22.65 $ 33.18 $ 17.85 Risk free interest rate 0.11 % 1.59 % 2.46 - 2.47% Expected life 1.31 years 2.31 years 2.58 - 3.31 years Expected volatility 83.7 % 41.4 % 41.1 - 42.5% Dividend yield — % — % — % |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Reinsurance Disclosures [Abstract] | |
Schedule of Effects of Reinsurance Agreements | The effect of our reinsurance agreements on premiums written and earned is as follows: For the year ended December 31, 2020 December 31, 2019 December 31, 2018 (In Thousands) Net premiums written Direct $ 455,172 $ 376,052 $ 287,791 Ceded (1) (66,528) (43,400) (30,988) Net premiums written $ 388,644 $ 332,652 $ 256,803 Net premiums earned Direct $ 472,998 $ 398,303 $ 292,064 Ceded (1) (75,826) (53,288) (40,867) Net premiums earned $ 397,172 $ 345,015 $ 251,197 (1) Net of profit commission. The following table shows amounts related to the QSR Transactions: For the year ended December 31, 2020 December 31, 2019 December 31, 2018 (In Thousands) Ceded risk-in-force $ 5,543,969 $ 5,137,249 $ 4,292,450 Ceded premiums earned (94,899) (89,211) (74,068) Ceded claims and claim expenses 14,002 3,465 1,763 Ceding commission earned 18,526 17,652 14,585 Profit commission 41,902 50,513 42,846 |
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. Current amounts are presented as of December 31, 2020. ( $ values in thousands) Inception Date Covered Production Initial Reinsurance Coverage Current Reinsurance Coverage Initial First Layer Retained Loss Current First Layer Retained Loss (1) 2017 ILN Transaction May 2, 2017 1/1/2013 - 12/31/2016 $ 211,320 $ 40,226 $ 126,793 $ 121,423 2018 ILN Transaction July 25, 2018 1/1/2017 - 5/31/2018 264,545 158,489 125,312 123,234 2019 ILN Transaction July 30, 2019 6/1/2018 - 6/30/2019 326,905 231,877 123,424 122,874 2020-1 ILN Transaction July 30, 2020 7/1/2019 - 3/31/2020 322,076 250,685 169,514 169,514 2020-2 ILN Transaction October 29, 2020 4/1/2020 - 9/30/2020 (2) 242,351 242,351 121,777 121,177 (1) NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claims expenses to each applicable ILN Transaction and recognizes a reinsurance recoverable if such incurred claims and claims expenses exceed its current first layer retained loss. (2) Less than 1% of the production covered by the 2020-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2020. |
Reserves for Insurance Claims a
Reserves for Insurance Claims and Claim Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
Reconciliation of Liability for Insurance Claims and Claims Expenses | The following table provides a reconciliation of the beginning and ending gross reserve balances for primary insurance claims and claim expenses: For the year ended December 31, 2020 December 31, 2019 December 31, 2018 (In Thousands) Beginning balance $ 23,752 $ 12,811 $ 8,761 Less reinsurance recoverables (1) (4,939) (3,001) (1,902) Beginning balance, net of reinsurance recoverables 18,813 9,810 6,859 Add claims incurred: Claims and claim expenses incurred: Current year (2) 66,943 14,737 7,860 Prior years (3) (7,696) (2,230) (2,408) Total claims and claim expenses incurred 59,247 12,507 5,452 Less claims paid: Claims and claim expenses paid: Current year (2) 586 204 130 Prior years (3) 4,515 3,849 2,371 Reinsurance terminations (4) — (549) — Total claims and claim expenses paid 5,101 3,504 2,501 Reserve at end of period, net of reinsurance recoverables 72,959 18,813 9,810 Add reinsurance recoverables (1) 17,608 4,939 3,001 Ending balance $ 90,567 $ 23,752 $ 12,811 (1) Related to ceded losses recoverable under the QSR Transactions. See Note 6, " Reinsurance " for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the 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 6, " Reinsurance " for additional information. |
Schedule of Claims Development Data | The following tables provide claim development data by accident year and a reconciliation to the reserve for insurance claims and claim expenses. Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance (1) As of December 31, 2020 Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 Total of IBNR Defaults (2) ($ Values In Thousands) 2013 $ — $ — $ — $ — $ — $ — $ — $ — $ — — 2014 83 34 4 4 4 4 4 — — 2015 699 664 743 764 894 894 — — 2016 2,394 1,568 1,790 1,934 1,936 8 5 2017 6,028 3,475 3,570 3,807 20 16 2018 7,779 5,271 4,709 88 77 2019 14,391 7,229 364 422 2020 65,769 4,514 11,689 Total $ 84,348 $ 4,994 12,209 (1) Amounts include case and IBNR reserves. (2) Number of defaults outstanding as of December 31, 2020. Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 (In Thousands) 2013 $ — $ — $ — $ — $ — $ — $ — $ — 2014 — 4 4 4 4 4 4 2015 50 246 684 720 804 894 2016 171 890 1,596 1,826 1,827 2017 27 1,655 2,925 3,494 2018 130 1,981 3,537 2019 69 2,368 2020 586 Total $ 12,710 |
Schedule of Reconciliation of Claims Development to Liability | Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses (In Thousands) As of December 31, 2020 Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance $ 84,348 Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance 12,710 Liabilities for unpaid claims and allocated claims adjustment expenses, net of reinsurance 71,638 Reinsurance recoverable on unpaid claims 17,608 Unallocated claims adjustment expenses 1,321 Total gross liability for unpaid claims and claim adjustment expenses $ 90,567 |
Schedule of Historical Claims Duration | The following table shows the average percentage of claims and allocated claims adjustment expenses paid in the years following the incurrence of a claim. Average annual percentage payout of incurred claims and allocated claims adjustment expenses by age, net of reinsurance Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Claims duration disclosure 3% 37% 88% 95% 95% 100% 100% |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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 EPS of common stock. For the year ended December 31, 2020 2019 2018 (In Thousands, except for per share data) Net income $ 171,566 $ 171,957 $ 107,927 Basic weighted average shares outstanding 78,023 67,573 65,019 Basic earnings per share $ 2.20 $ 2.54 $ 1.66 Net income $ 171,566 $ 171,957 $ 107,927 Gain from change in fair value of warrant liability (2,907) — — Diluted net income $ 168,659 $ 171,957 $ 107,927 Basic weighted average shares outstanding 78,023 67,573 65,019 Dilutive effect of issuable shares 1,240 2,148 2,633 Diluted weighted average shares outstanding 79,263 69,721 67,652 Diluted earnings per share $ 2.13 $ 2.47 $ 1.60 Anti-dilutive shares 58 565 843 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | A summary of option activity during the years ended December 31, 2020, 2019 and 2018, is as follows: For the year ended December 31, 2020 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2019 1,928 $ 4.84 $ 13.04 Options granted — — — Options exercised (435) 4.21 11.17 Options forfeited — — — Options expired — — — Options outstanding at December 31, 2020 1,493 $ 5.02 $ 13.59 For the year ended December 31, 2019 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2018 2,882 $ 4.24 $ 11.42 Options granted 163 8.85 22.19 Options exercised (1,117) 3.88 10.19 Options forfeited — — — Options expired — — — Options outstanding at December 31, 2019 1,928 $ 4.84 $ 13.04 For the Year Ended December 31, 2018 Shares Weighted Average Grant Date Fair Value per Share Weighted Average Exercise Price (Shares in Thousands) Options outstanding at December 31, 2017 3,311 $ 3.95 $ 10.41 Options granted 383 6.32 18.08 Options exercised (803) 4.06 10.43 Options forfeited — — — Options expired (9) 4.05 10.51 Options outstanding at December 31, 2018 2,882 $ 4.24 $ 11.42 |
Schedule of Stock Options Valuation Assumptions | The estimated grant date fair values of the stock options granted during the years ended December 31, 2019 and 2018 were calculated using the Black-Scholes valuation model based on the following assumptions. For the years ended December 31, 2019 2018 Expected life 6 years 6 years Risk free interest rate 2.57 % 2.66-2.89% Dividend yield — % — % Expected stock price volatility 36.8 % 30.1-30.6% |
Schedule of Restricted Stock Units Activity | A summary of RSU activity during the years ended December 31, 2020, 2019 and 2018 is as follows: For the year ended December 31, 2020 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2019 1,202 $ 18.67 Restricted stock units granted 646 22.67 Restricted stock units vested (664) 17.68 Restricted stock units forfeited (122) 19.55 Non-vested restricted stock units at December 31, 2020 1,062 $ 21.61 For the year ended December 31, 2019 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2018 1,753 $ 12.06 Restricted stock units granted 470 24.42 Restricted stock units vested (970) 9.71 Restricted stock units forfeited (51) 15.06 Non-vested restricted stock units at December 31, 2019 1,202 $ 18.67 For the Year Ended December 31, 2018 Shares Weighted Average Grant Date Fair Value per Share (Shares in Thousands) Non-vested restricted stock units at December 31, 2017 2,065 $ 8.15 Restricted stock units granted 701 17.22 Restricted stock units vested (913) 7.42 Restricted stock units forfeited (100) 9.89 Non-vested restricted stock units at December 31, 2018 1,753 $ 12.06 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Total income tax expense consists of the following components: For the year ended December 31, 2020 2019 2018 (In Thousands) Current $ 34 $ (386) $ 1,677 Deferred 46,506 45,082 26,357 Total income tax expense $ 46,540 $ 44,696 $ 28,034 |
Schedule of Effective Income Tax Rate Reconciliation | The following table presents a reconciliation between the federal statutory income tax rate and our effective income tax rate: For the year ended December 31, 2020 2019 2018 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State provision 0.5 0.5 0.7 Share-based and other compensation 0.1 (1.7) (1.4) Warrant gain/loss (0.3) 0.9 0.2 Other — (0.1) 0.1 Effective income tax rate 21.3 % 20.6 % 20.6 % |
Schedule of Net Deferred Tax Asset | The components of our net deferred tax asset are summarized as follows: As of December 31, 2020 2019 Deferred tax asset (In Thousands) Net operating loss carry forwards $ 7,938 $ 9,244 Share-based compensation 5,067 5,959 Unearned premium reserve 4,844 5,213 Accrued expenses 3,198 4,539 Other (1) 1,592 1,972 Total gross deferred tax asset 22,639 26,927 Less: valuation allowance (7,610) (7,857) Total deferred tax asset 15,029 19,070 Deferred tax liability Contingency reserve (91,429) (47,730) Deferred acquisition costs (13,381) (12,902) Unrealized gain on investments (15,432) (7,634) Capitalized software (5,569) (5,107) Other (1) (1,804) (2,057) Total deferred tax liability (127,615) (75,430) Net deferred income tax (liability) $ (112,586) $ (56,360) (1) Prior periods have been reclassified for consistency and presentation purposes. |
Software and Equipment (Tables)
Software and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Equipment and Software | Software and equipment, net of accumulated amortization and depreciation, as of December 31, 2020 and 2019, consists of the following: December 31, 2020 December 31, 2019 (In Thousands) Software $ 59,678 $ 46,522 Equipment 9,123 8,992 Leasehold improvements 3,402 3,442 Subtotal 72,203 58,956 Accumulated amortization and depreciation (42,538) (32,860) Software and equipment, net $ 29,665 $ 26,096 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Identifiable Intangible Assets and Goodwill | Intangible assets and goodwill consist of identifiable intangible assets and goodwill purchased in connection with the acquisition of our insurance subsidiaries. Intangible assets and goodwill as of both December 31, 2020 and 2019 were as follows: (In Thousands) Expected Lives Goodwill $ 3,244 Indefinite State licenses 260 Indefinite GSE applications 130 Indefinite Total intangible assets and goodwill $ 3,634 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [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 December 31, 2020: Weighted-average remaining lease term 2.2 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 December 31, 2020 are as follows: Years ending December 31, (In Thousands) 2021 $ 2,609 2022 2,574 2023 462 Total undiscounted lease payments 5,645 Less effects of discounting (391) Present value of lease payments $ 5,254 |
Regulatory Information (Tables)
Regulatory Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
Schedule of Combined Statutory Net Gain (Loss), Statutory Surplus, Contingency Reserve and RTC Ratios | NMIC and Re One's combined statutory net income (loss), statutory surplus, contingency reserve, statutory capital and risk-to-capital (RTC) ratios as of and for the years ended December 31, 2020, 2019 and 2018 were as follows: As of and for the year ended December 31, 2020 2019 2018 (In Thousands) Statutory net (loss) gain $ (20,136) $ 15,233 $ (19,784) Statutory surplus 894,331 449,602 430,785 Contingency reserve 768,324 531,825 332,702 Statutory capital (1) 1,662,655 981,427 763,487 Risk-to-capital 11.7:1 15.8:1 13.1:1 (1) Represents the total of the statutory surplus and contingency reserve. |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | 2020 Quarters 2020 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 98,717 $ 98,944 $ 98,802 $ 100,709 $ 397,172 Net investment income 8,104 7,070 8,337 8,386 31,897 Net realized investment (losses) gains (72) 711 (4) 295 930 Other revenues 900 1,223 648 513 3,284 Insurance claims and claim expenses 5,697 34,334 15,667 3,549 59,247 Underwriting and operating expenses 32,277 30,370 33,969 34,994 131,610 Service expenses 734 1,090 557 459 2,840 Interest expense 2,744 5,941 7,796 7,906 24,387 (Gain) loss from change in fair value of warrant liability (5,959) 1,236 437 1,379 (2,907) Pre-tax income 72,156 34,977 49,357 61,616 218,106 Income tax expense 13,885 8,129 11,178 13,348 46,540 Net income $ 58,271 $ 26,848 $ 38,179 $ 48,268 $ 171,566 Basic earnings per share (1) $ 0.85 $ 0.36 $ 0.45 $ 0.57 $ 2.20 Diluted earnings per share (1) $ 0.74 $ 0.36 $ 0.45 $ 0.56 $ 2.13 Weighted average common shares outstanding - basic 68,563 73,617 84,805 84,956 78,023 Weighted average common shares outstanding - diluted 70,401 74,174 85,599 86,250 79,263 (1) Due to the use of weighted average shares outstanding when calculating EPS, the sum of quarterly per share data may not equal the per share data for the year. 2019 Quarters 2019 First Second Third Fourth Year (In Thousands, except per share data) Net premiums earned $ 73,868 $ 83,249 $ 92,381 $ 95,517 $ 345,015 Net investment income 7,383 7,629 7,882 7,962 $ 30,856 Net realized investment (losses) gains (187) (113) 81 264 $ 45 Other revenues 42 415 1,244 1,154 $ 2,855 Insurance claims and claim expenses 2,743 2,923 2,572 4,269 $ 12,507 Underwriting and operating expenses 30,800 32,190 32,335 31,296 $ 126,621 Service expenses 49 353 909 937 $ 2,248 Interest expense 3,061 3,071 2,979 2,974 $ 12,085 Loss (gain) from change in fair value of warrant liability 5,479 1,685 (1,139) 2,632 $ 8,657 Pre-tax income 38,974 50,958 63,932 62,789 $ 216,653 Income tax expense 6,075 11,858 14,169 12,594 $ 44,696 Net income $ 32,899 $ 39,100 $ 49,763 $ 50,195 $ 171,957 Basic earnings per share (1) $ 0.49 $ 0.58 $ 0.73 $ 0.74 $ 2.54 Diluted earnings per share (1) $ 0.48 $ 0.56 $ 0.69 $ 0.71 $ 2.47 Weighted average common shares outstanding - basic 66,692 67,590 67,849 68,140 67,573 Weighted average common shares outstanding - diluted 68,996 69,590 70,137 70,276 69,721 (1) Due to the use of weighted average shares outstanding when calculating EPS, the sum of quarterly per share data may not equal the per share data for the year. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) | Dec. 31, 2020state |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of states in which the entity operates | 50 |
Summary of Accounting Policie_2
Summary of Accounting Policies (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Accrued interest receivable | $ 9,900,000 | |||
Amortization of deferred acquisition expense | 19,100,000 | $ 8,400,000 | $ 8,100,000 | |
Premium deficiency reserve expense | 0 | 0 | 0 | |
Reinsurance recoverable on unpaid claims | $ 17,608,000 | $ 4,939,000 | $ 3,001,000 | $ 1,902,000 |
Software | Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful life | 3 years | |||
Software | Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful life | 5 years | |||
Equipment | Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful life | 3 years | |||
Equipment | Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful life | 5 years | |||
Geographic Concentration Risk | Risk-in-Force | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Concentration risk | 11.00% | 12.00% | 13.00% |
Investments - Fair Values and G
Investments - Fair Values and Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Total investments | $ 1,730,835 | $ 1,113,779 |
Gross unrealized gains | 73,963 | 28,579 |
Gross unrealized losses | (512) | (1,418) |
Fair value of securities | 1,804,286 | 1,140,940 |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total investments | 29,412 | 48,203 |
Gross unrealized gains | 2,186 | 784 |
Gross unrealized losses | 0 | (58) |
Fair value of securities | 31,598 | 48,929 |
Municipal debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total investments | 407,323 | 189,530 |
Gross unrealized gains | 14,027 | 1,721 |
Gross unrealized losses | (2) | (1,035) |
Fair value of securities | 421,348 | 190,216 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total investments | 1,165,260 | 661,719 |
Gross unrealized gains | 55,014 | 23,373 |
Gross unrealized losses | (483) | (211) |
Fair value of securities | 1,219,791 | 684,881 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total investments | 128,471 | 170,153 |
Gross unrealized gains | 2,736 | 2,603 |
Gross unrealized losses | (27) | (114) |
Fair value of securities | 131,180 | 172,642 |
Total bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total investments | 1,730,466 | 1,069,605 |
Gross unrealized gains | 73,963 | 28,481 |
Gross unrealized losses | (512) | (1,418) |
Fair value of securities | 1,803,917 | 1,096,668 |
Short-term investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total investments | 369 | 44,174 |
Gross unrealized gains | 0 | 98 |
Gross unrealized losses | 0 | 0 |
Fair value of securities | $ 369 | $ 44,272 |
Investments - Corporate Debt Se
Investments - Corporate Debt Securities by Industry Group (Details) | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 100.00% | 100.00% |
Financial | ||
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 37.00% | 38.00% |
Consumer | ||
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 23.00% | 26.00% |
Communications | ||
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 10.00% | 10.00% |
Utilities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 11.00% | 9.00% |
Industrial | ||
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 9.00% | 8.00% |
Technology | ||
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 10.00% | 7.00% |
Energy | ||
Debt Securities, Available-for-sale [Line Items] | ||
Corporate debt securities as component of total (percent) | 0.00% | 2.00% |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2020 | |
Debt Securities, Available-for-sale [Line Items] | |||
Unrealized loss position, accumulated loss | $ 1,418,000 | $ 512,000 | |
Unrealized loss position, 12 months or greater | 84,000 | 8,000 | |
Other-than-temporary impairment | 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 | $ 5,700,000 | |
Unrealized loss position, accumulated loss | 58,000 | ||
Unrealized loss position, 12 months or greater | $ 0 |
Investments - Scheduled Maturit
Investments - Scheduled Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Due in one year or less | $ 57,429 | $ 138,776 |
Due after one through five years | 507,444 | 406,986 |
Due after five through ten years | 1,016,230 | 380,737 |
Due after ten years | 21,261 | 17,127 |
Asset-backed securities | 128,471 | 170,153 |
Total investments | 1,730,835 | 1,113,779 |
Fair Value | ||
Due in one year or less | 57,949 | 139,113 |
Due after one through five years | 536,520 | 417,208 |
Due after five through ten years | 1,056,098 | 394,180 |
Due after ten years | 22,539 | 17,797 |
Asset-backed securities | 131,180 | 172,642 |
Total investments | $ 1,804,286 | $ 1,140,940 |
Investments - Aging of Unrealiz
Investments - Aging of Unrealized Losses (Details) $ in Thousands | Dec. 31, 2020USD ($)security | Dec. 31, 2019USD ($)security |
Number of Securities | ||
Less Than Twelve Months | security | 15 | 49 |
Twelve Months or Greater | security | 2 | 16 |
Total | security | 17 | 65 |
Fair Value | ||
Less Than Twelve Months | $ 48,820 | $ 154,562 |
Twelve Months or Greater | 2,528 | 27,963 |
Total | 51,348 | 182,525 |
Unrealized Losses | ||
Less Than Twelve Months | (504) | (1,334) |
Twelve Months or Greater | (8) | (84) |
Total | $ (512) | $ (1,418) |
U.S. Treasury securities and obligations of U.S. government agencies | ||
Number of Securities | ||
Less Than Twelve Months | security | 4 | |
Twelve Months or Greater | security | 0 | |
Total | security | 4 | |
Fair Value | ||
Less Than Twelve Months | $ 12,001 | |
Twelve Months or Greater | 0 | |
Total | 12,001 | |
Unrealized Losses | ||
Less Than Twelve Months | (58) | |
Twelve Months or Greater | 0 | |
Total | $ (58) | |
Municipal debt securities | ||
Number of Securities | ||
Less Than Twelve Months | security | 4 | 26 |
Twelve Months or Greater | security | 0 | 1 |
Total | security | 4 | 27 |
Fair Value | ||
Less Than Twelve Months | $ 3,548 | $ 92,844 |
Twelve Months or Greater | 0 | 999 |
Total | 3,548 | 93,843 |
Unrealized Losses | ||
Less Than Twelve Months | (2) | (1,034) |
Twelve Months or Greater | 0 | (1) |
Total | $ (2) | $ (1,035) |
Corporate debt securities | ||
Number of Securities | ||
Less Than Twelve Months | security | 9 | 10 |
Twelve Months or Greater | security | 1 | 14 |
Total | security | 10 | 24 |
Fair Value | ||
Less Than Twelve Months | $ 40,081 | $ 30,481 |
Twelve Months or Greater | 33 | 23,976 |
Total | 40,114 | 54,457 |
Unrealized Losses | ||
Less Than Twelve Months | (483) | (140) |
Twelve Months or Greater | 0 | (71) |
Total | $ (483) | $ (211) |
Asset-backed securities | ||
Number of Securities | ||
Less Than Twelve Months | security | 2 | 9 |
Twelve Months or Greater | security | 1 | 1 |
Total | security | 3 | 10 |
Fair Value | ||
Less Than Twelve Months | $ 5,191 | $ 19,236 |
Twelve Months or Greater | 2,495 | 2,988 |
Total | 7,686 | 22,224 |
Unrealized Losses | ||
Less Than Twelve Months | (19) | (102) |
Twelve Months or Greater | (8) | (12) |
Total | $ (27) | $ (114) |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |||
Investment income | $ 33,140 | $ 31,332 | $ 24,342 |
Investment expenses | (1,243) | (476) | (804) |
Net investment income | $ 31,897 | $ 30,856 | $ 23,538 |
Investments - Net Realized Inve
Investments - Net Realized Investments Gains (Losses) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |||
Gross realized investment gains | $ 5,572 | $ 561 | $ 525 |
Gross realized investment losses | (4,642) | (516) | (468) |
Net realized investment gains | $ 930 | $ 45 | $ 57 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | $ 1,804,286 | $ 1,140,940 |
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 | 31,598 | 48,929 |
Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 421,348 | 190,216 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 1,219,791 | 684,881 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 131,180 | 172,642 |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash, cash equivalents and short-term investments | 127,306 | 85,361 |
Total assets | 1,931,223 | 1,182,029 |
Total liabilities | 4,409 | 7,641 |
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 | 31,598 | 48,929 |
Recurring | Municipal debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 421,348 | 190,216 |
Recurring | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 1,219,791 | 684,881 |
Recurring | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of securities | 131,180 | 172,642 |
Recurring | Warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | 4,409 | 7,641 |
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 | 127,306 | 85,361 |
Total assets | 158,904 | 134,290 |
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 | 31,598 | 48,929 |
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 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | 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 | 1,772,319 | 1,047,739 |
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 | 421,348 | 190,216 |
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 | 1,219,791 | 684,881 |
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 | 131,180 | 172,642 |
Recurring | Significant Other Observable Inputs (Level 2) | Warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | 0 | 0 |
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 |
Total liabilities | 4,409 | 7,641 |
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 |
Recurring | Significant Unobservable Inputs (Level 3) | Warrant liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | $ 4,409 | $ 7,641 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Rollfoward of Level 3 Liabilities (Details) - Significant Unobservable Inputs (Level 3) - Warrant liability - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | $ 7,641 | $ 7,296 | $ 7,472 |
Change in fair value of warrant liability included in earnings | (2,907) | 8,657 | 1,397 |
Issuance of common stock on warrant exercise | (325) | (8,312) | (1,573) |
Ending balance | $ 4,409 | $ 7,641 | $ 7,296 |
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 | Dec. 31, 2020$ / shares | Dec. 31, 2019$ / shares | Dec. 31, 2018$ / shares |
Common stock price | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 22.65 | 33.18 | 17.85 |
Risk free interest rate | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 0.0011 | 0.0159 | |
Risk free interest rate | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 0.0246 | ||
Risk free interest rate | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 0.0247 | ||
Expected life | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, expected life (in years) | 1 year 3 months 21 days | 2 years 3 months 21 days | |
Expected life | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, expected life (in years) | 2 years 6 months 29 days | ||
Expected life | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, expected life (in years) | 3 years 3 months 21 days | ||
Expected volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 0.837 | 0.414 | |
Expected volatility | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 0.411 | ||
Expected volatility | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 0.425 | ||
Dividend yield | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrant liability, measurement input | 0 | 0 | 0 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Jun. 19, 2020 | Jan. 19, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Debt | $ 393,301 | $ 145,764 | ||
Senior debt | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Debt instrument face amount | 400,000 | $ 400,000 | ||
Debt | 393,300 | |||
Deferred debt issuance costs | 6,700 | $ 7,400 | ||
Senior debt | 2018 Term loan | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Debt instrument face amount | $ 150,000 | |||
Debt | 145,800 | |||
Deferred debt issuance costs | 2,000 | |||
Senior debt | Significant Other Observable Inputs (Level 2) | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of term loan | $ 447,100 | |||
Senior debt | Significant Other Observable Inputs (Level 2) | 2018 Term loan | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of term loan | $ 147,800 |
Debt (Details)
Debt (Details) - USD ($) | Jun. 19, 2020 | Mar. 20, 2020 | Mar. 19, 2020 | Dec. 31, 2020 | Dec. 31, 2020 | Oct. 30, 2020 | Jan. 19, 2020 | Dec. 31, 2019 |
General corporate purposes | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from senior secured notes | $ 244,400,000 | |||||||
2018 Term loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Loss on extinguishment of debt | $ 2,600,000 | |||||||
Interest and Dividends Payable | $ 2,500,000 | 2,500,000 | ||||||
2018 Revolving credit facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Deferred debt issuance costs | $ 600,000 | |||||||
Revolving credit facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fees in interest expense | $ 400,000 | |||||||
Revolving credit facility | 2018 Revolving credit facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Credit facility borrowing capacity | $ 85,000,000 | |||||||
Debt instrument term (years) | 3 years | |||||||
Revolving credit facility | 2020 Revolving credit facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum debt-to-total capitalization (in percent) | 35.00% | |||||||
Credit facility borrowing capacity | $ 100,000,000 | $ 110,000,000 | $ 110,000,000 | $ 110,000,000 | ||||
Commitment fee (in percent) | 0.35% | |||||||
Debt Issuance costs | $ 800,000 | |||||||
Remaining deferred issuance costs, net of accumulated amortization | $ 1,100,000 | 1,100,000 | ||||||
Revolving credit facility | 2020 Revolving credit facility | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee (in percent) | 0.175% | |||||||
Revolving credit facility | 2020 Revolving credit facility | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee (in percent) | 0.525% | |||||||
Revolving credit facility | 2020 Revolving credit facility | Base rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate floor (in percent) | 1.00% | |||||||
Revolving credit facility | 2020 Revolving credit facility | Base rate | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (in percent) | 0.375% | |||||||
Revolving credit facility | 2020 Revolving credit facility | Base rate | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (in percent) | 1.875% | |||||||
Revolving credit facility | 2020 Revolving credit facility | Eurodollar | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (in percent) | 1.375% | |||||||
Revolving credit facility | 2020 Revolving credit facility | Eurodollar | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (in percent) | 2.875% | |||||||
Senior debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 400,000,000 | 400,000,000 | 400,000,000 | |||||
Stated interest rate (in percent) | 7.375% | |||||||
Applicable premium | 1.00% | |||||||
Percent of aggregate balance redeemable with equity offerings | 40.00% | |||||||
Deferred debt issuance costs | $ 7,400,000 | 6,700,000 | 6,700,000 | |||||
Capitalized issuance cost and issue discounts | $ 6,700,000 | $ 6,700,000 | ||||||
Senior debt | Prior to March 1, 2025 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price (in percent) | 100.00% | |||||||
Senior debt | After March 1, 2025 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price (in percent) | 100.00% | |||||||
Senior debt | Prior to June 1, 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price (in percent) | 107.375% | |||||||
Senior debt | 2018 Term loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 150,000,000 | |||||||
Deferred debt issuance costs | $ 2,000,000 |
Reinsurance - Effect of Reinsur
Reinsurance - Effect of Reinsurance Agreements on Premiums Written and Earned (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net premiums written | |||||||||||
Direct | $ 455,172 | $ 376,052 | $ 287,791 | ||||||||
Ceded | (66,528) | (43,400) | (30,988) | ||||||||
Net premiums written | 388,644 | 332,652 | 256,803 | ||||||||
Net premiums earned | |||||||||||
Direct | 472,998 | 398,303 | 292,064 | ||||||||
Ceded | (75,826) | (53,288) | (40,867) | ||||||||
Net premiums earned | $ 100,709 | $ 98,802 | $ 98,944 | $ 98,717 | $ 95,517 | $ 92,381 | $ 83,249 | $ 73,868 | $ 397,172 | $ 345,015 | $ 251,197 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) $ in Thousands | Apr. 01, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)quotaShareAgreement | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Ceded Credit Risk [Line Items] | ||||||
Restricted cash | $ 2,662 | $ 5,555 | $ 2,662 | |||
Number of quota share agreements | quotaShareAgreement | 3 | |||||
Reinsurance recoverable on unpaid claims | $ 4,939 | $ 17,608 | 4,939 | $ 3,001 | $ 1,902 | |
ILN Transactions | ||||||
Ceded Credit Risk [Line Items] | ||||||
Reinsurance coverage, term of underlying mortgage amortization (in years) | 10 years | |||||
Optional termination right, percent of reinsurance coverage threshold | 10.00% | |||||
QSR Transactions | ||||||
Ceded Credit Risk [Line Items] | ||||||
Ceding commissions under QSR Transaction | 20.00% | |||||
2018 QSR Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Threshold for loss ratio on loans to qualify for profit commission | 61.00% | |||||
2016 QSR Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Threshold for loss ratio on loans to qualify for profit commission | 60.00% | |||||
2020 QSR Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Threshold for loss ratio on loans to qualify for profit commission | 50.00% | |||||
Third-Party Reinsurers | 2017 ILN Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Risk premiums paid | $ 22,800 | $ 14,600 | $ 9,600 | |||
Third-Party Reinsurers | 2018 QSR Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Reinsurance recoverable on unpaid claims | $ 12,600 | |||||
Third-Party Reinsurers | Risk Written Policies in 2018 | ||||||
Ceded Credit Risk [Line Items] | ||||||
Premiums of premiums earned under 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 | 20.50% | 25.00% | ||||
Previously Ceded Primary Risk-In-Force Recaptured | $ 500,000 | |||||
Reinsurance recoverable on unpaid claims | $ 4,500 | |||||
Third-Party Reinsurers | Existing Risk Written Policies | ||||||
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% | |||||
Third-Party Reinsurers | 2020 QSR Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Reinsurance recoverable on unpaid claims | $ 500 | |||||
Third-Party Reinsurers | Risk written in 2020 | ||||||
Ceded Credit Risk [Line Items] | ||||||
Premiums of premiums earned under QSR Transaction | 21.00% | |||||
Third-Party Reinsurers | Maximum | 2017 ILN Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Anticipated payment related to annual operating expenses | $ 300 | |||||
Third-Party Reinsurers | Maximum | 2018 ILN Transaction | ||||||
Ceded Credit Risk [Line Items] | ||||||
Anticipated payment related to annual operating expenses | $ 250 |
Reinsurance - ILN Transactions
Reinsurance - ILN Transactions (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Jul. 30, 2019 | Jul. 25, 2018 | May 02, 2017 |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Percentage of population with production prior to April 1, 2020 (less than) | 1.00% | |||
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 | 40,226 | |||
Initial First Layer Retained Loss | 126,793 | |||
Current First Layer Retained Loss | $ 121,423 | |||
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 | 158,489 | |||
Initial First Layer Retained Loss | 125,312 | |||
Current First Layer Retained Loss | $ 123,234 | |||
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 | 231,877 | |||
Initial First Layer Retained Loss | 123,424 | |||
Current First Layer Retained Loss | 122,874 | |||
2020-1 ILN Transaction | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Initial Reinsurance Coverage | 322,076 | |||
Current Reinsurance Coverage | 250,685 | |||
Initial First Layer Retained Loss | 169,514 | |||
Current First Layer Retained Loss | 169,514 | |||
2020-2 ILN Transaction | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Initial Reinsurance Coverage | 242,351 | |||
Current Reinsurance Coverage | 242,351 | |||
Initial First Layer Retained Loss | 121,777 | |||
Current First Layer Retained Loss | $ 121,177 |
Reinsurance - Amounts Ceded Rel
Reinsurance - Amounts Ceded Related to QSR Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Ceded Credit Risk [Line Items] | |||
Ceded premiums earned | $ (75,826) | $ (53,288) | $ (40,867) |
Third-Party Reinsurers | |||
Ceded Credit Risk [Line Items] | |||
Ceded risk-in-force | 5,543,969 | 5,137,249 | 4,292,450 |
Ceded premiums earned | (94,899) | (89,211) | (74,068) |
Ceded claims and claim expenses | 14,002 | 3,465 | 1,763 |
Ceding commission earned | 18,526 | 17,652 | 14,585 |
Profit commission | $ 41,902 | $ 50,513 | $ 42,846 |
Reserves for Insurance Claims_2
Reserves for Insurance Claims and Claim Expenses - Narrative (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020USD ($)loanclaimpolicy | Dec. 31, 2019USD ($)policyloan | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Primary loans in default | loan | 12,209 | 1,448 | ||
Reserve for insurance claims and claim expenses | $ 90,567 | $ 23,752 | $ 12,811 | $ 8,761 |
Number of claims paid | claim | 143 | |||
Claims paid, including amounts covered by insurance | $ 6,400 | |||
Default rate (in percent) | 3.06% | 0.40% | ||
Total policies in-force | policy | 399,429 | 366,039 | ||
Favorable prior year development | $ (7,696) | $ (2,230) | $ (2,408) | |
Reserve for prior year insurance claims and claims expense | $ 8,300 | |||
Fannie Mae | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Number of loans in pool past due 60 days or more | loan | 219 | |||
Risk-in-Force of loans in pool past due 60 days or more | $ 17,600 | |||
Loan-to-value ratio (less than) | 0.80 | |||
Claims applied to pool deductible | $ 1,000 | |||
Deductible on policy | 9,400 | |||
2016 QSR Transaction | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Reserve for insurance claims and claim expenses | $ 1,300 | |||
Number of covered claims included in number of claims paid | claim | 137 | |||
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_3
Reserves for Insurance Claims and Claim Expenses - Reconciliation of Reserve Balances for Insurance Claims Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Beginning balance | $ 23,752 | $ 12,811 | $ 8,761 |
Less reinsurance recoverables | (4,939) | (3,001) | (1,902) |
Beginning balance, net of reinsurance recoverables | 18,813 | 9,810 | 6,859 |
Claims and claim expenses incurred: | |||
Current year | 66,943 | 14,737 | 7,860 |
Prior years | (7,696) | (2,230) | (2,408) |
Total claims and claims expenses incurred | 59,247 | 12,507 | 5,452 |
Claims and claim expenses paid: | |||
Current year | 586 | 204 | 130 |
Prior years | 4,515 | 3,849 | 2,371 |
Reinsurance terminations | 0 | (549) | 0 |
Total claims and claim expenses paid | 5,101 | 3,504 | 2,501 |
Reserve at end of period, net of reinsurance recoverables | 72,959 | 18,813 | 9,810 |
Add reinsurance recoverables | 17,608 | 4,939 | 3,001 |
Ending balance | $ 90,567 | $ 23,752 | $ 12,811 |
Reserves for Insurance Claims_4
Reserves for Insurance Claims and Claim Expenses - Claim Development by Accident Year and Reconciliation of Reserve for Insurance Claims and Claims Expense (Details) - Financial Guarantee Insurance Product Line $ in Thousands | Dec. 31, 2020USD ($)claim | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | $ 84,348 | |||||||
Total of IBNR | $ 4,994 | |||||||
NODs | claim | 12,209 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 12,710 | |||||||
2013 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Total of IBNR | $ 0 | |||||||
NODs | claim | 0 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 0 | 0 | 0 | 0 | 0 | 0 | 0 | $ 0 |
2014 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 4 | 4 | 4 | 4 | 4 | 34 | 83 | |
Total of IBNR | $ 0 | |||||||
NODs | claim | 0 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 4 | 4 | 4 | 4 | 4 | 4 | $ 0 | |
2015 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 894 | 894 | 764 | 743 | 664 | 699 | ||
Total of IBNR | $ 0 | |||||||
NODs | claim | 0 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 894 | 804 | 720 | 684 | 246 | $ 50 | ||
2016 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 1,936 | 1,934 | 1,790 | 1,568 | 2,394 | |||
Total of IBNR | $ 8 | |||||||
NODs | claim | 5 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 1,827 | 1,826 | 1,596 | 890 | $ 171 | |||
2017 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 3,807 | 3,570 | 3,475 | 6,028 | ||||
Total of IBNR | $ 20 | |||||||
NODs | claim | 16 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 3,494 | 2,925 | 1,655 | 27 | ||||
2018 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 4,709 | 5,271 | 7,779 | |||||
Total of IBNR | $ 88 | |||||||
NODs | claim | 77 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 3,537 | 1,981 | $ 130 | |||||
2019 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 7,229 | 14,391 | ||||||
Total of IBNR | $ 364 | |||||||
NODs | claim | 422 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 2,368 | $ 69 | ||||||
2020 | ||||||||
Claims Development [Line Items] | ||||||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 65,769 | |||||||
Total of IBNR | $ 4,514 | |||||||
NODs | claim | 11,689 | |||||||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | $ 586 |
Reserves for Insurance Claims_5
Reserves for Insurance Claims and Claim Expenses - Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claims Adjustment Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Reinsurance recoverable on unpaid claims | $ 17,608 | $ 4,939 | $ 3,001 | $ 1,902 |
Reserve for insurance claims and claim expenses | 90,567 | $ 23,752 | $ 12,811 | $ 8,761 |
Financial Guarantee Insurance Product Line | ||||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||||
Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance | 84,348 | |||
Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance | 12,710 | |||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 71,638 | |||
Reinsurance recoverable on unpaid claims | 17,608 | |||
Unallocated claims adjustment expenses | 1,321 | |||
Reserve for insurance claims and claim expenses | $ 90,567 |
Reserves for Insurance Claims_6
Reserves for Insurance Claims and Claim Expenses - Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Details) - Financial Guarantee Insurance Product Line | Dec. 31, 2020 |
Average annual percentage payout of incurred claims and allocated claims adjustment expenses by age, net of reinsurance | |
Year 1 | 3.00% |
Year 2 | 37.00% |
Year 3 | 88.00% |
Year 4 | 95.00% |
Year 5 | 95.00% |
Year 6 | 100.00% |
Year 7 | 100.00% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Basic EPS | |||||||||||
Net income | $ 48,268 | $ 38,179 | $ 26,848 | $ 58,271 | $ 50,195 | $ 49,763 | $ 39,100 | $ 32,899 | $ 171,566 | $ 171,957 | $ 107,927 |
Basic weighted average shares outstanding (in shares) | 84,956 | 84,805 | 73,617 | 68,563 | 68,140 | 67,849 | 67,590 | 66,692 | 78,023 | 67,573 | 65,019 |
Basic earnings per share (in dollars per share) | $ 0.57 | $ 0.45 | $ 0.36 | $ 0.85 | $ 0.74 | $ 0.73 | $ 0.58 | $ 0.49 | $ 2.20 | $ 2.54 | $ 1.66 |
Diluted EPS | |||||||||||
Net income | $ 48,268 | $ 38,179 | $ 26,848 | $ 58,271 | $ 50,195 | $ 49,763 | $ 39,100 | $ 32,899 | $ 171,566 | $ 171,957 | $ 107,927 |
Gain from change in fair value of warrant liability | 2,907 | 0 | 0 | ||||||||
Diluted net income | $ 168,659 | $ 171,957 | $ 107,927 | ||||||||
Basic weighted average shares outstanding (in shares) | 84,956 | 84,805 | 73,617 | 68,563 | 68,140 | 67,849 | 67,590 | 66,692 | 78,023 | 67,573 | 65,019 |
Dilutive effect of issuable shares (in shares) | 1,240 | 2,148 | 2,633 | ||||||||
Diluted weighted average shares outstanding (in shares) | 86,250 | 85,599 | 74,174 | 70,401 | 70,276 | 70,137 | 69,590 | 68,996 | 79,263 | 69,721 | 67,652 |
Diluted earnings per share (in dollars per share) | $ 0.56 | $ 0.45 | $ 0.36 | $ 0.74 | $ 0.71 | $ 0.69 | $ 0.56 | $ 0.48 | $ 2.13 | $ 2.47 | $ 1.60 |
Antidilutive securities excluded from EPS calculation (in shares) | 58 | 565 | 843 |
Warrants (Details)
Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | 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 | $ 4,409 | $ 7,641 | $ 5,100 | |
Warrants exercised (in shares) | 18,000 | 448,000 | ||
Stock issued upon exercise of warrants (in shares) | 11,000 | 289,000 | ||
Fair value of warrant liability reclassified to additional paid in capital upon exercise | $ 300 | $ 8,300 | ||
Change in fair value of warrant liability in current period | $ 100 | $ 4,100 | $ 400 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | May 11, 2017 | Apr. 16, 2012 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | May 08, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation expense | $ 11,115 | $ 13,031 | $ 12,557 | ||||
Income tax benefit related to share-based compensation | $ 2,300 | $ 2,700 | $ 2,600 | ||||
Number of options vested (in shares) | 1,300,000 | ||||||
Options exercised (in shares) | 435,000 | 1,117,000 | 803,000 | ||||
Aggregate intrinsic value of options exercised | $ 6,000 | ||||||
Weighted average exercise price for options vested (in dollars per share) | $ 12.39 | ||||||
Weighted average remaining contractual term | 4 years 10 months 6 days | ||||||
Options vested aggregate value | $ 12,900 | ||||||
Unrecognized compensation cost related to non-vested stock options | $ 200 | ||||||
Unrecognized compensation cost, period for recognition | 10 months 9 days | ||||||
Employer matching contribution, percent of match (up to) | 100.00% | ||||||
Employer matching contribution, percent of employees' gross pay (up to) | 5.00% | ||||||
Contribution amount | $ 2,200 | $ 2,500 | $ 1,600 | ||||
Options granted (in shares) | 0 | 163,000 | 383,000 | ||||
Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted stock units outstanding (in shares) | 1,062,000 | 1,202,000 | 1,753,000 | 2,065,000 | |||
Fair value of shares vested | $ 11,700 | ||||||
Weighted average remaining contractual life of RSUs outstanding | 1 year 5 months 8 days | 1 year 5 months 26 days | |||||
Unrecognized compensation cost related to RSUs | $ 8,800 | $ 7,200 | |||||
Restricted Stock Units (RSUs) | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based awards vesting period (in years) | 1 year | ||||||
Restricted Stock Units (RSUs) | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based awards vesting period (in years) | 5 years | ||||||
RSUs Subject to Service Conditions | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted stock units outstanding (in shares) | 1,000,000 | ||||||
RSUs Subject to Service and Performance Conditions | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted stock units outstanding (in shares) | 100,000 | ||||||
2012 Stock Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized to be reserved for issuance (in shares) | 5,500,000 | ||||||
2012 Stock Incentive Plan | Stock Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized to be reserved for issuance (in shares) | 3,850,000 | ||||||
Expiration period (not more than) | 10 years | 10 years | |||||
Award requisite service period | 3 years | ||||||
2012 Stock Incentive Plan | Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized to be reserved for issuance (in shares) | 1,650,000 | ||||||
2014 Omnibus Incentive Plan | Common Class A | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized to be reserved for issuance (in shares) | 6,000,000 | 4,000,000 | |||||
Additional shares authorized (in shares) | 2,000,000 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Shares | |||
Options beginning balance (in shares) | 1,928,000 | 2,882,000 | 3,311,000 |
Options granted (in shares) | 0 | 163,000 | 383,000 |
Options exercised (in shares) | (435,000) | (1,117,000) | (803,000) |
Options forfeited (in shares) | 0 | 0 | 0 |
Options expired (in shares) | 0 | 0 | (9,000) |
Options ending balance (in shares) | 1,493,000 | 1,928,000 | 2,882,000 |
Weighted Average Grant Date Fair Value per Share | |||
Options beginning balance (in dollars per share) | $ 4.84 | $ 4.24 | $ 3.95 |
Options granted (in dollars per share) | 0 | 8.85 | 6.32 |
Options exercised (in dollars per share) | 4.21 | 3.88 | 4.06 |
Options forfeited (in dollars per share) | 0 | 0 | 0 |
Options expired (in dollars per share) | 0 | 0 | 4.05 |
Options ending balance (in dollars per share) | 5.02 | 4.84 | 4.24 |
Weighted Average Exercise Price | |||
Options beginning balance (in dollars per share) | 13.04 | 11.42 | 10.41 |
Options granted (in dollars per share) | 0 | 22.19 | 18.08 |
Options exercised (in dollars per share) | 11.17 | 10.19 | 10.43 |
Options forfeited (in dollars per share) | 0 | 0 | 0 |
Options expired (in dollars per share) | 0 | 0 | 10.51 |
Options beginning balance (in dollars per share) | $ 13.59 | $ 13.04 | $ 11.42 |
Share-Based Compensation - St_2
Share-Based Compensation - Stock Option Valuation Assumptions (Details) - Stock Options | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life (in years) | 6 years | 6 years |
Risk free interest rate (percent) | 2.57% | |
Risk free interest rate, minimum (percent) | 2.66% | |
Risk free interest rate, maximum (percent) | 2.89% | |
Dividend yield (percent) | 0.00% | |
Expected stock price volatility (percent) | 36.80% | |
Expected stock price volatility, minimum (percent) | 30.10% | |
Expected stock price volatility, maximum (percent) | 30.60% |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Shares | |||
Non-vested restricted stock units, beginning balance (in shares) | 1,202 | 1,753 | 2,065 |
Restricted stock units granted (in shares) | 646 | 470 | 701 |
Restricted stock units vested (in shares) | (664) | (970) | (913) |
Restricted stock units forfeited (in shares) | (122) | (51) | (100) |
Non-vested restricted stock units, ending balance (in shares) | 1,062 | 1,202 | 1,753 |
Weighted Average Grant Date Fair Value per Share | |||
Non-vested restricted stock units, beginning balance (in dollars per share) | $ 18.67 | $ 12.06 | $ 8.15 |
Restricted stock units granted (in dollars per share) | 22.67 | 24.42 | 17.22 |
Restricted stock units vested (in dollars per share) | 17.68 | 9.71 | 7.42 |
Restricted stock units forfeited (in dollars per share) | 19.55 | 15.06 | 9.89 |
Non-vested restricted stock units, ending balance (in dollars per share) | $ 21.61 | $ 18.67 | $ 12.06 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||||||||
Current | $ 34 | $ (386) | $ 1,677 | ||||||||
Deferred | 46,506 | 45,082 | 26,357 | ||||||||
Total income tax expense | $ 13,348 | $ 11,178 | $ 8,129 | $ 13,885 | $ 12,594 | $ 14,169 | $ 11,858 | $ 6,075 | $ 46,540 | $ 44,696 | $ 28,034 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||||||||||
Income tax expense (benefit) | $ 13,348 | $ 11,178 | $ 8,129 | $ 13,885 | $ 12,594 | $ 14,169 | $ 11,858 | $ 6,075 | $ 46,540 | $ 44,696 | $ 28,034 | ||
Income Tax Contingency [Line Items] | |||||||||||||
Income tax expense | 13,348 | $ 11,178 | $ 8,129 | $ 13,885 | 12,594 | $ 14,169 | $ 11,858 | $ 6,075 | 46,540 | 44,696 | 28,034 | ||
Purchases of T&L Bonds | 38,800 | 7,600 | |||||||||||
Tax and loss bonds | 46,400 | 7,600 | 46,400 | 7,600 | |||||||||
Stockholders' Equity Attributable to Parent | (1,369,591) | (930,420) | (1,369,591) | (930,420) | (701,500) | $ (509,077) | |||||||
Stranded tax in AOCI related to available-for-sale fixed income holdings | $ 4,200 | ||||||||||||
Loss carry forwards subject to expiration | 7,300 | 7,300 | |||||||||||
Valuation allowance | 7,610 | 7,857 | 7,610 | 7,857 | |||||||||
Unrecognized tax benefits reserve | 0 | 0 | 0 | 0 | |||||||||
Retained Earnings (Accumulated Deficit) | |||||||||||||
Income Tax Contingency [Line Items] | |||||||||||||
Stockholders' Equity Attributable to Parent | (377,011) | $ (205,445) | (377,011) | (205,445) | $ (33,488) | 74,157 | |||||||
Cumulative effect of change in accounting principle | Retained Earnings (Accumulated Deficit) | |||||||||||||
Income Tax Contingency [Line Items] | |||||||||||||
Stockholders' Equity Attributable to Parent | $ 300 | $ 282 | |||||||||||
Annual Limitation Through Year Two | |||||||||||||
Income Tax Contingency [Line Items] | |||||||||||||
Loss carry forwards subject to expiration | 800 | 800 | |||||||||||
Annual Limitations After Year Two | |||||||||||||
Income Tax Contingency [Line Items] | |||||||||||||
Loss carry forwards subject to expiration | 300 | 300 | |||||||||||
Domestic Tax Authority | IRS | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Income tax expense (benefit) | 0 | 0 | |||||||||||
Income Tax Contingency [Line Items] | |||||||||||||
Income tax expense | 0 | $ 0 | |||||||||||
Operating loss carryforwards | 2,100 | 2,100 | |||||||||||
State and Local Jurisdiction | |||||||||||||
Income Tax Contingency [Line Items] | |||||||||||||
Operating loss carryforwards | $ 111,600 | $ 111,600 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory income tax rate | 21.00% | 21.00% | 21.00% |
State provision | 0.50% | 0.50% | 0.70% |
Share-based and other compensation | 0.10% | (1.70%) | (1.40%) |
Warrant gain/loss | (0.30%) | 0.90% | 0.20% |
Other | 0.00% | (0.10%) | 0.10% |
Effective income tax rate | 21.30% | 20.60% | 20.60% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Asset and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax asset | ||
Net operating loss carry forwards | $ 7,938 | $ 9,244 |
Share-based compensation | 5,067 | 5,959 |
Unearned premium reserve | 4,844 | 5,213 |
Accrued expenses | 3,198 | 4,539 |
Other | 1,592 | 1,972 |
Total gross deferred tax asset | 22,639 | 26,927 |
Less: valuation allowance | (7,610) | (7,857) |
Total deferred tax asset | 15,029 | 19,070 |
Deferred tax liability | ||
Contingency reserve | (91,429) | (47,730) |
Deferred acquisition costs | (13,381) | (12,902) |
Unrealized gain on investments | (15,432) | (7,634) |
Capitalized software | (5,569) | (5,107) |
Other | (1,804) | (2,057) |
Net deferred income tax (liability) | (127,615) | (75,430) |
Net deferred income tax (liability) | $ 112,586 | $ 56,360 |
Software and Equipment - Net Ba
Software and Equipment - Net Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | $ 72,203 | $ 58,956 |
Accumulated amortization and depreciation | (42,538) | (32,860) |
Software and equipment, net | 29,665 | 26,096 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 59,678 | 46,522 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 9,123 | 8,992 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | $ 3,402 | $ 3,442 |
Software and Equipment - Narrat
Software and Equipment - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |||
Capitalized costs related to software, equipment, and leaseholds | $ 14.5 | $ 10.6 | $ 9.8 |
Depreciation and amortization | $ 9.9 | $ 9.3 | $ 7.8 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill | $ 3,244 | $ 3,244 | |
Total intangible assets and goodwill | 3,634 | 3,634 | |
Impairment loss related to intangible assets or goodwill | 0 | 0 | $ 0 |
State licenses | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets | 260 | 260 | |
GSE applications | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets | $ 130 | $ 130 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)lease_agreement | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Lessee, Lease, Description [Line Items] | |||
Approved insurers, required assets (equal or greater than) | $ 400,000 | ||
Approved insurers, risked-based required assets, primary insurance floor | 5.60% | ||
Number of operating leases related to corporate headquarters and data center facility | lease_agreement | 2 | ||
Right-of-use lease assets | $ 4,600 | $ 6,400 | |
Operating lease liabilities | $ 5,254 | $ 7,400 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssets | us-gaap:OtherAssets | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilities | us-gaap:OtherLiabilities | |
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 | $ 2,500 | 2,500 | $ 2,300 |
Operating lease expense | $ 2,300 | $ 2,200 | $ 2,100 |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease terms | 3 years | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease terms | 5 years | ||
Corporate Headquarters | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease option to renew, term | 5 years |
Commitments and Contingencies_2
Commitments and Contingencies - Right-of-Use Asset and Lease Liability Assumptions (Details) | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted-average remaining lease term (in years) | 2 years 2 months 12 days |
Weighted-average discount rate | 6.21% |
Commitments and Contingencies_3
Commitments and Contingencies - Future Payment Due Under Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
2021 | $ 2,609 | |
2022 | 2,574 | |
2023 | 462 | |
Total undiscounted lease payments | 5,645 | |
Less effects of discounting | (391) | |
Present value of lease payments | $ 5,254 | $ 7,400 |
Common Stock - Narrative (Detai
Common Stock - Narrative (Details) - USD ($) $ in Millions | Jun. 08, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | |||
Common stock, outstanding (in shares) | 85,163,039 | 68,358,074 | |
Overallotment Option | Common Stock - Class A | |||
Class of Stock [Line Items] | |||
Overallotment option included in sale of stock (percent) | 15.00% | ||
Public Stock Offering | Common Stock - Class A | |||
Class of Stock [Line Items] | |||
Shares issued from sale of stock (in shares) | 13,800,000 | ||
Proceeds from sale of stock | $ 219.7 | ||
Public Stock Offering and Over Allotment Option | Common Stock - Class A | |||
Class of Stock [Line Items] | |||
Shares issued from sale of stock (in shares) | 15,900,000 |
Regulatory Information - Schedu
Regulatory Information - Schedule of Combined Statutory Net Loss, Statutory Surplus, Contingency Reserve and RTC Ratios (Details) - NMIC and Re One Combined $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Statutory Accounting Practices [Line Items] | |||
Statutory net (loss) gain | $ (20,136) | $ 15,233 | $ (19,784) |
Statutory surplus | 894,331 | 449,602 | 430,785 |
Contingency reserve | 768,324 | 531,825 | 332,702 |
Statutory surplus and contingency reserve | $ 1,662,655 | $ 981,427 | $ 763,487 |
Risk-to-capital | 11.7 | 15.8 | 13.1 |
Regulatory Information - Narrat
Regulatory Information - Narrative (Details) | 12 Months Ended | ||||||
Dec. 31, 2020USD ($)state | Oct. 30, 2020USD ($) | Jun. 19, 2020USD ($) | Mar. 20, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Statutory Accounting Practices [Line Items] | |||||||
Maximum permitted RTC ratio | 25 | ||||||
Number of states which require minimum amount of statutory capital relative to risk in force | state | 16 | ||||||
Mortgage insurance, percentage of indebtedness on single loan | 25.00% | ||||||
Shareholders' equity | $ 1,369,591,000 | $ 930,420,000 | $ 701,500,000 | $ 509,077,000 | |||
Dividends, restriction with regards to capital surplus (in percent) | 10.00% | ||||||
Dividends, restriction with regards to capital surplus | $ (1,600,000) | ||||||
Revolving credit facility | 2020 Revolving credit facility | |||||||
Statutory Accounting Practices [Line Items] | |||||||
Credit facility borrowing capacity | 110,000,000 | $ 110,000,000 | $ 100,000,000 | ||||
Senior debt | |||||||
Statutory Accounting Practices [Line Items] | |||||||
Debt instrument face amount | 400,000,000 | $ 400,000,000 | |||||
NMIC | |||||||
Statutory Accounting Practices [Line Items] | |||||||
Mortgage insurance risk in force | $ 19,400,000,000 | $ 15,400,000,000 | |||||
Risk-to-capital | 12 | 16.3 | |||||
NMIC and Re One Combined | |||||||
Statutory Accounting Practices [Line Items] | |||||||
Risk-to-capital | 11.7 | 15.8 | 13.1 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net premiums earned | $ 100,709 | $ 98,802 | $ 98,944 | $ 98,717 | $ 95,517 | $ 92,381 | $ 83,249 | $ 73,868 | $ 397,172 | $ 345,015 | $ 251,197 |
Net investment income | 8,386 | 8,337 | 7,070 | 8,104 | 7,962 | 7,882 | 7,629 | 7,383 | 31,897 | 30,856 | 23,538 |
Net realized investment (losses) gains | 295 | (4) | 711 | (72) | 264 | 81 | (113) | (187) | 930 | 45 | 57 |
Other revenues | 513 | 648 | 1,223 | 900 | 1,154 | 1,244 | 415 | 42 | 3,284 | 2,855 | 233 |
Insurance claims and claim expenses | 3,549 | 15,667 | 34,334 | 5,697 | 4,269 | 2,572 | 2,923 | 2,743 | 59,247 | 12,507 | 5,452 |
Underwriting and operating expenses | 34,994 | 33,969 | 30,370 | 32,277 | 31,296 | 32,335 | 32,190 | 30,800 | 131,610 | 126,621 | 116,966 |
Service expenses | 459 | 557 | 1,090 | 734 | 937 | 909 | 353 | 49 | 2,840 | 2,248 | 270 |
Interest expense | 7,906 | 7,796 | 5,941 | 2,744 | 2,974 | 2,979 | 3,071 | 3,061 | 24,387 | 12,085 | 14,979 |
(Gain) loss from change in fair value of warrant liability | 1,379 | 437 | 1,236 | (5,959) | 2,632 | (1,139) | 1,685 | 5,479 | (2,907) | 8,657 | 1,397 |
Income before income taxes | 61,616 | 49,357 | 34,977 | 72,156 | 62,789 | 63,932 | 50,958 | 38,974 | 218,106 | 216,653 | 135,961 |
Income tax expense | 13,348 | 11,178 | 8,129 | 13,885 | 12,594 | 14,169 | 11,858 | 6,075 | 46,540 | 44,696 | 28,034 |
Net income | $ 48,268 | $ 38,179 | $ 26,848 | $ 58,271 | $ 50,195 | $ 49,763 | $ 39,100 | $ 32,899 | $ 171,566 | $ 171,957 | $ 107,927 |
Income per share | |||||||||||
Basic earnings per share (in dollars per share) | $ 0.57 | $ 0.45 | $ 0.36 | $ 0.85 | $ 0.74 | $ 0.73 | $ 0.58 | $ 0.49 | $ 2.20 | $ 2.54 | $ 1.66 |
Diluted earnings per share (in dollars per share) | $ 0.56 | $ 0.45 | $ 0.36 | $ 0.74 | $ 0.71 | $ 0.69 | $ 0.56 | $ 0.48 | $ 2.13 | $ 2.47 | $ 1.60 |
Basic weighted average shares outstanding (in shares) | 84,956 | 84,805 | 73,617 | 68,563 | 68,140 | 67,849 | 67,590 | 66,692 | 78,023 | 67,573 | 65,019 |
Diluted weighted average shares outstanding (in shares) | 86,250 | 85,599 | 74,174 | 70,401 | 70,276 | 70,137 | 69,590 | 68,996 | 79,263 | 69,721 | 67,652 |
Subsequent Event (Details)
Subsequent Event (Details) - 2021 QSR Transaction - Subsequent Event - Third-Party Reinsurers | Jan. 01, 2021 |
Subsequent Event [Line Items] | |
Premiums of premiums earned under QSR Transaction | 22.50% |
Ceding commissions under QSR Transaction | 20.00% |
Threshold for loss ratio on loans to qualify for profit commission | 57.50% |
SCHEDULE I - SUMMARY OF INVES_2
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) $ in Thousands | Dec. 31, 2020USD ($) |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Amortized Cost | $ 1,730,835 |
Fair Value | 1,804,286 |
Amount Reflected on Balance Sheet | 1,804,286 |
U.S. Treasury securities and obligations of U.S. government agencies | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Amortized Cost | 29,412 |
Fair Value | 31,598 |
Amount Reflected on Balance Sheet | 31,598 |
Municipal debt securities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Amortized Cost | 407,323 |
Fair Value | 421,348 |
Amount Reflected on Balance Sheet | 421,348 |
Corporate debt securities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Amortized Cost | 1,165,260 |
Fair Value | 1,219,791 |
Amount Reflected on Balance Sheet | 1,219,791 |
Asset-backed securities | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Amortized Cost | 128,471 |
Fair Value | 131,180 |
Amount Reflected on Balance Sheet | 131,180 |
Total bonds | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Amortized Cost | 1,730,466 |
Fair Value | 1,803,917 |
Amount Reflected on Balance Sheet | 1,803,917 |
Short-term investments | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | |
Amortized Cost | 369 |
Fair Value | 369 |
Amount Reflected on Balance Sheet | $ 369 |
SCHEDULE II - FINANCIAL INFOR_2
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Balance Sheets - Parent Company Only (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Apr. 30, 2012 | |
Assets | ||||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,730,835 and $1,113,779 as of December 31, 2020 and December 31, 2019, respectively) | $ 1,804,286 | $ 1,140,940 | ||||
Cash and cash equivalents | 126,937 | 41,089 | $ 25,294 | $ 19,196 | ||
Accrued investment income | 9,862 | 6,831 | ||||
Prepaid expenses | 3,292 | 3,512 | ||||
Software and equipment, net | 29,665 | 26,096 | ||||
Other assets | 53,188 | 16,232 | ||||
Total assets | 2,166,666 | 1,364,818 | ||||
Liabilities | ||||||
Debt | 393,301 | 145,764 | ||||
Accounts payable and accrued expenses | 61,716 | 39,904 | ||||
Warrant liability, at fair value | 4,409 | 7,641 | $ 5,100 | |||
Deferred tax liability, net | 112,586 | 56,360 | ||||
Other liabilities | 7,026 | [1] | 10,025 | |||
Total liabilities | 797,075 | 434,398 | ||||
Shareholders' equity | ||||||
Common stock - class A shares, $0.01 par value; 85,163,039 and 68,358,074 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively (250,000,000 shares authorized) | 852 | 684 | ||||
Additional paid-in capital | 937,872 | 707,003 | ||||
Accumulated other comprehensive income, net of tax | 53,856 | 17,288 | ||||
Retained earnings | 377,011 | 205,445 | ||||
Total shareholders' equity | 1,369,591 | 930,420 | 701,500 | 509,077 | ||
Total liabilities and shareholders' equity | 2,166,666 | 1,364,818 | ||||
Parent | ||||||
Assets | ||||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,730,835 and $1,113,779 as of December 31, 2020 and December 31, 2019, respectively) | 52,867 | 41,220 | ||||
Cash and cash equivalents | 19,146 | 13,431 | $ 12,345 | $ 528 | ||
Investment in subsidiaries, at equity in net assets | 1,724,360 | 1,025,286 | ||||
Accrued investment income | 263 | 219 | ||||
Prepaid expenses | 2,912 | 3,332 | ||||
Due from affiliates, net | 76,892 | 62,241 | ||||
Software and equipment, net | 29,665 | 26,096 | ||||
Other assets | 5,676 | 7,188 | ||||
Total assets | 1,911,781 | 1,179,013 | ||||
Liabilities | ||||||
Debt | 393,301 | 145,764 | ||||
Accounts payable and accrued expenses | 30,802 | 24,871 | ||||
Warrant liability, at fair value | 4,409 | 7,641 | ||||
Deferred tax liability, net | 108,424 | 62,921 | ||||
Other liabilities | 5,254 | 7,396 | ||||
Total liabilities | 542,190 | 248,593 | ||||
Shareholders' equity | ||||||
Common stock - class A shares, $0.01 par value; 85,163,039 and 68,358,074 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively (250,000,000 shares authorized) | 852 | 684 | ||||
Additional paid-in capital | 937,872 | 707,003 | ||||
Accumulated other comprehensive income, net of tax | 53,856 | 17,288 | ||||
Retained earnings | 377,011 | 205,445 | ||||
Total shareholders' equity | 1,369,591 | 930,420 | ||||
Total liabilities and shareholders' equity | $ 1,911,781 | $ 1,179,013 | ||||
[1] | Reinsurance recoverable has been reclassified from "Other assets" in the prior period. |
SCHEDULE II - FINANCIAL INFOR_3
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Balance Sheets Additional Information - Parent Company Only (Details) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 85,163,039 | 68,358,074 |
Common stock, outstanding (in shares) | 85,163,039 | 68,358,074 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
Parent | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 85,163,039 | 68,358,074 |
Common stock, outstanding (in shares) | 85,163,039 | 68,358,074 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
SCHEDULE II - FINANCIAL INFOR_4
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Statement of Operations - Parent Company Only (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | |||||||||||
Net investment income | $ 8,386 | $ 8,337 | $ 7,070 | $ 8,104 | $ 7,962 | $ 7,882 | $ 7,629 | $ 7,383 | $ 31,897 | $ 30,856 | $ 23,538 |
Net realized investment gains | 295 | (4) | 711 | (72) | 264 | 81 | (113) | (187) | 930 | 45 | 57 |
Total revenues | 433,283 | 378,771 | 275,025 | ||||||||
Expenses | |||||||||||
Interest expense | 7,906 | 7,796 | 5,941 | 2,744 | 2,974 | 2,979 | 3,071 | 3,061 | 24,387 | 12,085 | 14,979 |
(Gain) loss from change in fair value of warrant liability | 1,379 | 437 | 1,236 | (5,959) | 2,632 | (1,139) | 1,685 | 5,479 | (2,907) | 8,657 | 1,397 |
Total expenses | 215,177 | 162,118 | 139,064 | ||||||||
Income before income taxes | 61,616 | 49,357 | 34,977 | 72,156 | 62,789 | 63,932 | 50,958 | 38,974 | 218,106 | 216,653 | 135,961 |
Income tax expense | 13,348 | 11,178 | 8,129 | 13,885 | 12,594 | 14,169 | 11,858 | 6,075 | 46,540 | 44,696 | 28,034 |
Net income | $ 48,268 | $ 38,179 | $ 26,848 | $ 58,271 | $ 50,195 | $ 49,763 | $ 39,100 | $ 32,899 | 171,566 | 171,957 | 107,927 |
Other comprehensive (loss) income, net of tax: | |||||||||||
Unrealized gains (losses) in accumulated other comprehensive loss, net of tax expense (benefit) of $25, $82, and ($34) for each of the years in the three-year period ended December 31, 2020, respectively | 35,829 | 32,155 | (12,357) | ||||||||
Reclassification adjustment for (gains) losses included in net loss, net of tax expense (benefit) of $5, $0 and ($1) for each of the years in the three-year period ended December 31, 2020, respectively | 739 | (35) | 102 | ||||||||
Other comprehensive income (loss), net of tax | 36,568 | 32,120 | (12,255) | ||||||||
Comprehensive income | 208,134 | 204,077 | 95,672 | ||||||||
Parent | |||||||||||
Revenues | |||||||||||
Net investment income | 398 | 1,124 | 1,145 | ||||||||
Net realized investment gains | 23 | 1 | 5 | ||||||||
Total revenues | 421 | 1,125 | 1,150 | ||||||||
Expenses | |||||||||||
Other operating expenses | 9,262 | 11,714 | 21,095 | ||||||||
Interest expense | 0 | 0 | 2,227 | ||||||||
(Gain) loss from change in fair value of warrant liability | 8,657 | 1,397 | |||||||||
Total expenses | 6,355 | 20,371 | 24,719 | ||||||||
Equity in net income of subsidiaries | 217,134 | 226,480 | 134,127 | ||||||||
Income before income taxes | 211,200 | 207,234 | 110,558 | ||||||||
Income tax expense | 39,634 | 35,277 | 2,631 | ||||||||
Net income | 171,566 | 171,957 | 107,927 | ||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Unrealized gains (losses) in accumulated other comprehensive loss, net of tax expense (benefit) of $25, $82, and ($34) for each of the years in the three-year period ended December 31, 2020, respectively | 94 | 308 | (128) | ||||||||
Reclassification adjustment for (gains) losses included in net loss, net of tax expense (benefit) of $5, $0 and ($1) for each of the years in the three-year period ended December 31, 2020, respectively | (18) | 0 | 2 | ||||||||
Equity in other comprehensive income (loss) of subsidiaries | 36,492 | 31,812 | (12,129) | ||||||||
Other comprehensive income (loss), net of tax | 36,568 | 32,120 | (12,255) | ||||||||
Comprehensive income | $ 208,134 | $ 204,077 | $ 95,672 |
SCHEDULE II - FINANCIAL INFOR_5
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Statement of Operations Additional Information - Parent Company Only (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Condensed Income Statements, Captions [Line Items] | |||
Change in unrealized investment gains (losses), tax amount | $ 9,525 | $ 8,548 | $ (3,285) |
Reclassification adjustment from AOCI for sale of securities, tax | (196) | 9 | (27) |
Parent | |||
Condensed Income Statements, Captions [Line Items] | |||
Change in unrealized investment gains (losses), tax amount | 82 | 82 | (34) |
Reclassification adjustment from AOCI for sale of securities, tax | $ 0 | $ 0 | $ (1) |
SCHEDULE II - FINANCIAL INFOR_6
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Statements of Cash Flows - Parent Company Only (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | |||||||||||||
Net income | $ 48,268 | $ 38,179 | $ 26,848 | $ 58,271 | $ 50,195 | $ 49,763 | $ 39,100 | $ 32,899 | $ 171,566 | $ 171,957 | $ 107,927 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
(Gain) loss from change in fair value of warrant liability | (2,907) | 8,657 | 1,397 | ||||||||||
Net realized investment gains | (930) | (45) | (57) | ||||||||||
Depreciation and amortization | 9,930 | 9,299 | 7,811 | ||||||||||
Amortization of debt discount and debt issuance costs | 4,036 | 1,011 | 3,390 | ||||||||||
Deferred income taxes | 46,506 | 45,082 | 25,927 | ||||||||||
Share-based compensation expense | 11,115 | 13,031 | 12,557 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Accrued investment income | (3,031) | (1,137) | (1,482) | ||||||||||
Prepaid expenses | 220 | (472) | (1,090) | ||||||||||
Other assets | (38,804) | (8,831) | 1,304 | ||||||||||
Accounts payable and accrued expenses | 18,072 | 3,888 | 6,064 | ||||||||||
Net cash provided by operating activities | 252,598 | 208,150 | 145,861 | ||||||||||
Cash flows from investing activities | |||||||||||||
Purchase of short-term investments | (42,241) | (230,362) | (257,916) | ||||||||||
Purchase of fixed-maturity investments, available-for-sale | (1,065,916) | (290,533) | (356,337) | ||||||||||
Proceeds from maturity of short-term investments | 86,045 | 244,921 | 221,685 | ||||||||||
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 404,717 | 91,575 | 179,978 | ||||||||||
Software and equipment | (12,159) | (9,956) | (8,060) | ||||||||||
Net cash (used in) investing activities | (629,554) | (194,355) | (220,650) | ||||||||||
Cash flows from financing activities | |||||||||||||
Proceeds from issuance of common stock related to public offering, net of issuance costs | 219,687 | 0 | 79,165 | ||||||||||
Proceeds from issuance of common stock related to employee equity plans | 8,871 | 21,748 | 12,857 | ||||||||||
Proceeds from issuance of common stock related to warrant exercises | 0 | 0 | 321 | ||||||||||
Taxes paid related to net share settlement of equity awards | (8,961) | (18,248) | (9,722) | ||||||||||
Proceeds from senior secured notes | 400,000 | 0 | 149,250 | ||||||||||
Repayments of term loan | (147,750) | (1,500) | (147,375) | ||||||||||
Payments of debt issuance costs | (9,043) | 0 | (3,609) | ||||||||||
Net cash provided by financing activities | 462,804 | 2,000 | 80,887 | ||||||||||
Net increase in cash, cash equivalents and restricted cash | 85,848 | 15,795 | 6,098 | ||||||||||
Cash, cash equivalents and restricted cash, beginning of period | 41,089 | 25,294 | 41,089 | 25,294 | 19,196 | ||||||||
Cash, cash equivalents and restricted cash, end of period | 126,937 | 41,089 | 126,937 | 41,089 | 25,294 | ||||||||
Stockholders' Equity Attributable to Parent | (1,369,591) | (930,420) | (1,369,591) | (930,420) | (701,500) | $ (509,077) | |||||||
Retained Earnings (Accumulated Deficit) | |||||||||||||
Cash flows from operating activities | |||||||||||||
Net income | 171,566 | 171,957 | 107,927 | ||||||||||
Cash flows from financing activities | |||||||||||||
Stockholders' Equity Attributable to Parent | (377,011) | (205,445) | (377,011) | (205,445) | (33,488) | 74,157 | |||||||
Cumulative effect of change in accounting principle | Retained Earnings (Accumulated Deficit) | |||||||||||||
Cash flows from financing activities | |||||||||||||
Stockholders' Equity Attributable to Parent | $ 300 | $ 282 | |||||||||||
Parent | |||||||||||||
Cash flows from operating activities | |||||||||||||
Net income | 171,566 | 171,957 | 107,927 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
(Gain) loss from change in fair value of warrant liability | (2,907) | 8,657 | 1,397 | ||||||||||
Net realized investment gains | (23) | (1) | (5) | ||||||||||
Depreciation and amortization | 807 | 286 | 274 | ||||||||||
Amortization of debt discount and debt issuance costs | 4,036 | 1,011 | 3,390 | ||||||||||
Deferred income taxes | 45,483 | 44,030 | 25,163 | ||||||||||
Share-based compensation expense | 11,115 | 13,031 | 12,557 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Equity in net income of subsidiaries | (217,134) | (226,480) | (133,837) | ||||||||||
Accrued investment income | (44) | (3) | (14) | ||||||||||
Receivable from affiliates | (14,651) | (20,902) | (18,932) | ||||||||||
Prepaid expenses | 420 | (409) | (1,010) | ||||||||||
Other assets | (336) | 165 | 1,258 | ||||||||||
Accounts payable and accrued expenses | 4,592 | (1,640) | 5,393 | ||||||||||
Net cash provided by operating activities | 2,924 | (10,298) | 3,561 | ||||||||||
Cash flows from investing activities | |||||||||||||
Capitalization of subsidiaries | (445,448) | (800) | (70,500) | ||||||||||
Purchase of short-term investments | (19,897) | (104,192) | (134,376) | ||||||||||
Purchase of fixed-maturity investments, available-for-sale | (53,504) | (2,186) | (12,906) | ||||||||||
Proceeds from maturity of short-term investments | 41,228 | 111,539 | 122,612 | ||||||||||
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale | 20,241 | 5,877 | 22,954 | ||||||||||
Software and equipment | (2,633) | (854) | (415) | ||||||||||
Net cash (used in) investing activities | (460,013) | 9,384 | (72,631) | ||||||||||
Cash flows from financing activities | |||||||||||||
Proceeds from issuance of common stock related to public offering, net of issuance costs | 219,687 | 0 | 79,165 | ||||||||||
Proceeds from issuance of common stock related to employee equity plans | 8,871 | 21,748 | 12,857 | ||||||||||
Proceeds from issuance of common stock related to warrant exercises | 0 | 0 | 321 | ||||||||||
Taxes paid related to net share settlement of equity awards | (8,961) | (18,248) | (9,722) | ||||||||||
Proceeds from senior secured notes | 400,000 | 0 | 149,250 | ||||||||||
Repayments of term loan | (147,750) | (1,500) | (147,375) | ||||||||||
Payments of debt issuance costs | (9,043) | 0 | (3,609) | ||||||||||
Net cash provided by financing activities | 462,804 | 2,000 | 80,887 | ||||||||||
Net increase in cash, cash equivalents and restricted cash | 5,715 | 1,086 | 11,817 | ||||||||||
Cash, cash equivalents and restricted cash, beginning of period | $ 13,431 | $ 12,345 | 13,431 | 12,345 | 528 | ||||||||
Cash, cash equivalents and restricted cash, end of period | 19,146 | 13,431 | 19,146 | 13,431 | $ 12,345 | ||||||||
Stockholders' Equity Attributable to Parent | $ (1,369,591) | $ (930,420) | $ (1,369,591) | $ (930,420) |
SCHEDULE II - FINANCIAL INFOR_7
SCHEDULE II - FINANCIAL INFORMATION OF REGISTRANT- PARENT COMPANY ONLY - Supplemental Notes - Parent Company Only (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Condensed Financial Statements, Captions [Line Items] | |||
Dividends, restriction with regards to capital surplus | (10.00%) | ||
Dividends, restriction with regards to capital surplus | $ 1.6 | ||
Subsidiaries | |||
Condensed Financial Statements, Captions [Line Items] | |||
Restricted net assets less aggregate dividend capacity | $ 1,000 | ||
Operating underwriting and operating expenses | $ 152.9 | $ 117.1 | $ 111.6 |
SCHEDULE IV - FINANCIAL INFOR_2
SCHEDULE IV - FINANCIAL INFORMATION OF REGISTRANT REINSURANCE (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||||||||||
Gross Amount | $ 472,998 | $ 398,303 | $ 292,064 | ||||||||
Ceded to Other Companies | 75,826 | 53,288 | 40,867 | ||||||||
Net premiums earned | $ 100,709 | $ 98,802 | $ 98,944 | $ 98,717 | $ 95,517 | $ 92,381 | $ 83,249 | $ 73,868 | 397,172 | 345,015 | 251,197 |
Parent | |||||||||||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||||||||||
Gross Amount | 472,998 | 398,303 | 292,064 | ||||||||
Ceded to Other Companies | 75,826 | 53,288 | 40,867 | ||||||||
Assumed from Other Companies | 0 | 0 | 0 | ||||||||
Net premiums earned | $ 397,172 | $ 345,015 | $ 251,197 | ||||||||
Percentage of Amount Assumed to Net | 0.00% | 0.00% | 0.00% |