Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 28, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MGIC INVESTMENT CORP | |
Entity Central Index Key | 876,437 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 370,556,561 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Securities, available-for-sale, at fair value: | ||
Fixed income (amortized cost, 2017 - $4,655,457; 2016 - $4,717,211) | $ 4,642,119 | $ 4,685,222 |
Equity securities | 7,162 | 7,128 |
Total investment portfolio | 4,649,281 | 4,692,350 |
Cash and cash equivalents | 427,074 | 155,410 |
Accrued investment income | 43,786 | 44,073 |
Reinsurance recoverable on loss reserves | 46,658 | 50,493 |
Reinsurance recoverable on paid losses | 5,129 | 4,964 |
Premiums receivable | 51,907 | 52,392 |
Home office and equipment, net | 38,314 | 36,088 |
Deferred insurance policy acquisition costs | 18,236 | 17,759 |
Deferred income taxes, net | 552,469 | 607,655 |
Other assets | 71,034 | 73,345 |
Total assets | 5,903,888 | 5,734,529 |
Liabilities: | ||
Loss reserves | 1,335,042 | 1,438,813 |
Unearned premiums | 337,322 | 329,737 |
Revolving credit facility | 150,000 | 0 |
Federal Home Loan Bank advance | 155,000 | 155,000 |
Senior notes | 417,695 | 417,406 |
Convertible senior notes | 349,848 | 349,461 |
Convertible junior subordinated debentures | 256,872 | 256,872 |
Other liabilities | 254,578 | 238,398 |
Total liabilities | 3,256,357 | 3,185,687 |
Contingencies | ||
Shareholders' equity: | ||
Common stock (one dollar par value, shares authorized 1,000,000; shares issued 2017 - 360,171; 2016 - 359,400; shares outstanding 2017 - 341,434; 2016 - 340,663) | 360,171 | 359,400 |
Paid-in capital | 1,778,305 | 1,782,337 |
Treasury stock at cost (shares 2017 and 2016 - 18,737) | (150,359) | (150,359) |
Accumulated other comprehensive loss, net of tax | (63,101) | (75,100) |
Retained earnings | 722,515 | 632,564 |
Total shareholders’ equity | 2,647,531 | 2,548,842 |
Total liabilities and shareholders’ equity | $ 5,903,888 | $ 5,734,529 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, amortized cost | $ 4,655,457 | $ 4,717,211 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 360,171,000 | 359,400,000 |
Common stock, shares outstanding (in shares) | 341,434,000 | 340,663,000 |
Treasury stock, shares at cost (in shares) | 18,737,000 | 18,737,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Premiums written: | ||
Direct | $ 265,823 | $ 265,291 |
Assumed | 1,288 | 208 |
Ceded | (30,409) | (34,218) |
Net premiums written | 236,702 | 231,281 |
Increase in unearned premiums, net | (7,599) | (9,940) |
Net premiums earned | 229,103 | 221,341 |
Investment income, net of expenses | 29,477 | 27,809 |
Net realized investment (losses) gains | (122) | 3,056 |
Other revenue | 2,422 | 6,373 |
Total revenues | 260,880 | 258,579 |
Losses and expenses: | ||
Losses incurred, net | 27,619 | 85,012 |
Amortization of deferred policy acquisition costs | 2,230 | 1,961 |
Other underwriting and operating expenses, net | 40,765 | 39,777 |
Interest expense | 16,309 | 14,701 |
Loss on debt extinguishment | 0 | 13,440 |
Total losses and expenses | 86,923 | 154,891 |
Income before tax | 173,957 | 103,688 |
Provision for income taxes | 84,159 | 34,497 |
Net income | $ 89,798 | $ 69,191 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.26 | $ 0.20 |
Diluted (in dollars per share) | $ 0.24 | $ 0.17 |
Weighted average common shares outstanding - basic (in shares) | 341,009 | 340,144 |
Weighted average common shares outstanding - diluted (in shares) | 402,175 | 431,365 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 89,798 | $ 69,191 |
Other comprehensive (loss) income, net of tax: | ||
Change in unrealized investment gains and losses | 12,121 | 50,827 |
Benefit plan adjustments | (153) | (308) |
Foreign currency translation adjustment | 31 | (975) |
Other comprehensive income, net of tax | 11,999 | 49,544 |
Comprehensive income | $ 101,797 | $ 118,735 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common stock | Paid-in capital | Treasury stock | Accumulated other comprehensive loss | Retained earnings |
Balance, beginning of period at Dec. 31, 2015 | $ 340,097 | $ 1,670,238 | $ (3,362) | $ (60,880) | $ 290,047 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net common stock issued under share-based compensation plans | 979 | (5,949) | ||||
Tax benefit from share-based compensation | 115 | |||||
Equity compensation | 3,129 | |||||
Reacquisition of convertible junior subordinated debentures-equity component | (6,337) | |||||
Other comprehensive income, net of tax | $ 49,544 | 49,544 | ||||
Net income | 69,191 | 69,191 | ||||
Balance, end of period at Mar. 31, 2016 | 2,346,812 | 341,076 | 1,661,196 | (3,362) | (11,336) | 359,238 |
Balance, beginning of period at Dec. 31, 2016 | 2,548,842 | 359,400 | 1,782,337 | (150,359) | (75,100) | 632,717 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net common stock issued under share-based compensation plans | 771 | (7,493) | ||||
Tax benefit from share-based compensation | 0 | |||||
Equity compensation | 3,461 | |||||
Reacquisition of convertible junior subordinated debentures-equity component | 0 | |||||
Other comprehensive income, net of tax | 11,999 | 11,999 | ||||
Net income | 89,798 | 89,798 | ||||
Balance, end of period at Mar. 31, 2017 | $ 2,647,531 | $ 360,171 | $ 1,778,305 | $ (150,359) | $ (63,101) | $ 722,515 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 89,798 | $ 69,191 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 17,079 | 14,109 |
Deferred tax expense | 48,932 | 33,270 |
Net realized investment losses (gains) | 122 | (3,056) |
Loss on debt extinguishment | 0 | 13,440 |
Change in certain assets and liabilities: | ||
Accrued investment income | 287 | 1,205 |
Prepaid insurance premium | 15 | 34 |
Reinsurance recoverable on loss reserves | 3,835 | 3,368 |
Reinsurance recoverable on paid losses | (165) | (536) |
Premium receivable | 485 | 1,284 |
Deferred insurance policy acquisition costs | (477) | (705) |
Profit commission receivable | (3,395) | 760 |
Loss reserves | (103,771) | (140,013) |
Unearned premiums | 7,585 | 9,906 |
Return premium accrual | (4,800) | (4,850) |
Income taxes payable - current | 34,654 | 289 |
Other, net | (12,715) | 5,840 |
Net cash provided by operating activities | 77,469 | 3,536 |
Purchases of investments: | ||
Fixed income | (187,077) | (288,273) |
Equity securities | (19) | (3,109) |
Proceeds from sales of fixed income | 33,980 | 315,927 |
Proceeds from maturity of fixed income | 199,234 | 139,863 |
Proceeds from sale of equity securities | 0 | 2,525 |
Net increase in payable for securities | 10,336 | 44,289 |
Additions to property and equipment | (4,014) | (1,916) |
Net cash provided by investing activities | 52,440 | 209,306 |
Cash flows from financing activities: | ||
Proceeds from revolving credit facility | 150,000 | 0 |
Proceeds from issuance of long-term debt | 0 | 155,000 |
Purchase of convertible senior notes | 0 | (134,105) |
Payment of original issue discount - convertible senior notes | 0 | (4,148) |
Purchase of convertible junior subordinated debentures | 0 | (100,860) |
Payment of original issue discount - convertible junior subordinated debentures | 0 | (41,540) |
Cash portion of loss on debt extinguishment | 0 | (13,440) |
Payment of debt issuance costs | (1,523) | 0 |
Payment of withholding taxes related to stock-based compensation net share settlement | (6,722) | (4,971) |
Net cash provided by (used in) financing activities | 141,755 | (144,064) |
Net increase in cash and cash equivalents | 271,664 | 68,778 |
Cash and cash equivalents at beginning of period | 155,410 | 181,120 |
Cash and cash equivalents at end of period | $ 427,074 | $ 249,898 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Basis of Presentation | Nature of Business and Basis of Presentation MGIC Investment Corporation is a holding company which, through Mortgage Guaranty Insurance Corporation (“MGIC”) is principally engaged in the mortgage insurance business. We provide mortgage insurance to lenders throughout the United States and to government sponsored entities (“GSEs”) to protect against loss from defaults on low down payment residential mortgage loans. The accompanying unaudited consolidated financial statements of MGIC Investment Corporation and its wholly-owned subsidiaries have been prepared in accordance with the instructions to Form 10-Q as prescribed by the Securities and Exchange Commission (“SEC”) for interim reporting and do not include all of the other information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2016 included in our Annual Report on Form 10-K. As used below, “we,” “our” and “us” refer to MGIC Investment Corporation’s consolidated operations or to MGIC Investment Corporation, as the context requires. In the opinion of management the accompanying financial statements include all adjustments, consisting primarily of normal recurring accruals, necessary to fairly state our consolidated financial position and consolidated results of operations for the periods indicated. The consolidated results of operations for the interim period may not be indicative of the results that may be expected for the year ending December 31, 2017 . Substantially all of our insurance written since 2008 has been for loans purchased by the GSEs. We operate under the Private Mortgage Insurer Eligibility Requirements ("PMIERs") of the GSEs that became effective December 31, 2015, and were most recently revised in December 2016. The financial requirements of the PMIERs require a mortgage insurer’s "Available Assets" (generally only the most liquid assets of an insurer) to equal or exceed its "Minimum Required Assets" (which are based on an insurer's book and are calculated from tables of factors with several risk dimensions and are subject to a floor amount). Based on our interpretation of the PMIERs, as of March 31, 2017 , MGIC’s Available Assets are in excess of its Minimum Required Assets; and MGIC is in compliance with the financial requirements of the PMIERs and eligible to insure loans purchased by the GSEs. Reclassifications Certain reclassifications to 2016 amounts have been made in the accompanying financial statements to conform to the 2017 presentation. Subsequent events We have considered subsequent events through the date of this filing. See Note 3 - “Debt” and Note 13 - “Shareholders’ Equity” for information regarding the conversion of our 2% Notes into shares of our common stock, and partial cash redemption, in April 2017. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Adopted Accounting Standards Improvements to Employee Share-Based Compensation Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance that simplifies several aspects of the accounting for employee share-based compensation including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. The updated guidance requires that, prospectively, all tax effects related to share-based compensation be made through the statement of operations at the time of settlement. In contrast, the previous guidance required excess tax benefits to be recognized in paid-in capital. The updated guidance also removes the requirement to delay recognition of a tax benefit until it reduces current taxes payable. This change is required to be applied on a modified retrospective basis, with a cumulative effect adjustment to opening retained earnings. Additionally, all tax related cash flows resulting from share-based compensation are to be reported as operating activities on the statement of cash flows, a change from the existing requirement to present tax benefits as an inflow from financing activities and an outflow from operating activities. Finally, for tax withholding purposes, entities will be allowed to withhold an amount of shares up to the employee’s maximum individual tax rate (as opposed to the minimum statutory tax rate) in the relevant jurisdiction without resulting in liability classification of the award. The change in tax withholding is to be applied on a modified retrospective approach. This updated guidance became effective January 1, 2017. We have adopted this guidance for the period ending March 31, 2017 and as a result of the adoption: • We recognized discrete tax benefits of $1.5 million in the provision for income taxes on our statement of operations for the three months ended March 31, 2017 related to excess tax benefits upon vesting of stock-based awards during the period. • We recognized a cumulative effect adjustment related to the recognition of a deferred tax asset related to suspended tax benefits from vesting transactions occurring in prior years and from the elimination of our forfeiture estimate on stock-based awards, which was previously applied only to awards with service conditions. • Prior to adoption, cash flows related to excess tax benefits from share-based compensation were included in financing activities. We have reclassified excess tax benefits related to share-based compensation for the three months ended March 31, 2016 to operating activities. • Prior to adoption, cash flows related to employee taxes paid for withheld shares were included in operating activities. We have reclassified employee taxes paid for withheld shares for the three months ended March 31, 2016 to financing activities. Prospective Accounting Standards Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued updated guidance to amend the amortization period for certain purchased callable debt securities held at a premium shortening the amortization period to the earliest call date. Under current GAAP, there is diversity in practice in the amortization period for premiums of callable debt securities and in how the potential for exercise of a call is factored into current impairment assessments. This updated guidance aligns with how callable debt securities, in the United States, are generally quoted, priced, and traded assuming a model that incorporates consideration of calls (also referred to as “yield-to-worst” pricing). The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. We are currently evaluating the impacts the adoption of this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated financial statements or disclosures. We currently account for premium amortization on our purchased callable debt securities on a yield-to-worst basis, which generally aligns with the earliest call date. Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued updated guidance that improves the reporting of net benefit cost in the financial statements. The updated guidance requires that an employer report the service cost component in the same financial statement caption as other compensation costs arising from services rendered by employees during the period. The other components of net benefit cost are required to be presented in the statement of operations separately from the service cost component and outside a subtotal of income from operations, if one is presented. Current guidance does not prescribe where the amount of net benefit cost should be presented in an employer’s statement of operations and does not require entities to disclose by line item the amount of net benefit cost that is included in the statement of operations. The updated guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. We are currently evaluating the impacts the adoption of this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated statement of operations or financial statement disclosures. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued updated guidance that requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial instruments. Entities will be required to utilize a current expected credit losses (“CECL”) methodology that incorporates their forecasts of future economic conditions into their loss estimate unless such forecast is not reasonable and supportable, in which case the entity will revert to historical loss experience. Any allowance for CECL reduces the amortized cost basis of the financial instrument to the amount an entity expects to collect. Credit losses relating to available-for-sale fixed maturity securities are to be recorded through an allowance for credit losses, rather than a write-down of the asset, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The updated guidance is not prescriptive about certain aspects of estimating expected credit losses, including the specific methodology to use, and therefore will require significant judgment in application. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted for annual and interim periods in fiscal years beginning after December 15, 2018. We are currently evaluating the impacts the adoption of this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated financial statements or disclosures. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued updated guidance to address the recognition, measurement, presentation, and disclosure of certain financial instruments. The updated guidance requires equity investments, except those accounted for under the equity method of accounting, that have a readily determinable fair value to be measured at fair value with changes in fair value recognized in net income. Equity investments that do not have readily determinable fair values may be remeasured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. A qualitative assessment for impairment is required for equity investments without readily determinable fair values. The updated guidance also eliminates the requirement to disclose the method and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost on the balance sheet. The updated guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods and will require recognition of a cumulative effect adjustment at adoption. We do not currently expect the adoption of this guidance to impact our consolidated financial position or liquidity. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt 2017 debt transactions 2% Notes On March 21, 2017, we issued an irrevocable notice of redemption in respect of our outstanding 2% Notes, with a redemption date of April 21, 2017. As of March 31, 2017, we had outstanding approximately $207.6 million aggregate principal amount of our 2% Notes. Subsequent event Subsequent to our notice of redemption, in April, holders of approximately $202.5 million of the outstanding principal exercised their rights to convert their notes into shares of our common stock. The remaining $5.1 million of outstanding principal was redeemed for cash. The conversions of the 2% Notes at a rate of 143.8332 shares per $1,000 principal amount resulted in the issuance of approximately 29.1 million shares of our common stock in April. The conversions and cash redemption eliminated our debt obligation. No gain or loss will be recognized from the conversions as the outstanding debt issuance costs associated with the conversions are included in the debt carrying value, which is credited to shareholders’ equity at the time of conversion. Credit Facility On March 21, 2017, we entered into a Credit Agreement with various lenders which provides for a $175 million unsecured revolving credit facility maturing on March 21, 2020. Revolving credit borrowings bear interest at a floating rate, which will be, at our option, either a eurocurrency rate or a base rate, in each case plus an applicable margin. The applicable margins are subject to adjustment based on our senior unsecured long-term debt rating, or if we do not have such a rating, our corporate or issuer rating. Amounts under the facility may be borrowed, repaid and reborrowed from time to time until the maturity of the revolving credit facility. Voluntary prepayments and commitment reductions are permitted at any time without fee subject to a minimum dollar requirement and, for outstanding eurocurrency loans, customary breakage costs. We are required under the Credit Agreement to pay commitment fees on the average daily amount of the unused revolving commitments of the lenders, and an annual administrative fee to the Administrative Agent. The Credit Agreement contains affirmative, negative and financial covenants which are customary for financings of this type, including, among other things, limits on the creation of liens, limits on the incurrence of indebtedness, restrictions on dispositions, maximum debt-to-capital ratio, minimum consolidated stockholders' equity, minimum policyholder's position of MGIC, and compliance with the financial requirements of the PMIERs. The Credit Agreement includes customary events of default for facilities of this type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default, payments of all outstanding loans may be accelerated and/or the lenders' commitments may be terminated. Upon the occurrence of certain insolvency or bankruptcy related events of default, all amounts payable under the Credit Agreements shall automatically become immediately due and payable, and the lenders' commitments will automatically terminate. In addition, upon the occurrence of certain insolvency or bankruptcy related events of default, or the failure to pay interest, principal or fees, the interest rates on all outstanding obligations will be increased. As of March 31, 2017, we borrowed $150 million under the revolving credit facility, to fund a portion of the redemption price of the 2% Notes if holders did not elect to convert their 2% Notes. In April, we repaid the amount borrowed under the revolving credit facility because most holders elected to convert their notes. Costs incurred to enter into the Credit Agreement have been deferred and recorded as Other assets and will be amortized over the term of the Credit Agreement. 5% Notes As of March 31, 2017, we had outstanding $145.0 million aggregate principal amount of our 5% Notes due in 2017 (“5% Notes”). These notes matured on May 1, 2017 and the principal and accrued interest were settled with cash at our holding company. Debt obligations The par value of our long-term debt obligations and their aggregate carrying values and borrowings under our revolving credit facility as of March 31, 2017 and December 31, 2016 were as follows. (In millions) March 31, December 31, FHLB Advance $ 155.0 $ 155.0 5% Notes 145.0 145.0 2% Notes 207.6 207.6 5.75% Notes 425.0 425.0 9% Debentures (1) 256.9 256.9 Long-term debt, par value 1,189.5 1,189.5 Less: Debt issuance costs (10.1 ) (10.8 ) Long-term debt, carrying value 1,179.4 1,178.7 Revolving credit facility 150.0 n/a Total debt, carrying value $ 1,329.4 $ 1,178.7 (1) Convertible at any time prior to maturity at the holder’s option, at an initial conversion rate, which is subject to adjustment, of 74.0741 shares per $1,000 principal amount, representing an initial conversion price of approximately $13.50 per share. If a holder elects to convert their debentures, deferred interest owed on the debentures being converted is also converted into shares of our common stock. The conversion rate for any deferred interest is based on the average price that our shares traded at during a 5 -day period immediately prior to the election to convert. In lieu of issuing shares of common stock upon conversion of the debentures, we may, at our option, make a cash payment to converting holders for all or some of the shares of our common stock otherwise issuable upon conversion. The 5.75% Senior Notes due 2023 (“5.75% Notes”) and 9% Convertible Junior Subordinated Debentures due in 2063 (“ 9% Debentures”) that remain outstanding as of the date of this filing are obligations of our holding company, MGIC Investment Corporation, and not of its subsidiaries. The Federal Home Loan Bank Advance (the “FHLB Advance”) is an obligation of MGIC. Interest payments on our debt obligations appear below. Three Months Ended March 31, (In millions) 2017 2016 FHLB Advance $ 0.7 $ 0.2 5% Notes — 1.8 5.75% Notes 12.9 — 9% Debentures — 4.3 Total interest payments $ 13.6 $ 6.3 |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance The reinsurance agreements we have entered into are discussed below. The effect of all of our reinsurance agreements on premiums earned and losses incurred is as follows: Three Months Ended March 31, (In thousands) 2017 2016 Premiums earned: Direct $ 259,428 $ 255,387 Assumed 98 208 Ceded (30,423 ) (34,254 ) Net premiums earned $ 229,103 $ 221,341 Losses incurred: Direct $ 32,413 $ 92,432 Assumed 105 101 Ceded (4,899 ) (7,521 ) Net losses incurred $ 27,619 $ 85,012 Quota share reinsurance In March 2017, we entered into a quota share reinsurance agreement (“2017 QSR Transaction”) with an effective date of January 1, 2017 with a group of unaffiliated reinsurers, each with a financial strength rating of A- or better by Standard and Poor’s, A.M. Best or both. We utilize quota share reinsurance to manage our exposure to losses resulting from our mortgage guaranty insurance policies and to provide reinsurance capital credit under the PMIERs. Our 2017 QSR Transaction provides coverage on new business written January 1, 2017 through December 29, 2017 that meets certain eligibility requirements. Under the agreement we cede losses incurred and premiums on or after the effective date through December 31, 2028, at which time the agreement expires. Early termination of the agreement can be elected by us effective December 31, 2021 for a fee, or under specified scenarios for no fee upon prior written notice including if we will receive less than 90% of the full credit amount under the PMIERs for the risk ceded in any required calculation period. Our 2015 quota share reinsurance agreement (“2015 QSR Transaction”), which became effective on July 1, 2015, covers eligible risk in force written before 2017. The group of unaffiliated reinsurers under our 2015 QSR Transaction each has an insurer financial strength rating of A- or better by Standard and Poor’s Rating Services, A.M. Best or both. The 2015 QSR Transaction cedes losses incurred and premiums through December 31, 2024, at which time the agreement expires. Early termination of the agreement can be elected by us effective December 31, 2018 for a fee, or under specified scenarios for no fee upon prior written notice, including if we will receive less than 90% of the full credit amount under the PMIERs for the risk ceded in any required calculation period. The structure of both the 2017 QSR Transaction and 2015 QSR Transaction is a 30% quota share for all policies covered, with a 20% ceding commission as well as a profit commission. Generally, under the QSR Transactions, we will receive a profit commission provided that the loss ratio on the loans covered under the agreement remains below 60% . Following is a summary of our quota share reinsurance agreements, excluding captive agreements discussed below, for the three months ended March 31, 2017 and 2016 . Three Months Ended March 31, (In thousands) 2017 2016 Ceded premiums written and earned, net of profit commission (1) 28,895 31,666 Ceded losses incurred 4,687 8,513 Ceding commissions (2) 12,003 11,576 Profit commission 31,117 26,215 (1) Under our QSR Transactions, premiums are ceded on an earned and received basis as defined in the agreements. (2) Ceding commissions are reported within Other underwriting and operating expenses, net on the consolidated statements of operations. Under the terms of QSR Transactions, ceded premiums, ceding commission and profit commission are settled net on a quarterly basis. The ceded premium due after deducting the related ceding commission and profit commission is reported within “Other liabilities” on the consolidated balance sheets. The reinsurance recoverable on loss reserves related to our QSR Transactions was $32.7 million as of March 31, 2017 and $31.8 million as of December 31, 2016 . The reinsurance recoverable balance is secured by funds on deposit from the reinsurers which are based on the funding requirements of PMIERs that address ceded risk. Captive reinsurance In the past, MGIC also obtained captive reinsurance. In a captive reinsurance arrangement, the reinsurer is affiliated with the lender for whom MGIC provides mortgage insurance. As part of our settlement with the Consumer Financial Protection Bureau (“CFPB”) in 2013 and with the Minnesota Department of Commerce in 2015, MGIC has agreed to not enter into any new captive reinsurance agreement or reinsure any new loans under any existing captive reinsurance agreement for a period of ten years subsequent to the respective settlements. In accordance with the CFPB settlement, all of our active captive arrangements were placed into run-off. In addition, the GSEs will not approve any future reinsurance or risk sharing transaction with a mortgage enterprise or an affiliate of a mortgage enterprise. The reinsurance recoverable on loss reserves related to captive agreements was $14 million as of March 31, 2017 , which was supported by $86 million of trust assets, while as of December 31, 2016 , the reinsurance recoverable on loss reserves related to captive agreements was $19 million , which was supported by $91 million of trust assets. Each captive reinsurer is required to maintain a separate trust account to support its combined reinsured risk on all annual books. MGIC is the sole beneficiary of the trusts. |
Litigation and Contingencies
Litigation and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Contingencies | Litigation and Contingencies Before paying an insurance claim, we review the loan and servicing files to determine the appropriateness of the claim amount. When reviewing the files, we may determine that we have the right to rescind coverage on the loan. In our SEC reports, we refer to insurance rescissions and denials of claims collectively as “rescissions” and variations of that term. In addition, all of our insurance policies provide that we can reduce or deny a claim if the servicer did not comply with its obligations under our insurance policy. We call such reduction of claims “curtailments.” In recent quarters, an immaterial percentage of claims received in a quarter have been resolved by rescissions. In each of 2016 and the first quarter of 2017, curtailments reduced our average claim paid by approximately 5.5% . Our loss reserving methodology incorporates our estimates of future rescissions, curtailments, and reversals of rescissions and curtailments. A variance between ultimate actual rescission, curtailment and reversal rates and our estimates, as a result of the outcome of litigation, settlements or other factors, could materially affect our losses. When the insured disputes our right to rescind coverage or curtail claims, we generally engage in discussions in an attempt to settle the dispute. If we are unable to reach a settlement, the outcome of a dispute ultimately would be determined by legal proceedings. Under ASC 450-20, until a liability associated with settlement discussions or legal proceedings becomes probable and can be reasonably estimated, we consider our claim payment or rescission resolved for financial reporting purposes and do not accrue an estimated loss. Where we have determined that a loss is probable and can be reasonably estimated, we have recorded our best estimate of our probable loss. If we are not able to implement settlements we consider probable, we intend to defend MGIC vigorously against any related legal proceedings. In addition to matters for which we have recorded a probable loss, we are involved in other discussions and/or proceedings with insureds with respect to our claims paying practices. Although it is reasonably possible that when these matters are resolved we will not prevail in all cases, we are unable to make a reasonable estimate or range of estimates of the potential liability. We estimate the maximum exposure associated with matters where a loss is reasonably possible to be approximately $306 million , although we believe (but can give no assurance that) we will ultimately resolve these matters for significantly less than this amount. This estimate of our maximum exposure does not include interest or consequential or exemplary damages. Mortgage insurers, including MGIC, have been involved in litigation and regulatory actions related to alleged violations of the anti-referral fee provisions of the Real Estate Settlement Procedures Act, which is commonly known as RESPA, and the notice provisions of the Fair Credit Reporting Act, which is commonly known as FCRA. While these proceedings in the aggregate have not resulted in material liability for MGIC, there can be no assurance that the outcome of future proceedings, if any, under these laws would not have a material adverse affect on us. In addition, various regulators, including the CFPB, state insurance commissioners and state attorneys general may bring other actions seeking various forms of relief in connection with alleged violations of RESPA. The insurance law provisions of many states prohibit paying for the referral of insurance business and provide various mechanisms to enforce this prohibition. While we believe our practices are in conformity with applicable laws and regulations, it is not possible to predict the eventual scope, duration or outcome of any such reviews or investigations nor is it possible to predict their effect on us or the mortgage insurance industry. Through a non-insurance subsidiary, we utilize our underwriting skills to provide an outsourced underwriting service to our customers known as contract underwriting. As part of the contract underwriting activities, that subsidiary is responsible for the quality of the underwriting decisions in accordance with the terms of the contract underwriting agreements with customers. That subsidiary may be required to provide certain remedies to its customers if certain standards relating to the quality of our underwriting work are not met, and we have an established reserve for such future obligations. Claims for remedies may be made a number of years after the underwriting work was performed. The underwriting remedy expense for 2016 and the first quarter of 2017 was immaterial to our consolidated financial statements. In addition to the matters described above, we are involved in other legal proceedings in the ordinary course of business. In our opinion, based on the facts known at this time, the ultimate resolution of these ordinary course legal proceedings will not have a material adverse effect on our financial position or results of operations. See Note 11 – “Income Taxes” for a description of federal income tax contingencies. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS includes the components of basic EPS and also gives effect to dilutive common stock equivalents. We calculate diluted EPS using the treasury stock method and if-converted method. Under the if-converted method, diluted EPS reflects the potential dilution that could occur if our convertible debt instruments result in the issuance of common stock. The determination of potentially issuable shares does not consider the satisfaction of the conversion requirements and the shares are included in the determination of diluted EPS as of the beginning of the period, if dilutive. As of March 31, 2017, we had several debt issuances that could result in contingently issuable shares and consider each potential issuance of shares separately to reflect the maximum potential dilution. Nonetheless, our dilutive common stock equivalents may not reflect all of the contingently issuable shares that could be required to be issued upon any debt conversion. See Note 3 - “Debt’ for a discussion of subsequent events affecting our debt issuances that could result in contingently issuable shares. For purposes of calculating basic and diluted EPS, vested restricted stock and restricted stock units ("RSUs") are considered outstanding. The following table reconciles the numerators and denominators used to calculate basic and diluted EPS and also indicates the number of antidilutive securities. Three Months Ended March 31, (In thousands, except per share data) 2017 2016 Basic earnings per share: Net income $ 89,798 $ 69,191 Weighted average common shares outstanding 341,009 340,144 Basic income per share $ 0.26 $ 0.20 Diluted earnings per share: Net income $ 89,798 $ 69,191 Interest expense, net of tax (1) : 2% Notes 823 1,982 5% Notes 1,282 2,678 9% Debentures 3,757 — Diluted income available to common shareholders $ 95,660 $ 73,851 Weighted average shares - basic 341,009 340,144 Effect of dilutive securities: Unvested RSUs 1,488 1,679 2% Notes 29,859 71,917 5% Notes 10,791 17,625 9% Debentures 19,028 — Weighted average shares - diluted 402,175 431,365 Diluted income per share $ 0.24 $ 0.17 Antidilutive securities (in millions) — 23.3 (1) Tax effected at a rate of 35%. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2017 | |
Investments [Abstract] | |
Investments | Investments The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio at March 31, 2017 and December 31, 2016 are shown below. March 31, 2017 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 61,035 $ 387 $ (604 ) $ 60,818 Obligations of U.S. states and political subdivisions 2,161,765 25,893 (19,208 ) 2,168,450 Corporate debt securities 1,753,470 7,594 (13,724 ) 1,747,340 ABS 37,107 29 (19 ) 37,117 RMBS 220,739 93 (7,923 ) 212,909 CMBS 300,185 1,038 (7,106 ) 294,117 CLOs 121,156 380 (168 ) 121,368 Total debt securities 4,655,457 35,414 (48,752 ) 4,642,119 Equity securities 7,163 20 (21 ) 7,162 Total investment portfolio $ 4,662,620 $ 35,434 $ (48,773 ) $ 4,649,281 December 31, 2016 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 73,847 $ 407 $ (724 ) $ 73,530 Obligations of U.S. states and political subdivisions 2,147,458 20,983 (25,425 ) 2,143,016 Corporate debt securities 1,756,461 6,059 (18,610 ) 1,743,910 ABS 59,519 74 (28 ) 59,565 RMBS 231,733 102 (7,626 ) 224,209 CMBS 327,042 769 (7,994 ) 319,817 CLOs 121,151 226 (202 ) 121,175 Total debt securities 4,717,211 28,620 (60,609 ) 4,685,222 Equity securities 7,144 8 (24 ) 7,128 Total investment portfolio $ 4,724,355 $ 28,628 $ (60,633 ) $ 4,692,350 (1) At March 31, 2017 and December 31, 2016 , there were no other-than-temporary impairment losses recorded in other comprehensive income. The FHLB Advance is secured by eligible collateral whose fair value must be maintained at 102% of the outstanding principal balance. As of March 31, 2017 that collateral is included in our total investment portfolio amount shown above with a total fair value of $165.0 million . The amortized cost and fair values of debt securities at March 31, 2017 , by contractual maturity, are shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed and mortgage-backed securities and collateralized loan obligations provide for periodic payments throughout their lives, they are listed in separate categories. March 31, 2017 (In thousands) Amortized Cost Fair Value Due in one year or less $ 338,124 $ 338,309 Due after one year through five years 1,318,577 1,323,558 Due after five years through ten years 1,091,184 1,082,035 Due after ten years 1,228,385 1,232,706 $ 3,976,270 $ 3,976,608 ABS 37,107 37,117 RMBS 220,739 212,909 CMBS 300,185 294,117 CLOs 121,156 121,368 Total as of March 31, 2017 $ 4,655,457 $ 4,642,119 At March 31, 2017 and December 31, 2016 , the investment portfolio had gross unrealized losses of $48.8 million and $60.6 million , respectively. For those securities in an unrealized loss position, the length of time the securities were in such a position, as measured by their month-end fair values, is as follows: March 31, 2017 Less Than 12 Months 12 Months or Greater Total (In thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 51,602 $ (604 ) $ — $ — $ 51,602 $ (604 ) Obligations of U.S. states and political subdivisions 830,978 (18,391 ) 22,930 (817 ) 853,908 (19,208 ) Corporate debt securities 802,288 (12,157 ) 34,552 (1,567 ) 836,840 (13,724 ) ABS 2,998 (19 ) — — 2,998 (19 ) RMBS 46,425 (985 ) 162,729 (6,938 ) 209,154 (7,923 ) CMBS 165,771 (6,994 ) 16,453 (112 ) 182,224 (7,106 ) CLOs 7,276 (168 ) — — 7,276 (168 ) Equity securities 527 (12 ) 138 (9 ) 665 (21 ) Total $ 1,907,865 $ (39,330 ) $ 236,802 $ (9,443 ) $ 2,144,667 $ (48,773 ) December 31, 2016 Less Than 12 Months 12 Months or Greater Total (In thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 48,642 $ (724 ) $ — $ — $ 48,642 $ (724 ) Obligations of U.S. states and political subdivisions 1,136,676 (24,918 ) 13,681 (507 ) 1,150,357 (25,425 ) Corporate debt securities 915,777 (16,771 ) 35,769 (1,839 ) 951,546 (18,610 ) ABS 3,366 (28 ) 656 — 4,022 (28 ) RMBS 46,493 (857 ) 171,326 (6,769 ) 217,819 (7,626 ) CMBS 205,545 (7,529 ) 38,587 (465 ) 244,132 (7,994 ) CLOs 13,278 (73 ) 34,760 (129 ) 48,038 (202 ) Equity securities 568 (15 ) 137 (9 ) 705 (24 ) Total $ 2,370,345 $ (50,915 ) $ 294,916 $ (9,718 ) $ 2,665,261 $ (60,633 ) The unrealized losses in all categories of our investments at March 31, 2017 and December 31, 2016 were primarily caused by the difference in interest rates at each respective period, compared to interest rates at the time of purchase. There were 495 and 607 securities in an unrealized loss position at March 31, 2017 and December 31, 2016 , respectively. During each of the three months ended March 31, 2017 and 2016 there were no other-than-temporary impairments (“OTTI”) recognized. The net realized investment (losses) gains on the investment portfolio are as follows: Three Months Ended (In thousands) 2017 2016 Realized investment (losses) gains on investments: Fixed maturities $ (125 ) $ 3,054 Equity securities 3 2 Net realized investment (losses) gains $ (122 ) $ 3,056 Three Months Ended (In thousands) 2017 2016 Realized investment (losses) gains on investments: Gains on sales $ 185 $ 4,104 Losses on sales (307 ) (1,048 ) Net realized investment (losses) gains $ (122 ) $ 3,056 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The authoritative guidance around fair value established a framework for measuring fair value. Fair value is disclosed using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and includes Levels 1, 2, and 3. 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. This model combines all inputs to arrive at a value assigned to each security. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information, data changes, and directional moves compared to market moves. In addition, on a quarterly basis, we perform quality controls over values received from the pricing sources which also include reviewing tolerance reports, trading information, data changes, and directional moves compared to market moves. We have not made any adjustments to the prices obtained from the independent pricing sources. In accordance with fair value accounting guidance, we applied the following fair value hierarchy in order to measure fair value for assets and liabilities: Level 1 - Quoted prices for identical instruments in active markets that we can access. Financial assets utilizing Level 1 inputs primarily include U.S. Treasury securities, equity securities. Level 2 - Quoted prices for similar instruments in active markets that we can access; quoted prices for identical or similar instruments in markets that are not active; and inputs, other than quoted prices, that are observable in the marketplace for the instrument. The observable inputs are used in valuation models to calculate the fair value of the instruments. Financial assets utilizing Level 2 inputs primarily include obligations of U.S. government corporations and agencies, corporate bonds, mortgage-backed securities, asset-backed securities, and most municipal bonds. The independent pricing sources utilize these approaches to determine the fair value of the instruments in Level 2 of the fair value hierarchy based on type of instrument: Corporate Debt & U.S. Government and Agency Bonds are evaluated by surveying the dealer community, obtaining relevant trade data, benchmark quotes and spreads and incorporating this information into the evaluation process. Obligations of U.S. States & Political Subdivisions are evaluated by tracking, capturing, and analyzing quotes for active issues and trades reported via the Municipal Securities Rulemaking Board records. Daily briefings and reviews of current economic conditions, trading levels, spread relationships, and the slope of the yield curve provide further data for evaluation. Residential Mortgage-Backed Securities (“RMBS) are evaluated by monitoring interest rate movements, and other pertinent data daily. Incoming market data is enriched to derive spread, yield and/or price data as appropriate, enabling known data points to be extrapolated for valuation application across a range of related securities. Commercial Mortgage-Backed Securities (“CMBS”) are evaluated using valuation techniques that reflect market participants’ assumptions and maximize the use of relevant observable inputs including quoted prices for similar assets, benchmark yield curves and market corroborated inputs. Evaluation utilizes regular reviews of the inputs for securities covered, including executed trades, broker quotes, credit information, collateral attributes and/or cash flow waterfall as applicable. Asset-Backed Securities (“ABS”) are evaluated using spreads and other information solicited from market buy- and sell-side sources, including primary and secondary dealers, portfolio managers, and research analysts. Cash flows are generated for each tranche, benchmark yields are determined, and deal collateral performance and tranche level attributes including trade activity, bids, and offer are applied, resulting in tranche-specific prices. Collateralized loan obligations ("CLO") are evaluated by manager rating, seniority in the capital structure, assumptions about prepayment, default and recovery and their impact on cash flow generation. Loan level net asset values are determined and aggregated for tranches and as a final step, prices are checked against available recent trade activity. Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or value drivers are unobservable or from par values for equity securities restricted in their ability to be redeemed or sold. The inputs used to derive the fair value of Level 3 securities reflect our own assumptions about the assumptions a market participant would use in pricing an asset or liability. Financial assets utilizing Level 3 inputs primarily include equity securities that can only be redeemed or sold at their par value and only to the security issuer and a state premium tax credit investment. The state premium tax credit investment has an average maturity of less than 2 years , a credit rating of AAA , and its balance reflects its remaining scheduled payments discounted at an average annual rate of 7.1% . Our non-financial assets that are classified as Level 3 securities consist of real estate acquired through claim settlement. The fair value of real estate acquired is the lower of our acquisition cost or a percentage of the appraised value. The percentage applied to the appraised value is based upon our historical sales experience adjusted for current trends. Fair value measurements for assets measured at fair value included the following as of March 31, 2017 and December 31, 2016 : March 31, 2017 (In thousands) Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 60,818 $ 12,431 $ 48,387 $ — Obligations of U.S. states and political subdivisions 2,168,450 — 2,167,767 683 Corporate debt securities 1,747,340 — 1,747,340 — ABS 37,117 — 37,117 — RMBS 212,909 — 212,909 — CMBS 294,117 — 294,117 — CLOs 121,368 — 121,368 — Total debt securities 4,642,119 12,431 4,629,005 683 Equity securities (1) 7,162 2,894 4,268 Total investment portfolio $ 4,649,281 $ 15,325 $ 4,629,005 $ 4,951 Real estate acquired (2) $ 10,730 $ — $ — $ 10,730 (1) Equity securities in Level 3 are carried at cost, which approximates fair value. (2) Real estate acquired through claim settlement, which is held for sale, is reported in Other assets on the consolidated balance sheets. December 31, 2016 (In thousands) Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 73,530 $ 30,690 $ 42,840 $ — Obligations of U.S. states and political subdivisions 2,143,016 — 2,142,325 691 Corporate debt securities 1,743,910 — 1,743,910 — ABS 59,565 — 59,565 — RMBS 224,209 — 224,209 — CMBS 319,817 — 319,817 — CLOs 121,175 — 121,175 — Total debt securities 4,685,222 30,690 4,653,841 691 Equity securities (1) 7,128 2,860 — 4,268 Total investment portfolio $ 4,692,350 $ 33,550 $ 4,653,841 $ 4,959 Real estate acquired (2) $ 11,748 $ — $ — $ 11,748 (1) Equity securities in Level 3 are carried at cost, which approximates fair value. (2) Real estate acquired through claim settlement, which is held for sale, is reported in Other assets on the consolidated balance sheets. For assets measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the three months ended March 31, 2017 and 2016 is shown in the following tables. There were no transfers into or out of Level 3 in those periods and there were no losses included in earnings for those periods attributable to the change in unrealized losses on assets still held at the end of the applicable period. Three Months Ended March 31, 2017 (In thousands) Debt Securities Equity Securities Total Investments Real Estate Acquired Balance at December 31, 2016 $ 691 $ 4,268 $ 4,959 $ 11,748 Total realized/unrealized gains (losses): Included in earnings and reported as losses incurred, net — — — (163 ) Purchases — — — 8,683 Sales (8 ) — (8 ) (9,538 ) Balance at March 31, 2017 $ 683 $ 4,268 $ 4,951 $ 10,730 Three Months Ended March 31, 2016 (In thousands) Debt Equity Total Real Estate Balance at December 31, 2015 $ 1,228 $ 2,855 $ 4,083 $ 12,149 Total realized/unrealized gains (losses): Included in earnings and reported as losses incurred, net — — — (293 ) Purchases — 3,091 3,091 12,267 Sales (36 ) (2,525 ) (2,561 ) (11,274 ) Balance at March 31, 2016 $ 1,192 $ 3,421 $ 4,613 $ 12,849 Authoritative guidance over disclosures about the fair value of financial instruments requires additional disclosure for financial instruments not measured at fair value. Certain financial instruments, including insurance contracts, are excluded from these fair value disclosure requirements. The carrying values of cash and cash equivalents (Level 1) and accrued investment income (Level 2) approximated their fair values. Additional fair value disclosures related to our investment portfolio are included in Note 7 – “Investments.” Financial Liabilities Not Measured at Fair Value We incur financial liabilities in the normal course of our business. The following table presents the carrying value and fair value of our financial liabilities disclosed, but not carried, at fair value at March 31, 2017 and December 31, 2016 . The fair values of our 5% Notes, 2% Notes, 5.75% Notes, and 9% Debentures were based on observable market prices. The fair value of the FHLB Advance was estimated using discounted cash flows on current incremental borrowing rates for similar borrowing arrangements. The fair value of the amount borrowed under our credit facility approximates its carrying value. In all cases the fair values of the financial liabilities below are categorized as Level 2. March 31, 2017 December 31, 2016 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Financial liabilities: Revolving credit facility $ 150,000 $ 150,000 n/a n/a FHLB Advance 155,000 152,757 $ 155,000 $ 151,905 5% Notes 144,948 145,051 144,789 147,679 2% Notes 204,900 302,165 204,672 308,605 5.75% Notes 417,695 448,906 417,406 445,987 9% Debentures 256,872 332,436 256,872 323,040 Total financial liabilities $ 1,329,415 $ 1,531,315 $ 1,178,739 $ 1,377,216 |
Other Comprehensive Income
Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Other Comprehensive Income The pretax and related income tax (expense) benefit components of our other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 are included in the following table. Three Months Ended March 31, (In thousands) 2017 2016 Net unrealized investment gains arising during the period $ 18,647 $ 78,383 Income tax expense (6,526 ) (27,556 ) Net of taxes 12,121 50,827 Net changes in benefit plan assets and obligations (234 ) (474 ) Income tax benefit 81 166 Net of taxes (153 ) (308 ) Net changes in unrealized foreign currency translation adjustment 45 (1,496 ) Income tax (expense) benefit (14 ) 521 Net of taxes 31 (975 ) Total other comprehensive income 18,458 76,413 Total income tax expense (6,459 ) (26,869 ) Total other comprehensive income, net of tax $ 11,999 $ 49,544 The pretax and related income tax (expense) benefit components of the amounts reclassified from our accumulated other comprehensive loss (“AOCL”) to our consolidated statements of operations for the three months ended March 31, 2017 and 2016 are included in the following table. Three Months Ended March 31, (In thousands) 2017 2016 Reclassification adjustment for net realized (losses) gains (1) $ (747 ) $ 612 Income tax benefit (expense) 261 (92 ) Net of taxes (486 ) 520 Reclassification adjustment related to benefit plan assets and obligations (2) 234 474 Income tax expense (81 ) (166 ) Net of taxes 153 308 Reclassification adjustment related to foreign currency (3) — (1,467 ) Income tax benefit — 513 Net of taxes — (954 ) Total reclassifications (513 ) (381 ) Total income tax benefit 180 255 Total reclassifications, net of tax $ (333 ) $ (126 ) (1) Increases (decreases) Net realized investment (losses) gains on the consolidated statements of operations. (2) Decreases (increases) Other underwriting and operating expenses, net on the consolidated statements of operations. (3) Increases (decreases) Other revenue on the consolidated statements of operations. __________________________ A rollforward of AOCL for the three months ended March 31, 2017 , including amounts reclassified from AOCL, are included in the table below. Three Months Ended March 31, 2017 (In thousands) Net unrealized gains and losses on available-for-sale securities Net benefit plan assets and obligations recognized in shareholders' equity Net unrealized foreign currency translation Total AOCL Balance, December 31, 2016, net of tax $ (20,797 ) $ (54,272 ) $ (31 ) $ (75,100 ) Other comprehensive income before reclassifications 11,635 — 31 11,666 Less: Amounts reclassified from AOCL (486 ) 153 — (333 ) Balance, March 31, 2017, net of tax $ (8,676 ) $ (54,425 ) $ — $ (63,101 ) |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Benefit Plans | Benefit Plans The following tables provide the components of net periodic benefit cost for our pension, supplemental executive retirement and other postretirement benefit plans for three months ended March 31, 2017 and 2016 : Three Months Ended March 31, Pension and Supplemental Executive Retirement Plans Other Postretirement Benefit Plans (In thousands) 2017 2016 2017 2016 Service cost $ 2,294 $ 2,163 $ 187 $ 175 Interest cost 3,858 3,929 167 172 Expected return on plan assets (5,036 ) (4,889 ) (1,312 ) (1,222 ) Recognized net actuarial loss 1,535 1,361 — — Amortization of prior service cost (107 ) (172 ) (1,662 ) (1,662 ) Net periodic benefit cost (benefit) $ 2,544 $ 2,392 $ (2,620 ) $ (2,537 ) We currently intend to make contributions totaling $9.2 million to our qualified pension plan and supplemental executive retirement plan in 2017. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We have approximately $1.3 billion of net operating loss (“NOL”) carryforwards on a regular tax basis and $0.5 billion of NOL carryforwards for computing the alternative minimum tax as of March 31, 2017 . Any unutilized carryforwards are scheduled to expire at the end of tax years 2030 through 2033. We evaluate the realizability of our deferred tax assets including our NOL carryforwards on a quarterly basis. Based on our analysis, we have concluded that all of our deferred tax assets are fully realizable and therefore no valuation allowance existed at March 31, 2017 and December 31, 2016. Tax Contingencies As previously disclosed, the Internal Revenue Service (“IRS”) completed examinations of our federal income tax returns for the years 2000 through 2007 and issued proposed assessments for taxes, interest and penalties related to our treatment of the flow-through income and loss from an investment in a portfolio of residual interests of Real Estate Mortgage Investment Conduits (“REMICs”). The IRS indicated that it did not believe that, for various reasons, we had established sufficient tax basis in the REMIC residual interests to deduct the losses from taxable income. We appealed these assessments within the IRS and in August 2010, we reached a tentative settlement agreement with the IRS which was not finalized. In 2014, we received Notices of Deficiency (commonly referred to as “90 day letters”) covering the 2000-2007 tax years. The Notices of Deficiency reflect taxes and penalties related to the REMIC matters of $197.5 million and at March 31, 2017 , there would also be interest related to these matters of approximately $191.2 million . In 2007, we made a payment of $65.2 million to the United States Department of the Treasury which will reduce any amounts we would ultimately owe. The Notices of Deficiency also reflect additional amounts due of $261.4 million , which are primarily associated with the disallowance of the carryback of the 2009 net operating loss to the 2004-2007 tax years. We believe the IRS included the carryback adjustments as a precaution to keep open the statute of limitations on collection of the tax that was refunded when this loss was carried back, and not because the IRS actually intends to disallow the carryback permanently. Depending on the outcome of this matter, additional state income taxes and state interest may become due when a final resolution is reached. As of March 31, 2017 , those state taxes and interest would approximate $80.9 million . In addition, there could also be state tax penalties. Our total amount of unrecognized tax benefits as of March 31, 2017 is $139.9 million , which represents the tax benefits generated by the REMIC portfolio included in our tax returns that we have not taken benefit for in our financial statements, including any related interest. We filed a petition with the U.S. Tax Court contesting most of the IRS' proposed adjustments reflected in the Notices of Deficiency and the IRS filed an answer to our petition which continued to assert their claim. The case has twice been scheduled for trial and in each instance, the parties jointly filed, and the U.S. Tax Court approved (most recently in February 2016), motions for continuance to postpone the trial date. Also in February 2016, the U.S. Tax Court approved a joint motion to consolidate for trial, briefing and opinion, our case with similar cases of Radian Group, Inc., as successor to Enhance Financial Services Group, Inc., et al. In January 2017, the parties informed the Tax Court that they had reached a basis for settlement of the major issues in the case. Any agreed settlement terms will ultimately be subject to review by the Joint Committee on Taxation ("JCT") before a settlement can be completed and there is no assurance that a settlement will be completed. Based on information that we currently have regarding the status of our ongoing dispute, we recorded a provision for additional taxes and interest of $27.2 million in the first quarter of 2017. Should a settlement not be completed, ongoing litigation to resolve our dispute with the IRS could be lengthy and costly in terms of legal fees and related expenses. We would need to make further adjustments, which could be material, to our tax provision and liabilities if our view of the probability of success in this matter changes, and the ultimate resolution of this matter could have a material negative impact on our effective tax rate, results of operations, cash flows, available assets and statutory capital. In this regard, see Note 15 - “Statutory Information.” The total amount of the unrecognized tax benefits, related to our aforementioned REMIC issue that would affect our effective tax rate is $118.4 million . We recognize interest accrued and penalties related to unrecognized tax benefits in income taxes. As of March 31, 2017 and December 31, 2016 , we had accrued $49.1 million and $28.9 million , respectively, for the payment of interest. |
Loss Reserves
Loss Reserves | 3 Months Ended |
Mar. 31, 2017 | |
Insurance Loss Reserves [Abstract] | |
Loss Reserves | Loss Reserves We establish reserves to recognize the estimated liability for losses and loss adjustment expenses (“LAE”) related to defaults on insured mortgage loans. Loss reserves are established by estimating the number of loans in our inventory of delinquent loans that will result in a claim payment, which is referred to as the claim rate, and further estimating the amount of the claim payment, which is referred to as claim severity. Estimation of losses is inherently judgmental. The conditions that affect the claim rate and claim severity include the current and future state of the domestic economy, including unemployment and the current and future strength of local housing markets; exposure on insured loans; the amount of time between default and claim filing; and curtailments and rescissions. The actual amount of the claim payments may be substantially different than our loss reserve estimates. Our estimates could be adversely affected by several factors, including a deterioration of regional or national economic conditions, including unemployment, leading to a reduction in borrowers’ income and thus their ability to make mortgage payments, and a drop in housing values which may affect borrower willingness to continue to make mortgage payments when the value of the home is below the mortgage balance. Changes to our estimates could result in a material impact to our results of operations and capital position, even in a stable economic environment. The “Losses incurred” section of the table below shows losses incurred on defaults that occurred in the current year and in prior years. The amount of losses incurred relating to defaults that occurred in the current year represents the estimated amount to be ultimately paid on such defaults. The amount of losses incurred relating to defaults that occurred in prior years represents the actual claim rate and severity associated with those defaults resolved in the current year differing from the estimated liability at the prior year-end, as well as a re-estimation of amounts to be ultimately paid on defaults continuing from the end of the prior year. This re-estimation of the claim rate and severity is the result of our review of current trends in the default inventory, such as percentages of defaults that have resulted in a claim, the amount of the claims relative to the average loan exposure, changes in the relative level of defaults by geography and changes in average loan exposure. Losses incurred on defaults that occurred in the current year decreased in the first three months of 2017 compared to the same period in 2016 , primarily due to a decrease in the estimated claim rate on recently reported defaults and a decrease in the number of new defaults, net of related cures. For the three months ended March 31, 2017 and 2016 we experienced favorable prior year loss reserve development. This development was, in part, due to the resolution of approximately 29% and 28% of the prior year default inventory during the three months ended March 31, 2017 and 2016 , respectively. During the first three months of 2017 and 2016 , we experienced improved cure rates on prior year defaults, which was offset in part by an increase in severity on the prior year defaults in both periods. The “Losses paid” section of the table below shows the breakdown between claims paid on new default notices in the current year and claims paid on defaults from prior years. Until a few years ago, it took, on average, approximately twelve months for a default that is not cured to develop into a paid claim. Over the past several years, the average time it takes to receive a claim associated with a default has increased. This is, in part, due to new loss mitigation protocols established by servicers and to changes in some state foreclosure laws that may include, for example, a requirement for additional review and/or mediation processes. It is difficult to estimate how long it may take for current and future defaults that do not cure to develop into paid claims. During the first three months of 2016, our losses paid included $47 million associated with settlements for claims paying practices and a nonperforming loan settlement. These settlements reduced our delinquent inventory by 1,138 notices. These settlements had no material impact on our losses incurred, net. The liability associated with our estimate of premiums to be refunded on expected claim payments is accrued for separately at March 31, 2017 and December 31, 2016 and approximated $81 million and $85 million , respectively. This liability was included in “Other liabilities” on our consolidated balance sheets. The following table provides a reconciliation of beginning and ending loss reserves as of and for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (In thousands) 2017 2016 Reserve at beginning of period $ 1,438,813 $ 1,893,402 Less reinsurance recoverable 50,493 44,487 Net reserve at beginning of period 1,388,320 1,848,915 Losses incurred: Losses and LAE incurred in respect of default notices received in: Current year 80,416 92,479 Prior years (1) (52,797 ) (7,467 ) Total losses incurred 27,619 85,012 Losses paid: Losses and LAE paid in respect of default notices received in: Current year 331 204 Prior years 127,224 221,457 Reinsurance terminations — (4 ) Total losses paid 127,555 221,657 Net reserve at end of period 1,288,384 1,712,270 Plus reinsurance recoverables 46,658 41,119 Reserve at end of period $ 1,335,042 $ 1,753,389 (1) A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves. See the following table for more information about prior year loss development. The prior year development of the reserves in the first three months of 2017 and 2016 is reflected in the following table. Three months ended March 31, (In millions) 2017 2016 Decrease in estimated claim rate on primary defaults $ (54 ) $ (26 ) Increase in estimated severity on primary defaults 4 22 Change in estimates related to pool reserves, LAE reserves and reinsurance (3 ) (3 ) Total prior year loss development (1) $ (53 ) $ (7 ) (1) A negative number for prior year loss development indicates a redundancy of prior year loss reserves. Default inventory A rollforward of our primary default inventory for the three months ended March 31, 2017 and 2016 appears in the following table. The information concerning new notices and cures is compiled from monthly reports received from loan servicers. The level of new notice and cure activity reported in a particular month can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month and transfers of servicing between loan servicers. Three months ended March 31, 2017 2016 Default inventory at beginning of period 50,282 62,633 New notices 14,939 16,731 Cures (17,128 ) (19,053 ) Paids (including those charged to a deductible or captive) (2,635 ) (3,373 ) Rescissions and denials (95 ) (210 ) Other items removed from inventory (14 ) (1,138 ) Default inventory at end of period 45,349 55,590 The decrease in the primary default inventory experienced during 2017 and 2016 was generally across all markets and primarily in book years 2008 and prior. Historically as a default ages it becomes more likely to result in a claim. Consecutive months in default March 31, 2017 December 31, 2016 March 31, 2016 3 months or less 9,184 20 % 12,194 24 % 10,120 18 % 4 - 11 months 13,617 30 % 13,450 27 % 15,319 28 % 12 months or more (1) 22,548 50 % 24,638 49 % 30,151 54 % Total primary default inventory 45,349 100 % 50,282 100 % 55,590 100 % Primary claims received inventory included in ending default inventory 1,390 3 % 1,385 3 % 2,267 4 % (1) Approximately 48% , 47% , and 49% of the primary default inventory in default for 12 consecutive months or more has been in default for at least 36 consecutive months as of March 31, 2017 , December 31, 2016 , and March 31, 2016 , respectively. The number of months a loan is in the default inventory can differ from the number of payments that the borrower has not made or is considered delinquent. These differences typically result from a borrower making monthly payments that do not result in the loan becoming fully current. The number of payments that a borrower is delinquent is shown in the table below. Number of payments delinquent March 31, 2017 December 31, 2016 March 31, 2016 3 payments or less 15,692 35 % 18,419 36 % 16,864 30 % 4 - 11 payments 12,275 27 % 12,892 26 % 14,595 26 % 12 payments or more 17,382 38 % 18,971 38 % 24,131 44 % Total primary default inventory 45,349 100 % 50,282 100 % 55,590 100 % Pool insurance default inventory decreased to 1,714 at March 31, 2017 from 1,883 at December 31, 2016 . and 2,247 at March 31, 2016 . Claims paying practices Our loss reserving methodology incorporates our estimates of future rescissions. A variance between ultimate actual rescission rates and our estimates, as a result of the outcome of litigation, settlements or other factors, could materially affect our losses. The liability associated with our estimate of premiums to be refunded on expected future rescissions is accrued for separately. At both March 31, 2017 and December 31, 2016 the estimate of this liability totaled $5 million . This liability was included in “Other liabilities” on our consolidated balance sheets. For information about discussions and legal proceedings with customers with respect to our claims paying practices see Note 5 – “Litigation and Contingencies.” |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Change in accounting principle As described in Note 2 - “New Accounting Pronouncements,” during the first quarter of 2017 we adopted the updated guidance of “ Improvements to Employee Share-Based Compensation Accounting .” The adoption of this guidance resulted in an immaterial cumulative effect adjustment to our beginning retained earnings for the quarter ended March 31, 2017. 2% Notes As described in Note 3 - “Debt,” on March 21, 2017, we issued an irrevocable notice of redemption in respect of our outstanding 2% Notes, with a redemption date of April 21, 2017. Subsequent to our notice of redemption, in April, holders of approximately $202.5 million of the outstanding principal amount exercised their rights to convert their notes into shares of our common stock. As a result, we issued approximately 29.1 million shares of our common stock, of which 18.7 million shares were reissued from our treasury stock and 10.4 million were newly issued shares. The conversions of the notes increase our shareholders’ equity by the carrying value, which includes outstanding debt issuance costs, at the time of conversion. Shareholders Rights Agreement Our Amended and Restated Rights Agreement dated July 23, 2015 seeks to diminish the risk that our ability to use our NOLs to reduce potential future federal income tax obligations may become substantially limited and to deter certain abusive takeover practices. The benefit of the NOLs would be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, if we were to experience an “ownership change” as defined by Section 382 of the Internal Revenue Code. Under the Agreement each outstanding share of our Common Stock is accompanied by one Right. The “Distribution Date” occurs on the earlier of ten days after a public announcement that a person has become an “Acquiring Person,” or ten business days after a person announces or begins a tender offer in which consummation of such offer would result in a person becoming an “Acquiring Person.” An “Acquiring Person” is any person that becomes, by itself or together with its affiliates and associates, a beneficial owner of 5% or more of the shares of our Common Stock then outstanding, but excludes, among others, certain exempt and grandfathered persons as defined in the Agreement. The Rights are not exercisable until the Distribution Date. Each Right will initially entitle shareholders to buy one-tenth of one share of our Common Stock at a Purchase Price of $45 per full share (equivalent to $4.50 for each one-tenth share), subject to adjustment. Each exercisable Right (subject to certain limitations) will entitle its holder to purchase, at the Rights’ then-current Purchase Price, a number of our shares of Common Stock (or if after the Shares Acquisition Date, we are acquired in a business combination, common shares of the acquiror) having a market value at the time equal to twice the Purchase Price. The Rights will expire on August 1, 2018, or earlier as described in the Agreement. The Rights are redeemable at a price of $0.001 per Right at any time prior to the time a person becomes an Acquiring Person. Other than certain amendments, the Board of Directors may amend the Rights in any respect without the consent of the holders of the Rights. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation We have certain share-based compensation plans. Under the fair value method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period which generally corresponds to the vesting period. Awards under our plans generally vest over periods ranging from one to three years . The number of shares granted to employees and the weighted average fair value per share during the periods presented were (shares in thousands): Three months ended March 31, 2017 2016 Shares Granted Weighted Average Share Fair Value Shares Granted Weighted Average Share Fair Value RSUs subject to performance conditions 1,237 $ 10.41 1,257 $ 5.66 RSUs subject only to service conditions 395 10.41 433 5.67 |
Statutory Information
Statutory Information | 3 Months Ended |
Mar. 31, 2017 | |
Statutory Capital [Abstract] | |
Statutory Information | Statutory Information Statutory Capital Requirements The insurance laws of 16 jurisdictions, including Wisconsin, our domiciliary state, require a mortgage insurer to maintain a minimum amount of statutory capital relative to the risk in force (or a similar measure) in order for the mortgage insurer to continue to write new business. We refer to these requirements as the “State Capital Requirements” and, together with the GSE Financial Requirements, the “Financial Requirements.” While they vary among jurisdictions, the most common State Capital Requirements allow for a maximum risk-to-capital ratio of 25 to 1 . A risk-to-capital ratio will increase if (i) the percentage decrease in capital exceeds the percentage decrease in insured risk, or (ii) the percentage increase in capital is less than the percentage increase in insured risk. Wisconsin does not regulate capital by using a risk-to-capital measure but instead requires a minimum policyholder position (“MPP”). The “policyholder position” of a mortgage insurer is its net worth or surplus, contingency reserve and a portion of the reserves for unearned premiums. At March 31, 2017 , MGIC’s risk-to-capital ratio was 10.4 to 1 , below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $1.7 billion above the required MPP of $1.1 billion . In calculating our risk-to-capital ratio and MPP, we are allowed full credit for the risk ceded under our reinsurance transactions with a group of unaffiliated reinsurers. It is possible that under the revised State Capital Requirements discussed below, MGIC will not be allowed full credit for the risk ceded to the reinsurers. If MGIC is not allowed an agreed level of credit under either the State Capital Requirements or the PMIERs, MGIC may terminate the reinsurance agreement, without penalty. At this time, we expect MGIC to continue to comply with the current State Capital Requirements; however, you should read the rest of these financial statement footnotes for information about matters that could negatively affect such compliance. At March 31, 2017 , the risk-to-capital ratio of our combined insurance operations (which includes a reinsurance affiliate) was 11.6 to 1 . Reinsurance agreements with an affiliate permit MGIC to write insurance with a higher coverage percentage than it could on its own under certain state-specific requirements. A higher risk-to-capital ratio on a combined basis may indicate that, in order for MGIC to continue to utilize reinsurance agreements with its affiliate, additional capital contributions to the reinsurance affiliate could be needed. We ask the Commissioner of Insurance of the State of Wisconsin (the “OCI”) not to object before MGIC pays dividends. In the first quarter of 2017, MGIC paid a $20 million dividend to our holding company. MGIC is subject to statutory regulations as to payment of dividends. The maximum amount of dividends that MGIC may pay in any twelve-month period without regulatory approval by the OCI is the lesser of adjusted statutory net income or 10% of statutory policyholders’ surplus as of the preceding calendar year end. Adjusted statutory net income is defined for this purpose to be the greater of statutory net income, net of realized investment gains, for the calendar year preceding the date of the dividend or statutory net income, net of realized investment gains, for the three calendar years preceding the date of the dividend less dividends paid within the first two of the preceding three calendar years. The 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. The OCI has adopted certain prescribed accounting practices that differ from those found in other states. Specifically, Wisconsin domiciled companies record changes in the contingency reserves through the income statement as a change in underwriting deduction. As a result, in periods in which MGIC is increasing contingency reserves, statutory net income is lowered. For the year ended December 31, 2016 , MGIC’s statutory net income was reduced by $490 million to account for the increase in contingency reserves. The NAIC previously announced that it plans to revise the minimum capital and surplus requirements for mortgage insurers that are provided for in its Mortgage Guaranty Insurance Model Act. In May 2016, a working group of state regulators released an exposure draft of a risk-based capital framework to establish capital requirements for mortgage insurers, although no date has been established by which the NAIC must propose revisions to the capital requirements. We are currently evaluating the impact of the framework contained in the exposure draft, including the potential impact of certain items that have not yet been completely addressed by the framework which include: the treatment of ceded risk, minimum capital floors, and action level triggers. While MGIC currently meets the State Capital Requirements of Wisconsin and all other jurisdictions, it could be prevented from writing new business in the future in all jurisdictions if it fails to meet the State Capital Requirements of Wisconsin, or it could be prevented from writing new business in another jurisdiction if it fails to meet the State Capital Requirements of that jurisdiction, and in each case MGIC does not obtain a waiver of such requirements. It is possible that regulatory action by one or more jurisdictions, including those that do not have specific State Capital Requirements, may prevent MGIC from continuing to write new insurance in such jurisdictions. If we are unable to write business in all jurisdictions, lenders may be unwilling to procure insurance from us anywhere. In addition, a lender’s assessment of the future ability of our insurance operations to meet the State Capital Requirements or the PMIERs may affect its willingness to procure insurance from us. A possible future failure by MGIC to meet the State Capital Requirements or the PMIERs will not necessarily mean that MGIC lacks sufficient resources to pay claims on its insurance liabilities. While we believe MGIC has sufficient claims paying resources to meet its claim obligations on its insurance in force on a timely basis, you should read the rest of these financial statement footnotes for information about matters that could negatively affect MGIC’s claims paying resources. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Adopted Accounting Standards/Prospective Accounting Standards | Adopted Accounting Standards Improvements to Employee Share-Based Compensation Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance that simplifies several aspects of the accounting for employee share-based compensation including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. The updated guidance requires that, prospectively, all tax effects related to share-based compensation be made through the statement of operations at the time of settlement. In contrast, the previous guidance required excess tax benefits to be recognized in paid-in capital. The updated guidance also removes the requirement to delay recognition of a tax benefit until it reduces current taxes payable. This change is required to be applied on a modified retrospective basis, with a cumulative effect adjustment to opening retained earnings. Additionally, all tax related cash flows resulting from share-based compensation are to be reported as operating activities on the statement of cash flows, a change from the existing requirement to present tax benefits as an inflow from financing activities and an outflow from operating activities. Finally, for tax withholding purposes, entities will be allowed to withhold an amount of shares up to the employee’s maximum individual tax rate (as opposed to the minimum statutory tax rate) in the relevant jurisdiction without resulting in liability classification of the award. The change in tax withholding is to be applied on a modified retrospective approach. This updated guidance became effective January 1, 2017. We have adopted this guidance for the period ending March 31, 2017 and as a result of the adoption: • We recognized discrete tax benefits of $1.5 million in the provision for income taxes on our statement of operations for the three months ended March 31, 2017 related to excess tax benefits upon vesting of stock-based awards during the period. • We recognized a cumulative effect adjustment related to the recognition of a deferred tax asset related to suspended tax benefits from vesting transactions occurring in prior years and from the elimination of our forfeiture estimate on stock-based awards, which was previously applied only to awards with service conditions. • Prior to adoption, cash flows related to excess tax benefits from share-based compensation were included in financing activities. We have reclassified excess tax benefits related to share-based compensation for the three months ended March 31, 2016 to operating activities. • Prior to adoption, cash flows related to employee taxes paid for withheld shares were included in operating activities. We have reclassified employee taxes paid for withheld shares for the three months ended March 31, 2016 to financing activities. Prospective Accounting Standards Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued updated guidance to amend the amortization period for certain purchased callable debt securities held at a premium shortening the amortization period to the earliest call date. Under current GAAP, there is diversity in practice in the amortization period for premiums of callable debt securities and in how the potential for exercise of a call is factored into current impairment assessments. This updated guidance aligns with how callable debt securities, in the United States, are generally quoted, priced, and traded assuming a model that incorporates consideration of calls (also referred to as “yield-to-worst” pricing). The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. We are currently evaluating the impacts the adoption of this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated financial statements or disclosures. We currently account for premium amortization on our purchased callable debt securities on a yield-to-worst basis, which generally aligns with the earliest call date. Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued updated guidance that improves the reporting of net benefit cost in the financial statements. The updated guidance requires that an employer report the service cost component in the same financial statement caption as other compensation costs arising from services rendered by employees during the period. The other components of net benefit cost are required to be presented in the statement of operations separately from the service cost component and outside a subtotal of income from operations, if one is presented. Current guidance does not prescribe where the amount of net benefit cost should be presented in an employer’s statement of operations and does not require entities to disclose by line item the amount of net benefit cost that is included in the statement of operations. The updated guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. We are currently evaluating the impacts the adoption of this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated statement of operations or financial statement disclosures. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued updated guidance that requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial instruments. Entities will be required to utilize a current expected credit losses (“CECL”) methodology that incorporates their forecasts of future economic conditions into their loss estimate unless such forecast is not reasonable and supportable, in which case the entity will revert to historical loss experience. Any allowance for CECL reduces the amortized cost basis of the financial instrument to the amount an entity expects to collect. Credit losses relating to available-for-sale fixed maturity securities are to be recorded through an allowance for credit losses, rather than a write-down of the asset, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The updated guidance is not prescriptive about certain aspects of estimating expected credit losses, including the specific methodology to use, and therefore will require significant judgment in application. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted for annual and interim periods in fiscal years beginning after December 15, 2018. We are currently evaluating the impacts the adoption of this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated financial statements or disclosures. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued updated guidance to address the recognition, measurement, presentation, and disclosure of certain financial instruments. The updated guidance requires equity investments, except those accounted for under the equity method of accounting, that have a readily determinable fair value to be measured at fair value with changes in fair value recognized in net income. Equity investments that do not have readily determinable fair values may be remeasured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. A qualitative assessment for impairment is required for equity investments without readily determinable fair values. The updated guidance also eliminates the requirement to disclose the method and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost on the balance sheet. The updated guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods and will require recognition of a cumulative effect adjustment at adoption. We do not currently expect the adoption of this guidance to impact our consolidated financial position or liquidity. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-term debt | The par value of our long-term debt obligations and their aggregate carrying values and borrowings under our revolving credit facility as of March 31, 2017 and December 31, 2016 were as follows. (In millions) March 31, December 31, FHLB Advance $ 155.0 $ 155.0 5% Notes 145.0 145.0 2% Notes 207.6 207.6 5.75% Notes 425.0 425.0 9% Debentures (1) 256.9 256.9 Long-term debt, par value 1,189.5 1,189.5 Less: Debt issuance costs (10.1 ) (10.8 ) Long-term debt, carrying value 1,179.4 1,178.7 Revolving credit facility 150.0 n/a Total debt, carrying value $ 1,329.4 $ 1,178.7 (1) Convertible at any time prior to maturity at the holder’s option, at an initial conversion rate, which is subject to adjustment, of 74.0741 shares per $1,000 principal amount, representing an initial conversion price of approximately $13.50 per share. If a holder elects to convert their debentures, deferred interest owed on the debentures being converted is also converted into shares of our common stock. The conversion rate for any deferred interest is based on the average price that our shares traded at during a 5 -day period immediately prior to the election to convert. In lieu of issuing shares of common stock upon conversion of the debentures, we may, at our option, make a cash payment to converting holders for all or some of the shares of our common stock otherwise issuable upon conversion. |
Interest payments made | Interest payments on our debt obligations appear below. Three Months Ended March 31, (In millions) 2017 2016 FHLB Advance $ 0.7 $ 0.2 5% Notes — 1.8 5.75% Notes 12.9 — 9% Debentures — 4.3 Total interest payments $ 13.6 $ 6.3 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Effect of reinsurance agreement | The reinsurance agreements we have entered into are discussed below. The effect of all of our reinsurance agreements on premiums earned and losses incurred is as follows: Three Months Ended March 31, (In thousands) 2017 2016 Premiums earned: Direct $ 259,428 $ 255,387 Assumed 98 208 Ceded (30,423 ) (34,254 ) Net premiums earned $ 229,103 $ 221,341 Losses incurred: Direct $ 32,413 $ 92,432 Assumed 105 101 Ceded (4,899 ) (7,521 ) Net losses incurred $ 27,619 $ 85,012 |
Effect of all reinsurance agreements on premiums earned and losses incurred | Following is a summary of our quota share reinsurance agreements, excluding captive agreements discussed below, for the three months ended March 31, 2017 and 2016 . Three Months Ended March 31, (In thousands) 2017 2016 Ceded premiums written and earned, net of profit commission (1) 28,895 31,666 Ceded losses incurred 4,687 8,513 Ceding commissions (2) 12,003 11,576 Profit commission 31,117 26,215 (1) Under our QSR Transactions, premiums are ceded on an earned and received basis as defined in the agreements. (2) Ceding commissions are reported within Other underwriting and operating expenses, net on the consolidated statements of operations. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Calculation of earnings (loss) per share | The following table reconciles the numerators and denominators used to calculate basic and diluted EPS and also indicates the number of antidilutive securities. Three Months Ended March 31, (In thousands, except per share data) 2017 2016 Basic earnings per share: Net income $ 89,798 $ 69,191 Weighted average common shares outstanding 341,009 340,144 Basic income per share $ 0.26 $ 0.20 Diluted earnings per share: Net income $ 89,798 $ 69,191 Interest expense, net of tax (1) : 2% Notes 823 1,982 5% Notes 1,282 2,678 9% Debentures 3,757 — Diluted income available to common shareholders $ 95,660 $ 73,851 Weighted average shares - basic 341,009 340,144 Effect of dilutive securities: Unvested RSUs 1,488 1,679 2% Notes 29,859 71,917 5% Notes 10,791 17,625 9% Debentures 19,028 — Weighted average shares - diluted 402,175 431,365 Diluted income per share $ 0.24 $ 0.17 Antidilutive securities (in millions) — 23.3 (1) Tax effected at a rate of 35%. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investments [Abstract] | |
Amortized cost, gross unrealized gains and losses and fair value of investments portfolio | The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio at March 31, 2017 and December 31, 2016 are shown below. March 31, 2017 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 61,035 $ 387 $ (604 ) $ 60,818 Obligations of U.S. states and political subdivisions 2,161,765 25,893 (19,208 ) 2,168,450 Corporate debt securities 1,753,470 7,594 (13,724 ) 1,747,340 ABS 37,107 29 (19 ) 37,117 RMBS 220,739 93 (7,923 ) 212,909 CMBS 300,185 1,038 (7,106 ) 294,117 CLOs 121,156 380 (168 ) 121,368 Total debt securities 4,655,457 35,414 (48,752 ) 4,642,119 Equity securities 7,163 20 (21 ) 7,162 Total investment portfolio $ 4,662,620 $ 35,434 $ (48,773 ) $ 4,649,281 December 31, 2016 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 73,847 $ 407 $ (724 ) $ 73,530 Obligations of U.S. states and political subdivisions 2,147,458 20,983 (25,425 ) 2,143,016 Corporate debt securities 1,756,461 6,059 (18,610 ) 1,743,910 ABS 59,519 74 (28 ) 59,565 RMBS 231,733 102 (7,626 ) 224,209 CMBS 327,042 769 (7,994 ) 319,817 CLOs 121,151 226 (202 ) 121,175 Total debt securities 4,717,211 28,620 (60,609 ) 4,685,222 Equity securities 7,144 8 (24 ) 7,128 Total investment portfolio $ 4,724,355 $ 28,628 $ (60,633 ) $ 4,692,350 (1) At March 31, 2017 and December 31, 2016 , there were no other-than-temporary impairment losses recorded in other comprehensive income. |
Amortized cost and fair values of debt securities by contractual maturity | The amortized cost and fair values of debt securities at March 31, 2017 , by contractual maturity, are shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed and mortgage-backed securities and collateralized loan obligations provide for periodic payments throughout their lives, they are listed in separate categories. March 31, 2017 (In thousands) Amortized Cost Fair Value Due in one year or less $ 338,124 $ 338,309 Due after one year through five years 1,318,577 1,323,558 Due after five years through ten years 1,091,184 1,082,035 Due after ten years 1,228,385 1,232,706 $ 3,976,270 $ 3,976,608 ABS 37,107 37,117 RMBS 220,739 212,909 CMBS 300,185 294,117 CLOs 121,156 121,368 Total as of March 31, 2017 $ 4,655,457 $ 4,642,119 |
Aging of the fair values of securities in an unrealized loss position | For those securities in an unrealized loss position, the length of time the securities were in such a position, as measured by their month-end fair values, is as follows: March 31, 2017 Less Than 12 Months 12 Months or Greater Total (In thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 51,602 $ (604 ) $ — $ — $ 51,602 $ (604 ) Obligations of U.S. states and political subdivisions 830,978 (18,391 ) 22,930 (817 ) 853,908 (19,208 ) Corporate debt securities 802,288 (12,157 ) 34,552 (1,567 ) 836,840 (13,724 ) ABS 2,998 (19 ) — — 2,998 (19 ) RMBS 46,425 (985 ) 162,729 (6,938 ) 209,154 (7,923 ) CMBS 165,771 (6,994 ) 16,453 (112 ) 182,224 (7,106 ) CLOs 7,276 (168 ) — — 7,276 (168 ) Equity securities 527 (12 ) 138 (9 ) 665 (21 ) Total $ 1,907,865 $ (39,330 ) $ 236,802 $ (9,443 ) $ 2,144,667 $ (48,773 ) December 31, 2016 Less Than 12 Months 12 Months or Greater Total (In thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 48,642 $ (724 ) $ — $ — $ 48,642 $ (724 ) Obligations of U.S. states and political subdivisions 1,136,676 (24,918 ) 13,681 (507 ) 1,150,357 (25,425 ) Corporate debt securities 915,777 (16,771 ) 35,769 (1,839 ) 951,546 (18,610 ) ABS 3,366 (28 ) 656 — 4,022 (28 ) RMBS 46,493 (857 ) 171,326 (6,769 ) 217,819 (7,626 ) CMBS 205,545 (7,529 ) 38,587 (465 ) 244,132 (7,994 ) CLOs 13,278 (73 ) 34,760 (129 ) 48,038 (202 ) Equity securities 568 (15 ) 137 (9 ) 705 (24 ) Total $ 2,370,345 $ (50,915 ) $ 294,916 $ (9,718 ) $ 2,665,261 $ (60,633 ) |
Net realized investment gains (losses) and OTTI on investments | The net realized investment (losses) gains on the investment portfolio are as follows: Three Months Ended (In thousands) 2017 2016 Realized investment (losses) gains on investments: Fixed maturities $ (125 ) $ 3,054 Equity securities 3 2 Net realized investment (losses) gains $ (122 ) $ 3,056 Three Months Ended (In thousands) 2017 2016 Realized investment (losses) gains on investments: Gains on sales $ 185 $ 4,104 Losses on sales (307 ) (1,048 ) Net realized investment (losses) gains $ (122 ) $ 3,056 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements for items measured at fair value | Fair value measurements for assets measured at fair value included the following as of March 31, 2017 and December 31, 2016 : March 31, 2017 (In thousands) Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 60,818 $ 12,431 $ 48,387 $ — Obligations of U.S. states and political subdivisions 2,168,450 — 2,167,767 683 Corporate debt securities 1,747,340 — 1,747,340 — ABS 37,117 — 37,117 — RMBS 212,909 — 212,909 — CMBS 294,117 — 294,117 — CLOs 121,368 — 121,368 — Total debt securities 4,642,119 12,431 4,629,005 683 Equity securities (1) 7,162 2,894 4,268 Total investment portfolio $ 4,649,281 $ 15,325 $ 4,629,005 $ 4,951 Real estate acquired (2) $ 10,730 $ — $ — $ 10,730 (1) Equity securities in Level 3 are carried at cost, which approximates fair value. (2) Real estate acquired through claim settlement, which is held for sale, is reported in Other assets on the consolidated balance sheets. December 31, 2016 (In thousands) Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 73,530 $ 30,690 $ 42,840 $ — Obligations of U.S. states and political subdivisions 2,143,016 — 2,142,325 691 Corporate debt securities 1,743,910 — 1,743,910 — ABS 59,565 — 59,565 — RMBS 224,209 — 224,209 — CMBS 319,817 — 319,817 — CLOs 121,175 — 121,175 — Total debt securities 4,685,222 30,690 4,653,841 691 Equity securities (1) 7,128 2,860 — 4,268 Total investment portfolio $ 4,692,350 $ 33,550 $ 4,653,841 $ 4,959 Real estate acquired (2) $ 11,748 $ — $ — $ 11,748 (1) Equity securities in Level 3 are carried at cost, which approximates fair value. (2) Real estate acquired through claim settlement, which is held for sale, is reported in Other assets on the consolidated balance sheets. |
Reconciliation of beginning and ending balance for assets and liabilities measured at fair value with significant unobservable inputs (level 3) | For assets measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the three months ended March 31, 2017 and 2016 is shown in the following tables. There were no transfers into or out of Level 3 in those periods and there were no losses included in earnings for those periods attributable to the change in unrealized losses on assets still held at the end of the applicable period. Three Months Ended March 31, 2017 (In thousands) Debt Securities Equity Securities Total Investments Real Estate Acquired Balance at December 31, 2016 $ 691 $ 4,268 $ 4,959 $ 11,748 Total realized/unrealized gains (losses): Included in earnings and reported as losses incurred, net — — — (163 ) Purchases — — — 8,683 Sales (8 ) — (8 ) (9,538 ) Balance at March 31, 2017 $ 683 $ 4,268 $ 4,951 $ 10,730 Three Months Ended March 31, 2016 (In thousands) Debt Equity Total Real Estate Balance at December 31, 2015 $ 1,228 $ 2,855 $ 4,083 $ 12,149 Total realized/unrealized gains (losses): Included in earnings and reported as losses incurred, net — — — (293 ) Purchases — 3,091 3,091 12,267 Sales (36 ) (2,525 ) (2,561 ) (11,274 ) Balance at March 31, 2016 $ 1,192 $ 3,421 $ 4,613 $ 12,849 |
Carrying value and fair value of debt | The following table presents the carrying value and fair value of our financial liabilities disclosed, but not carried, at fair value at March 31, 2017 and December 31, 2016 . The fair values of our 5% Notes, 2% Notes, 5.75% Notes, and 9% Debentures were based on observable market prices. The fair value of the FHLB Advance was estimated using discounted cash flows on current incremental borrowing rates for similar borrowing arrangements. The fair value of the amount borrowed under our credit facility approximates its carrying value. In all cases the fair values of the financial liabilities below are categorized as Level 2. March 31, 2017 December 31, 2016 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Financial liabilities: Revolving credit facility $ 150,000 $ 150,000 n/a n/a FHLB Advance 155,000 152,757 $ 155,000 $ 151,905 5% Notes 144,948 145,051 144,789 147,679 2% Notes 204,900 302,165 204,672 308,605 5.75% Notes 417,695 448,906 417,406 445,987 9% Debentures 256,872 332,436 256,872 323,040 Total financial liabilities $ 1,329,415 $ 1,531,315 $ 1,178,739 $ 1,377,216 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other comprehensive income | The pretax and related income tax (expense) benefit components of our other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 are included in the following table. Three Months Ended March 31, (In thousands) 2017 2016 Net unrealized investment gains arising during the period $ 18,647 $ 78,383 Income tax expense (6,526 ) (27,556 ) Net of taxes 12,121 50,827 Net changes in benefit plan assets and obligations (234 ) (474 ) Income tax benefit 81 166 Net of taxes (153 ) (308 ) Net changes in unrealized foreign currency translation adjustment 45 (1,496 ) Income tax (expense) benefit (14 ) 521 Net of taxes 31 (975 ) Total other comprehensive income 18,458 76,413 Total income tax expense (6,459 ) (26,869 ) Total other comprehensive income, net of tax $ 11,999 $ 49,544 |
Reclassification out of accumulated other comprehensive income | The pretax and related income tax (expense) benefit components of the amounts reclassified from our accumulated other comprehensive loss (“AOCL”) to our consolidated statements of operations for the three months ended March 31, 2017 and 2016 are included in the following table. Three Months Ended March 31, (In thousands) 2017 2016 Reclassification adjustment for net realized (losses) gains (1) $ (747 ) $ 612 Income tax benefit (expense) 261 (92 ) Net of taxes (486 ) 520 Reclassification adjustment related to benefit plan assets and obligations (2) 234 474 Income tax expense (81 ) (166 ) Net of taxes 153 308 Reclassification adjustment related to foreign currency (3) — (1,467 ) Income tax benefit — 513 Net of taxes — (954 ) Total reclassifications (513 ) (381 ) Total income tax benefit 180 255 Total reclassifications, net of tax $ (333 ) $ (126 ) (1) Increases (decreases) Net realized investment (losses) gains on the consolidated statements of operations. (2) Decreases (increases) Other underwriting and operating expenses, net on the consolidated statements of operations. (3) Increases (decreases) Other revenue on the consolidated statements of operations. |
Accumulated other comprehensive income (loss) | A rollforward of AOCL for the three months ended March 31, 2017 , including amounts reclassified from AOCL, are included in the table below. Three Months Ended March 31, 2017 (In thousands) Net unrealized gains and losses on available-for-sale securities Net benefit plan assets and obligations recognized in shareholders' equity Net unrealized foreign currency translation Total AOCL Balance, December 31, 2016, net of tax $ (20,797 ) $ (54,272 ) $ (31 ) $ (75,100 ) Other comprehensive income before reclassifications 11,635 — 31 11,666 Less: Amounts reclassified from AOCL (486 ) 153 — (333 ) Balance, March 31, 2017, net of tax $ (8,676 ) $ (54,425 ) $ — $ (63,101 ) |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Components of net periodic benefit cost | The following tables provide the components of net periodic benefit cost for our pension, supplemental executive retirement and other postretirement benefit plans for three months ended March 31, 2017 and 2016 : Three Months Ended March 31, Pension and Supplemental Executive Retirement Plans Other Postretirement Benefit Plans (In thousands) 2017 2016 2017 2016 Service cost $ 2,294 $ 2,163 $ 187 $ 175 Interest cost 3,858 3,929 167 172 Expected return on plan assets (5,036 ) (4,889 ) (1,312 ) (1,222 ) Recognized net actuarial loss 1,535 1,361 — — Amortization of prior service cost (107 ) (172 ) (1,662 ) (1,662 ) Net periodic benefit cost (benefit) $ 2,544 $ 2,392 $ (2,620 ) $ (2,537 ) |
Loss Reserves (Tables)
Loss Reserves (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Insurance Loss Reserves [Abstract] | |
Reconciliation of beginning and ending loss reserves | The following table provides a reconciliation of beginning and ending loss reserves as of and for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (In thousands) 2017 2016 Reserve at beginning of period $ 1,438,813 $ 1,893,402 Less reinsurance recoverable 50,493 44,487 Net reserve at beginning of period 1,388,320 1,848,915 Losses incurred: Losses and LAE incurred in respect of default notices received in: Current year 80,416 92,479 Prior years (1) (52,797 ) (7,467 ) Total losses incurred 27,619 85,012 Losses paid: Losses and LAE paid in respect of default notices received in: Current year 331 204 Prior years 127,224 221,457 Reinsurance terminations — (4 ) Total losses paid 127,555 221,657 Net reserve at end of period 1,288,384 1,712,270 Plus reinsurance recoverables 46,658 41,119 Reserve at end of period $ 1,335,042 $ 1,753,389 (1) A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves. See the following table for more information about prior year loss development. |
Prior year development of the reserves | The prior year development of the reserves in the first three months of 2017 and 2016 is reflected in the following table. Three months ended March 31, (In millions) 2017 2016 Decrease in estimated claim rate on primary defaults $ (54 ) $ (26 ) Increase in estimated severity on primary defaults 4 22 Change in estimates related to pool reserves, LAE reserves and reinsurance (3 ) (3 ) Total prior year loss development (1) $ (53 ) $ (7 ) (1) A negative number for prior year loss development indicates a redundancy of prior year loss reserves. |
Rollforward of primary default inventory | A rollforward of our primary default inventory for the three months ended March 31, 2017 and 2016 appears in the following table. The information concerning new notices and cures is compiled from monthly reports received from loan servicers. The level of new notice and cure activity reported in a particular month can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month and transfers of servicing between loan servicers. Three months ended March 31, 2017 2016 Default inventory at beginning of period 50,282 62,633 New notices 14,939 16,731 Cures (17,128 ) (19,053 ) Paids (including those charged to a deductible or captive) (2,635 ) (3,373 ) Rescissions and denials (95 ) (210 ) Other items removed from inventory (14 ) (1,138 ) Default inventory at end of period 45,349 55,590 |
Aging of the primary default inventory | Historically as a default ages it becomes more likely to result in a claim. Consecutive months in default March 31, 2017 December 31, 2016 March 31, 2016 3 months or less 9,184 20 % 12,194 24 % 10,120 18 % 4 - 11 months 13,617 30 % 13,450 27 % 15,319 28 % 12 months or more (1) 22,548 50 % 24,638 49 % 30,151 54 % Total primary default inventory 45,349 100 % 50,282 100 % 55,590 100 % Primary claims received inventory included in ending default inventory 1,390 3 % 1,385 3 % 2,267 4 % (1) Approximately 48% , 47% , and 49% of the primary default inventory in default for 12 consecutive months or more has been in default for at least 36 consecutive months as of March 31, 2017 , December 31, 2016 , and March 31, 2016 , respectively. |
Number of payments delinquent | The number of payments that a borrower is delinquent is shown in the table below. Number of payments delinquent March 31, 2017 December 31, 2016 March 31, 2016 3 payments or less 15,692 35 % 18,419 36 % 16,864 30 % 4 - 11 payments 12,275 27 % 12,892 26 % 14,595 26 % 12 payments or more 17,382 38 % 18,971 38 % 24,131 44 % Total primary default inventory 45,349 100 % 50,282 100 % 55,590 100 % |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock-based compensation, activity | The number of shares granted to employees and the weighted average fair value per share during the periods presented were (shares in thousands): Three months ended March 31, 2017 2016 Shares Granted Weighted Average Share Fair Value Shares Granted Weighted Average Share Fair Value RSUs subject to performance conditions 1,237 $ 10.41 1,257 $ 5.66 RSUs subject only to service conditions 395 10.41 433 5.67 |
New Accounting Pronouncements33
New Accounting Pronouncements (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Discrete tax benefits realized upon adoption of ASU | $ 1.5 |
Debt - Narrative (Details)
Debt - Narrative (Details) shares in Millions | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2017USD ($)shares | Mar. 31, 2017USD ($) | Mar. 21, 2017USD ($) | Dec. 31, 2016USD ($) | |
Debt Instrument [Line Items] | ||||
Long-term debt, par value | $ 1,189,500,000 | $ 1,189,500,000 | ||
Revolving credit facility | $ 150,000,000 | 0 | ||
Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (in hundredths) | 5.00% | |||
Long-term debt, par value | $ 145,000,000 | 145,000,000 | ||
Convertible Senior Notes | 2% Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (in hundredths) | 2.00% | |||
Convertible Senior Notes | 2% Convertible Senior Notes | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Shares issued during period upon conversion of convertible debt (in shares) | shares | 29.1 | |||
2% Notes | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (in hundredths) | 2.00% | |||
Long-term debt, par value | $ 207,600,000 | 207,600,000 | ||
Conversion rate (in shares per $1,000 note) | 0.1438332 | |||
2% Notes | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Principal amount of notes converted into shares | $ 202,500,000 | |||
Principal amount of notes redeemed for cash | $ 5,100,000 | |||
Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 175,000,000 | |||
Revolving credit facility | $ 150,000,000 | |||
9% Debentures | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (in hundredths) | 9.00% | |||
Long-term debt, par value | $ 256,900,000 | $ 256,900,000 | ||
Conversion rate (in shares per $1,000 note) | 0.0740741 |
Debt - Summary of Debt Obligati
Debt - Summary of Debt Obligations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Long-term debt, par value | $ 1,189,500 | $ 1,189,500 |
Less: Debt issuance costs | (10,100) | (10,800) |
Long-term debt, carrying value | 1,179,400 | 1,178,700 |
Revolving credit facility | 150,000 | 0 |
Total debt, carrying value | 1,329,400 | 1,178,700 |
FHLB Advance | ||
Debt Instrument [Line Items] | ||
Long-term debt, par value | 155,000 | 155,000 |
5% Convertible Senior Notes due 2017 | ||
Debt Instrument [Line Items] | ||
Long-term debt, par value | $ 145,000 | 145,000 |
Stated interest rate (in hundredths) | 5.00% | |
2% Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, par value | $ 207,600 | 207,600 |
Stated interest rate (in hundredths) | 2.00% | |
5.75% Notes | 5.75% Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, par value | $ 425,000 | 425,000 |
Stated interest rate (in hundredths) | 5.75% | |
9% Debentures | ||
Debt Instrument [Line Items] | ||
Long-term debt, par value | $ 256,900 | $ 256,900 |
Stated interest rate (in hundredths) | 9.00% | |
Convertible debt, conversion price (in dollars per share) | $ 13.50 | |
Period preceding election to convert (in days) | 5 days |
Debt - Summary of Interest Paid
Debt - Summary of Interest Paid (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Debt Instrument [Line Items] | ||
Total interest payments | $ 13.6 | $ 6.3 |
FHLB Advance | ||
Debt Instrument [Line Items] | ||
Total interest payments | 0.7 | 0.2 |
Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Total interest payments | $ 0 | 1.8 |
Stated interest rate (in hundredths) | 5.00% | |
5.75% Notes | 5.75% Notes | ||
Debt Instrument [Line Items] | ||
Total interest payments | $ 12.9 | 0 |
Stated interest rate (in hundredths) | 5.75% | |
9% Debentures | ||
Debt Instrument [Line Items] | ||
Total interest payments | $ 0 | $ 4.3 |
Stated interest rate (in hundredths) | 9.00% |
Reinsurance - Summary of Premiu
Reinsurance - Summary of Premiums Earned and Losses Incurred (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reinsurance Disclosures [Abstract] | ||
Premiums earned - Direct | $ 259,428 | $ 255,387 |
Premiums earned - Assumed | 98 | 208 |
Premiums earned - Ceded | (30,423) | (34,254) |
Net premiums earned | 229,103 | 221,341 |
Losses incurred - Direct | 32,413 | 92,432 |
Losses incurred - Assumed | 105 | 101 |
Losses incurred - Ceded | (4,899) | (7,521) |
Net losses incurred | $ 27,619 | $ 85,012 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | |
Effects of Reinsurance [Line Items] | ||||
Reinsurance recoverable on loss reserves | $ 46,658,000 | $ 50,493,000 | $ 41,119,000 | $ 44,487,000 |
Period of existing captive reinsurance agreement | 10 years | |||
Reinsurance recoverable on loss reserves related to captive agreements | $ 14,000,000 | 19,000,000 | ||
Fair value of trust fund assets under captive agreements | 86,000,000 | 91,000,000 | ||
Quota Share Reinsurance Agreement, 2017 | ||||
Effects of Reinsurance [Line Items] | ||||
Contingent termination fee | $ 0 | |||
Threshold for private mortgage insurer eligibility requirements for termination election (less than) (as a percent) | 90.00% | |||
Quota share for all policies covered (as a percent) | 30.00% | |||
Ceding commission, percentage (as a percent) | 20.00% | |||
Loss ratio threshold for profit commissions (as a percent) | 60.00% | |||
Quota Share Reinsurance Agreement, 2015 | ||||
Effects of Reinsurance [Line Items] | ||||
Contingent termination fee | $ 0 | |||
Threshold for private mortgage insurer eligibility requirements for termination election (less than) (as a percent) | 90.00% | |||
Quota share for all policies covered (as a percent) | 30.00% | |||
Ceding commission, percentage (as a percent) | 20.00% | |||
Loss ratio threshold for profit commissions (as a percent) | 60.00% | |||
Quota Share Reinsurance Agreements, Excluding Captives [Member] | ||||
Effects of Reinsurance [Line Items] | ||||
Reinsurance recoverable on loss reserves | $ 32,700,000 | $ 31,800,000 |
Reinsurance - Summary of Quota
Reinsurance - Summary of Quota Reinsurance Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Effects of Reinsurance [Line Items] | ||
Ceded losses incurred | $ 4,899 | $ 7,521 |
Quota Share Reinsurance Agreements, Excluding Captives [Member] | ||
Effects of Reinsurance [Line Items] | ||
Ceded premiums written and earned, net of profit commission | 28,895 | 31,666 |
Ceded losses incurred | 4,687 | 8,513 |
Ceding commissions | 12,003 | 11,576 |
Profit commission | $ 31,117 | $ 26,215 |
Litigation and Contingencies (D
Litigation and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Average paid claim reduction due to curtailments (as a percent) | 5.50% | 5.50% |
Maximum exposure associated with other discussions and legal proceedings | $ 306 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Basic earnings per share: | ||
Net income | $ 89,798 | $ 69,191 |
Weighted average common shares outstanding (in shares) | 341,009 | 340,144 |
Basic income per share (in dollars per share) | $ 0.26 | $ 0.20 |
Diluted earnings per share: | ||
Net income | $ 89,798 | $ 69,191 |
Diluted income available to common shareholders | $ 95,660 | $ 73,851 |
Weighted-average shares - Basic (in shares) | 341,009 | 340,144 |
Effect of dilutive securities: | ||
Weighted-average shares - Diluted (in shares) | 402,175 | 431,365 |
Diluted income per share (in dollars per share) | $ 0.24 | $ 0.17 |
Antidilutive securities (in shares) | 0 | 23,300 |
Effective income tax rate (in hundredths) | 35.00% | 35.00% |
2% Notes | ||
Diluted earnings per share: | ||
Dilutive securities | $ 823 | $ 1,982 |
Effect of dilutive securities: | ||
Dilutive securities (in shares) | 29,859 | 71,917 |
Stated interest rate (in hundredths) | 2.00% | |
5% Convertible Senior Notes due 2017 | ||
Diluted earnings per share: | ||
Dilutive securities | $ 1,282 | $ 2,678 |
Effect of dilutive securities: | ||
Dilutive securities (in shares) | 10,791 | 17,625 |
Stated interest rate (in hundredths) | 5.00% | |
9% Convertible Junior Subordinated Debentures due 2063 | ||
Diluted earnings per share: | ||
Dilutive securities | $ 3,757 | $ 0 |
Effect of dilutive securities: | ||
Dilutive securities (in shares) | 19,028 | 0 |
Stated interest rate (in hundredths) | 9.00% | |
Unvested Restricted Stock Units | ||
Effect of dilutive securities: | ||
Unvested RSUs (in shares) | 1,488 | 1,679 |
Investments (Details)
Investments (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)security | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)security | |
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | $ 4,662,620,000 | $ 4,724,355,000 | |
Gross Unrealized Gains | 35,434,000 | 28,628,000 | |
Gross Unrealized Losses | (48,773,000) | (60,633,000) | |
Fair Value | 4,649,281,000 | 4,692,350,000 | |
Other-than-temporary impairments | $ 0 | 0 | |
Federal Home Loan Bank advances, collateral, value of principal, percent (as a percent) | 102.00% | ||
FHLB advance collateral | $ 165,000,000 | ||
Gross accumulated unrealized gain (losses) on available-for-sale securities | $ (48,800,000) | $ (60,600,000) | |
Number of securities in unrealized loss position (in securities) | security | 495 | 607 | |
Net impairment losses recognized in earnings | $ 0 | $ 0 | |
Total debt securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 4,655,457,000 | $ 4,717,211,000 | |
Gross Unrealized Gains | 35,414,000 | 28,620,000 | |
Gross Unrealized Losses | (48,752,000) | (60,609,000) | |
Fair Value | 4,642,119,000 | 4,685,222,000 | |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 61,035,000 | 73,847,000 | |
Gross Unrealized Gains | 387,000 | 407,000 | |
Gross Unrealized Losses | (604,000) | (724,000) | |
Fair Value | 60,818,000 | 73,530,000 | |
Obligations of U.S. states and political subdivisions | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 2,161,765,000 | 2,147,458,000 | |
Gross Unrealized Gains | 25,893,000 | 20,983,000 | |
Gross Unrealized Losses | (19,208,000) | (25,425,000) | |
Fair Value | 2,168,450,000 | 2,143,016,000 | |
Corporate debt securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 1,753,470,000 | 1,756,461,000 | |
Gross Unrealized Gains | 7,594,000 | 6,059,000 | |
Gross Unrealized Losses | (13,724,000) | (18,610,000) | |
Fair Value | 1,747,340,000 | 1,743,910,000 | |
ABS | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 37,107,000 | 59,519,000 | |
Gross Unrealized Gains | 29,000 | 74,000 | |
Gross Unrealized Losses | (19,000) | (28,000) | |
Fair Value | 37,117,000 | 59,565,000 | |
RMBS | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 220,739,000 | 231,733,000 | |
Gross Unrealized Gains | 93,000 | 102,000 | |
Gross Unrealized Losses | (7,923,000) | (7,626,000) | |
Fair Value | 212,909,000 | 224,209,000 | |
CMBS | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 300,185,000 | 327,042,000 | |
Gross Unrealized Gains | 1,038,000 | 769,000 | |
Gross Unrealized Losses | (7,106,000) | (7,994,000) | |
Fair Value | 294,117,000 | 319,817,000 | |
CLOs | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 121,156,000 | 121,151,000 | |
Gross Unrealized Gains | 380,000 | 226,000 | |
Gross Unrealized Losses | (168,000) | (202,000) | |
Fair Value | 121,368,000 | 121,175,000 | |
Equity securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 7,163,000 | 7,144,000 | |
Gross Unrealized Gains | 20,000 | 8,000 | |
Gross Unrealized Losses | (21,000) | (24,000) | |
Fair Value | $ 7,162,000 | $ 7,128,000 |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Values of Debt Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Maturities, Amortized Cost [Abstract] | ||
Due in one year or less | $ 338,124 | |
Due after one year through five years | 1,318,577 | |
Due after five years through ten years | 1,091,184 | |
Due after ten years | 1,228,385 | |
Total debt securities with single maturity date, amortized cost | 3,976,270 | |
Total at end of period | 4,655,457 | $ 4,717,211 |
Maturities, Fair Value [Abstract] | ||
Due in one year or less | 338,309 | |
Due after one year through five years | 1,323,558 | |
Due after five years through ten years | 1,082,035 | |
Due after ten years | 1,232,706 | |
Total debt securities with single maturity date, fair value | 3,976,608 | |
Total at end of period | 4,642,119 | $ 4,685,222 |
ABS | ||
Maturities, Amortized Cost [Abstract] | ||
Total debt securities without single maturity date, amortized cost | 37,107 | |
Maturities, Fair Value [Abstract] | ||
Total debt securities without single maturity date, fair value | 37,117 | |
RMBS | ||
Maturities, Amortized Cost [Abstract] | ||
Total debt securities without single maturity date, amortized cost | 220,739 | |
Maturities, Fair Value [Abstract] | ||
Total debt securities without single maturity date, fair value | 212,909 | |
CMBS | ||
Maturities, Amortized Cost [Abstract] | ||
Total debt securities without single maturity date, amortized cost | 300,185 | |
Maturities, Fair Value [Abstract] | ||
Total debt securities without single maturity date, fair value | 294,117 | |
CLOs | ||
Maturities, Amortized Cost [Abstract] | ||
Total debt securities without single maturity date, amortized cost | 121,156 | |
Maturities, Fair Value [Abstract] | ||
Total debt securities without single maturity date, fair value | $ 121,368 |
Investments - Securities In Unr
Investments - Securities In Unrealized Loss Position (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | $ 1,907,865 | $ 2,370,345 |
12 months or greater | 236,802 | 294,916 |
Total investment portfolio | 2,144,667 | 2,665,261 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (39,330) | (50,915) |
12 months or greater | (9,443) | (9,718) |
Total investment portfolio | (48,773) | (60,633) |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 51,602 | 48,642 |
12 months or greater | 0 | 0 |
Total investment portfolio | 51,602 | 48,642 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (604) | (724) |
12 months or greater | 0 | 0 |
Total investment portfolio | (604) | (724) |
Obligations of U.S. states and political subdivisions | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 830,978 | 1,136,676 |
12 months or greater | 22,930 | 13,681 |
Total investment portfolio | 853,908 | 1,150,357 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (18,391) | (24,918) |
12 months or greater | (817) | (507) |
Total investment portfolio | (19,208) | (25,425) |
Corporate debt securities | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 802,288 | 915,777 |
12 months or greater | 34,552 | 35,769 |
Total investment portfolio | 836,840 | 951,546 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (12,157) | (16,771) |
12 months or greater | (1,567) | (1,839) |
Total investment portfolio | (13,724) | (18,610) |
ABS | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 2,998 | 3,366 |
12 months or greater | 0 | 656 |
Total investment portfolio | 2,998 | 4,022 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (19) | (28) |
12 months or greater | 0 | 0 |
Total investment portfolio | (19) | (28) |
RMBS | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 46,425 | 46,493 |
12 months or greater | 162,729 | 171,326 |
Total investment portfolio | 209,154 | 217,819 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (985) | (857) |
12 months or greater | (6,938) | (6,769) |
Total investment portfolio | (7,923) | (7,626) |
CMBS | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 165,771 | 205,545 |
12 months or greater | 16,453 | 38,587 |
Total investment portfolio | 182,224 | 244,132 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (6,994) | (7,529) |
12 months or greater | (112) | (465) |
Total investment portfolio | (7,106) | (7,994) |
CLOs | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 7,276 | 13,278 |
12 months or greater | 0 | 34,760 |
Total investment portfolio | 7,276 | 48,038 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (168) | (73) |
12 months or greater | 0 | (129) |
Total investment portfolio | (168) | (202) |
Equity securities | ||
Continuous Unrealized Loss Portion, Fair Value [Abstract] | ||
Less than 12 months | 527 | 568 |
12 months or greater | 138 | 137 |
Total investment portfolio | 665 | 705 |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | ||
Less than 12 months | (12) | (15) |
12 months or greater | (9) | (9) |
Total investment portfolio | $ (21) | $ (24) |
Investments - Gain (Loss) on In
Investments - Gain (Loss) on Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Gain (Loss) on Investments [Line Items] | ||
Net realized investment (losses) gains | $ (122) | $ 3,056 |
Realized investment (losses) gains on investments: | ||
Gains on sales | 185 | 4,104 |
Losses on sales | (307) | (1,048) |
Net realized investment (losses) gains | (122) | 3,056 |
Fixed maturities | ||
Gain (Loss) on Investments [Line Items] | ||
Net realized investment (losses) gains | (125) | 3,054 |
Realized investment (losses) gains on investments: | ||
Net realized investment (losses) gains | (125) | 3,054 |
Equity securities | ||
Gain (Loss) on Investments [Line Items] | ||
Net realized investment (losses) gains | 3 | 2 |
Realized investment (losses) gains on investments: | ||
Net realized investment (losses) gains | $ 3 | $ 2 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | ||
State premium tax credit investments, average maturity (in years) | 2 years | |
Annual average discount rate (as a percent) | 7.10% | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ 60,818 | $ 73,530 |
Obligations of U.S. states and political subdivisions | 2,168,450 | 2,143,016 |
Corporate debt securities | 1,747,340 | 1,743,910 |
ABS | 37,117 | 59,565 |
RMBS | 212,909 | 224,209 |
CMBS | 294,117 | 319,817 |
CLOs | 121,368 | 121,175 |
Total debt securities | 4,642,119 | 4,685,222 |
Equity securities | 7,162 | 7,128 |
Total investment portfolio | 4,649,281 | 4,692,350 |
Real estate acquired | 10,730 | 11,748 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 12,431 | 30,690 |
Obligations of U.S. states and political subdivisions | 0 | 0 |
Corporate debt securities | 0 | 0 |
ABS | 0 | 0 |
RMBS | 0 | 0 |
CMBS | 0 | 0 |
CLOs | 0 | 0 |
Total debt securities | 12,431 | 30,690 |
Equity securities | 2,894 | 2,860 |
Total investment portfolio | 15,325 | 33,550 |
Real estate acquired | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 48,387 | 42,840 |
Obligations of U.S. states and political subdivisions | 2,167,767 | 2,142,325 |
Corporate debt securities | 1,747,340 | 1,743,910 |
ABS | 37,117 | 59,565 |
RMBS | 212,909 | 224,209 |
CMBS | 294,117 | 319,817 |
CLOs | 121,368 | 121,175 |
Total debt securities | 4,629,005 | 4,653,841 |
Equity securities | 0 | |
Total investment portfolio | 4,629,005 | 4,653,841 |
Real estate acquired | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Obligations of U.S. states and political subdivisions | 683 | 691 |
Corporate debt securities | 0 | 0 |
ABS | 0 | 0 |
RMBS | 0 | 0 |
CMBS | 0 | 0 |
CLOs | 0 | 0 |
Total debt securities | 683 | 691 |
Equity securities | 4,268 | 4,268 |
Total investment portfolio | 4,951 | 4,959 |
Real estate acquired | $ 10,730 | $ 11,748 |
Fair Value Measurements - Unobs
Fair Value Measurements - Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Total Investments | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | $ 4,959 | $ 4,083 | ||
Total realized/unrealized gains (losses): | ||||
Included in earnings and reported as losses incurred, net | 0 | 0 | ||
Purchases | 0 | 3,091 | ||
Sales | (8) | (2,561) | ||
Balance at end of period | 4,959 | 4,083 | $ 4,951 | $ 4,613 |
Debt Securities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | 691 | 1,228 | ||
Total realized/unrealized gains (losses): | ||||
Included in earnings and reported as losses incurred, net | 0 | 0 | ||
Purchases | 0 | 0 | ||
Sales | (8) | (36) | ||
Balance at end of period | 691 | 1,228 | 683 | 1,192 |
Equity securities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | 4,268 | 2,855 | ||
Total realized/unrealized gains (losses): | ||||
Included in earnings and reported as losses incurred, net | 0 | 0 | ||
Purchases | 0 | 3,091 | ||
Sales | 0 | (2,525) | ||
Balance at end of period | 4,268 | 2,855 | 4,268 | 3,421 |
Real Estate Acquired | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | 11,748 | 12,149 | ||
Total realized/unrealized gains (losses): | ||||
Included in earnings and reported as losses incurred, net | (163) | (293) | ||
Purchases | 8,683 | 12,267 | ||
Sales | (9,538) | (11,274) | ||
Balance at end of period | $ 11,748 | $ 12,149 | $ 10,730 | $ 12,849 |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements - Liabilities Not Measured at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
5% Convertible Senior Notes due 2017 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate (in hundredths) | 5.00% | |
2% Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate (in hundredths) | 2.00% | |
Senior Notes | 5.75% Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate (in hundredths) | 5.75% | |
9% Debentures | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate (in hundredths) | 9.00% | |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Line of credit | $ 150,000 | |
FHLB Advance | 155,000 | $ 155,000 |
5% Notes | 144,948 | 144,789 |
2% Notes | 204,900 | 204,672 |
5.75% Notes | 417,695 | 417,406 |
9% Debentures | 256,872 | 256,872 |
Total financial liabilities | 1,329,415 | 1,178,739 |
Fair Value | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Line of credit | 150,000 | |
FHLB Advance | 152,757 | 151,905 |
5% Notes | 145,051 | 147,679 |
2% Notes | 302,165 | 308,605 |
5.75% Notes | 448,906 | 445,987 |
9% Debentures | 332,436 | 323,040 |
Total financial liabilities | $ 1,531,315 | $ 1,377,216 |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Total other comprehensive income | $ 18,458 | $ 76,413 |
Income tax (expense) benefit | (6,459) | (26,869) |
Other comprehensive income, net of tax | 11,999 | 49,544 |
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | ||
Net realized investment (losses) gains | (122) | 3,056 |
Other underwriting and operating expenses, net | (40,765) | (39,777) |
Other revenue | 2,422 | 6,373 |
Reclassification adjustment | 173,957 | 103,688 |
Income tax benefit (expense) | (84,159) | (34,497) |
Net income | 89,798 | 69,191 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | 2,548,842 | |
Other comprehensive income before reclassifications | 11,666 | |
Less: Amounts reclassified from AOCL | (333) | |
Balance, end of period | 2,647,531 | 2,346,812 |
Accumulated other comprehensive loss | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other comprehensive income, net of tax | 11,999 | 49,544 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | (75,100) | (60,880) |
Balance, end of period | (63,101) | (11,336) |
Net unrealized gains and losses on available-for-sale securities | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Total other comprehensive income | 18,647 | 78,383 |
Income tax (expense) benefit | (6,526) | (27,556) |
Other comprehensive income, net of tax | 12,121 | 50,827 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | (20,797) | |
Other comprehensive income before reclassifications | 11,635 | |
Less: Amounts reclassified from AOCL | (486) | |
Balance, end of period | (8,676) | |
Net benefit plan assets and obligations recognized in shareholders' equity | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Total other comprehensive income | (234) | (474) |
Income tax (expense) benefit | 81 | 166 |
Other comprehensive income, net of tax | (153) | (308) |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | (54,272) | |
Other comprehensive income before reclassifications | 0 | |
Less: Amounts reclassified from AOCL | 153 | |
Balance, end of period | (54,425) | |
Net unrealized foreign currency translation | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Total other comprehensive income | 45 | (1,496) |
Income tax (expense) benefit | (14) | 521 |
Other comprehensive income, net of tax | 31 | (975) |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | (31) | |
Other comprehensive income before reclassifications | 31 | |
Less: Amounts reclassified from AOCL | 0 | |
Balance, end of period | 0 | |
Reclassification from Accumulated Other Comprehensive Income | ||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | ||
Reclassification adjustment | (513) | (381) |
Income tax benefit (expense) | 180 | 255 |
Net income | (333) | (126) |
Reclassification from Accumulated Other Comprehensive Income | Net unrealized gains and losses on available-for-sale securities | ||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | ||
Net realized investment (losses) gains | (747) | 612 |
Income tax benefit (expense) | 261 | (92) |
Net income | (486) | 520 |
Reclassification from Accumulated Other Comprehensive Income | Net benefit plan assets and obligations recognized in shareholders' equity | ||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | ||
Other underwriting and operating expenses, net | 234 | 474 |
Income tax benefit (expense) | (81) | (166) |
Net income | 153 | 308 |
Reclassification from Accumulated Other Comprehensive Income | Net unrealized foreign currency translation | ||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | ||
Other revenue | 0 | (1,467) |
Income tax benefit (expense) | 0 | 513 |
Net income | $ 0 | $ (954) |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Pension and Supplemental Executive Retirement Plans | ||
Components of Net Periodic Benefit Cost [Abstract] | ||
Service cost | $ 2,294 | $ 2,163 |
Interest cost | 3,858 | 3,929 |
Expected return on plan assets | (5,036) | (4,889) |
Recognized net actuarial loss | 1,535 | 1,361 |
Amortization of prior service cost | (107) | (172) |
Net periodic benefit cost (benefit) | 2,544 | 2,392 |
Estimated future employer contributions in current fiscal year | 9,200 | |
Other Postretirement Benefit Plans | ||
Components of Net Periodic Benefit Cost [Abstract] | ||
Service cost | 187 | 175 |
Interest cost | 167 | 172 |
Expected return on plan assets | (1,312) | (1,222) |
Recognized net actuarial loss | 0 | 0 |
Amortization of prior service cost | (1,662) | (1,662) |
Net periodic benefit cost (benefit) | $ (2,620) | $ (2,537) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2007 | Dec. 31, 2016 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Net operating loss carryforwards, regular tax basis | $ 1,300 | |||
Net operating loss carryforwards for computing the alternative minimum tax | 500 | |||
Information regarding income tax examinations [Abstract] | ||||
Amount of IRS assessment for unpaid taxes and penalties related to REMIC issue | $ 197.5 | |||
Estimate of federal interest that may be due | 191.2 | |||
Amount of payment made related to the IRS assessment on the REMIC issue | $ 65.2 | |||
Amount of IRS assessment for unpaid taxes and penalties related to disallowance of carryback of 2009 net operating loss | $ 261.4 | |||
Estimate of additional state income taxes and interest that may be due | 80.9 | |||
Total amount of unrecognized tax benefits | 139.9 | |||
Provision for additional taxes and interest recorded | 27.2 | |||
Total amount of the unrecognized tax benefits that would affect our effective tax rate | 118.4 | |||
Unrecognized tax benefits, accrued interest | $ 49.1 | $ 28.9 |
Loss Reserves - Reconciliation
Loss Reserves - Reconciliation of Beginning and Ending Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Loss Reserve [Roll Forward] | ||
Reserve at beginning of period | $ 1,438,813 | $ 1,893,402 |
Less reinsurance recoverable | 50,493 | 44,487 |
Net reserve at beginning of period | 1,388,320 | 1,848,915 |
Losses and LAE incurred in respect of default notices received in: | ||
Current year | 80,416 | 92,479 |
Prior years | (52,797) | (7,467) |
Total losses incurred | 27,619 | 85,012 |
Losses and LAE paid in respect of default notices received in: | ||
Current year | 331 | 204 |
Prior years | 127,224 | 221,457 |
Reinsurance terminations | 0 | (4) |
Total losses paid | 127,555 | 221,657 |
Net reserve at end of period | 1,288,384 | 1,712,270 |
Plus reinsurance recoverables | 46,658 | 41,119 |
Reserve at end of period | $ 1,335,042 | $ 1,753,389 |
Loss Reserves (Details)
Loss Reserves (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017USD ($)loan | Mar. 31, 2016USD ($)loan | Dec. 31, 2016USD ($) | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | $ | $ (52,797) | $ (7,467) | |
Prior years | $ | $ 127,224 | $ 221,457 | |
Other items removed from inventory (in loans) | (14) | (1,138) | |
Premium refund liability, expected claim payments | $ | $ 81,000 | $ 85,000 | |
Primary Default Inventory [Roll Forward] | |||
Default inventory at the beginning of period (in loans) | 50,282 | 62,633 | |
New notices (in loans) | 14,939 | 16,731 | |
Cures (in loans) | (17,128) | (19,053) | |
Paids (including those charged to a deductible or captive) (in loans) | (2,635) | (3,373) | |
Rescissions and denials (in loans) | (95) | (210) | |
Other items removed from inventory (in loans) | (14) | (1,138) | |
Default inventory at end of period (in loans) | 45,349 | 55,590 | |
Decrease in estimated claim rate on primary defaults | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | $ | $ (54,000) | $ (26,000) | |
Percentage of prior year default inventory resolved (as a percent) | 29.00% | 28.00% | |
Increase in estimated severity on primary defaults | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | $ | $ 4,000 | $ 22,000 | |
Change in estimates related to pool reserves, LAE reserves and reinsurance | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | $ | $ (3,000) | (3,000) | |
Settlements for claims paying practices and nonperforming loan sale | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | $ | $ 47,000 |
Loss Reserves - Delinquent Item
Loss Reserves - Delinquent Items (Details) $ in Millions | Mar. 31, 2017USD ($)loan | Dec. 31, 2016USD ($)loan | Mar. 31, 2016loan | Dec. 31, 2015loan |
Aging of the Primary Default Inventory [Abstract] | ||||
3 months or less (in loans) | 9,184 | 12,194 | 10,120 | |
3 months or less (as a percent) | 20.00% | 24.00% | 18.00% | |
4 - 11 months (in loans) | 13,617 | 13,450 | 15,319 | |
4 - 11 months (as a percent) | 30.00% | 27.00% | 28.00% | |
12 months or more (in loans) | 22,548 | 24,638 | 30,151 | |
12 months or more (as a percent) | 50.00% | 49.00% | 54.00% | |
Total primary default inventory (in loans) | 45,349 | 50,282 | 55,590 | 62,633 |
Total primary default inventory (as a percent) | 100.00% | 100.00% | 100.00% | |
Primary claims received inventory included in ending default inventory (in loans) | 1,390 | 1,385 | 2,267 | |
Primary claims received inventory included in ending default inventory (as a percent) | 3.00% | 3.00% | 4.00% | |
Percent of default inventory in default for more than 36 months (as a percent) | 48.00% | 47.00% | 49.00% | |
Number of payments delinquent [Abstract] | ||||
3 payments or less (in loans) | 15,692 | 18,419 | 16,864 | |
3 payments or less (as a percent) | 35.00% | 36.00% | 30.00% | |
4 - 11 payments (in loans) | 12,275 | 12,892 | 14,595 | |
4 - 11 payments (as a percent) | 27.00% | 26.00% | 26.00% | |
12 payments or more (in loans) | 17,382 | 18,971 | 24,131 | |
12 payments or more (as a percent) | 38.00% | 38.00% | 44.00% | |
Total primary default inventory (in loans) | 45,349 | 50,282 | 55,590 | 62,633 |
Total primary default inventory (as a percent) | 100.00% | 100.00% | 100.00% | |
Pool insurance notice inventory (in number of loans) | 1,714 | 1,883 | 2,247 | |
Premium refund liability, expected future rescissions | $ | $ 5 | $ 5 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 23, 2015 | Apr. 30, 2017 | Mar. 31, 2017 |
Class of Warrant or Right [Line Items] | |||
Common stock, beneficial ownership threshold to be considered an Acquiring Person (as a percent) | 5.00% | ||
Common shares purchasable per Right (in shares) | 0.1 | ||
Shareholder rights accompanying each outstanding share of the company's common stock (in number of Rights) | 1 | ||
Purchase price (in dollars per share) | $ 45 | ||
Purchase price (in dollars per share) | $ 4.50 | ||
Redemption price (in dollars per Right) | $ 0.001 | ||
Rights | |||
Class of Warrant or Right [Line Items] | |||
Number of rights per outstanding share of common stock (in shares) | 1 | ||
Period after public announcement that a person has become an acquirer (in days) | 10 days | ||
Period after a person announces a tender offer which would make them an acquirer (in days) | 10 days | ||
5% Convertible Senior Notes due 2017 | |||
Class of Warrant or Right [Line Items] | |||
Stated interest rate (in hundredths) | 5.00% | ||
5% Convertible Senior Notes due 2017 | 2% Convertible Senior Notes | |||
Class of Warrant or Right [Line Items] | |||
Stated interest rate (in hundredths) | 2.00% | ||
5% Convertible Senior Notes due 2017 | 2% Convertible Senior Notes | Subsequent Event | |||
Class of Warrant or Right [Line Items] | |||
Shares issued during period upon conversion of convertible debt (in shares) | 29,100,000 | ||
Treasury stock reissued during period upon conversion of notes (in shares) | 18,700,000 | ||
Stock issued during period upon conversion of notes (in shares) | 10,400,000 | ||
2% Notes | |||
Class of Warrant or Right [Line Items] | |||
Stated interest rate (in hundredths) | 2.00% | ||
2% Notes | Subsequent Event | |||
Class of Warrant or Right [Line Items] | |||
Principal amount of notes converted into shares | $ 202.5 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
RSUs subject to performance conditions | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in shares) | 1,237 | 1,257 |
Weighted Average Share Fair Value (in dollars per share) | $ 10.41 | $ 5.66 |
RSUs subject only to service conditions | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in shares) | 395 | 433 |
Weighted Average Share Fair Value (in dollars per share) | $ 10.41 | $ 5.67 |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period (in years) | 1 year | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period (in years) | 3 years |
Statutory Information (Details)
Statutory Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017USD ($)jurisdiction | Dec. 31, 2016USD ($) | |
Statutory capital requirements [Abstract] | ||
Number of jurisdictions with risk-to-capital requirements (in jurisdictions) | jurisdiction | 16 | |
Maximum permitted risk-to-capital ratio commonly applied | 25 to 1 | |
Risk to capital ratio of combined insurance operations, including reinsurance affiliates, at end of period | 11.6 to 1 | |
Risk-to-capital ratio for combined insurance operations | 11.6 | |
Percentage of statutory policyholders surplus used to determine maximum allowable dividends (as a percent) | 10.00% | |
Mortgage Guaranty Insurance Corporation | ||
Statutory capital requirements [Abstract] | ||
Maximum risk-to-capital ratio | 25 | |
Risk to capital ratio at end of period | 10.4 to 1 | |
Risk-to-capital ratio | 10.4 | |
Amount of policyholders position above or below required MPP | $ 1,700 | |
Amount of required MPP | 1,100 | |
Cash dividends paid | $ 20 | |
Adjusted statutory net income measurement period (in years) | 3 years | |
Adjusted statutory net income dividend payment measurement period (in years) | 2 years | |
Reduction in statutory net income due to increase in contingency reserve | $ 490 |