Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 16, 2018 | Jun. 30, 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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 4.1 | ||
Entity Common Stock, Shares Outstanding | 370,862,190 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Securities, available-for-sale, at fair value: | ||
Fixed income (amortized cost, 2017 - $4,946,278; 2016 - $4,717,211) | $ 4,983,315 | $ 4,685,222 |
Equity securities | 7,246 | 7,128 |
Total investment portfolio | 4,990,561 | 4,692,350 |
Cash and cash equivalents | 99,851 | 155,410 |
Accrued investment income | 46,060 | 44,073 |
Reinsurance recoverable on loss reserves | 48,474 | 50,493 |
Reinsurance recoverable on paid losses | 3,872 | 4,964 |
Premiums receivable | 54,045 | 52,392 |
Home office and equipment, net | 44,936 | 36,088 |
Deferred insurance policy acquisition costs | 18,841 | 17,759 |
Deferred income taxes, net | 234,381 | 607,655 |
Other assets | 78,478 | 73,345 |
Total assets | 5,619,499 | 5,734,529 |
Liabilities: | ||
Loss reserves | 985,635 | 1,438,813 |
Unearned premiums | 392,934 | 329,737 |
FHLB Advance | 155,000 | 155,000 |
Senior notes | 418,560 | 417,406 |
Convertible senior notes | 0 | 349,461 |
Convertible junior subordinated debentures | 256,872 | 256,872 |
Other liabilities | 255,972 | 238,398 |
Total liabilities | 2,464,973 | 3,185,687 |
Contingencies | ||
Shareholders' equity: | ||
Common stock (one dollar par value, shares authorized 1,000,000; shares issued 2017 - 370,567; 2016 - 359,400; outstanding 2017 - 370,567; 2016 - 340,663) | 370,567 | 359,400 |
Paid-in capital | 1,850,582 | 1,782,337 |
Treasury stock (shares at cost 2016 - 18,737) | 0 | (150,359) |
Accumulated other comprehensive loss, net of tax | (43,783) | (75,100) |
Retained earnings | 977,160 | 632,564 |
Total shareholders' equity | 3,154,526 | 2,548,842 |
Total liabilities and shareholders' equity | $ 5,619,499 | $ 5,734,529 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Fixed income, amortized cost | $ 4,946,278 | $ 4,717,211 |
Shareholders' equity: | ||
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) | 370,567,000 | 359,400,000 |
Common stock, shares outstanding (in shares) | 370,567,000 | 340,663,000 |
Treasury stock, shares at cost (in shares) | 0 | 18,737,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Premiums written: | |||
Direct | $ 1,121,776 | $ 1,107,923 | $ 1,074,490 |
Assumed | 1,905 | 1,053 | 1,178 |
Ceded | (125,726) | (133,885) | (55,391) |
Net premiums written | 997,955 | 975,091 | 1,020,277 |
Increase in unearned premiums | (63,208) | (49,865) | (124,055) |
Net premiums earned | 934,747 | 925,226 | 896,222 |
Investment income, net of expenses | 120,871 | 110,666 | 103,741 |
Net realized investment gains | 249 | 8,932 | 28,361 |
Other revenue | 10,187 | 17,659 | 12,964 |
Total revenues | 1,066,054 | 1,062,483 | 1,041,288 |
Losses and expenses: | |||
Losses incurred, net | 53,709 | 240,157 | 343,547 |
Change in premium deficiency reserve | 0 | 0 | (23,751) |
Amortization of deferred policy acquisition costs | 11,111 | 9,646 | 8,789 |
Other underwriting and operating expenses, net | 159,638 | 150,763 | 155,577 |
Interest expense | 57,035 | 56,672 | 68,932 |
Loss on debt extinguishment | 65 | 90,531 | 507 |
Total losses and expenses | 281,558 | 547,769 | 553,601 |
Income before tax | 784,496 | 514,714 | 487,687 |
Provision for (benefit from) income taxes | 428,735 | 172,197 | (684,313) |
Net income | $ 355,761 | $ 342,517 | $ 1,172,000 |
Earnings per share: | |||
Basic (in dollars per share) | $ 0.98 | $ 1 | $ 3.45 |
Diluted (in dollars per share) | $ 0.95 | $ 0.86 | $ 2.60 |
Weighted average common shares outstanding - basic (in shares) | 362,380 | 342,890 | 339,552 |
Weighted average common shares outstanding - diluted (in shares) | 394,766 | 431,992 | 468,039 |
Dividends per share (in dollars per share) | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||||||||||
Net income | $ 27,314 | $ 120,027 | $ 118,622 | $ 89,798 | $ 107,487 | $ 56,618 | $ 109,221 | $ 69,191 | $ 355,761 | $ 342,517 | $ 1,172,000 |
Other comprehensive income (loss), net of tax: | |||||||||||
Change in unrealized investment gains and losses | 47,547 | (3,649) | 40,403 | ||||||||
Benefit plans adjustment | (5,839) | (9,620) | (15,714) | ||||||||
Foreign currency translation adjustment | 31 | (951) | (4,228) | ||||||||
Other comprehensive income (loss), net of tax | 41,739 | (14,220) | 20,461 | ||||||||
Comprehensive income | $ 397,500 | $ 328,297 | $ 1,192,461 |
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 (deficit) |
Balance, beginning of year at Dec. 31, 2014 | $ 340,047 | $ 1,663,592 | $ (32,937) | $ (81,341) | $ (852,458) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net common stock issued under share-based compensation plans | 50 | (478) | ||||
Reissuance of treasury stock, net under share-based compensation plans | (6,894) | 29,575 | (29,495) | |||
Tax benefit from share-based compensation | 2,116 | |||||
Equity compensation | 11,902 | |||||
Other comprehensive income (loss) | $ 20,461 | 20,461 | ||||
Net income | 1,172,000 | 1,172,000 | ||||
Balance, end of year at Dec. 31, 2015 | 2,236,140 | 340,097 | 1,670,238 | (3,362) | (60,880) | 290,047 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | 18,313 | 113,146 | ||||
Net common stock issued under share-based compensation plans | 990 | (6,020) | ||||
Reissuance of treasury stock, net under share-based compensation plans | (130) | 130 | ||||
Tax benefit from share-based compensation | 67 | |||||
Equity compensation | 11,373 | |||||
Reacquisition of convertible junior subordinated debentures-equity component | (6,337) | |||||
Purchases of common stock | (147,100) | (147,127) | ||||
Other comprehensive income (loss) | (14,220) | (14,220) | ||||
Net income | 342,517 | 342,517 | ||||
Balance, end of year at Dec. 31, 2016 | 2,548,842 | 359,400 | 1,782,337 | (150,359) | (75,100) | 632,564 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of share-based compensation accounting standard update | 49 | 153 | ||||
Issuance of common stock | 10,386 | 60,903 | ||||
Net common stock issued under share-based compensation plans | 781 | (7,602) | ||||
Equity compensation | 14,895 | |||||
Reissuance of treasury stock, net | 150,359 | (21,740) | ||||
Other comprehensive income (loss) | 41,739 | 41,739 | ||||
Net income | 355,761 | 355,761 | ||||
Cumulative effect to reclassify certain tax effects from accumulated other comprehensive loss | (10,422) | 10,422 | ||||
Balance, end of year at Dec. 31, 2017 | $ 3,154,526 | $ 370,567 | $ 1,850,582 | $ 0 | $ (43,783) | $ 977,160 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 355,761 | $ 342,517 | $ 1,172,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and other amortization | 64,430 | 61,342 | 52,559 |
Deferred tax expense (benefit) | 355,044 | 162,356 | (692,810) |
Net realized investment gains | (249) | (8,932) | (28,361) |
Loss on debt extinguishment | 65 | 90,531 | 507 |
Change in certain assets and liabilities: | |||
Accrued investment income | (1,987) | (3,849) | (9,706) |
Prepaid reinsurance premium | 11 | 101 | 47,457 |
Reinsurance recoverable on loss reserves | 2,019 | (6,006) | 13,354 |
Reinsurance recoverable on paid losses | 1,092 | (1,645) | 3,105 |
Premiums receivable | (1,653) | (3,923) | 8,973 |
Deferred insurance policy acquisition costs | (1,082) | (2,518) | (3,001) |
Profit commission receivable | (2,844) | (747) | 64,525 |
Loss reserves | (453,178) | (454,589) | (503,405) |
Premium deficiency reserve | 0 | 0 | (23,751) |
Unearned premiums | 63,197 | 49,764 | 76,559 |
Return premium accrual | (25,400) | (18,800) | (9,600) |
Income taxes payable - current | 49,178 | 1,123 | 2,518 |
Other, net | 2,253 | 18,035 | (9,528) |
Net cash provided by operating activities | 406,657 | 224,760 | 161,395 |
Purchases of investments: | |||
Fixed income | (1,293,616) | (1,360,386) | (2,462,844) |
Equity securities | (79) | (3,197) | (2,623) |
Proceeds from sales of fixed income | 246,908 | 728,042 | 1,796,153 |
Proceeds from maturity of fixed income | 759,212 | 547,444 | 559,774 |
Proceeds from sale of equity securities | 0 | 5,257 | 0 |
Net increase in restricted cash | 0 | 0 | 17,212 |
Additions to property and equipment | (16,066) | (10,552) | (4,630) |
Net cash used in investing activities | (303,641) | (93,392) | (96,958) |
Cash flows from financing activities: | |||
Proceeds from revolving credit facility | 150,000 | 0 | 0 |
Repayment of revolving credit facility | (150,000) | 0 | 0 |
Proceeds from issuance of long-term debt | 0 | 573,094 | 0 |
Repayment of long-term debt | 0 | 0 | (61,953) |
Purchase or repayment of convertible senior notes | (145,620) | (363,778) | (11,152) |
Payment of original issue discount - convertible senior notes | (4,504) | (11,250) | (345) |
Purchase of convertible junior subordinated debentures | 0 | (100,860) | 0 |
Payment of original issue discount-convertible junior subordinated debentures | 0 | (41,540) | 0 |
Cash portion of loss on debt extinguishment | 0 | (59,460) | (507) |
Repurchase of common stock | 0 | (147,127) | 0 |
Payment of debt issuance costs | (1,630) | (1,127) | 0 |
Payment of withholding taxes related to share-based compensation net share settlement | (6,821) | (5,030) | (7,242) |
Net cash used in financing activities | (158,575) | (157,078) | (81,199) |
Net decrease in cash and cash equivalents | (55,559) | (25,710) | (16,762) |
Cash and cash equivalents at beginning of year | 155,410 | 181,120 | 197,882 |
Cash and cash equivalents at end of year | $ 99,851 | $ 155,410 | $ 181,120 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2017 | |
Nature of Business [Abstract] | |
Nature of Business | Nature of Business 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 to protect against loss from defaults on low down payment residential mortgage loans. Our principal product is primary mortgage insurance. Primary mortgage insurance provides mortgage default protection on individual loans and covers unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure or sale approved by us. Through certain non-insurance subsidiaries, we also provide various services for the mortgage finance industry, such as contract underwriting, analysis of loan originations and portfolios, and mortgage lead generation. An insurance subsidiary of MGIC provides credit insurance for certain mortgages under Fannie Mae and Freddie Mac (the "GSEs") credit risk transfer programs in transactions entered into in 2016. At December 31, 2017 , our direct domestic primary insurance in force ("IIF") was $194.9 billion , which represents the principal balance in our records of all mortgage loans that we insure, and our direct domestic primary risk in force ("RIF") was $50.3 billion , which represents the IIF multiplied by the insurance coverage percentage. 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 which have been amended from time to time. 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, calculated from tables of factors with several risk dimensions and subject to a floor amount). Based on our interpretation of the PMIERs, as of December 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. |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), as codified in the Accounting Standards Codification ("ASC"). Our consolidated financial statements include the accounts of MGIC Investment Corporation and its majority-owned subsidiaries. Intercompany transactions and balances have been eliminated. In accordance with GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We have considered subsequent events through the date of this filing. Reclassifications Certain reclassifications to 2016 and 2015 amounts have been made in the accompanying consolidated financial statements to conform to the 2017 presentation. See Note 3 - "Significant Accounting Policies" for a discussion of our adoption of accounting guidance in 2017 that resulted in other reclassifications. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Cash and Cash Equivalents We consider money market funds and investments with original maturities of three months or less to be cash equivalents. Fair value measurements The authoritative accounting guidance includes 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 and certain 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 offers are applied, resulting in tranche specific prices. Collateralized loan obligations ("CLO") Collateralized Loan Obligations 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, for certain equity securities, from their par value due to restrictions that require them to be redeemed or sold only to the security issuer at par value. 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. 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. Investments Our entire investment portfolio is classified as available-for-sale and is reported at fair value or, for certain equity securities carried at cost, amounts that approximate fair value. The related unrealized investment gains or losses are, after considering the related tax expense or benefit, recognized as a component of accumulated other comprehensive income (loss) in shareholders' equity. Realized investment gains and losses are reported in income based upon specific identification of securities sold. (See Note 5 – “Investments.” ) Each quarter we perform reviews of our investments in order to determine whether declines in fair value below amortized cost were considered other-than-temporary. In evaluating whether a decline in fair value is other-than-temporary, we consider several factors including, but not limited to: ▪ our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis; ▪ the present value of the discounted cash flows we expect to collect compared to the amortized cost basis of the security; ▪ extent and duration of the decline; ▪ failure of the issuer to make scheduled interest or principal payments; ▪ change in rating below investment grade; and ▪ adverse conditions specifically related to the security, an industry, or a geographic area. Based on our evaluation, we will record an other-than-temporary impairment ("OTTI") adjustment on a security if we intend to sell the impaired security, if it is more likely than not that we will be required to sell the impaired security prior to recovery of its amortized cost basis, or if the present value of the discounted cash flows we expect to collect is less than the amortized cost basis of the security. If the fair value of a security is below its amortized cost at the time of our intent to sell, the security is classified as other-than-temporarily impaired and the full amount of the impairment is recognized as a loss in the statement of operations. Otherwise, when a security is considered to be other-than-temporarily impaired, the losses are separated into the portion of the loss that represents the credit loss and the portion that is due to other factors. The credit loss portion is recognized as a loss in the statement of operations, while the loss due to other factors is recognized in accumulated other comprehensive loss, net of taxes. A credit loss is determined to exist if the present value of the discounted cash flows, using the security’s original yield, expected to be collected from the security is less than the cost basis of the security. Home office and equipment Home office and equipment is carried at cost net of depreciation. For financial reporting purposes, depreciation is determined on a straight-line basis for the home office and equipment over estimated lives ranging from 3 to 45 years. For income tax purposes, we use accelerated depreciation methods. Home office and equipment is shown net of accumulated depreciation of $33.9 million , $30.6 million and $26.1 million as of December 31, 2017 , 2016 and 2015 , respectively. Depreciation expense for the years ended December 31, 2017 , 2016 and 2015 was $5.4 million , $4.6 million and $3.2 million , respectively. Deferred Insurance Policy Acquisition Costs Costs directly associated with the successful acquisition of mortgage insurance business, consisting of employee compensation and other policy issuance and underwriting expenses, are initially deferred and reported as deferred insurance policy acquisition costs ("DAC"). The deferred costs are net of any ceding commissions received associated with our reinsurance agreements. For each underwriting year of business, these costs are amortized to income in proportion to estimated gross profits over the estimated life of the policies. We utilize anticipated investment income in our calculation. This includes accruing interest on the unamortized balance of DAC. The estimates for each underwriting year are reviewed quarterly and updated when necessary to reflect actual experience and any changes to key variables such as persistency or loss development. Loss Reserves Reserves are established for insurance losses and loss adjustment expenses ("LAE") when we receive notices of default on insured mortgage loans. We consider a loan in default when it is two or more payments past due. Even though the accounting standard, ASC 944, regarding accounting and reporting by insurance entities specifically excludes mortgage insurance from its guidance relating to loss reserves, we establish loss reserves using the general principles contained in the insurance standard. However, consistent with industry standards for mortgage insurers, we do not establish loss reserves for future claims on insured loans which are not currently in default. 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. Our loss estimates are established based upon historical experience, including rescissions of policies, curtailments of claims, and loan modification activity. Adjustments to reserve estimates are reflected in the financial statements in the years in which the adjustments are made. The liability for reinsurance assumed is based on information provided by the ceding companies. Reserves are also established for estimated losses from defaults occurring prior to the close of an accounting period on notices of default not yet reported to us. These incurred but not reported ("IBNR") reserves are also established using estimated claim rates and claim severities. Reserves are also established for the estimated costs of settling claims, including legal and other expenses and general expenses of administering the claims settlement process. Reserves are also ceded to reinsurers under our reinsurance agreements. (See Note 8 – “Loss Reserves” and Note 9 – “Reinsurance.” ) Premium Deficiency Reserve After our loss reserves are initially established, we perform premium deficiency tests using our best estimate assumptions as of the testing date. Premium deficiency reserves are established, if necessary, when the present value of expected future losses and expenses exceeds the present value of expected future premium and already established reserves. Products are grouped for premium deficiency testing purposes based on similarities in the way the products are acquired, serviced and measured for profitability. The calculation of premium deficiency reserves requires the use of significant judgments and estimates to determine the present value of future premium and present value of expected losses and expenses on our business. Similar to our loss reserve estimates, our estimates for premium deficiency reserves could be adversely affected by several factors discussed in Note 8 - Loss Reserves. To the extent premium patterns and actual loss experience differ from the assumptions used in calculating the premium deficiency reserves, the differences between the actual results and our estimate will affect future period earnings and could be material. We established a premium deficiency reserve in 2007 on our Wall Street Bulk business, which we also ceased writing in that year. The premium deficiency reserve was eliminated in 2015 and our consolidated statement of operations for the year ended December 31, 2015 was affected by a decrease in our premium deficiency reserves of $24 million . Revenue Recognition We write policies which are guaranteed renewable contracts at the insured's option on a monthly, single, or annual premium basis. We have no ability to reunderwrite or reprice these contracts. Premiums written on monthly premium policies are earned as coverage is provided. Premiums written on single premium policies and annual premium policies are initially deferred as unearned premium reserve and earned over the estimated policy life. Premiums written on single premium policies are amortized over the policy life in relationship to the anticipated incurred loss pattern based on historical experience. Premiums written on annual premium policies are earned on a monthly pro rata basis. When a policy is cancelled for a reason other than rescission or claim payment, all premium that is non-refundable is immediately earned. Any refundable premium is returned to the servicer or borrower. When a policy is cancelled due to rescission, all previously collected premium is returned to the servicer and when a policy is cancelled because a claim is paid, premium collected since the date of default is returned. The liability associated with our estimate of premium to be returned is accrued for separately and included in "Other liabilities" on our consolidated balance sheets. When a premium deficiency exists the premium refund liability is included in “Premium deficiency reserves” on our consolidated balance sheets. Changes in these liabilities affect premiums written and earned and change in premium deficiency reserve, respectively. The actual return of premium for all periods affects premiums written and earned. Fee income of our non-insurance subsidiaries is earned and recognized as the services are provided and the customer is obligated to pay. Fee income consists primarily of contract underwriting and related fee-based services provided to lenders and is included in “Other revenue” on the consolidated statements of operations. Income Taxes Deferred income taxes are provided under the liability method, which recognizes the future tax effects of temporary differences between amounts reported in the consolidated financial statements and the tax bases of these items. The expected tax effects are computed at the enacted regular federal statutory tax rate. Using this method, we have recorded a net deferred tax asset primarily due to net operating losses incurred in prior years. During 2017, net deferred tax assets were remeasured at the lower corporate tax rate enacted under the U.S. tax reform legislation signed into law in the fourth quarter of 2017 (the "Tax Act"). See Note 12- "Income Taxes" for discussion of the impact of the Tax Act on our consolidated financial statements. On a quarterly basis, we review the need to maintain a deferred tax asset valuation allowance as an offset to the net deferred tax asset, before valuation allowance. We analyze several factors, among which are the severity and frequency of operating losses, our capacity for the carryback or carryforward of any losses, the existence and current level of taxable operating income, operating results on a three year cumulative basis, the expected occurrence of future income or loss, the expiration dates of the carryforwards, the cyclical nature of our operating results, and available tax planning strategies. Based on our analysis, we reduced our benefit from income tax through the recognition of a valuation allowance from the first quarter of 2009 through the second quarter of 2015. In the third quarter of 2015, as discussed in Note 12 – “Income Taxes,” we concluded that it was more likely than not that our deferred tax assets would be fully realizable and we reversed the valuation allowance. We provide for uncertain tax positions and the related interest and penalties based on our assessment of whether a tax benefit is more likely than not to be sustained under any examination by taxing authorities. Benefit Plans We have a non-contributory defined benefit pension plan covering substantially all employees, as well as a supplemental executive retirement plan. Retirement benefits are based on compensation and years of service. We recognize these retirement benefit costs over the period during which employees render the service that qualifies them for benefits. Our policy is to fund pension cost as required under the Employee Retirement Income Security Act of 1974. We offer both medical and dental benefits for retired domestic employees, their eligible spouses and dependents until the retiree reaches the age of 65 . Under the plan retirees pay a premium for these benefits. We accrue the estimated costs of retiree medical and dental benefits over the period during which employees render the service that qualifies them for benefits. (See Note 11 – “Benefit Plans.” ) Reinsurance Loss reserves and unearned premiums are reported before taking credit for amounts ceded under reinsurance agreements. Ceded loss reserves are reflected as "Reinsurance recoverable on loss reserves." Ceded unearned premiums are included in “Other assets.” Amounts due from reinsurers on paid claims are reflected as “Reinsurance recoverable on paid losses.” Ceded premiums payable are included in “Other liabilities.” Any profit commissions are included with “Premiums written – Ceded” and any ceding commissions are included with “Other underwriting and operating expenses, net.” We remain liable for all insurance ceded. (See Note 9 – “Reinsurance.” ) 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. (See Note 15 – “Share-based Compensation Plans.” ) 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. The computation of basic EPS includes as "participating securities" an immaterial number of unvested share-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, under the "two-class" method. Our participating securities are composed of vested restricted stock and restricted stock units ("RSUs") with non-forfeitable rights to dividends (of which none have been declared since the issuance of these participating securities). 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 treasury stock method, diluted EPS reflects the potential dilution that could occur if our unvested restricted stock units result in the issuance of common stock. 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. In addition to our 9% Debentures, of which a portion remain outstanding, we previously had several senior note debt issuances that could have resulted in contingently issuable shares and we considered each potential issuance of shares separately to reflect the maximum potential dilution for the period the debt issuances were outstanding. For purposes of calculating basic and diluted EPS, vested restricted stock and RSUs are considered outstanding. Related party transactions There were no related party transactions during 2017 , 2016 or 2015 . Recent accounting and reporting developments Accounting standards effective in 2017, or early adopted, and relevant to our financial statements Table 3.1 shows the relevant amendments to accounting standards that have been implemented for the fiscal year beginning January 1, 2017; none had a material impact on our consolidated financial statements or disclosures. Table 3.1 Standard / Interpretation Effective date Amended Standards ASC 220 Income Statement - Reporting Comprehensive Income • ASU 2018 -02 - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income January 1, 2019 ASC 718 Compensation - Stock Compensation • ASU 2016-09 - Improvements to Employee Share-Based Compensation Accounting January 1, 2017 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the Financial Accounting Standards Board ("FASB") issued updated guidance that allows an election to reclassify stranded tax effects resulting from the Tax Act's newly enacted federal corporate income tax rate of 21% from accumulated other comprehensive income to retained earnings in an amount that reflects the effect of the change in tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of the enactment of the Tax Act related to items remaining in accumulated comprehensive income (loss). Other than the effect of the change in tax rate, we have no other income tax effects related to the application of the Tax Act that are reclassified from accumulated other comprehensive income (loss) to retained earnings. Absent the updated guidance, we generally would remove stranded tax effects lodged in accumulated other comprehensive income (loss) at the time the circumstances under which these tax effects originally arose no longer exist. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted and we adopted this guidance electing to reclass stranded tax effects from the Tax Act to retained earnings for the fourth quarter ending December 31, 2017. ◦ Adoption impact: We recorded a cumulative effect adjustment that reclassified $10.4 million from accumulated other comprehensive loss to retained earnings to reflect the difference between the amount initially credited to other comprehensive income (loss) and the amount that would have been credited at the newly enacted federal corporate tax rate. The effect of this reclassification increases our retained earnings and increases our accumulated other comprehensive loss, with no change to our total shareholders' equity as of December 31, 2017. Improvements to Employee Share-Based Compensation Accounting In March 2016, the 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. Specifically, the updated guidance requires the following: • Tax effects related to share-based compensation are made through the statement of operations at the time of settlement instead of recognizing them in paid-in capital. ◦ Adoption impact: We recognized discrete tax benefits of $1.6 million in the provision for income taxes on our statement of operations for the year ended December 31, 2017 related to excess tax benefits upon vesting of share-based awards during the period. • Recognition of a tax benefit is no longer required to be delayed until it reduces current taxes payable. ◦ Adoption impact: We recognized an immaterial cumulative effect adjustment in opening retained earnings as of January 1, 2017 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 share-based awards, which was previously applied only to awards with service conditions. • Tax related cash flows resulting from share-based compensation are to be reported as operating activities on the statement of cash flows, instead of as an inflow from financing activities and an outflow from operating activities. ◦ Adoption impact: We reclassified excess tax benefits related to share-based compensation for 2016 and 2015 to operating activities from financing activities. • Shares withheld by an employer for tax-withholding purposes upon vesting of equity compensation represents a cash outflow required to be classified as a financing activity on the statements of cash flows. ◦ Adoption impact: We reclassified employee taxes paid for withheld shares for 2016 and 2015 to financing activities from operating activities. The update also allows, for tax withholding purposes, entities 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. A change in tax withholding is to be applied on a modified retrospective approach. Prospective Accounting Standards Table 3.2 shows the relevant new amendments to accounting standards, which are not yet effective or adopted. Table 3.2 Standard / Interpretation Effective date Amended Standards ASC 718 Compensation - Stock Compensation • ASU 2017-09 - Scope of Modification Accounting January 1, 2018 ASC 715 Compensation - Retirement Benefits • ASU 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost January 1, 2018 ASC 310 Receivables - Nonrefundable Fees and Other Costs • ASU 2017-08 - Premium Amortization on Purchased Callable Debt Securities January 1, 2019 ASC 326 Financial Instruments - Credit Losses • ASU 2016-13 - Measurement of Credit Losses on Financial Instruments January 1, 2020 ASC 825 Financial Instruments - Overall • ASU 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities January 1, 2018 Stock Compensation - Scope of Modification Accounting In May 2017, the FASB issued updated guidance related to a change in the terms or conditions (modification) of a share-based award. The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the award (equity or liability instrument) are the same as the original award immediately before the modification. The updated guidance addresses the current diversity in practice on applying modification accounting, as some entities evaluate whether changes to awards are substantive, which is not prescribed within the current accounting guidance. 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 financial statements or disclosures. 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 financial statements or disclosures. Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued updated guidance to amend the amortization period for premiums on certain purchased callable debt securities, 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, which 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. Early adoption is permitted, including adoption in an interim period. 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. 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 forecasts are 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 s |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings Per Share Table 4.1 reconciles basic and diluted EPS amounts: Table 4.1 Earnings per share Years Ended December 31, (In thousands, except per share data) 2017 2016 2015 Basic earnings per share: Net income $ 355,761 $ 342,517 $ 1,172,000 Weighted average common shares outstanding - basic 362,380 342,890 339,552 Basic earnings per share $ 0.98 $ 1.00 $ 3.45 Diluted earnings per share: Net income $ 355,761 $ 342,517 $ 1,172,000 Interest expense, net of tax (1) : 2% Notes 907 6,111 7,928 5% Notes 1,709 6,362 12,228 9% Debentures 15,027 15,893 22,786 Diluted income available to common shareholders $ 373,404 $ 370,883 $ 1,214,942 Weighted-average shares - Basic 362,380 342,890 339,552 Effect of dilutive securities: Unvested restricted stock units 1,493 1,470 2,113 2% Notes 8,317 54,450 71,917 5% Notes 3,548 13,107 25,603 9% Debentures 19,028 20,075 28,854 Weighted average common shares outstanding - diluted 394,766 431,992 468,039 Diluted income per share $ 0.95 $ 0.86 $ 2.60 (1) Interest expense for the years ended December 31, 2017 , 2016 and 2015 has been tax effected at a rate of 35% . The computation of diluted EPS for the years ended December 31, 2017 , 2016 , and 2015 includes weighted average unvested restricted stock units outstanding of 1.5 million , 1.5 million , and 2.1 million , respectively. For the years ended December 31, 2017 , 2016 , and 2015, all of our then outstanding Convertible Senior Notes and Convertible Junior Subordinated Debentures are reflected in diluted earnings per share using the “if-converted” method. Under this method, if dilutive, the common stock related to the outstanding Convertible Senior Notes and/or Convertible Junior Debentures is assumed issued as of the beginning of the reporting period and the related interest expense, net of tax, is added back to earnings in calculating diluted EPS. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2017 | |
Investments [Abstract] | |
Investments | Investments The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio as of December 31, 2017 and 2016 are shown below: Table 5.1a Details of investments by category - current year December 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 $ 179,850 $ 274 $ (1,278 ) $ 178,846 Obligations of U.S. states and political subdivisions 2,105,063 56,210 (8,749 ) 2,152,524 Corporate debt securities 2,065,475 10,532 (9,169 ) 2,066,838 ABS 4,925 — (2 ) 4,923 RMBS 189,153 60 (7,364 ) 181,849 CMBS 301,014 1,204 (4,906 ) 297,312 CLOs 100,798 304 (79 ) 101,023 Total debt securities 4,946,278 68,584 (31,547 ) 4,983,315 Equity securities 7,223 39 (16 ) 7,246 Total investment portfolio $ 4,953,501 $ 68,623 $ (31,563 ) $ 4,990,561 Table 5.1b Details of investments by category - prior year 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) There were no OTTI losses recorded in other comprehensive (loss) income as of December 31, 2017 and 2016 . As discussed in Note 7 - "Debt" we are required to pledge collateral of at least 102% of the outstanding principal balance of the FHLB Advance. As of December 31, 2017 , that collateral is included in our total investment portfolio amount shown above with a total fair value of $166.9 million . We had $13.6 million of investments at fair value on deposit with various states as of December 31, 2017 and 2016 , respectively, due to regulatory requirements of those state insurance departments. Table 5.2 compares the amortized cost and fair values of debt securities, by contractual maturity, as of December 31, 2017 . Table 5.2 Debt securities maturity schedule December 31, 2017 (In thousands) Amortized Cost Fair Value Due in one year or less $ 541,755 $ 541,695 Due after one year through five years 1,547,712 1,544,943 Due after five years through ten years 925,751 929,883 Due after ten years 1,335,170 1,381,687 4,350,388 4,398,208 ABS 4,925 4,923 RMBS 189,153 181,849 CMBS 301,014 297,312 CLOs 100,798 101,023 Total as of December 31, 2017 $ 4,946,278 $ 4,983,315 The analysis in table 5.2 is based upon contractual maturity. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties. Because most mortgage and asset-backed securities provide for periodic payments throughout their lives, they are listed separately in the table. Tables 5.3a and 5.3b show the components of our unrealized losses on our investment portfolio in the amount of $32 million and $61 million as of December 31, 2017 and 2016 , respectively. Table 5.3a Investments unrealized losses - current year December 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 $ 144,042 $ (796 ) $ 31,196 $ (482 ) $ 175,238 $ (1,278 ) Obligations of U.S. states and political subdivisions 505,311 (3,624 ) 211,684 (5,125 ) 716,995 (8,749 ) Corporate debt securities 932,350 (4,288 ) 200,716 (4,881 ) 1,133,066 (9,169 ) ABS 4,923 (2 ) — — 4,923 (2 ) RMBS 14,979 (280 ) 166,329 (7,084 ) 181,308 (7,364 ) CMBS 51,096 (358 ) 138,769 (4,548 ) 189,865 (4,906 ) CLOs 14,243 (7 ) 3,568 (72 ) 17,811 (79 ) Equity securities 226 (2 ) 431 (14 ) 657 (16 ) Total investment portfolio $ 1,667,170 $ (9,357 ) $ 752,693 $ (22,206 ) $ 2,419,863 $ (31,563 ) Table 5.3b Investments unrealized losses - prior year 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 investment portfolio $ 2,370,345 $ (50,915 ) $ 294,916 $ (9,718 ) $ 2,665,261 $ (60,633 ) For those securities in an unrealized loss position, the length of time the securities were in such a position, is measured by their month-end fair values. The unrealized losses in all categories of our investments as of December 31, 2017 and 2016 were primarily caused by changes in interest rates between the time of purchase and the respective year end. There were 586 and 607 securities in an unrealized loss position as of December 31, 2017 and 2016 , respectively. As of December 31, 2017 , the fair value as a percent of amortized cost of the securities in an unrealized loss position was 99% and approximately 27% of the securities in an unrealized loss position were backed by the U.S. Government. The source of net investment income is shown in Table 5.4 below. Table 5.4 Investment income by source (In thousands) 2017 2016 2015 Fixed income $ 122,105 $ 112,513 $ 105,882 Equity securities 206 182 208 Cash equivalents 1,447 754 191 Other 620 433 455 Investment income 124,378 113,882 106,736 Investment expenses (3,507 ) (3,216 ) (2,995 ) Net investment income $ 120,871 $ 110,666 $ 103,741 For the years ended December 31, 2017 , 2016 , and 2015 , there were no OTTI losses in earnings. The net realized investment gains (table 5.5 ) and the change in unrealized gains (losses) of investments (table 5.6 ) are shown below. Table 5.5 Net realized investment gains (In thousands) 2017 2016 2015 Fixed income $ 228 $ 5,310 $ 28,335 Equity securities 21 3,622 26 Other — — — Total net realized investment gains $ 249 $ 8,932 $ 28,361 Table 5.6 Change in unrealized gains (losses) (In thousands) 2017 2016 2015 Fixed income $ 69,026 $ (5,403 ) $ (33,687 ) Equity securities 39 (36 ) (32 ) Other (13 ) 14 1 Total increase (decrease) in unrealized gains/losses $ 69,052 $ (5,425 ) $ (33,718 ) Gross realized gains and losses on investments are shown in Table 5.7 below. Table 5.7 Gross realized investment gains (In thousands) 2017 2016 2015 Gross realized gains $ 1,599 $ 11,909 $ 30,039 Gross realized losses (1,350 ) (2,977 ) (1,678 ) Net realized gains on securities $ 249 $ 8,932 $ 28,361 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Recurring fair value measurements Assets measured at fair value included those listed, by hierarchy level, in the following tables as of December 31, 2017 and 2016 : Table 6.1a Fair value hierarchy - current year December 31, 2017 (In thousands) 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 $ 178,846 $ 81,598 $ 97,248 $ — Obligations of U.S. states and political subdivisions 2,152,524 — 2,152,253 271 Corporate debt securities 2,066,838 — 2,066,838 — ABS 4,923 — 4,923 — RMBS 181,849 — 181,849 — CMBS 297,312 — 297,312 — CLOs 101,023 — 101,023 — Total debt securities 4,983,315 81,598 4,901,446 271 Equity securities (1) 7,246 2,978 — 4,268 Total investments $ 4,990,561 $ 84,576 $ 4,901,446 $ 4,539 Real estate acquired (2) $ 12,713 $ — $ — $ 12,713 Table 6.1b Fair value hierarchy - prior year December 31, 2016 (In thousands) 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 investments $ 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. Reconciliations of Level 3 assets For assets and liabilities measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the years ended December 31, 2017 , 2016 , and 2015 is shown in the following tables. There were no transfers into or out of Level 3 in those years and there we no losses included in earnings for those years attributable to the change in unrealized losses on assets still held at the end of each applicable year. Table 6.2a Development of assets and liabilities classified within level 3 - current year (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 — — — (1,315 ) Purchases — — — 34,749 Sales (420 ) — (420 ) (32,469 ) Balance at December 31, 2017 $ 271 $ 4,268 $ 4,539 $ 12,713 Table 6.2b Development of assets and liabilities classified within level 3 - prior year (In thousands) Debt Securities Equity Securities Total Investments Real Estate Acquired Balance at December 31, 2015 $ 1,228 $ 2,855 $ 4,083 $ 12,149 Total realized/unrealized gains (losses): Included in earnings and reported as net realized investment gains — 3,579 3,579 — Included in earnings and reported as losses incurred, net — — — (1,142 ) Purchases — 4,258 4,258 36,859 Sales (537 ) (6,424 ) (6,961 ) (36,118 ) Balance at December 31, 2016 $ 691 $ 4,268 $ 4,959 $ 11,748 Table 6.2c Development of assets and liabilities classified within level 3 - two years prior (In thousands) Debt Securities Equity Securities Total Investments Real Estate Acquired Balance at December 31, 2014 $ 1,846 $ 321 $ 2,167 $ 12,658 Total realized/unrealized gains (losses): Included in earnings and reported as losses incurred, net — — — (2,322 ) Purchases 7 2,534 2,541 34,624 Sales (625 ) — (625 ) (32,811 ) Balance at December 31, 2015 $ 1,228 $ 2,855 $ 4,083 $ 12,149 Level 3 securities within total investments consisted primarily of equity securities that can only be redeemed or sold at their par value and only to the security issuer. 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 5 – “Investments. ” Financial liabilities not measured at fair value Financial liabilities are incurred in the normal course of our business. Table 6.3 compares the carrying value and fair value of our financial liabilities disclosed, but not carried, at fair value as of December 31, 2017 and 2016 . Table 6.3 Fair value measurements - liabilities December 31, 2017 December 31, 2016 (In thousands) Carrying Value Fair Value Carrying Value Fair Value FHLB Advance $ 155,000 $ 152,124 $ 155,000 $ 151,905 5% Notes — — 144,789 147,679 2% Notes — — 204,672 308,605 5.75% Notes 418,560 465,473 417,406 445,987 9% Debentures 256,872 353,507 256,872 323,040 Total financial liabilities $ 830,432 $ 971,104 $ 1,178,739 $ 1,377,216 The fair values of our 5% Notes, 2% Notes, 5.75% Notes, and 9% Debentures were based on observable market prices and the fair value of the FHLB Advance was estimated using discounted cash flows on current incremental borrowing rates for similar borrowing arrangements, and in all cases they are categorized as Level 2. See Note 7 - "Debt" for a description of the financial liabilities in table 6.3 . The 5.75% Notes and 9% Debentures are obligations of our holding company, MGIC Investment Corporation, and not of its subsidiaries. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt obligations Table 7.1 shows the par value of our long-term debt obligations and their aggregate carrying values as of December 31, 2017 and 2016 . Table 7.1 Long-term debt obligations December 31, (In millions) 2017 2016 FHLB Advance $ 155.0 $ 155.0 5% Notes — 145.0 2% Notes — 207.6 5.75% Notes 425.0 425.0 9% Debentures 256.9 256.9 Long-term debt, par value 836.9 1,189.5 Debt issuance costs (6.5 ) (10.8 ) Long-term debt, carrying value $ 830.4 $ 1,178.7 Table 7.2 shows the interest payments, on a consolidated basis, for our debt obligations outstanding during 2017 and 2016 . Table 7.2 Interest payments on debt obligations Years Ended December 31, (In millions) 2017 2016 Revolving credit facility $ 0.9 $ — FHLB Advance 3.0 2.4 5% Notes 3.6 10.6 2% Notes 2.1 9.1 5.75% Notes 25.1 — 9% Debentures 23.1 27.4 Total interest payments $ 57.8 $ 49.5 2% Notes On March 21, 2017, we issued an irrevocable notice of redemption in respect of our outstanding 2% Convertible Senior Notes due April 1, 2020 (" 2% Notes"), with a redemption date of April 21, 2017. In April, holders of approximately $202.5 million of the outstanding principal exercised their rights to convert their notes to 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 2017. The conversions and cash redemption eliminated our debt obligation. A loss on debt extinguishment of $0.07 million was recognized on notes redeemed for cash. No gain or loss was recognized from the conversions as the outstanding debt issuance costs associated with the conversions were included in the carrying value of the notes, which was credited to shareholders' equity at the time of conversion. In the third quarter of 2016, we entered into privately negotiated agreements to repurchase $292.4 million in aggregate principal of our outstanding 2% Notes at a purchase price of $362.1 million , plus accrued interest. We funded the purchases with $230.7 million in cash, using proceeds from the issuance of our 5.75% Notes, and by issuing to certain sellers approximately 18.3 million shares of our common stock. The excess of the purchase price over carrying value is reflected as a loss on debt extinguishment of $74.3 million on our consolidated statement of operations for the year ended December 31, 2016. The shares issued as consideration for the notes repurchases were repurchased as of December 31, 2016 using cash from our 5.75% Notes issuance. The repurchases of the 2% Notes reduced potentially dilutive shares by approximately 42.1 million shares, without considering the shares issued as partial consideration in the purchases of the 2% Notes or the repurchase of shares to offset such shares issued. Interest on the 2% Notes was payable semi-annually in arrears on April 1 and October 1 of each year. Debt issuance costs were being amortized to interest expense over the contractual life of the notes. 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 margin is 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 Agreement 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. In March 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 On May 1, 2017, our 5% Notes due in 2017 (" 5% Notes") matured and we repaid the outstanding $145 million in aggregate par value, plus accrued interest with cash at our holding company. Interest on the 5% Notes was payable semi-annually in arrears on May 1 and November 1 of each year. In 2016, we repurchased $188.5 million in aggregate principal of our 5% Notes at a purchase price of $195.5 million , plus accrued interest using funds held at our holding company. The excess of the purchase price over carrying value was reflected as a loss on debt extinguishment of $7.9 million on our consolidated statement of operations. Our 2016 5% Notes repurchases reduced our potentially dilutive shares by approximately 14.0 million shares. 5.75% Notes In August 2016, we issued $425 million aggregate principal amount of 5.75% Senior Notes due in 2023 (" 5.75% Notes") and received net proceeds, after the deduction of underwriting fees, of $418.1 million . Interest on the 5.75% Notes is payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2017. We have the option to redeem these notes, in whole or in part, at any time or from time to time prior to maturity at a redemption price equal to the greater of (i) 100% of the aggregate principal amount of the notes to be redeemed and (ii) the make-whole amount, which is the sum of the present values of the remaining scheduled payments of principal and interest discounted at the treasury rate defined in the notes plus 50 basis points, plus, in each case, accrued interest thereon to, but excluding, the redemption date. In addition to underwriting fees, we incurred approximately $1.2 million of other expenses associated with the issuance of these notes. The 5.75% Notes have covenants customary for securities of this nature, including customary events of default, and further provide that the trustee or holders of at least 25% in aggregate principal amount of the outstanding 5.75% Notes may declare them immediately due and payable upon the occurrence of certain events of default after the expiration of the applicable grace period. In addition, in the case of an event of default arising from certain events of bankruptcy, insolvency or reorganization relating to the Company or any of its significant subsidiaries, the 5.75% Notes will become due and payable immediately. This description is not intended to be complete in all respects and is qualified in its entirety by the terms of the 5.75% Notes, including their covenants and events of default. We were in compliance with all covenants as of December 31, 2017. The net proceeds from the 5.75% Notes issuance were primarily used as (i) cash consideration to repurchase a portion of our 2% Notes, and (ii) to repurchase the shares issued as partial consideration in the repurchases of our 2% Notes, as described above. The remaining proceeds are being held for general corporate purposes. FHLB Advance In February 2016, MGIC borrowed $155.0 million in the form of a fixed rate advance from the Federal Home Loan Bank of Chicago ("FHLB Advance"). Interest on the Advance is payable monthly at an annual rate, fixed for the term of the Advance, of 1.91% . The principal of the Advance matures on February 10, 2023 . MGIC may prepay the Advance at any time. Such prepayment would be below par if interest rates have risen after the Advance was originated, or above par if interest rates have declined. The Advance is secured by eligible collateral whose market value must be maintained at 102% of the principal balance of the Advance. MGIC provided eligible collateral from its investment portfolio. 9% Debentures As of December 31, 2017 and 2016 we had outstanding $256.9 million principal amount of our 9% Debentures due in 2063 (" 9% Debentures"). In February 2016, MGIC purchased $132.7 million in aggregate principal of our outstanding 9% Debentures at a purchase price of $150.7 million , plus accrued interest. The 9% Debentures include a conversion feature that allows us, at our option, to make a cash payment to converting holders in lieu of issuing shares of common stock upon conversion of the 9% Debentures. The accounting standards applicable to extinguishment of debt with a cash conversion feature require the consideration paid to be allocated between the extinguishment of the liability component and reacquisition of the equity component. The purchase of the 9% Debentures resulted in an $8.3 million loss on debt extinguishment on the consolidated statement of operations for the year ended December 31, 2016, which represents the difference between the fair value and the carrying value of the liability component on the purchase date. In addition, our shareholders’ equity was separately reduced by $6.3 million related to the reacquisition of the equity component. For GAAP accounting purposes, the 9% Debentures owned by MGIC are considered retired and are eliminated in our consolidated financial statements and the underlying common stock equivalents, approximately 9.8 million shares, are not included in the computation of diluted shares. The 9% Debentures are currently convertible, at the holder's option, at an initial conversion rate, which is subject to adjustment, of 74.0741 common shares per $1,000 principal amount of the 9% Debentures at any time prior to the maturity date. This represents an initial conversion price of approximately $13.50 per share. If a holder elects to convert their 9% Debentures, deferred interest, if any, owed on the 9% 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. We have 19.0 million authorized shares reserved for conversion under our 9% debentures. We may redeem the 9% Debentures in whole or in part from time to time, at our option, at a redemption price equal to 100% of the principal amount of the 9% Debentures being redeemed, plus any accrued and unpaid interest, if the closing sale price of our common stock exceeds $17.55 for at least 20 of the 30 trading days preceding notice of the redemption. Interest on the 9% Debentures is payable semi-annually in arrears on April 1 and October 1 of each year. As long as no event of default with respect to the debentures has occurred and is continuing, we may defer interest, under an optional deferral provision, for one or more consecutive interest periods up to 10 years without giving rise to an event of default. Deferred interest will accrue additional interest at the rate then applicable to the debentures. During an optional deferral period we may not pay or declare dividends on our common stock. When interest on the 9% Debentures is deferred, we are required, not later than a specified time, to use reasonable commercial efforts to begin selling qualifying securities to persons who are not our affiliates. The specified time is one business day after we pay interest on the 9% Debentures that was not deferred, or if earlier, the fifth anniversary of the scheduled interest payment date on which the deferral started. Qualifying securities are common stock, certain warrants and certain non-cumulative perpetual preferred stock. The requirement to use such efforts to sell such securities is called the Alternative Payment Mechanism. The net proceeds of Alternative Payment Mechanism sales are to be applied to the payment of deferred interest, including the compound portion. We cannot pay deferred interest other than from the net proceeds of Alternative Payment Mechanism sales, except at the final maturity of the debentures or at the ten th anniversary of the start of the interest deferral. The Alternative Payment Mechanism does not require us to sell common stock or warrants before the fifth anniversary of the interest payment date on which that deferral started if the net proceeds (counting any net proceeds of those securities previously sold under the Alternative Payment Mechanism) would exceed the 2% cap. The 2% cap is 2% of the average closing price of our common stock times the number of our outstanding shares of common stock. The average price is determined over a specified period ending before the issuance of the common stock or warrants being sold, and the number of outstanding shares is determined as of the date of our most recent publicly released financial statements. We are not required to issue under the Alternative Payment Mechanism a total of more than 10 million shares of common stock, including shares underlying qualifying warrants. In addition, we may not issue under the Alternative Payment Mechanism qualifying preferred stock if the total net proceeds of all issuances would exceed 25% of the aggregate principal amount of the debentures. The Alternative Payment Mechanism does not apply during any period between scheduled interest payment dates if there is a “market disruption event” that occurs over a specified portion of such period. Market disruption events include any material adverse change in domestic or international economic or financial conditions. The provisions of the 9% Debentures are complex. The description above is not intended to be complete in all respects. Moreover, that description is qualified in its entirety by the terms of the 9% Debentures, including their covenants and events of default. We were in compliance with all covenants at December 31, 2017 . The 9% Debentures rank junior to all of our existing and future senior indebtedness. |
Loss Reserves
Loss Reserves | 12 Months Ended |
Dec. 31, 2017 | |
Insurance Loss Reserves [Abstract] | |
Loss Reserves | Loss Reserves As described in Note 3 – “Summary of Significant Accounting Policies – Loss Reserves,” we establish reserves to recognize the estimated liability for losses and 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 consolidated results of operations and financial position, even in a stable economic environment. The “Losses incurred” section of table 8.1 below shows losses incurred on delinquencies that occurred in the current year and in prior years. The amount of losses incurred relating to delinquencies that occurred in the current year represents the estimated amount to be ultimately paid on such delinquencies. The amount of losses incurred relating to delinquencies that occurred in prior years represents the difference between the actual claim rate and severity associated with those delinquencies resolved in the current year compared to the estimated claim rate and severity at the prior year-end, as well as a re-estimation of amounts to be ultimately paid on delinquencies 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 delinquent 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 delinquencies by geography and changes in average loan exposure. Losses incurred on delinquencies that occurred in the current year decreased in 2017 compared to 2016 due to a decrease in the estimated claim rate on recently reported delinquencies, and in 2016 compared to 2015 , primarily due to a decrease in the number of new delinquencies, net of cures, as well as a decrease in the estimated claim rate on recently reported delinquencies. See "Hurricane activity" below for additional information on new notice activity and items in our delinquent inventory from the hurricane impacted areas. Based on our analysis and past experience, new notices received in areas impacted by hurricanes generally cure at a higher rate than notices received in the normal course of business and we have estimated a materially lower claim rate on the estimated new notices caused by the hurricane activity; however, our estimated severity was similar to other new notices received. The “Losses paid” section of table 8.1 below shows the amount of losses paid on delinquent notices received in the current year and losses paid on delinquent notices received in prior years. For several years, the average time it took to receive a claim associated with a delinquency had increased significantly from our historical experience of approximately twelve months. This was, 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. In recent quarters, we have experienced a decline in the average time servicers are utilizing to process foreclosures, which has reduced the average time to receive a claim associated with new delinquent notices that do not cure. All else being equal, the longer the period between delinquency and claim filing, the greater the severity. Our estimate of premiums to be refunded on expected claim payments is accrued for separately in "Other liabilities" on our consolidated balance sheets and approximated $61 million and $85 million at December 31, 2017 and 2016 , respectively. During 2017 and 2016 , our losses paid included amounts paid upon commutation of coverage on pools of non-performing loans ("NPLs"), and in 2016 our losses paid also included amounts paid in connection with settlements for disputes concerning our claims paying practices. Losses paid in 2015 included amounts paid in connection with settlements for disputes concerning our claims paying practices. The impacts of the commutations of coverage on NPLs and/or settlements in each of the past three years were as follows: • 2017 - 1,337 notices removed from default inventory with an amount paid of $54 million , • 2016 - 1,273 notices removed from default inventory with an amount paid of $53 million , • 2015 - 1,121 notices removed from default inventory with an amount paid of $ 10 million . In each of 2016 and 2015, we paid $42 million in connection with a 2012 settlement agreement with Freddie Mac regarding the aggregate loss limit under certain pool insurance policies. The final payment under that settlement agreement was made on December 1, 2016. Table 8.1 provides a reconciliation of beginning and ending loss reserves for each of the past three years: Table 8.1 Development of reserves for losses and loss adjustment expenses (In thousands) 2017 2016 2015 Reserve at beginning of year $ 1,438,813 $ 1,893,402 $ 2,396,807 Less reinsurance recoverable 50,493 44,487 57,841 Net reserve at beginning of year 1,388,320 1,848,915 2,338,966 Losses incurred: Losses and LAE incurred in respect of delinquent notices received in: Current year 284,913 387,815 453,849 Prior years (1) (231,204 ) (147,658 ) (110,302 ) Total losses incurred 53,709 240,157 343,547 Losses paid: Losses and LAE paid in respect of delinquent notices received in: Current year 11,267 14,823 25,980 Prior years 493,300 689,258 823,058 Reinsurance terminations (2) 301 (3,329 ) (15,440 ) Total losses paid 504,868 700,752 833,598 Net reserve at end of year 937,161 1,388,320 1,848,915 Plus reinsurance recoverables 48,474 50,493 44,487 Reserve at end of year $ 985,635 $ 1,438,813 $ 1,893,402 (1) A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves. See table 8.2 below for more information about prior year loss development. (2) In a termination, the reinsurance agreement is cancelled, with no future premium ceded and amounts for any incurred but unpaid losses paid to us. Amounts paid to (received from) reinsurers result in an increase (decrease) in net losses paid. The change in net losses paid on our losses incurred is offset by a corresponding change in the reinsurance recoverable, resulting in no net impact on losses incurred. (See Note 9 – “Reinsurance” ). Table 8.2 below shows the development of reserves in 2017 , 2016 and 2015 for previously received delinquencies. Table 8.2 Reserve development on previously received delinquencies (In millions) 2017 2016 2015 Decrease in estimated claim rate on primary delinquencies $ (248 ) $ (148 ) $ (141 ) Increase in estimated severity on primary delinquencies 9 9 43 Change in estimates related to pool reserves, LAE reserves, reinsurance and other 8 (9 ) (12 ) Total prior year loss development (1) $ (231 ) $ (148 ) $ (110 ) (1) A negative number for prior year loss development indicates a redundancy of prior year loss reserves. For the years ended December 31, 2017 , 2016 and 2015 , we experienced favorable development on previously received delinquencies. This development was, in part, due to the resolution of approximately 67% , 63% and 60% for the years ended December 31, 2017 , 2016 and 2015 , respectively, of the prior year delinquent inventory, with improved cure rates. During 2017, cure activity on loans that were delinquent twelve months or more was significantly higher than our previous estimates. During 2015, the claim rate development was also favorably impacted by re-estimations of previously recorded reserves relating to disputes on our claims paying practices and adjustments to IBNR. The favorable development for the years ended 2017, 2016, and 2015 was offset, in part, by an increase in the estimated severity on previously reported delinquencies remaining in the delinquent inventory. Delinquent Inventory A rollforward of our primary delinquent inventory for the years ended December 31, 2017 , 2016 , and 2015 appears in table 8.3 below. 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. Table 8.3 Delinquent inventory rollforward 2017 2016 2015 Delinquent inventory at beginning of year 50,282 62,633 79,901 New Notices 68,268 67,434 74,315 Cures (61,094 ) (65,516 ) (73,610 ) Paids (including those charged to a deductible or captive) (9,206 ) (12,367 ) (16,004 ) Rescissions and denials (357 ) (629 ) (848 ) Other items removed from inventory (1,337 ) (1,273 ) (1,121 ) Delinquent inventory at end of year 46,556 50,282 62,633 2017 delinquent inventory Hurricane activity New default notice activity increased in 2017 compared to the prior year (particularly in the fourth quarter) because of hurricane activity that primarily impacted Puerto Rico, Texas, and Florida in the third quarter of 2017. In response to the hurricanes, the Federal Emergency Management Agency has declared Individual Assistance Disaster Areas ("IADA") which we are utilizing to identify new notices of delinquency for reserving and loss mitigation purposes. We received 9,294 new notices of delinquency on loans in the IADAs in the fourth quarter of 2017, which compares to 1,968 new notices in the same areas in the fourth quarter of 2016. Loans in our ending delinquent inventory within the IADAs were 12,446 and 7,162 as of December 31, 2017 and 2016, respectively. The new notice activity from hurricane impacted areas in the fourth quarter of 2017 has increased the percentage of our delinquent inventory that has been delinquent for three months or less (table 8.4 ) and correspondingly our percentage of delinquent inventory with three payments or less (table 8.5 ) delinquent has also increased. 2016 and 2015 delinquent inventory The decrease in the primary delinquent inventory experienced during 2016 and 2015 from the respective prior year was generally across all markets and all book years prior to 2013. In 2016 and 2015, the percentage of loans in the inventory that had been delinquent for 12 or more consecutive months had decreased compared to the respective prior year. Historically as a delinquency ages it becomes more likely to result in a claim. The percentage of loans that have been delinquent for 12 or more consecutive months and the number of loans in our primary claims received inventory have been affected by our suspended rescissions and the resolution of certain of those rescissions discussed below and in Note 17 - "Litigation and Contingencies" . The number of consecutive months that a borrower has been delinquent is shown in the table below. Table 8.4 Delinquent inventory - consecutive months delinquent December 31, 2017 2016 2015 3 months or less 17,119 37 % 12,194 24 % 13,053 21 % 4 - 11 months 12,050 26 % 13,450 27 % 15,763 25 % 12 months or more (1) 17,387 37 % 24,638 49 % 33,817 54 % Total primary delinquent inventory 46,556 100 % 50,282 100 % 62,633 100 % Primary claims received inventory included in ending delinquent inventory 954 2 % 1,385 3 % 2,769 4 % (1) Approximately 45% , 47% and 50% of the primary delinquent inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of December 31, 2017 , 2016 and 2015 , respectively. The length of time a loan is in the delinquent 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 table 8.5 below. Table 8.5 Delinquent inventory - number of payments delinquent December 31, 2017 2016 2015 3 payments or less 21,678 46 % 18,419 36 % 20,360 33 % 4 - 11 payments 12,446 27 % 12,892 26 % 15,092 24 % 12 payments or more 12,432 27 % 18,971 38 % 27,181 43 % Total primary delinquent inventory 46,556 100 % 50,282 100 % 62,633 100 % Pool insurance default inventory decreased to 1,309 at December 31, 2017 from 1,883 at December 31, 2016 and 2,739 at December 31, 2015 . 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. Our estimate of premiums to be refunded on expected future rescissions is accrued for separately and is 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, including settlements that we believe are probable, as defined in ASC 450-20, see Note 17 – “Litigation and Contingencies.” |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance Our consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the acceptance of certain insurance risks that other insurance companies have underwritten. Ceded reinsurance involves transferring certain insurance risks (along with the related earned premiums) we have underwritten to other insurance companies who agree to share these risks. The purpose of ceded reinsurance is to protect us, at a cost, against a fixed percentage of losses arising from our mortgage guaranty policies covered by the agreement and to manage our capital requirements under PMIERs. Reinsurance is currently placed on a quota-share basis, but we also have captive reinsurance agreements that remain in effect. The reinsurance agreements we have entered into are discussed below. Table 9.1 below shows the effect of all reinsurance agreements on premiums earned and losses incurred as reflected in the consolidated statements of operations. Table 9.1 Reinsurance Years ended December 31, (In thousands) 2017 2016 2015 Premiums earned: Direct $ 1,059,973 $ 1,058,545 $ 997,892 Assumed 509 662 1,178 Ceded (125,735 ) (133,981 ) (102,848 ) Net premiums earned $ 934,747 $ 925,226 $ 896,222 Losses incurred: Direct $ 74,727 $ 273,207 $ 369,680 Assumed 183 1,138 1,552 Ceded (21,201 ) (34,188 ) (27,685 ) Net losses incurred $ 53,709 $ 240,157 $ 343,547 Quota share reinsurance Each of the reinsurers under our 2017 and 2015 quota share reinsurance agreements ("2017 QSR Transaction" and "2015 QSR Transaction", respectively) and proposed 2018 quota share reinsurance agreement ("2018 QSR Transaction") has an insurer financial strength rating of A- or better by Standard and Poor's Rating Services, A.M. Best, or both. 2017 QSR Transaction. Effective January 1, 2017, this transaction provides coverage on new business written from the effective date through December 29, 2017 that meets certain eligibility requirements. The agreement cedes 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. 2015 QSR Transaction . Effective July 1, 2015, this transaction provides coverage on policies that were in the 2013 quota share reinsurance agreement ("2013 QSR Transaction"); additional qualifying in force policies as of the agreement effective date which either had no history of defaults, or where a single default had been cured for twelve or more months at the agreement effective date; and all qualifying new insurance written through December 31, 2016. Compared to the 2013 QSR Transaction, the 2015 QSR Transaction increased the amount of our IIF covered by reinsurance and the amount of premiums and losses that will be ceded. The agreement cedes losses incurred and premiums on or after the effective date 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 the 2017 and 2015 QSR Transactions are both 30% quota share agreements for all policies covered, with a 20% ceding commission as well as a profit commission. Generally, under each transaction, we will receive a profit commission provided that the loss ratio on the loans covered under the agreement remains below 60% , with higher levels of losses ceded reducing our profit commission. 2013 QSR Transaction. Effective July 1, 2015 , we commuted and settled our 2013 QSR Transaction. The settlement included unearned premiums, loss reserves, and profit commission. The commutation resulted in an increase in net premiums written and earned of $69.4 million and $11.6 million , respectively, and a decrease in ceding commissions of $11.6 million in the third quarter of 2015. Receipt of our profit commission of $142.5 million , in addition to other premium and loss amounts, was also completed as part of the settlement. 2018 QSR Transaction. We have agreed to terms on a 2018 QSR Transaction with a group of unaffiliated reinsurers to manage our exposure to losses resulting from the covered mortgage guaranty insurance policies and to provide reinsurance capital credit under the PMIERs. The GSEs have approved the terms of our proposed 2018 QSR Transaction. The 2018 QSR Transaction is expected to be executed during the first quarter of 2018 with an effective date of January 1, 2018, and will provide coverage on new business written January 1, 2018 through December 31, 2018 that meets certain eligibility requirements. Under the agreed upon terms, the 2018 QSR Transaction will cede losses incurred and premiums on or after the effective date through December 31, 2029, at which time the agreement expires. Early termination of the agreement can be elected by us effective December 31, 2021, and annually thereafter, 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 agreed upon structure of the 2018 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 2018 QSR Transaction, we will receive a profit commission provided that the loss ratio on the loans covered under the agreement remains below 54% . Table 9.2 provides a summary of our quota share reinsurance agreements, excluding captive agreements, for 2017 , 2016 and 2015 . Table 9.2 Quota share reinsurance Years ended December 31, (In thousands) 2017 2016 2015 (3) Ceded premiums written, net of profit commission (1) $ 120,974 $ 125,460 $ 41,233 Ceded premiums earned, net of profit commission (1) 120,974 125,460 88,587 Ceded losses incurred 22,336 30,201 17,484 Ceding commissions (2) 49,321 47,629 30,816 Profit commission 125,629 112,685 112,847 (1) Since July 1, 2015, premiums are ceded on an earned and received basis as defined in our QSR Transactions currently in effect. (2) Ceding commissions are reported within Other underwriting and operating expenses, net on the consolidated statements of operations. (3) The year ended December 31, 2015 includes the non-recurring impact of commuting our 2013 QSR Transaction (see " 2013 QSR Transaction" above for additional information). The commutation had no impact on ceded losses incurred. Under the terms of our QSR Transactions currently in effect, reinsurance premiums, ceding commission and profit commission are settled net on a quarterly basis. The reinsurance 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 was $39.3 million as of December 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 $9 million at December 31, 2017 which was supported by $80 million of trust assets, while at 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. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The pretax components of our other comprehensive income (loss) and related income tax (expense) benefit for the years ended December 31, 2017 , 2016 and 2015 are included in table 10.1 below: Table 10.1 Components of other comprehensive income (loss) (In thousands) 2017 2016 2015 Net unrealized investment gains (losses) arising during the year $ 69,052 $ (5,425 ) $ (33,718 ) Income tax (expense) benefit (21,505 ) 1,776 11,738 Valuation allowance (1) — — 62,383 Net of taxes 47,547 (3,649 ) 40,403 Net changes in benefit plan assets and obligations (8,983 ) (14,799 ) (12,818 ) Income tax benefit 3,144 5,179 4,487 Valuation allowance (1) — — (7,383 ) Net of taxes (5,839 ) (9,620 ) (15,714 ) Net changes in unrealized foreign currency translation adjustment 45 (1,463 ) (5,699 ) Income tax (expense) benefit (14 ) 512 2,000 Valuation allowance (1) — — (529 ) Net of taxes 31 (951 ) (4,228 ) Total other comprehensive income (loss) 60,114 (21,687 ) (52,235 ) Total income tax (expense) benefit, net of valuation allowance (18,375 ) 7,467 72,696 Total other comprehensive income (loss), net of tax $ 41,739 $ (14,220 ) $ 20,461 (1) See Note 12 – “Income Taxes” for a discussion of the valuation allowance recorded against deferred tax assets in 2015. The pretax and related income tax benefit (expense) components of the amounts reclassified from our accumulated other comprehensive loss ("AOCL") to our consolidated statements of operations for the years ended December 31, 2017 , 2016 and 2015 are included in table 10.2 below: Table 10.2 Reclassifications from AOCL (In thousands) 2017 2016 2015 Reclassification adjustment for net realized (losses) gains included in net income (1) $ (2,580 ) $ 6,207 $ 11,693 Income tax benefit (expense) 903 (2,050 ) (4,076 ) Valuation allowance (2) — — 3,635 Net of taxes (1,677 ) 4,157 11,252 Reclassification adjustment related to benefit plan assets and obligations (3) 906 1,480 2,184 Income tax (expense) (317 ) (518 ) (764 ) Valuation allowance (2) — — 574 Net of taxes 589 962 1,994 Reclassification adjustment related to foreign currency (4) — 1,467 — Income tax (expense) — (513 ) — Net of taxes — 954 — Total reclassifications (1,674 ) 9,154 13,877 Total income tax benefit (expense), net of valuation allowance 586 (3,081 ) (631 ) Total reclassifications, net of tax $ (1,088 ) $ 6,073 $ 13,246 (1) (Decreases) increases Net realized investment gains on the consolidated statements of operations. (2) See Note 12 – “Income Taxes” for a discussion of the valuation allowance recorded against deferred tax assets in 2015. (3) Decreases (increases) Other underwriting and operating expenses, net on the consolidated statements of operations. (4) Increases (decreases) Other revenue on the consolidated statements of operations. A rollforward of AOCL for the years ended December 31, 2017 , 2016 , and 2015 , including amounts reclassified from AOCL, is included in table 10.3 below. Table 10.3 Rollforward of AOCL (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, 2014, net of tax $ (57,551 ) $ (28,938 ) $ 5,148 $ (81,341 ) Other comprehensive income (loss) before reclassifications 51,655 (13,720 ) (4,228 ) 33,707 Less: Amounts reclassified from AOCL 11,252 1,994 — 13,246 Balance, December 31, 2015, net of tax (17,148 ) (44,652 ) 920 (60,880 ) Other comprehensive income (loss) before reclassifications 508 (8,658 ) 3 (8,147 ) Less: Amounts reclassified from AOCL 4,157 962 954 6,073 Balance, December 31, 2016, net of tax (20,797 ) (54,272 ) (31 ) (75,100 ) Other comprehensive income (loss) before reclassifications 45,870 (5,250 ) 31 40,651 Less: Amounts reclassified from AOCL (1,677 ) 589 — (1,088 ) Less: Amounts reclassified for lower enacted corporate tax rate (2,525 ) 12,947 — 10,422 Balance, December 31, 2017, net of tax $ 29,275 $ (73,058 ) $ — (43,783 ) |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Benefit Plans We have a non-contributory defined benefit pension plan covering substantially all domestic employees, as well as a supplemental executive retirement plan. We also offer both medical and dental benefits for retired domestic employees, their eligible spouses and dependents under a postretirement benefit plan. The following tables 11.1 , 11.2 , and 11.3 provide the components of aggregate annual net periodic benefit cost for each of the years ended December 31, 2017 , 2016 , and 2015 and changes in the benefit obligation and the funded status of the pension, supplemental executive retirement and other postretirement benefit plans as recognized in the consolidated balance sheets as of December 31, 2017 and 2016 . Table 11.1 Components of net periodic benefit cost Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2015 12/31/2017 12/31/2016 12/31/2015 1. Company Service Cost $ 9,556 $ 9,130 $ 10,256 $ 813 $ 751 $ 833 2. Interest Cost 15,475 15,906 15,847 706 704 697 3. Expected Return on Assets (20,099 ) (19,508 ) (21,109 ) (5,248 ) (4,886 ) (4,991 ) 4. Other Adjustments — — — — — — Subtotal 4,932 5,528 4,994 (3,729 ) (3,431 ) (3,461 ) 5. Amortization of: a. Net Transition Obligation/(Asset) — — — — — — b. Net Prior Service Cost/(Credit) (426 ) (687 ) (845 ) (6,649 ) (6,649 ) (6,649 ) c. Net Losses/(Gains) 6,169 5,856 5,485 — — (175 ) Total Amortization 5,743 5,169 4,640 (6,649 ) (6,649 ) (6,824 ) 6. Net Periodic Benefit Cost 10,675 10,697 9,634 (10,378 ) (10,080 ) (10,285 ) 7. Cost of settlements — 1,277 3,172 — — — 8. Total Expense for Year $ 10,675 $ 11,974 $ 12,806 $ (10,378 ) $ (10,080 ) $ (10,285 ) Table 11.2 Development of funded status Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 Actuarial Value of Benefit Obligations 1. Measurement Date 12/31/2017 12/31/2016 12/31/2017 12/31/2016 2. Accumulated Benefit Obligation $ 411,996 $ 360,423 $ 24,716 $ 17,378 Funded Status/Asset (Liability) on the Consolidated Balance Sheet 1. Projected Benefit Obligation $ (417,770 ) $ (369,808 ) $ (24,716 ) $ (17,378 ) 2. Plan Assets at Fair Value 401,142 360,900 85,303 70,408 3. Funded Status - Overfunded/Asset N/A N/A $ 60,587 $ 53,030 4. Funded Status - Underfunded/Liability (16,628 ) (8,908 ) N/A N/A Table 11.3 Accumulated other comprehensive income (loss) Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Net Actuarial (Gain)/Loss $ 109,904 $ 103,861 $ (10,234 ) $ (6,088 ) 2. Net Prior Service Cost/(Credit) (1,850 ) (2,286 ) (5,342 ) (11,991 ) 3. Net Transition Obligation/(Asset) — — — — 4. Total at Year End $ 108,054 $ 101,575 $ (15,576 ) $ (18,079 ) The amortization of gains and losses resulting from actual experience different from assumed experience or changes in assumptions including discount rates is included as a component of Net Periodic Benefit Cost/(Income) for the year. The gain or loss in excess of a 10% corridor is amortized by the average remaining service period of participating employees expected to receive benefits under the plan. Table 11.4 shows the changes in the projected benefit obligation for 2017 and 2016 . Table 11.4 Change in projected benefit / accumulated benefit obligation Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Benefit Obligation at Beginning of Year $ 369,808 $ 349,483 $ 17,378 $ 16,423 2. Company Service Cost 9,556 9,130 813 751 3. Interest Cost 15,475 15,906 706 704 4. Plan Participants' Contributions — — 395 408 5. Net Actuarial (Gain)/Loss due to Assumption Changes 38,496 14,450 5,981 497 6. Net Actuarial (Gain)/Loss due to Plan Experience 2,338 5,428 924 357 7. Benefit Payments from Fund (1) (17,578 ) (21,831 ) (1,404 ) (1,678 ) 8. Benefit Payments Directly by Company (335 ) (2,669 ) — — 9. Plan Amendments 10 16 — — 10. Other Adjustment — (105 ) (77 ) (84 ) 11. Benefit Obligation at End of Year $ 417,770 $ 369,808 $ 24,716 $ 17,378 (1) Includes lump sum payments of $6.3 million and $11.2 million in 2017 and 2016 , respectively, from our pension plan to eligible participants, which were former employees with vested benefits. The increase in our pension and supplemental executive retirement plans obligation in 2017 compared to 2016 was primarily due to a decrease in the discount rate used to calculate the obligation and a lower amount of benefits paid from the fund. The increase in our other postretirement plan obligation was primarily due a decrease in the discount rate used to calculate the obligation. Table 11.8 below includes the actuarial assumptions used to calculate the benefit obligations of our plans for 2017 and 2016 . Tables 11.5 and 11.6 shows the changes in the fair value of the net assets available for plan benefits, and changes in other comprehensive income (loss) during 2017 and 2016 . Table 11.5 Change in plan assets Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Fair Value of Plan Assets at Beginning of Year $ 360,900 $ 350,107 $ 70,408 $ 65,568 2. Company Contributions 9,435 11,369 — — 3. Plan Participants' Contributions — — 395 408 4. Benefit Payments from Fund (17,578 ) (21,831 ) (1,404 ) (1,678 ) 5. Benefit Payments paid directly by Company (335 ) (2,669 ) — — 6. Actual Return on Assets 48,720 23,924 16,299 6,518 7. Other Adjustment — — (395 ) (408 ) 8. Fair Value of Plan Assets at End of Year $ 401,142 $ 360,900 $ 85,303 $ 70,408 Table 11.6 Change in accumulated other comprehensive income (loss) ("AOCI") Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. AOCI in Prior Year $ 101,575 $ 92,647 $ (18,079 ) $ (23,951 ) 2. Increase/(Decrease) in AOCI a. Recognized during year - Prior Service (Cost)/Credit 426 687 6,649 6,649 b. Recognized during year - Net Actuarial (Losses)/Gains (6,169 ) (5,856 ) — — c. Occurring during year - Prior Service Cost 10 16 — — d. Occurring during year - Net Actuarial Losses/(Gains) 12,212 15,358 (4,146 ) (777 ) e. Occurring during year - Net Settlement Losses/(Gains) — (1,277 ) — — f. Other adjustments — — — — 3. AOCI in Current Year $ 108,054 $ 101,575 $ (15,576 ) $ (18,079 ) Table 11.7 shows the amount of amortization on components of net periodic benefit costs expected to be recognized during the year ending December 31, 2018 . Table 11.7 Amortization expected to be recognized during next fiscal year ending Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (In thousands) 12/31/2018 12/31/2018 1. Amortization of Net Transition Obligation/(Asset) $ — $ — 2. Amortization of Prior Service Cost/(Credit) (349 ) (4,104 ) 3. Amortization of Net Losses/(Gains) 7,140 (183 ) The projected benefit obligations, net periodic benefit costs and accumulated postretirement benefit obligation for the plans were determined using the following weighted average assumptions. Table 11.8 Actuarial assumptions Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits 12/31/2017 12/31/2016 12/31/2017 12/31/2016 Weighted-Average Assumptions Used to Determine Benefit Obligations at year end 1. Discount Rate 3.75 % 4.30 % 3.55 % 3.95 % 2. Rate of Compensation Increase 3.00 % 3.00 % N/A N/A Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Year 1. Discount Rate 4.30 % 4.65 % 3.95 % 4.30 % 2. Expected Long-term Return on Plan Assets 5.75 % 5.75 % 7.50 % 7.50 % 3. Rate of Compensation Increase 3.00 % 3.00 % N/A N/A Assumed Health Care Cost Trend Rates at year end 1. Health Care Cost Trend Rate Assumed for Next Year N/A N/A 6.50 % 6.50 % 2. Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate) N/A N/A 5.00 % 5.00 % 3. Year That the Rate Reaches the Ultimate Trend Rate N/A N/A 2024 2020 In selecting a discount rate, we performed a hypothetical cash flow bond matching exercise, matching our expected pension plan and postretirement medical plan cash flows, respectively, against a selected portfolio of high quality corporate bonds. The modeling was performed using a bond portfolio of noncallable bonds with at least $50 million outstanding. The average yield of these hypothetical bond portfolios was used as the benchmark for determining the discount rate. In selecting the expected long-term rate of return on assets, we considered the average rate of earnings expected on the classes of funds invested or to be invested to provide for the benefits of these plans. This included considering the trusts' targeted asset allocation for the year and the expected returns likely to be earned over the next 20 years . The year-end asset allocations of the plans are shown in table 11.9 below. Table 11.9 Plan assets Pension Plan Other Postretirement Benefits 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Equity Securities 21 % 23 % 100 % 100 % 2. Debt Securities 79 % 77 % — % — % 3. Total 100 % 100 % 100 % 100 % In accordance with fair value guidance, we applied the following fair value hierarchy in order to measure fair value of our benefit plan assets: Level 1 – Quoted prices for identical instruments in active markets that we can access. Financial assets utilizing Level 1 inputs include equity securities, mutual funds, money market funds, certain U.S. Treasury securities and exchange traded funds ("ETFs"). Level 2 – Quoted prices for similar instruments in active markets; 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 include certain municipal, corporate and foreign bonds, obligations of U.S. government corporations and agencies, and pooled equity accounts. To determine the fair value of securities 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 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. In addition, on a quarterly basis, we perform quality controls over values received from the pricing source (the “Trustee”) which include comparing values to other independent pricing sources. In addition, we review annually the Trustee’s auditor’s report on internal controls in order to determine that their controls around valuing securities are operating effectively. We have not made any adjustments to the prices obtained from the independent sources. Tables 11.10a and 11.10b set forth by level, within the fair value hierarchy, the pension plan assets and related accrued investment income at fair value as of December 31, 2017 and 2016 . There were no securities that utilized Level 3 inputs. Table 11.10a Pension plan - current year Assets at fair value as of December 31, 2017 (in thousands) Level 1 Level 2 Total Domestic Mutual Funds $ 1,006 $ — $ 1,006 Corporate Bonds — 202,840 202,840 U.S. Government Securities 17,996 1,400 19,396 Municipal Bonds — 62,293 62,293 Foreign Bonds — 32,949 32,949 ETFs 5,734 — 5,734 Pooled Equity Accounts — 76,924 76,924 Total Assets at fair value $ 24,736 $ 376,406 $ 401,142 Table 11.10b Pension plan - prior year Assets at fair value as of December 31, 2016 (in thousands) Level 1 Level 2 Total Domestic Mutual Funds $ 11,805 $ — $ 11,805 Corporate Bonds — 178,412 178,412 U.S. Government Securities 6,761 354 7,115 Municipal Bonds — 63,492 63,492 Foreign Bonds — 27,917 27,917 ETFs 5,694 — 5,694 Pooled Equity Accounts — 66,465 66,465 Total Assets at fair value $ 24,260 $ 336,640 $ 360,900 The pension plan has implemented a strategy to reduce risk through the use of a targeted funded ratio. The liability driven component is key to the asset allocation. The liability driven component seeks to align the duration of the fixed income asset allocation with the expected duration of the plan liabilities or benefit payments. Overall asset allocation is dynamic and specifies target allocation weights and ranges based on the funded status. An improvement in funded status results in the de-risking of the portfolio, allocating more funds to fixed income and less to equity. A decline in funded status would result in a higher allocation to equity. The maximum equity allocation is 40% . The equity investments utilize combinations of mutual funds, ETFs, and pooled equity account structures focused on the following strategies: Strategy Objective Investment types Return seeking growth Funded ratio improvement over the long term ● Global quality growth ● Global low volatility Return seeking bridge Downside protection in the event of a declining equity market ● Enduring asset ● Durable company The fixed income objective is to preserve capital and to provide monthly cash flows for the payment of plan liabilities. Fixed income investments can include government, government agency, corporate, mortgage-backed, asset-backed, and municipal securities, and other classes of bonds. The duration of the fixed income portfolio has an objective of being within one year of the duration of the accumulated benefit obligation. The fixed income investments have an objective of a weighted average credit of A3/A-/A- by Moody’s, S&P, and Fitch, respectively. Tables 11.11a and 11.11b set forth the other postretirement benefits plan assets at fair value as of December 31, 2017 and 2016 . All are Level 1 assets. Table 11.11a Other postretirement benefits plan - current year Assets at fair value as of December 31, 2017 (in thousands) Level 1 Total Domestic Mutual Funds $ 64,489 $ 64,489 International Mutual Funds 20,814 20,814 Total Assets at fair value $ 85,303 $ 85,303 Table 11.11b Other postretirement benefits plan - prior year Assets at fair value as of December 31, 2016 (in thousands) Level 1 Total Domestic Mutual Funds $ 54,426 $ 54,426 International Mutual Funds 15,982 15,982 Total Assets at fair value $ 70,408 $ 70,408 Our postretirement plan portfolio is designed to achieve the following objectives over each market cycle and for at least 5 years: • Total return should exceed growth in the Consumer Price Index by 5.75% annually • Achieve competitive investment results The primary focus in developing asset allocation ranges for the portfolio is the assessment of the portfolio's investment objectives and the level of risk that is acceptable to obtain those objectives. To achieve these objectives the minimum and maximum allocation ranges for fixed income securities and equity securities are: Minimum Maximum Equities (long only) 70 % 100 % Real estate 0 % 15 % Commodities 0 % 10 % Fixed income/Cash 0 % 10 % Given the long term nature of this portfolio and the lack of any immediate need for significant cash flow, it is anticipated that the equity investments will consist of growth stocks and will typically be at the higher end of the allocation ranges above. Investment in international mutual funds is limited to a maximum of 30% of the equity range. The allocation as of December 31, 2017 included 3% that was primarily invested in equity securities of emerging market countries and another 21% was invested in securities of companies primarily based in Europe and the Pacific Basin. Tables 11.12 and 11.13 show the current and estimated future contributions and benefit payments. Table 11.12 Company contributions Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2017 Company Contributions for the Year Ending: 1. Current $ 9,435 $ — 2. Current + 1 10,950 — Table 11.13 Benefit payments - total Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2017 Actual Benefit Payments for the Year Ending: 1. Current $ 17,913 $ 1,086 Expected Benefit Payments for the Year Ending: 2. Current + 1 28,639 1,174 3. Current + 2 33,127 1,368 4. Current + 3 29,669 1,689 5. Current + 4 31,085 1,944 6. Current + 5 31,899 2,044 7. Current + 6 - 10 151,512 11,914 Health care sensitivities For measurement purposes for the other post retirement benefits plan, the increase in health care costs is estimated to be 6.5% for 2017 and 2018, decreasing to 5.0% by 2024 and remaining at this level beyond. Assumed health care cost trend rates have a significant effect on the amounts reported for the other postretirement benefits plan. A 1 percentage point change in the health care trend rate assumption would have the following effects on other postretirement benefits: Table 11.14 Health care trend rate assumption (in thousands) 1-Percentage Point Increase 1-Percentage Point Decrease Effect on total service and interest cost components $ 252 $ (217 ) Effect on postretirement benefit obligation 3,093 (2,748 ) Profit sharing and 401(k) We have a profit sharing and 401(k) savings plan for employees. At the discretion of the Board of Directors, we may make a contribution to the plan of up to 5% of each participant's eligible compensation. We provide a matching 401(k) savings contribution for employees on their before-tax contributions at a rate of 80% of the first $1,000 contributed and 40% of the next $2,000 contributed. For employees hired after January 1, 2014, the match is 100% up to 4% contributed. We recognized expenses related to these plans of $6.0 million , $5.9 million and $5.1 million in 2017 , 2016 and 2015 , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Net deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows: Table 12.1 Deferred tax assets and liabilities (in thousands) 2017 2016 Total deferred tax assets $ 258,663 $ 636,449 Total deferred tax liabilities (24,282 ) (28,794 ) Net deferred tax asset $ 234,381 $ 607,655 Table 12.2 includes the components of the net deferred tax asset as of December 31, 2017 and 2016 . Table 12.2 Deferred tax components (in thousands) 2017 2016 Unearned premium reserves $ 29,196 $ 40,153 Benefit plans (7,162 ) (12,350 ) Federal net operating loss 155,839 520,812 Loss reserves 4,994 10,883 Unrealized (appreciation) depreciation in investments (7,782 ) 11,211 Mortgage investments 8,963 17,751 Deferred compensation 7,265 12,517 AMT credit carryforward 37,017 2,215 Other, net 6,051 4,463 Net deferred tax asset $ 234,381 $ 607,655 We review the need to maintain a deferred tax asset valuation allowance on a quarterly basis. We analyze several factors, among which are the severity and frequency of operating losses, our capacity for the carryback or carryforward of any losses, the existence and current level of taxable operating income, operating results on a three year cumulative basis, the expected occurrence of future income or loss, the expiration dates of the carryforwards, the cyclical nature of our operating results, and available tax planning strategies. Based on our analysis, we reduced our benefit from income tax through the recognition of a valuation allowance from the first quarter of 2009 through the second quarter of 2015. In the third quarter of 2015, we concluded that it was more likely than not that our deferred tax assets would be fully realizable and that the valuation allowance was no longer necessary and we reversed the valuation allowance. For the year ended December 31, 2015, we reversed $161.1 million of our valuation allowance based on income from 2015. The portion of the valuation allowance reversed related to deferred tax assets that are expected to be realized in future years, totaling $747.5 million , is treated as a discrete period item and is recognized as a component of the tax provision in continuing operations in the period of reversal. Furthermore, in determining the discrete period impact from the reversal, we removed the prior period disproportionate tax effects that had arisen in other comprehensive income because of the valuation allowance. This reduced the amount of tax benefit included in net income and resulted in an allocation of tax benefit of $60.8 million to components of other comprehensive income. Table 12.3 provides a rollforward of our deferred tax asset valuation allowance for the year ended December 31, 2015. Table 12.3 Deferred tax valuation allowance rollforward (in millions) For the year ended December 31, 2015 Balance at December 31, 2014 $ 902.3 Reduction in tax provision in current year (161.1 ) Amounts recorded in other comprehensive income in the current year 6.3 Change in valuation allowance for deferred tax assets in the current year (154.8 ) Reduction in tax provision for amounts to be realized in future years (686.7 ) Amounts recorded in other comprehensive income to be realized in future years (60.8 ) Change in valuation allowance for deferred tax assets realizable in future years (747.5 ) Balance at December 31, 2015 $ — Table 12.4 shows the effect of the change in valuation allowance on the provision for (benefit from) income taxes for the year ended December 31, 2015. Table 12.4 Provision for (benefit from) income taxes (in thousands) 2015 Provision for income taxes before valuation allowance $ 163,497 Change in valuation allowance (161,158 ) Reversal of valuation allowance (686,652 ) Benefit from income taxes $ (684,313 ) The change in the valuation allowance that was included in other comprehensive income was a decrease $54.5 million for the year ended December 31, 2015 . Giving full effect to the carryback of net operating losses for federal income tax purposes, we have approximately $742 million of net operating loss ("NOL") carryforwards on a regular tax basis as of December 31, 2017 . Any unutilized carryforwards are scheduled to expire at the end of tax years 2032 and 2033. Table 12.5 summarizes the components of the provision for (benefit from) income taxes: Table 12.5 Provision for (benefit from) income taxes (in thousands) 2017 2016 2015 Current Federal $ 73,348 $ 9,470 $ 8,067 Deferred Federal 351,677 160,657 (686,652 ) Other 3,710 2,070 (5,728 ) Provision for (benefit from) income taxes $ 428,735 $ 172,197 $ (684,313 ) Our income tax expense for 2017 reflects the remeasurement of our net deferred tax assets to reflect the lower corporate tax rate of 21% under the Tax Act, effective January 1, 2018. As a result of the lower tax rate, we have recorded a decrease to our net deferred tax assets of $133 million with a corresponding increase to our deferred income tax expense for the year ended December 31, 2017. We paid $22.0 million , $4.5 million , and $5.4 million in federal income tax in 2017 , 2016 and 2015 , respectively. Table 12.6 reconciles the federal statutory income tax rate to our effective tax provision (benefit) rate. Table 12.6 Effective tax rate reconciliation 2017 2016 2015 Federal statutory income tax rate 35.0 % 35.0 % 35.0 % Additional income tax provision related to the rate decrease included in the Tax Act 17.0 % — % — % Additional income tax provision related to IRS litigation 3.7 % 0.1 % 0.1 % Valuation allowance — % — % (173.8 )% Tax exempt municipal bond interest (1.4 )% (1.9 )% (0.8 )% Other, net 0.4 % 0.3 % (0.8 )% Effective tax provision (benefit) rate 54.7 % 33.5 % (140.3 )% 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 December 31, 2017 , there would also be interest related to these matters of approximately $205.0 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 December 31, 2017 , those state taxes and interest would approximate $85.8 million . In addition, there could also be state tax penalties. Our total amount of unrecognized tax benefits as of December 31, 2017 is $142.8 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. The parties have reached agreement on all issues in the case and in the fourth quarter of 2017, the IRS submitted documentation reflecting the terms of the agreement to the Joint Committee on Taxation ("JCT") for its review, which must be performed before a settlement can be completed. 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 $29.0 million in 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 14 - "Statutory Information." Under current guidance, when evaluating a tax position for recognition and measurement, an entity shall presume that the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. The interpretation adopts a benefit recognition model with a two-step approach, a more-likely-than-not threshold for recognition and derecognition, and a measurement attribute that is the greatest amount of benefit that is cumulatively greater than 50% likely of being realized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is shown in table 12.7 . Table 12.7 Unrecognized tax benefits reconciliation (in thousands) 2017 2016 2015 Balance at beginning of year $ 108,245 $ 107,120 $ 106,230 Additions based on tax positions related to the current year — — — Additions for tax positions of prior years 35,003 1,125 890 Reductions for tax positions of prior years (427 ) — — Settlements — — — Balance at end of year $ 142,821 $ 108,245 $ 107,120 The total amount of the unrecognized tax benefits related to our aforementioned REMIC issue, which would affect our effective tax rate, is $129.3 million . We recognize interest accrued and penalties related to unrecognized tax benefits in income taxes. During 2017, we recognized $23.1 million in interest. As of December 31, 2017 and 2016 , we had $52.0 million and $28.9 million of accrued interest related to uncertain tax positions, respectively. The statute of limitations related to the consolidated federal income tax return is closed for all years prior to 2000. It is reasonably possible that our 2000-2007 federal tax case will be resolved, other than through litigation. If it is resolved under the basis of settlement as disclosed above, our total unrecognized tax benefits would be reduced by $142.8 million during 2018. After taking into account prior payments and the effect of available net operating loss carrybacks, any net cash outflows would approximate $55 million . |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders' Equity Change in accounting principle As of January 1, 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 2017 beginning retained earnings. For the year ending December 31, 2017, we adopted the updated guidance of "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The adoption of this guidance resulted in a $10.4 million reclassification from accumulated other comprehensive loss to retained earnings during the fourth quarter of 2017. Each of these adoptions are more fully described in Note 3 - "Significant Accounting Policies." 2017 Capital transactions 2% Notes As describe d in Note 7 - "Debt" in April 2017 holders of approximately $202.5 million of the outstanding principal amount of our 2% Notes exercised their rights to convert their notes into shares of our common stock resulting in the delivery of approximately 29.1 million shares of our common stock to the holders. The transactions included the delivery of approximately 18.7 million from our treasury stock and an additional 10.4 million of newly issued shares. Shareholders' equity was increased by the carrying value of the notes at the time of conversion. 2016 Capital transactions As described in Note 7 - "Debt," in 2016 we issued approximately 18.3 million shares of our common stock as consideration for the purchase of certain of our 2% Notes. As of December 31, 2016, we had repurchased all of the shares issued as partial consideration for our 2% Notes repurchases. The weighted average price paid for the share repurchases was $8.03 , which included commissions, and the aggregate purchase amount was $147.1 million . As described in Note 7 - "Debt" the purchase of a portion of our 9% Debentures by MGIC, and corresponding elimination of the purchased 9% Debentures in consolidation, resulted in a reduction to our consolidated shareholders' equity of approximately $6.3 million as of December 31, 2016. This reduction represents the allocated portion of the consideration paid to reacquire the equity component of the 9% Debentures, net of tax. The reduction was recognized in paid-in capital and was less than the amount ascribed to paid-in capital at original issuance of the 9% Debentures. 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. |
Statutory Information
Statutory Information | 12 Months Ended |
Dec. 31, 2017 | |
Statutory Capital [Abstract] | |
Statutory Information | Statutory Information Statutory Accounting Principles The statutory financial statements of our insurance companies are presented on the basis of accounting principles prescribed, or practices permitted, by the Office of the Commissioner of Insurance of the State of Wisconsin (the "OCI"), which has adopted the National Association of Insurance Commissioners ("NAIC") Statements of Statutory Accounting Principles ("SSAP") as the basis of its statutory accounting principles. In converting from statutory to GAAP, typical adjustments include deferral of policy acquisition costs, the inclusion of net unrealized holding gains or losses in shareholders' equity relating to fixed maturities and the inclusion of statutory non-admitted assets. In addition to the typical adjustments from statutory to GAAP, mortgage insurance companies are required to maintain contingency loss reserves equal to 50% of premiums earned under SSAP and principles prescribed by the OCI, and such amounts cannot be withdrawn for a period of ten years except as permitted by insurance regulations. With regulatory approval, a mortgage guaranty insurance company may make early withdrawals from the contingency reserve when incurred losses exceed 35% of net premiums earned in a calendar year. For the year ended 2017 , MGIC's losses incurred were 5% of net premiums earned. Changes in contingency loss reserves impact the statutory statement of operations. Contingency loss reserves are not reflected as liabilities under GAAP and changes in contingency loss reserves do not impact the GAAP statements of operations. A premium deficiency reserve that may be recorded on a GAAP basis when the present value of expected future losses and expenses exceeds the present value of expected future premiums and already established loss reserves, may not be recorded on a statutory basis if the present value of expected future premiums and already established loss reserves and statutory contingency reserves, exceeds the present value of expected future losses and expenses. On a GAAP basis, when calculating a premium deficiency reserve policies are grouped based on how they are acquired, serviced and measured. On a statutory basis, a premium deficiency reserve is calculated on all policies in force. The statutory net income (loss), policyholders' surplus and contingency reserve liability of the insurance subsidiaries of our holding company are show in table 14.1 below. The statutory net loss in 2015 was driven by the dissolution of an MGIC non-insurance subsidiary. The surplus amounts included in the following table are the combined policyholders' surplus of our insurance operations as utilized in our risk-to-capital calculations. Table 14.1 Statutory financial information of holding company insurance subsidiaries As of and for the Years Ended December 31, (in thousands) 2017 2016 2015 Statutory net income (loss) $ 310,776 $ 106,326 $ (72,767 ) (1) Statutory policyholders' surplus 1,622,115 1,506,475 1,608,214 (1) Contingency reserve 1,896,701 1,360,088 826,706 (1) The dissolution of an MGIC non-insurance subsidiary in 2015 had no impact on statutory surplus as the equity value of the investment was fully reflected in surplus as an unrealized loss prior to 2015. The surplus contributions made to MGIC, dividends paid by MGIC, and distributions from other insurance subsidiaries to us, are shown in table 14.2 below. Table 14.2 Surplus contributions and dividends of insurance subsidiaries Years Ended December 31, (in thousands) 2017 2016 2015 Additions to the surplus of MGIC from parent company funds $ — 36,025 — Dividends paid by MGIC to the parent company $ 140,000 64,000 — Distributions from other insurance subsidiaries to the parent company $ — 52,001 38,500 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 RIF (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 December 31, 2017 , MGIC’s risk-to-capital ratio was 9.5 to 1 , below the maximum allowed by the jurisdictions with State Capital Requirements and its policyholder position was $2.1 billion above the required MPP of $1.2 billion . In calculating our risk-to-capital ratio and MPP, we are allowed full credit for the risk ceded under our reinsurance transaction 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 December 31, 2017 , the risk-to-capital ratio of our combined insurance operations (which includes a reinsurance affiliate) was 10.5 to 1 . Reinsurance transactions with our 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 arrangements with its reinsurance affiliate, additional capital contributions to the affiliate could be needed. The NAIC 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 and certain items have not yet been completely addressed by the framework, including the treatment of ceded risk, minimum capital floors, and action level triggers. Currently we believe that the PMIERs contain the more restrictive capital requirements in most circumstances. 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 a particular 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 IIF 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. Dividend restrictions In 2017, MGIC paid a total of $140 million in dividends to our holding company, and we expect MGIC to continue to pay quarterly dividends. During 2016, distributions of $52 million were paid to our holding company from other insurance subsidiaries. These distributions were completed in conjunction with the transfer of risk and the final dissolution of those insurance entities during 2016. Our holding company subsequently contributed the majority of the funds to MGIC in relation to the transfer of risk. During 2015, distributions of $38.5 million were paid to our holding company from other insurance subsidiaries. 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 principles prescribed, or practices 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 reduced. For the year ended December 31, 2017 , MGIC’s statutory net income was reduced by $473 million to account for the increase in contingency reserves. |
Share-based Compensation Plans
Share-based Compensation Plans | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation Plans | Share-based Compensation Plans 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 . We have an omnibus incentive plan that was adopted on April 23, 2015. The purpose of the 2015 plan is to motivate and incent performance by, and to retain the services of, key employees and non-employee directors through receipt of equity-based and other incentive awards under the plan. The maximum number of shares of stock that can be awarded under the 2015 plan is 10.0 million . Awards issued under the plan that are subsequently forfeited will not count against the limit on the maximum number of shares that may be issued under the plan. The 2015 plan provides for the award of stock options, stock appreciation rights, restricted stock and restricted stock units, as well as cash incentive awards. No awards may be granted after April 23, 2025 under the 2015 plan. The vesting provisions of options, restricted stock and restricted stock units are determined at the time of grant. Shares issued under the 2015 plan will be newly issued shares. The compensation cost that has been charged against income for share-based plans was $14.9 million , $11.4 million , and $11.9 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. The related income tax benefit recognized for share-based plans was $5.2 million , $4.0 million , and $4.2 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. Table 15.1 summarizes restricted stock or restricted stock unit (collectively called “restricted stock”) activity during 2017 . Table 15.1 Weighted Average Grant Date Fair Market Value Shares Restricted stock outstanding at December 31, 2016 $ 7.44 3,146,672 Granted 10.41 1,631,744 Vested 7.71 (1,409,347 ) Forfeited 8.43 (68,460 ) Restricted stock outstanding at December 31, 2017 $ 8.78 3,300,609 At December 31, 2017 , the 3.3 million shares of restricted stock outstanding consisted of 2.5 million shares that are subject to performance conditions (“performance shares”) and 0.8 million shares that are subject only to service conditions (“time vested shares”). The weighted-average grant date fair value of restricted stock granted during 2016 and 2015 was $5.66 and $9.03 , respectively. The fair value of restricted stock granted is the closing price of the common stock on the New York Stock Exchange on the date of grant. The total fair value of restricted stock vested during 2017 , 2016 and 2015 was $15.3 million , $12.2 million , and $17.2 million , respectively. As of December 31, 2017 , there was $13.2 million of total unrecognized compensation cost related to non-vested share-based compensation agreements granted under the plans. Of this total, $9.9 million of unrecognized compensation costs relate to performance shares and $3.3 million relates to time vested shares. A portion of the unrecognized costs associated with the performance shares may or may not be recognized in future periods, depending upon whether or not the performance and service conditions are met. The cost associated with the time vested shares is expected to be recognized over a weighted-average period of 1.5 years . At December 31, 2017 , 6.7 million shares were available for future grant under the 2015 Omnibus Incentive Plan. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Leases | Leases We lease certain office space as well as data processing equipment and autos under operating leases that expire during the next five years . Generally, rental payments are fixed. Table 16.1 shows minimum the future operating lease payments as of December 31, 2017 . Table 16.1 Minimum future operating lease payments (in thousands) Amount 2018 $ 808 2019 823 2020 583 2021 48 2022 and thereafter — Total $ 2,262 Total rental expense under operating leases was $2.0 million in 2017 , $2.1 million in 2016 , and $2.2 million in 2015 . |
Litigation and Contingencies
Litigation and Contingencies | 12 Months Ended |
Dec. 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. We refer to insurance rescissions and denials of claims collectively as “rescissions” and variations of that term. In addition, our insurance policies generally 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 2016 and 2017 , curtailments reduced our average claim paid by approximately 5.5% and 5.6% , respectively. 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 $285 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 related contract underwriting remedy expense for the years ended December 31, 2017 , 2016 , and 2015 , respectively, 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 consolidated results of operations. See Note 12 – “Income Taxes” for a description of federal income tax contingencies. |
Unaudited Quarterly Financial D
Unaudited Quarterly Financial Data | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Financial Data | Unaudited Quarterly Financial Data Table: 18.1a Unaudited quarterly financial data - current year 2017: Quarter Full (in thousands, except per share data) First Second Third Fourth Year Net premiums earned $ 229,103 $ 231,136 $ 237,083 $ 237,425 $ 934,747 Investment income, net of expenses 29,477 29,716 30,402 31,276 120,871 Realized (losses) gains (122 ) (42 ) (47 ) 460 249 Other revenue 2,422 2,502 2,922 2,341 10,187 Loss incurred, net 27,619 27,339 29,747 (30,996 ) 53,709 Underwriting and other expenses, net 59,304 55,292 56,146 57,042 227,784 Loss on debt extinguishment — 65 — — 65 Provision for income tax 84,159 61,994 64,440 218,142 428,735 Net income 89,798 118,622 120,027 27,314 355,761 Income per share (a) (b) : Basic 0.26 0.32 0.32 0.07 0.98 Diluted 0.24 0.31 0.32 0.07 0.95 Table: 18.1b Unaudited quarterly financial data - prior year 2016: Quarter Full (in thousands, except per share data) First Second Third Fourth Year Net premiums earned $ 221,341 $ 231,456 $ 237,376 $ 235,053 $ 925,226 Investment income, net of expenses 27,809 27,248 27,515 28,094 110,666 Realized gains (losses) 3,056 836 5,092 (52 ) 8,932 Other revenue 6,373 3,994 3,867 3,425 17,659 Loss incurred, net 85,012 46,590 60,897 47,658 240,157 Underwriting and other expenses, net 56,439 49,837 53,981 56,824 217,081 Loss on debt extinguishment 13,440 1,868 75,223 — 90,531 Provision for income tax 34,497 56,018 27,131 54,551 172,197 Net income 69,191 109,221 56,618 107,487 342,517 Income per share (a) (b) : Basic 0.20 0.32 0.16 0.31 1.00 Diluted 0.17 0.26 0.14 0.28 0.86 (a) Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of the quarterly per share data may not equal the per share data for the year. (b) In periods where convertible debt instruments are dilutive to earnings per share the “if-converted” method of computing diluted EPS requires an interest expense adjustment, net of tax, to net income available to shareholders. See Note 4 – “Earnings Per Share” for further discussion on our calculation of diluted EPS. |
SCHEDULE I - SUMMARY OF INVESTM
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Investments, Other than Investments in Related Parties [Abstract] | |
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES | SCHEDULE I — SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES December 31, 2017 (In thousands) Type of Investment Amortized Cost Fair Value Amount at which shown in the balance sheet Fixed income: Bonds: United States Government and government agencies and authorities $ 179,850 $ 178,846 $ 178,846 States, municipalities and political subdivisions 2,105,063 2,152,524 2,152,524 Public utilities 222,619 222,806 222,806 Asset-backed securities 4,925 4,923 4,923 Collateralized loan obligations 100,798 101,023 101,023 Mortgage-backed 490,167 479,161 479,161 All other corporate bonds 1,842,856 1,844,032 1,844,032 Total fixed income 4,946,278 4,983,315 4,983,315 Equity securities: Common stocks: Industrial, miscellaneous and all other 7,223 7,246 7,246 Total equity securities 7,223 7,246 7,246 Total investments $ 4,953,501 $ 4,990,561 $ 4,990,561 |
SCHEDULE II - CONDENSED FINANCI
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT | SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED BALANCE SHEETS PARENT COMPANY ONLY December 31, (In thousands) 2017 2016 ASSETS Fixed income (amortized cost, 2017 – $195,846; 2016 – $247,396) $ 194,061 $ 245,435 Cash and cash equivalents 22,247 37,666 Investment in subsidiaries, at equity in net assets 3,567,034 3,150,671 Accounts receivable - affiliates 1,414 780 Income taxes - current and deferred 192,570 289,703 Accrued investment income 1,941 1,749 Other assets 1,275 80 Total assets $ 3,980,542 $ 3,726,084 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Senior notes $ 418,560 $ 417,406 Convertible senior notes — 349,461 Convertible junior subordinated debentures 389,522 389,522 Accrued interest 17,934 20,853 Total liabilities 826,016 1,177,242 Shareholders’ equity: Common stock, (one dollar par value, shares authorized 1,000,000; shares issued 2017 – 370,567; 2016 – 359,400; outstanding 2017 – 370,567; 2016 – 340,663) 370,567 359,400 Paid-in capital 1,850,582 1,782,337 Treasury stock (shares at cost 2016 – 18,737) — (150,359 ) Accumulated other comprehensive loss, net of tax (43,783 ) (75,100 ) Retained earnings 977,160 632,564 Total shareholders’ equity 3,154,526 2,548,842 Total liabilities and shareholders’ equity $ 3,980,542 $ 3,726,084 See accompanying supplementary notes to Parent Company condensed financial statements. MGIC INVESTMENT CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF OPERATIONS PARENT COMPANY ONLY Years Ended December 31, (In thousands) 2017 2016 2015 Revenues: Investment income, net of expenses $ 3,177 $ 3,807 $ 7,586 Net realized investment (losses) gains (13 ) 646 357 Total revenues 3,164 4,453 7,943 Expenses: Operating expenses 642 1,409 582 Interest expense 65,972 64,598 68,932 Loss on debt extinguishment 65 82,234 507 Total expenses 66,679 148,241 70,021 Loss before tax (63,515 ) (143,788 ) (62,078 ) Provision for (benefit from) income taxes 95,517 (52,575 ) (125,487 ) Equity in net income of subsidiaries 514,793 433,730 1,108,591 Net income 355,761 342,517 1,172,000 Other comprehensive income (loss), net of tax 41,739 (14,220 ) 20,461 Comprehensive income $ 397,500 $ 328,297 $ 1,192,461 See accompanying supplementary notes to Parent Company condensed financial statements. MGIC INVESTMENT CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED STATEMENTS OF CASH FLOWS PARENT COMPANY ONLY Years Ended December 31, (In thousands) 2017 2016 2015 Cash flows from operating activities: Net income $ 355,761 $ 342,517 $ 1,172,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in net income of subsidiaries (514,793 ) (433,730 ) (1,108,591 ) Dividends received from subsidiaries 110,145 64,000 6,500 Deferred tax benefit 96,741 (55,988 ) (125,532 ) Loss on debt extinguishment 65 82,234 507 Other 18,716 16,722 31,701 Change in certain assets and liabilities: Accounts receivable - affiliates (634 ) 158 (626 ) Income taxes receivable 297 3,602 (8,308 ) Accrued investment income (192 ) 1,951 (265 ) Accrued interest (2,819 ) 6,811 (652 ) Net cash provided by (used in) operating activities 63,287 28,277 (33,266 ) Cash flows from investing activities: Capital distributions from subsidiaries — 51,987 32,000 Capital contributions to subsidiaries — (36,025 ) — Purchase of fixed income (97,091 ) (194,751 ) (295,010 ) Sale of fixed income 176,960 330,142 386,385 Net cash provided by investing activities 79,869 151,353 123,375 Cash flows from financing activities: Proceeds from revolving credit facility 150,000 — — Repayment of revolving credit facility (150,000 ) — — Net proceeds from issuance of long-term debt — 418,094 — Repayment of long-term debt — — (61,953 ) Repurchase of convertible senior notes (150,124 ) (426,191 ) (12,004 ) Repurchase of common stock — (147,127 ) — Payment of debt issuance costs (1,630 ) (1,127 ) — Payment of withholding taxes related to share-based compensation net share settlement (6,821 ) (5,030 ) (7,242 ) Net cash used in financing activities (158,575 ) (161,381 ) (81,199 ) Net (decrease) increase in cash and cash equivalents (15,419 ) 18,249 8,910 Cash and cash equivalents at beginning of year 37,666 19,417 10,507 Cash and cash equivalents at end of year $ 22,247 $ 37,666 $ 19,417 See accompanying supplementary notes to Parent Company condensed financial statements. SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY SUPPLEMENTARY NOTES Note A The accompanying Parent Company financial statements should be read in conjunction with the consolidated financial statements and notes to consolidated financial statements appearing this annual report. Note B Our insurance subsidiaries are subject to statutory regulations as to maintenance of policyholders’ surplus and payment of dividends. The maximum amount of dividends that the insurance subsidiaries may pay in any twelve-month period without regulatory approval by the 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 payment of dividends from our insurance subsidiaries is the principal source of cash inflow for MGIC Investment Corporation, our holding company, other than investment income and raising capital in the public markets. The payment of dividends by our insurance subsidiaries is restricted by insurance regulation as discussed above. MGIC is the principal source of dividend-paying capacity and, in 2017, it paid a total of $140 million in dividends in cash and securities to our holding company, and we expect MGIC to continue to pay quarterly dividends. During 2016, MGIC paid a total of $64 million in dividends to our holding company and distributions of $52 million were paid to our holding company from other insurance subsidiaries. These distributions were completed in conjunction with the transfer of risk and the final dissolution of those insurance entities during 2016. Our holding company subsequently contributed the majority of the funds, approximately $36 million , to MGIC in relation to the transfer of risk. During 2015, distributions of $38.5 million , which includes dividends of $6.5 million , were paid to the holding company from other insurance subsidiaries. No contributions were made to our insurance subsidiaries in 2017 or 2015. Note C The senior notes and convertible junior subordinated debentures (" 9% Debentures"), discussed in Note 7 – “Debt” to our consolidated financial statements, are obligations of MGIC Investment Corporation, our holding company, and not of its subsidiaries. In February 2016, MGIC purchased $132.7 million in aggregate principal of the 9% Debentures. The details of this transaction are discussed in Note 7 – “Debt” to our consolidated financial statements. The 9% Debentures owned by MGIC remain obligations of our holding company. The carrying amount outstanding of the 9% Debentures of $389.5 million is reported on the Parent Company only condensed balance sheet. For GAAP accounting purposes, the 9% Debentures owned by MGIC are eliminated in our consolidated financial statements. |
SCHEDULE IV - REINSURANCE
SCHEDULE IV - REINSURANCE | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract] | |
SCHEDULE IV - REINSURANCE | SCHEDULE IV — REINSURANCE MORTGAGE INSURANCE PREMIUMS EARNED Years Ended December 31, 2017, 2016 and 2015 (Dollars in thousands) Gross Amount Ceded to Other Companies Assumed From Other Companies Net Amount Percentage of Amount Assumed to Net Years ended December 31, 2017 $ 1,059,973 $ 125,735 $ 509 $ 934,747 0.1 % 2016 1,058,545 133,981 662 925,226 0.1 % 2015 997,892 102,848 1,178 896,222 0.1 % |
Significant Accounting Polici29
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation | The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), as codified in the Accounting Standards Codification ("ASC"). Our consolidated financial statements include the accounts of MGIC Investment Corporation and its majority-owned subsidiaries. Intercompany transactions and balances have been eliminated. In accordance with GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We have considered subsequent events through the date of this filing. |
Reclassifications | Certain reclassifications to 2016 and 2015 amounts have been made in the accompanying consolidated financial statements to conform to the 2017 presentation. |
Cash and Cash Equivalents | We consider money market funds and investments with original maturities of three months or less to be cash equivalents. |
Fair value measurements | The authoritative accounting guidance includes 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 and certain 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 offers are applied, resulting in tranche specific prices. Collateralized loan obligations ("CLO") Collateralized Loan Obligations 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, for certain equity securities, from their par value due to restrictions that require them to be redeemed or sold only to the security issuer at par value. 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. 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. |
Investments | Our entire investment portfolio is classified as available-for-sale and is reported at fair value or, for certain equity securities carried at cost, amounts that approximate fair value. The related unrealized investment gains or losses are, after considering the related tax expense or benefit, recognized as a component of accumulated other comprehensive income (loss) in shareholders' equity. Realized investment gains and losses are reported in income based upon specific identification of securities sold. (See Note 5 – “Investments.” ) Each quarter we perform reviews of our investments in order to determine whether declines in fair value below amortized cost were considered other-than-temporary. In evaluating whether a decline in fair value is other-than-temporary, we consider several factors including, but not limited to: ▪ our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis; ▪ the present value of the discounted cash flows we expect to collect compared to the amortized cost basis of the security; ▪ extent and duration of the decline; ▪ failure of the issuer to make scheduled interest or principal payments; ▪ change in rating below investment grade; and ▪ adverse conditions specifically related to the security, an industry, or a geographic area. Based on our evaluation, we will record an other-than-temporary impairment ("OTTI") adjustment on a security if we intend to sell the impaired security, if it is more likely than not that we will be required to sell the impaired security prior to recovery of its amortized cost basis, or if the present value of the discounted cash flows we expect to collect is less than the amortized cost basis of the security. If the fair value of a security is below its amortized cost at the time of our intent to sell, the security is classified as other-than-temporarily impaired and the full amount of the impairment is recognized as a loss in the statement of operations. Otherwise, when a security is considered to be other-than-temporarily impaired, the losses are separated into the portion of the loss that represents the credit loss and the portion that is due to other factors. The credit loss portion is recognized as a loss in the statement of operations, while the loss due to other factors is recognized in accumulated other comprehensive loss, net of taxes. A credit loss is determined to exist if the present value of the discounted cash flows, using the security’s original yield, expected to be collected from the security is less than the cost basis of the security. |
Home office and equipment | Home office and equipment is carried at cost net of depreciation. For financial reporting purposes, depreciation is determined on a straight-line basis for the home office and equipment over estimated lives ranging from 3 to 45 years. For income tax purposes, we use accelerated depreciation methods. |
Deferred Insurance Policy Acquisition Costs | Costs directly associated with the successful acquisition of mortgage insurance business, consisting of employee compensation and other policy issuance and underwriting expenses, are initially deferred and reported as deferred insurance policy acquisition costs ("DAC"). The deferred costs are net of any ceding commissions received associated with our reinsurance agreements. For each underwriting year of business, these costs are amortized to income in proportion to estimated gross profits over the estimated life of the policies. We utilize anticipated investment income in our calculation. This includes accruing interest on the unamortized balance of DAC. The estimates for each underwriting year are reviewed quarterly and updated when necessary to reflect actual experience and any changes to key variables such as persistency or loss development. |
Loss Reserves | Reserves are established for insurance losses and loss adjustment expenses ("LAE") when we receive notices of default on insured mortgage loans. We consider a loan in default when it is two or more payments past due. Even though the accounting standard, ASC 944, regarding accounting and reporting by insurance entities specifically excludes mortgage insurance from its guidance relating to loss reserves, we establish loss reserves using the general principles contained in the insurance standard. However, consistent with industry standards for mortgage insurers, we do not establish loss reserves for future claims on insured loans which are not currently in default. 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. Our loss estimates are established based upon historical experience, including rescissions of policies, curtailments of claims, and loan modification activity. Adjustments to reserve estimates are reflected in the financial statements in the years in which the adjustments are made. The liability for reinsurance assumed is based on information provided by the ceding companies. Reserves are also established for estimated losses from defaults occurring prior to the close of an accounting period on notices of default not yet reported to us. These incurred but not reported ("IBNR") reserves are also established using estimated claim rates and claim severities. Reserves are also established for the estimated costs of settling claims, including legal and other expenses and general expenses of administering the claims settlement process. Reserves are also ceded to reinsurers under our reinsurance agreements. |
Premium Deficiency Reserve | After our loss reserves are initially established, we perform premium deficiency tests using our best estimate assumptions as of the testing date. Premium deficiency reserves are established, if necessary, when the present value of expected future losses and expenses exceeds the present value of expected future premium and already established reserves. Products are grouped for premium deficiency testing purposes based on similarities in the way the products are acquired, serviced and measured for profitability. The calculation of premium deficiency reserves requires the use of significant judgments and estimates to determine the present value of future premium and present value of expected losses and expenses on our business. Similar to our loss reserve estimates, our estimates for premium deficiency reserves could be adversely affected by several factors discussed in Note 8 - Loss Reserves. To the extent premium patterns and actual loss experience differ from the assumptions used in calculating the premium deficiency reserves, the differences between the actual results and our estimate will affect future period earnings and could be material. We established a premium deficiency reserve in 2007 on our Wall Street Bulk business, which we also ceased writing in that year. The premium deficiency reserve was eliminated in 2015 and our consolidated statement of operations for the year ended December 31, 2015 was affected by a decrease in our premium deficiency reserves of $24 million . |
Revenue Recognition | We write policies which are guaranteed renewable contracts at the insured's option on a monthly, single, or annual premium basis. We have no ability to reunderwrite or reprice these contracts. Premiums written on monthly premium policies are earned as coverage is provided. Premiums written on single premium policies and annual premium policies are initially deferred as unearned premium reserve and earned over the estimated policy life. Premiums written on single premium policies are amortized over the policy life in relationship to the anticipated incurred loss pattern based on historical experience. Premiums written on annual premium policies are earned on a monthly pro rata basis. When a policy is cancelled for a reason other than rescission or claim payment, all premium that is non-refundable is immediately earned. Any refundable premium is returned to the servicer or borrower. When a policy is cancelled due to rescission, all previously collected premium is returned to the servicer and when a policy is cancelled because a claim is paid, premium collected since the date of default is returned. The liability associated with our estimate of premium to be returned is accrued for separately and included in "Other liabilities" on our consolidated balance sheets. When a premium deficiency exists the premium refund liability is included in “Premium deficiency reserves” on our consolidated balance sheets. Changes in these liabilities affect premiums written and earned and change in premium deficiency reserve, respectively. The actual return of premium for all periods affects premiums written and earned. Fee income of our non-insurance subsidiaries is earned and recognized as the services are provided and the customer is obligated to pay. Fee income consists primarily of contract underwriting and related fee-based services provided to lenders and is included in “Other revenue” on the consolidated statements of operations. |
Income Taxes | Deferred income taxes are provided under the liability method, which recognizes the future tax effects of temporary differences between amounts reported in the consolidated financial statements and the tax bases of these items. The expected tax effects are computed at the enacted regular federal statutory tax rate. Using this method, we have recorded a net deferred tax asset primarily due to net operating losses incurred in prior years. During 2017, net deferred tax assets were remeasured at the lower corporate tax rate enacted under the U.S. tax reform legislation signed into law in the fourth quarter of 2017 (the "Tax Act"). See Note 12- "Income Taxes" for discussion of the impact of the Tax Act on our consolidated financial statements. On a quarterly basis, we review the need to maintain a deferred tax asset valuation allowance as an offset to the net deferred tax asset, before valuation allowance. We analyze several factors, among which are the severity and frequency of operating losses, our capacity for the carryback or carryforward of any losses, the existence and current level of taxable operating income, operating results on a three year cumulative basis, the expected occurrence of future income or loss, the expiration dates of the carryforwards, the cyclical nature of our operating results, and available tax planning strategies. Based on our analysis, we reduced our benefit from income tax through the recognition of a valuation allowance from the first quarter of 2009 through the second quarter of 2015. In the third quarter of 2015, as discussed in Note 12 – “Income Taxes,” we concluded that it was more likely than not that our deferred tax assets would be fully realizable and we reversed the valuation allowance. We provide for uncertain tax positions and the related interest and penalties based on our assessment of whether a tax benefit is more likely than not to be sustained under any examination by taxing authorities. |
Benefit Plans | We have a non-contributory defined benefit pension plan covering substantially all employees, as well as a supplemental executive retirement plan. Retirement benefits are based on compensation and years of service. We recognize these retirement benefit costs over the period during which employees render the service that qualifies them for benefits. Our policy is to fund pension cost as required under the Employee Retirement Income Security Act of 1974. We offer both medical and dental benefits for retired domestic employees, their eligible spouses and dependents until the retiree reaches the age of 65 . Under the plan retirees pay a premium for these benefits. We accrue the estimated costs of retiree medical and dental benefits over the period during which employees render the service that qualifies them for benefits. |
Reinsurance | Loss reserves and unearned premiums are reported before taking credit for amounts ceded under reinsurance agreements. Ceded loss reserves are reflected as "Reinsurance recoverable on loss reserves." Ceded unearned premiums are included in “Other assets.” Amounts due from reinsurers on paid claims are reflected as “Reinsurance recoverable on paid losses.” Ceded premiums payable are included in “Other liabilities.” Any profit commissions are included with “Premiums written – Ceded” and any ceding commissions are included with “Other underwriting and operating expenses, net.” We remain liable for all insurance ceded. |
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. |
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. The computation of basic EPS includes as "participating securities" an immaterial number of unvested share-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, under the "two-class" method. Our participating securities are composed of vested restricted stock and restricted stock units ("RSUs") with non-forfeitable rights to dividends (of which none have been declared since the issuance of these participating securities). 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 treasury stock method, diluted EPS reflects the potential dilution that could occur if our unvested restricted stock units result in the issuance of common stock. 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. In addition to our 9% Debentures, of which a portion remain outstanding, we previously had several senior note debt issuances that could have resulted in contingently issuable shares and we considered each potential issuance of shares separately to reflect the maximum potential dilution for the period the debt issuances were outstanding. For purposes of calculating basic and diluted EPS, vested restricted stock and RSUs are considered outstanding. |
Recent accounting and reporting developments | Accounting standards effective in 2017, or early adopted, and relevant to our financial statements Table 3.1 shows the relevant amendments to accounting standards that have been implemented for the fiscal year beginning January 1, 2017; none had a material impact on our consolidated financial statements or disclosures. Table 3.1 Standard / Interpretation Effective date Amended Standards ASC 220 Income Statement - Reporting Comprehensive Income • ASU 2018 -02 - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income January 1, 2019 ASC 718 Compensation - Stock Compensation • ASU 2016-09 - Improvements to Employee Share-Based Compensation Accounting January 1, 2017 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the Financial Accounting Standards Board ("FASB") issued updated guidance that allows an election to reclassify stranded tax effects resulting from the Tax Act's newly enacted federal corporate income tax rate of 21% from accumulated other comprehensive income to retained earnings in an amount that reflects the effect of the change in tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of the enactment of the Tax Act related to items remaining in accumulated comprehensive income (loss). Other than the effect of the change in tax rate, we have no other income tax effects related to the application of the Tax Act that are reclassified from accumulated other comprehensive income (loss) to retained earnings. Absent the updated guidance, we generally would remove stranded tax effects lodged in accumulated other comprehensive income (loss) at the time the circumstances under which these tax effects originally arose no longer exist. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted and we adopted this guidance electing to reclass stranded tax effects from the Tax Act to retained earnings for the fourth quarter ending December 31, 2017. ◦ Adoption impact: We recorded a cumulative effect adjustment that reclassified $10.4 million from accumulated other comprehensive loss to retained earnings to reflect the difference between the amount initially credited to other comprehensive income (loss) and the amount that would have been credited at the newly enacted federal corporate tax rate. The effect of this reclassification increases our retained earnings and increases our accumulated other comprehensive loss, with no change to our total shareholders' equity as of December 31, 2017. Improvements to Employee Share-Based Compensation Accounting In March 2016, the 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. Specifically, the updated guidance requires the following: • Tax effects related to share-based compensation are made through the statement of operations at the time of settlement instead of recognizing them in paid-in capital. ◦ Adoption impact: We recognized discrete tax benefits of $1.6 million in the provision for income taxes on our statement of operations for the year ended December 31, 2017 related to excess tax benefits upon vesting of share-based awards during the period. • Recognition of a tax benefit is no longer required to be delayed until it reduces current taxes payable. ◦ Adoption impact: We recognized an immaterial cumulative effect adjustment in opening retained earnings as of January 1, 2017 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 share-based awards, which was previously applied only to awards with service conditions. • Tax related cash flows resulting from share-based compensation are to be reported as operating activities on the statement of cash flows, instead of as an inflow from financing activities and an outflow from operating activities. ◦ Adoption impact: We reclassified excess tax benefits related to share-based compensation for 2016 and 2015 to operating activities from financing activities. • Shares withheld by an employer for tax-withholding purposes upon vesting of equity compensation represents a cash outflow required to be classified as a financing activity on the statements of cash flows. ◦ Adoption impact: We reclassified employee taxes paid for withheld shares for 2016 and 2015 to financing activities from operating activities. The update also allows, for tax withholding purposes, entities 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. A change in tax withholding is to be applied on a modified retrospective approach. Prospective Accounting Standards Table 3.2 shows the relevant new amendments to accounting standards, which are not yet effective or adopted. Table 3.2 Standard / Interpretation Effective date Amended Standards ASC 718 Compensation - Stock Compensation • ASU 2017-09 - Scope of Modification Accounting January 1, 2018 ASC 715 Compensation - Retirement Benefits • ASU 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost January 1, 2018 ASC 310 Receivables - Nonrefundable Fees and Other Costs • ASU 2017-08 - Premium Amortization on Purchased Callable Debt Securities January 1, 2019 ASC 326 Financial Instruments - Credit Losses • ASU 2016-13 - Measurement of Credit Losses on Financial Instruments January 1, 2020 ASC 825 Financial Instruments - Overall • ASU 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities January 1, 2018 Stock Compensation - Scope of Modification Accounting In May 2017, the FASB issued updated guidance related to a change in the terms or conditions (modification) of a share-based award. The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the award (equity or liability instrument) are the same as the original award immediately before the modification. The updated guidance addresses the current diversity in practice on applying modification accounting, as some entities evaluate whether changes to awards are substantive, which is not prescribed within the current accounting guidance. 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 financial statements or disclosures. 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 financial statements or disclosures. Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued updated guidance to amend the amortization period for premiums on certain purchased callable debt securities, 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, which 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. Early adoption is permitted, including adoption in an interim period. 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. 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 forecasts are 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. Further, the updated guidance clarifies that entities should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets. 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 statements or disclosures. |
Significant Accounting Polici30
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Recent Accounting and Reporting Developments | Table 3.1 shows the relevant amendments to accounting standards that have been implemented for the fiscal year beginning January 1, 2017; none had a material impact on our consolidated financial statements or disclosures. Table 3.1 Standard / Interpretation Effective date Amended Standards ASC 220 Income Statement - Reporting Comprehensive Income • ASU 2018 -02 - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income January 1, 2019 ASC 718 Compensation - Stock Compensation • ASU 2016-09 - Improvements to Employee Share-Based Compensation Accounting January 1, 2017 |
Schedule of Prospective Accounting Standards, Not Yet Effective Or Adopted | Table 3.2 shows the relevant new amendments to accounting standards, which are not yet effective or adopted. Table 3.2 Standard / Interpretation Effective date Amended Standards ASC 718 Compensation - Stock Compensation • ASU 2017-09 - Scope of Modification Accounting January 1, 2018 ASC 715 Compensation - Retirement Benefits • ASU 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost January 1, 2018 ASC 310 Receivables - Nonrefundable Fees and Other Costs • ASU 2017-08 - Premium Amortization on Purchased Callable Debt Securities January 1, 2019 ASC 326 Financial Instruments - Credit Losses • ASU 2016-13 - Measurement of Credit Losses on Financial Instruments January 1, 2020 ASC 825 Financial Instruments - Overall • ASU 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities January 1, 2018 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Calculation of earnings (loss) per share | Table 4.1 reconciles basic and diluted EPS amounts: Table 4.1 Earnings per share Years Ended December 31, (In thousands, except per share data) 2017 2016 2015 Basic earnings per share: Net income $ 355,761 $ 342,517 $ 1,172,000 Weighted average common shares outstanding - basic 362,380 342,890 339,552 Basic earnings per share $ 0.98 $ 1.00 $ 3.45 Diluted earnings per share: Net income $ 355,761 $ 342,517 $ 1,172,000 Interest expense, net of tax (1) : 2% Notes 907 6,111 7,928 5% Notes 1,709 6,362 12,228 9% Debentures 15,027 15,893 22,786 Diluted income available to common shareholders $ 373,404 $ 370,883 $ 1,214,942 Weighted-average shares - Basic 362,380 342,890 339,552 Effect of dilutive securities: Unvested restricted stock units 1,493 1,470 2,113 2% Notes 8,317 54,450 71,917 5% Notes 3,548 13,107 25,603 9% Debentures 19,028 20,075 28,854 Weighted average common shares outstanding - diluted 394,766 431,992 468,039 Diluted income per share $ 0.95 $ 0.86 $ 2.60 (1) Interest expense for the years ended December 31, 2017 , 2016 and 2015 has been tax effected at a rate of 35% . |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments [Abstract] | |
Amortized cost, gross unrealized gains and losses and fair value of investment portfolio | The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio as of December 31, 2017 and 2016 are shown below: Table 5.1a Details of investments by category - current year December 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 $ 179,850 $ 274 $ (1,278 ) $ 178,846 Obligations of U.S. states and political subdivisions 2,105,063 56,210 (8,749 ) 2,152,524 Corporate debt securities 2,065,475 10,532 (9,169 ) 2,066,838 ABS 4,925 — (2 ) 4,923 RMBS 189,153 60 (7,364 ) 181,849 CMBS 301,014 1,204 (4,906 ) 297,312 CLOs 100,798 304 (79 ) 101,023 Total debt securities 4,946,278 68,584 (31,547 ) 4,983,315 Equity securities 7,223 39 (16 ) 7,246 Total investment portfolio $ 4,953,501 $ 68,623 $ (31,563 ) $ 4,990,561 Table 5.1b Details of investments by category - prior year 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) There were no OTTI losses recorded in other comprehensive (loss) income as of December 31, 2017 and 2016 . |
Amortized cost and fair values of debt securities by contractual maturity | Table 5.2 compares the amortized cost and fair values of debt securities, by contractual maturity, as of December 31, 2017 . Table 5.2 Debt securities maturity schedule December 31, 2017 (In thousands) Amortized Cost Fair Value Due in one year or less $ 541,755 $ 541,695 Due after one year through five years 1,547,712 1,544,943 Due after five years through ten years 925,751 929,883 Due after ten years 1,335,170 1,381,687 4,350,388 4,398,208 ABS 4,925 4,923 RMBS 189,153 181,849 CMBS 301,014 297,312 CLOs 100,798 101,023 Total as of December 31, 2017 $ 4,946,278 $ 4,983,315 |
Aging of the fair values of securities in an unrealized loss position | Tables 5.3a and 5.3b show the components of our unrealized losses on our investment portfolio in the amount of $32 million and $61 million as of December 31, 2017 and 2016 , respectively. Table 5.3a Investments unrealized losses - current year December 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 $ 144,042 $ (796 ) $ 31,196 $ (482 ) $ 175,238 $ (1,278 ) Obligations of U.S. states and political subdivisions 505,311 (3,624 ) 211,684 (5,125 ) 716,995 (8,749 ) Corporate debt securities 932,350 (4,288 ) 200,716 (4,881 ) 1,133,066 (9,169 ) ABS 4,923 (2 ) — — 4,923 (2 ) RMBS 14,979 (280 ) 166,329 (7,084 ) 181,308 (7,364 ) CMBS 51,096 (358 ) 138,769 (4,548 ) 189,865 (4,906 ) CLOs 14,243 (7 ) 3,568 (72 ) 17,811 (79 ) Equity securities 226 (2 ) 431 (14 ) 657 (16 ) Total investment portfolio $ 1,667,170 $ (9,357 ) $ 752,693 $ (22,206 ) $ 2,419,863 $ (31,563 ) Table 5.3b Investments unrealized losses - prior year 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 investment portfolio $ 2,370,345 $ (50,915 ) $ 294,916 $ (9,718 ) $ 2,665,261 $ (60,633 ) |
Net investment income | The source of net investment income is shown in Table 5.4 below. Table 5.4 Investment income by source (In thousands) 2017 2016 2015 Fixed income $ 122,105 $ 112,513 $ 105,882 Equity securities 206 182 208 Cash equivalents 1,447 754 191 Other 620 433 455 Investment income 124,378 113,882 106,736 Investment expenses (3,507 ) (3,216 ) (2,995 ) Net investment income $ 120,871 $ 110,666 $ 103,741 |
Net realized investment gains (losses), including impairment losses, and change in unrealized gains (losses) of investments | The net realized investment gains (table 5.5 ) and the change in unrealized gains (losses) of investments (table 5.6 ) are shown below. Table 5.5 Net realized investment gains (In thousands) 2017 2016 2015 Fixed income $ 228 $ 5,310 $ 28,335 Equity securities 21 3,622 26 Other — — — Total net realized investment gains $ 249 $ 8,932 $ 28,361 Table 5.6 Change in unrealized gains (losses) (In thousands) 2017 2016 2015 Fixed income $ 69,026 $ (5,403 ) $ (33,687 ) Equity securities 39 (36 ) (32 ) Other (13 ) 14 1 Total increase (decrease) in unrealized gains/losses $ 69,052 $ (5,425 ) $ (33,718 ) |
Gross realized gains, gross realized losses and impairment losses | Gross realized gains and losses on investments are shown in Table 5.7 below. Table 5.7 Gross realized investment gains (In thousands) 2017 2016 2015 Gross realized gains $ 1,599 $ 11,909 $ 30,039 Gross realized losses (1,350 ) (2,977 ) (1,678 ) Net realized gains on securities $ 249 $ 8,932 $ 28,361 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements for items measured at fair value | Assets measured at fair value included those listed, by hierarchy level, in the following tables as of December 31, 2017 and 2016 : Table 6.1a Fair value hierarchy - current year December 31, 2017 (In thousands) 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 $ 178,846 $ 81,598 $ 97,248 $ — Obligations of U.S. states and political subdivisions 2,152,524 — 2,152,253 271 Corporate debt securities 2,066,838 — 2,066,838 — ABS 4,923 — 4,923 — RMBS 181,849 — 181,849 — CMBS 297,312 — 297,312 — CLOs 101,023 — 101,023 — Total debt securities 4,983,315 81,598 4,901,446 271 Equity securities (1) 7,246 2,978 — 4,268 Total investments $ 4,990,561 $ 84,576 $ 4,901,446 $ 4,539 Real estate acquired (2) $ 12,713 $ — $ — $ 12,713 Table 6.1b Fair value hierarchy - prior year December 31, 2016 (In thousands) 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 investments $ 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 and liabilities measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the years ended December 31, 2017 , 2016 , and 2015 is shown in the following tables. There were no transfers into or out of Level 3 in those years and there we no losses included in earnings for those years attributable to the change in unrealized losses on assets still held at the end of each applicable year. Table 6.2a Development of assets and liabilities classified within level 3 - current year (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 — — — (1,315 ) Purchases — — — 34,749 Sales (420 ) — (420 ) (32,469 ) Balance at December 31, 2017 $ 271 $ 4,268 $ 4,539 $ 12,713 Table 6.2b Development of assets and liabilities classified within level 3 - prior year (In thousands) Debt Securities Equity Securities Total Investments Real Estate Acquired Balance at December 31, 2015 $ 1,228 $ 2,855 $ 4,083 $ 12,149 Total realized/unrealized gains (losses): Included in earnings and reported as net realized investment gains — 3,579 3,579 — Included in earnings and reported as losses incurred, net — — — (1,142 ) Purchases — 4,258 4,258 36,859 Sales (537 ) (6,424 ) (6,961 ) (36,118 ) Balance at December 31, 2016 $ 691 $ 4,268 $ 4,959 $ 11,748 Table 6.2c Development of assets and liabilities classified within level 3 - two years prior (In thousands) Debt Securities Equity Securities Total Investments Real Estate Acquired Balance at December 31, 2014 $ 1,846 $ 321 $ 2,167 $ 12,658 Total realized/unrealized gains (losses): Included in earnings and reported as losses incurred, net — — — (2,322 ) Purchases 7 2,534 2,541 34,624 Sales (625 ) — (625 ) (32,811 ) Balance at December 31, 2015 $ 1,228 $ 2,855 $ 4,083 $ 12,149 |
Schedule of carrying value and fair value of financial liabilities measured on a recurring basis | Table 6.3 compares the carrying value and fair value of our financial liabilities disclosed, but not carried, at fair value as of December 31, 2017 and 2016 . Table 6.3 Fair value measurements - liabilities December 31, 2017 December 31, 2016 (In thousands) Carrying Value Fair Value Carrying Value Fair Value FHLB Advance $ 155,000 $ 152,124 $ 155,000 $ 151,905 5% Notes — — 144,789 147,679 2% Notes — — 204,672 308,605 5.75% Notes 418,560 465,473 417,406 445,987 9% Debentures 256,872 353,507 256,872 323,040 Total financial liabilities $ 830,432 $ 971,104 $ 1,178,739 $ 1,377,216 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Table 7.1 shows the par value of our long-term debt obligations and their aggregate carrying values as of December 31, 2017 and 2016 . Table 7.1 Long-term debt obligations December 31, (In millions) 2017 2016 FHLB Advance $ 155.0 $ 155.0 5% Notes — 145.0 2% Notes — 207.6 5.75% Notes 425.0 425.0 9% Debentures 256.9 256.9 Long-term debt, par value 836.9 1,189.5 Debt issuance costs (6.5 ) (10.8 ) Long-term debt, carrying value $ 830.4 $ 1,178.7 |
Interest Payments Made | Table 7.2 shows the interest payments, on a consolidated basis, for our debt obligations outstanding during 2017 and 2016 . Table 7.2 Interest payments on debt obligations Years Ended December 31, (In millions) 2017 2016 Revolving credit facility $ 0.9 $ — FHLB Advance 3.0 2.4 5% Notes 3.6 10.6 2% Notes 2.1 9.1 5.75% Notes 25.1 — 9% Debentures 23.1 27.4 Total interest payments $ 57.8 $ 49.5 |
Loss Reserves (Tables)
Loss Reserves (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Insurance Loss Reserves [Abstract] | |
Reconciliation of beginning and ending loss reserves | Table 8.1 provides a reconciliation of beginning and ending loss reserves for each of the past three years: Table 8.1 Development of reserves for losses and loss adjustment expenses (In thousands) 2017 2016 2015 Reserve at beginning of year $ 1,438,813 $ 1,893,402 $ 2,396,807 Less reinsurance recoverable 50,493 44,487 57,841 Net reserve at beginning of year 1,388,320 1,848,915 2,338,966 Losses incurred: Losses and LAE incurred in respect of delinquent notices received in: Current year 284,913 387,815 453,849 Prior years (1) (231,204 ) (147,658 ) (110,302 ) Total losses incurred 53,709 240,157 343,547 Losses paid: Losses and LAE paid in respect of delinquent notices received in: Current year 11,267 14,823 25,980 Prior years 493,300 689,258 823,058 Reinsurance terminations (2) 301 (3,329 ) (15,440 ) Total losses paid 504,868 700,752 833,598 Net reserve at end of year 937,161 1,388,320 1,848,915 Plus reinsurance recoverables 48,474 50,493 44,487 Reserve at end of year $ 985,635 $ 1,438,813 $ 1,893,402 (1) A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves. See table 8.2 below for more information about prior year loss development. (2) In a termination, the reinsurance agreement is cancelled, with no future premium ceded and amounts for any incurred but unpaid losses paid to us. Amounts paid to (received from) reinsurers result in an increase (decrease) in net losses paid. The change in net losses paid on our losses incurred is offset by a corresponding change in the reinsurance recoverable, resulting in no net impact on losses incurred. (See Note 9 – “Reinsurance” ). |
Prior year development of the reserves | Table 8.2 below shows the development of reserves in 2017 , 2016 and 2015 for previously received delinquencies. Table 8.2 Reserve development on previously received delinquencies (In millions) 2017 2016 2015 Decrease in estimated claim rate on primary delinquencies $ (248 ) $ (148 ) $ (141 ) Increase in estimated severity on primary delinquencies 9 9 43 Change in estimates related to pool reserves, LAE reserves, reinsurance and other 8 (9 ) (12 ) Total prior year loss development (1) $ (231 ) $ (148 ) $ (110 ) (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 delinquent inventory for the years ended December 31, 2017 , 2016 , and 2015 appears in table 8.3 below. 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. Table 8.3 Delinquent inventory rollforward 2017 2016 2015 Delinquent inventory at beginning of year 50,282 62,633 79,901 New Notices 68,268 67,434 74,315 Cures (61,094 ) (65,516 ) (73,610 ) Paids (including those charged to a deductible or captive) (9,206 ) (12,367 ) (16,004 ) Rescissions and denials (357 ) (629 ) (848 ) Other items removed from inventory (1,337 ) (1,273 ) (1,121 ) Delinquent inventory at end of year 46,556 50,282 62,633 |
Aging of the primary default inventory | The number of consecutive months that a borrower has been delinquent is shown in the table below. Table 8.4 Delinquent inventory - consecutive months delinquent December 31, 2017 2016 2015 3 months or less 17,119 37 % 12,194 24 % 13,053 21 % 4 - 11 months 12,050 26 % 13,450 27 % 15,763 25 % 12 months or more (1) 17,387 37 % 24,638 49 % 33,817 54 % Total primary delinquent inventory 46,556 100 % 50,282 100 % 62,633 100 % Primary claims received inventory included in ending delinquent inventory 954 2 % 1,385 3 % 2,769 4 % (1) Approximately 45% , 47% and 50% of the primary delinquent inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of December 31, 2017 , 2016 and 2015 , respectively. |
Number of payments delinquent | The number of payments that a borrower is delinquent is shown in table 8.5 below. Table 8.5 Delinquent inventory - number of payments delinquent December 31, 2017 2016 2015 3 payments or less 21,678 46 % 18,419 36 % 20,360 33 % 4 - 11 payments 12,446 27 % 12,892 26 % 15,092 24 % 12 payments or more 12,432 27 % 18,971 38 % 27,181 43 % Total primary delinquent inventory 46,556 100 % 50,282 100 % 62,633 100 % |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Effect of reinsurance agreements on premiums earned and losses incurred | Table 9.1 below shows the effect of all reinsurance agreements on premiums earned and losses incurred as reflected in the consolidated statements of operations. Table 9.1 Reinsurance Years ended December 31, (In thousands) 2017 2016 2015 Premiums earned: Direct $ 1,059,973 $ 1,058,545 $ 997,892 Assumed 509 662 1,178 Ceded (125,735 ) (133,981 ) (102,848 ) Net premiums earned $ 934,747 $ 925,226 $ 896,222 Losses incurred: Direct $ 74,727 $ 273,207 $ 369,680 Assumed 183 1,138 1,552 Ceded (21,201 ) (34,188 ) (27,685 ) Net losses incurred $ 53,709 $ 240,157 $ 343,547 |
Quota share reinsurance, excluding captive agreements | Table 9.2 provides a summary of our quota share reinsurance agreements, excluding captive agreements, for 2017 , 2016 and 2015 . Table 9.2 Quota share reinsurance Years ended December 31, (In thousands) 2017 2016 2015 (3) Ceded premiums written, net of profit commission (1) $ 120,974 $ 125,460 $ 41,233 Ceded premiums earned, net of profit commission (1) 120,974 125,460 88,587 Ceded losses incurred 22,336 30,201 17,484 Ceding commissions (2) 49,321 47,629 30,816 Profit commission 125,629 112,685 112,847 (1) Since July 1, 2015, premiums are ceded on an earned and received basis as defined in our QSR Transactions currently in effect. (2) Ceding commissions are reported within Other underwriting and operating expenses, net on the consolidated statements of operations. (3) The year ended December 31, 2015 includes the non-recurring impact of commuting our 2013 QSR Transaction (see " 2013 QSR Transaction" above for additional information). The commutation had no impact on ceded losses incurred. |
Other Comprehensive Income (L37
Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other comprehensive income | The pretax components of our other comprehensive income (loss) and related income tax (expense) benefit for the years ended December 31, 2017 , 2016 and 2015 are included in table 10.1 below: Table 10.1 Components of other comprehensive income (loss) (In thousands) 2017 2016 2015 Net unrealized investment gains (losses) arising during the year $ 69,052 $ (5,425 ) $ (33,718 ) Income tax (expense) benefit (21,505 ) 1,776 11,738 Valuation allowance (1) — — 62,383 Net of taxes 47,547 (3,649 ) 40,403 Net changes in benefit plan assets and obligations (8,983 ) (14,799 ) (12,818 ) Income tax benefit 3,144 5,179 4,487 Valuation allowance (1) — — (7,383 ) Net of taxes (5,839 ) (9,620 ) (15,714 ) Net changes in unrealized foreign currency translation adjustment 45 (1,463 ) (5,699 ) Income tax (expense) benefit (14 ) 512 2,000 Valuation allowance (1) — — (529 ) Net of taxes 31 (951 ) (4,228 ) Total other comprehensive income (loss) 60,114 (21,687 ) (52,235 ) Total income tax (expense) benefit, net of valuation allowance (18,375 ) 7,467 72,696 Total other comprehensive income (loss), net of tax $ 41,739 $ (14,220 ) $ 20,461 (1) See Note 12 – “Income Taxes” for a discussion of the valuation allowance recorded against deferred tax assets in 2015. |
Reclassification out of accumulated other comprehensive income | The pretax and related income tax benefit (expense) components of the amounts reclassified from our accumulated other comprehensive loss ("AOCL") to our consolidated statements of operations for the years ended December 31, 2017 , 2016 and 2015 are included in table 10.2 below: Table 10.2 Reclassifications from AOCL (In thousands) 2017 2016 2015 Reclassification adjustment for net realized (losses) gains included in net income (1) $ (2,580 ) $ 6,207 $ 11,693 Income tax benefit (expense) 903 (2,050 ) (4,076 ) Valuation allowance (2) — — 3,635 Net of taxes (1,677 ) 4,157 11,252 Reclassification adjustment related to benefit plan assets and obligations (3) 906 1,480 2,184 Income tax (expense) (317 ) (518 ) (764 ) Valuation allowance (2) — — 574 Net of taxes 589 962 1,994 Reclassification adjustment related to foreign currency (4) — 1,467 — Income tax (expense) — (513 ) — Net of taxes — 954 — Total reclassifications (1,674 ) 9,154 13,877 Total income tax benefit (expense), net of valuation allowance 586 (3,081 ) (631 ) Total reclassifications, net of tax $ (1,088 ) $ 6,073 $ 13,246 (1) (Decreases) increases Net realized investment gains on the consolidated statements of operations. (2) See Note 12 – “Income Taxes” for a discussion of the valuation allowance recorded against deferred tax assets in 2015. (3) Decreases (increases) Other underwriting and operating expenses, net on the consolidated statements of operations. (4) Increases (decreases) Other revenue on the consolidated statements of operations. |
Accumulated other comprehensive income (loss) | A rollforward of AOCL for the years ended December 31, 2017 , 2016 , and 2015 , including amounts reclassified from AOCL, is included in table 10.3 below. Table 10.3 Rollforward of AOCL (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, 2014, net of tax $ (57,551 ) $ (28,938 ) $ 5,148 $ (81,341 ) Other comprehensive income (loss) before reclassifications 51,655 (13,720 ) (4,228 ) 33,707 Less: Amounts reclassified from AOCL 11,252 1,994 — 13,246 Balance, December 31, 2015, net of tax (17,148 ) (44,652 ) 920 (60,880 ) Other comprehensive income (loss) before reclassifications 508 (8,658 ) 3 (8,147 ) Less: Amounts reclassified from AOCL 4,157 962 954 6,073 Balance, December 31, 2016, net of tax (20,797 ) (54,272 ) (31 ) (75,100 ) Other comprehensive income (loss) before reclassifications 45,870 (5,250 ) 31 40,651 Less: Amounts reclassified from AOCL (1,677 ) 589 — (1,088 ) Less: Amounts reclassified for lower enacted corporate tax rate (2,525 ) 12,947 — 10,422 Balance, December 31, 2017, net of tax $ 29,275 $ (73,058 ) $ — (43,783 ) |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Components of net periodic benefit cost | The following tables 11.1 , 11.2 , and 11.3 provide the components of aggregate annual net periodic benefit cost for each of the years ended December 31, 2017 , 2016 , and 2015 and changes in the benefit obligation and the funded status of the pension, supplemental executive retirement and other postretirement benefit plans as recognized in the consolidated balance sheets as of December 31, 2017 and 2016 . Table 11.1 Components of net periodic benefit cost Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2015 12/31/2017 12/31/2016 12/31/2015 1. Company Service Cost $ 9,556 $ 9,130 $ 10,256 $ 813 $ 751 $ 833 2. Interest Cost 15,475 15,906 15,847 706 704 697 3. Expected Return on Assets (20,099 ) (19,508 ) (21,109 ) (5,248 ) (4,886 ) (4,991 ) 4. Other Adjustments — — — — — — Subtotal 4,932 5,528 4,994 (3,729 ) (3,431 ) (3,461 ) 5. Amortization of: a. Net Transition Obligation/(Asset) — — — — — — b. Net Prior Service Cost/(Credit) (426 ) (687 ) (845 ) (6,649 ) (6,649 ) (6,649 ) c. Net Losses/(Gains) 6,169 5,856 5,485 — — (175 ) Total Amortization 5,743 5,169 4,640 (6,649 ) (6,649 ) (6,824 ) 6. Net Periodic Benefit Cost 10,675 10,697 9,634 (10,378 ) (10,080 ) (10,285 ) 7. Cost of settlements — 1,277 3,172 — — — 8. Total Expense for Year $ 10,675 $ 11,974 $ 12,806 $ (10,378 ) $ (10,080 ) $ (10,285 ) |
Development of funded status | Table 11.2 Development of funded status Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 Actuarial Value of Benefit Obligations 1. Measurement Date 12/31/2017 12/31/2016 12/31/2017 12/31/2016 2. Accumulated Benefit Obligation $ 411,996 $ 360,423 $ 24,716 $ 17,378 Funded Status/Asset (Liability) on the Consolidated Balance Sheet 1. Projected Benefit Obligation $ (417,770 ) $ (369,808 ) $ (24,716 ) $ (17,378 ) 2. Plan Assets at Fair Value 401,142 360,900 85,303 70,408 3. Funded Status - Overfunded/Asset N/A N/A $ 60,587 $ 53,030 4. Funded Status - Underfunded/Liability (16,628 ) (8,908 ) N/A N/A Table 11.3 Accumulated other comprehensive income (loss) Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Net Actuarial (Gain)/Loss $ 109,904 $ 103,861 $ (10,234 ) $ (6,088 ) 2. Net Prior Service Cost/(Credit) (1,850 ) (2,286 ) (5,342 ) (11,991 ) 3. Net Transition Obligation/(Asset) — — — — 4. Total at Year End $ 108,054 $ 101,575 $ (15,576 ) $ (18,079 ) |
Change in projected benefit obligation | Table 11.4 shows the changes in the projected benefit obligation for 2017 and 2016 . Table 11.4 Change in projected benefit / accumulated benefit obligation Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Benefit Obligation at Beginning of Year $ 369,808 $ 349,483 $ 17,378 $ 16,423 2. Company Service Cost 9,556 9,130 813 751 3. Interest Cost 15,475 15,906 706 704 4. Plan Participants' Contributions — — 395 408 5. Net Actuarial (Gain)/Loss due to Assumption Changes 38,496 14,450 5,981 497 6. Net Actuarial (Gain)/Loss due to Plan Experience 2,338 5,428 924 357 7. Benefit Payments from Fund (1) (17,578 ) (21,831 ) (1,404 ) (1,678 ) 8. Benefit Payments Directly by Company (335 ) (2,669 ) — — 9. Plan Amendments 10 16 — — 10. Other Adjustment — (105 ) (77 ) (84 ) 11. Benefit Obligation at End of Year $ 417,770 $ 369,808 $ 24,716 $ 17,378 (1) Includes lump sum payments of $6.3 million and $11.2 million in 2017 and 2016 , respectively, from our pension plan to eligible participants, which were former employees with vested benefits. |
Change in plan assets | Tables 11.5 and 11.6 shows the changes in the fair value of the net assets available for plan benefits, and changes in other comprehensive income (loss) during 2017 and 2016 . Table 11.5 Change in plan assets Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Fair Value of Plan Assets at Beginning of Year $ 360,900 $ 350,107 $ 70,408 $ 65,568 2. Company Contributions 9,435 11,369 — — 3. Plan Participants' Contributions — — 395 408 4. Benefit Payments from Fund (17,578 ) (21,831 ) (1,404 ) (1,678 ) 5. Benefit Payments paid directly by Company (335 ) (2,669 ) — — 6. Actual Return on Assets 48,720 23,924 16,299 6,518 7. Other Adjustment — — (395 ) (408 ) 8. Fair Value of Plan Assets at End of Year $ 401,142 $ 360,900 $ 85,303 $ 70,408 |
Change in accumulated other comprehensive income (AOCI) | Table 11.6 Change in accumulated other comprehensive income (loss) ("AOCI") Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. AOCI in Prior Year $ 101,575 $ 92,647 $ (18,079 ) $ (23,951 ) 2. Increase/(Decrease) in AOCI a. Recognized during year - Prior Service (Cost)/Credit 426 687 6,649 6,649 b. Recognized during year - Net Actuarial (Losses)/Gains (6,169 ) (5,856 ) — — c. Occurring during year - Prior Service Cost 10 16 — — d. Occurring during year - Net Actuarial Losses/(Gains) 12,212 15,358 (4,146 ) (777 ) e. Occurring during year - Net Settlement Losses/(Gains) — (1,277 ) — — f. Other adjustments — — — — 3. AOCI in Current Year $ 108,054 $ 101,575 $ (15,576 ) $ (18,079 ) |
Amortizations expected to be recognized during next fiscal year | Table 11.7 shows the amount of amortization on components of net periodic benefit costs expected to be recognized during the year ending December 31, 2018 . Table 11.7 Amortization expected to be recognized during next fiscal year ending Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (In thousands) 12/31/2018 12/31/2018 1. Amortization of Net Transition Obligation/(Asset) $ — $ — 2. Amortization of Prior Service Cost/(Credit) (349 ) (4,104 ) 3. Amortization of Net Losses/(Gains) 7,140 (183 ) |
Actuarial assumptions | The projected benefit obligations, net periodic benefit costs and accumulated postretirement benefit obligation for the plans were determined using the following weighted average assumptions. Table 11.8 Actuarial assumptions Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits 12/31/2017 12/31/2016 12/31/2017 12/31/2016 Weighted-Average Assumptions Used to Determine Benefit Obligations at year end 1. Discount Rate 3.75 % 4.30 % 3.55 % 3.95 % 2. Rate of Compensation Increase 3.00 % 3.00 % N/A N/A Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Year 1. Discount Rate 4.30 % 4.65 % 3.95 % 4.30 % 2. Expected Long-term Return on Plan Assets 5.75 % 5.75 % 7.50 % 7.50 % 3. Rate of Compensation Increase 3.00 % 3.00 % N/A N/A Assumed Health Care Cost Trend Rates at year end 1. Health Care Cost Trend Rate Assumed for Next Year N/A N/A 6.50 % 6.50 % 2. Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate) N/A N/A 5.00 % 5.00 % 3. Year That the Rate Reaches the Ultimate Trend Rate N/A N/A 2024 2020 |
Year-end asset allocations of the plans | The year-end asset allocations of the plans are shown in table 11.9 below. Table 11.9 Plan assets Pension Plan Other Postretirement Benefits 12/31/2017 12/31/2016 12/31/2017 12/31/2016 1. Equity Securities 21 % 23 % 100 % 100 % 2. Debt Securities 79 % 77 % — % — % 3. Total 100 % 100 % 100 % 100 % |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | |
Schedule of investment allocation strategies | The equity investments utilize combinations of mutual funds, ETFs, and pooled equity account structures focused on the following strategies: Strategy Objective Investment types Return seeking growth Funded ratio improvement over the long term ● Global quality growth ● Global low volatility Return seeking bridge Downside protection in the event of a declining equity market ● Enduring asset ● Durable company |
Minimum and maximum allocation ranges for fixed income securities and equity securities | The primary focus in developing asset allocation ranges for the portfolio is the assessment of the portfolio's investment objectives and the level of risk that is acceptable to obtain those objectives. To achieve these objectives the minimum and maximum allocation ranges for fixed income securities and equity securities are: Minimum Maximum Equities (long only) 70 % 100 % Real estate 0 % 15 % Commodities 0 % 10 % Fixed income/Cash 0 % 10 % |
Actual and estimated future contributions and actual and estimated future benefit payments | Tables 11.12 and 11.13 show the current and estimated future contributions and benefit payments. Table 11.12 Company contributions Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2017 Company Contributions for the Year Ending: 1. Current $ 9,435 $ — 2. Current + 1 10,950 — Table 11.13 Benefit payments - total Pension and Supplemental Executive Retirement Plans Other Postretirement Benefits (in thousands) 12/31/2017 12/31/2017 Actual Benefit Payments for the Year Ending: 1. Current $ 17,913 $ 1,086 Expected Benefit Payments for the Year Ending: 2. Current + 1 28,639 1,174 3. Current + 2 33,127 1,368 4. Current + 3 29,669 1,689 5. Current + 4 31,085 1,944 6. Current + 5 31,899 2,044 7. Current + 6 - 10 151,512 11,914 |
Effect of a 1% change in the health care trend rate assumption | A 1 percentage point change in the health care trend rate assumption would have the following effects on other postretirement benefits: Table 11.14 Health care trend rate assumption (in thousands) 1-Percentage Point Increase 1-Percentage Point Decrease Effect on total service and interest cost components $ 252 $ (217 ) Effect on postretirement benefit obligation 3,093 (2,748 ) |
Pension Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | |
Fair value of plan assets | Tables 11.10a and 11.10b set forth by level, within the fair value hierarchy, the pension plan assets and related accrued investment income at fair value as of December 31, 2017 and 2016 . There were no securities that utilized Level 3 inputs. Table 11.10a Pension plan - current year Assets at fair value as of December 31, 2017 (in thousands) Level 1 Level 2 Total Domestic Mutual Funds $ 1,006 $ — $ 1,006 Corporate Bonds — 202,840 202,840 U.S. Government Securities 17,996 1,400 19,396 Municipal Bonds — 62,293 62,293 Foreign Bonds — 32,949 32,949 ETFs 5,734 — 5,734 Pooled Equity Accounts — 76,924 76,924 Total Assets at fair value $ 24,736 $ 376,406 $ 401,142 Table 11.10b Pension plan - prior year Assets at fair value as of December 31, 2016 (in thousands) Level 1 Level 2 Total Domestic Mutual Funds $ 11,805 $ — $ 11,805 Corporate Bonds — 178,412 178,412 U.S. Government Securities 6,761 354 7,115 Municipal Bonds — 63,492 63,492 Foreign Bonds — 27,917 27,917 ETFs 5,694 — 5,694 Pooled Equity Accounts — 66,465 66,465 Total Assets at fair value $ 24,260 $ 336,640 $ 360,900 |
Other Postretirement Benefit Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | |
Fair value of plan assets | Tables 11.11a and 11.11b set forth the other postretirement benefits plan assets at fair value as of December 31, 2017 and 2016 . All are Level 1 assets. Table 11.11a Other postretirement benefits plan - current year Assets at fair value as of December 31, 2017 (in thousands) Level 1 Total Domestic Mutual Funds $ 64,489 $ 64,489 International Mutual Funds 20,814 20,814 Total Assets at fair value $ 85,303 $ 85,303 Table 11.11b Other postretirement benefits plan - prior year Assets at fair value as of December 31, 2016 (in thousands) Level 1 Total Domestic Mutual Funds $ 54,426 $ 54,426 International Mutual Funds 15,982 15,982 Total Assets at fair value $ 70,408 $ 70,408 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Net deferred tax assets and liabilities | Net deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows: Table 12.1 Deferred tax assets and liabilities (in thousands) 2017 2016 Total deferred tax assets $ 258,663 $ 636,449 Total deferred tax liabilities (24,282 ) (28,794 ) Net deferred tax asset $ 234,381 $ 607,655 |
Components of the net deferred tax asset (liability) | Table 12.2 includes the components of the net deferred tax asset as of December 31, 2017 and 2016 . Table 12.2 Deferred tax components (in thousands) 2017 2016 Unearned premium reserves $ 29,196 $ 40,153 Benefit plans (7,162 ) (12,350 ) Federal net operating loss 155,839 520,812 Loss reserves 4,994 10,883 Unrealized (appreciation) depreciation in investments (7,782 ) 11,211 Mortgage investments 8,963 17,751 Deferred compensation 7,265 12,517 AMT credit carryforward 37,017 2,215 Other, net 6,051 4,463 Net deferred tax asset $ 234,381 $ 607,655 |
Summary of valuation allowance | Table 12.3 provides a rollforward of our deferred tax asset valuation allowance for the year ended December 31, 2015. Table 12.3 Deferred tax valuation allowance rollforward (in millions) For the year ended December 31, 2015 Balance at December 31, 2014 $ 902.3 Reduction in tax provision in current year (161.1 ) Amounts recorded in other comprehensive income in the current year 6.3 Change in valuation allowance for deferred tax assets in the current year (154.8 ) Reduction in tax provision for amounts to be realized in future years (686.7 ) Amounts recorded in other comprehensive income to be realized in future years (60.8 ) Change in valuation allowance for deferred tax assets realizable in future years (747.5 ) Balance at December 31, 2015 $ — |
Tax provision (benefit) | Table 12.4 shows the effect of the change in valuation allowance on the provision for (benefit from) income taxes for the year ended December 31, 2015. Table 12.4 Provision for (benefit from) income taxes (in thousands) 2015 Provision for income taxes before valuation allowance $ 163,497 Change in valuation allowance (161,158 ) Reversal of valuation allowance (686,652 ) Benefit from income taxes $ (684,313 ) |
Components of the provision for (benefit from) income taxes | Table 12.5 summarizes the components of the provision for (benefit from) income taxes: Table 12.5 Provision for (benefit from) income taxes (in thousands) 2017 2016 2015 Current Federal $ 73,348 $ 9,470 $ 8,067 Deferred Federal 351,677 160,657 (686,652 ) Other 3,710 2,070 (5,728 ) Provision for (benefit from) income taxes $ 428,735 $ 172,197 $ (684,313 ) |
Reconciliation of federal statutory income tax rate | Table 12.6 reconciles the federal statutory income tax rate to our effective tax provision (benefit) rate. Table 12.6 Effective tax rate reconciliation 2017 2016 2015 Federal statutory income tax rate 35.0 % 35.0 % 35.0 % Additional income tax provision related to the rate decrease included in the Tax Act 17.0 % — % — % Additional income tax provision related to IRS litigation 3.7 % 0.1 % 0.1 % Valuation allowance — % — % (173.8 )% Tax exempt municipal bond interest (1.4 )% (1.9 )% (0.8 )% Other, net 0.4 % 0.3 % (0.8 )% Effective tax provision (benefit) rate 54.7 % 33.5 % (140.3 )% |
Reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is shown in table 12.7 . Table 12.7 Unrecognized tax benefits reconciliation (in thousands) 2017 2016 2015 Balance at beginning of year $ 108,245 $ 107,120 $ 106,230 Additions based on tax positions related to the current year — — — Additions for tax positions of prior years 35,003 1,125 890 Reductions for tax positions of prior years (427 ) — — Settlements — — — Balance at end of year $ 142,821 $ 108,245 $ 107,120 |
Statutory Information (Tables)
Statutory Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Statutory Capital [Abstract] | |
Summary of amounts disclosed under statutory accounting practices | The statutory net income (loss), policyholders' surplus and contingency reserve liability of the insurance subsidiaries of our holding company are show in table 14.1 below. The statutory net loss in 2015 was driven by the dissolution of an MGIC non-insurance subsidiary. The surplus amounts included in the following table are the combined policyholders' surplus of our insurance operations as utilized in our risk-to-capital calculations. Table 14.1 Statutory financial information of holding company insurance subsidiaries As of and for the Years Ended December 31, (in thousands) 2017 2016 2015 Statutory net income (loss) $ 310,776 $ 106,326 $ (72,767 ) (1) Statutory policyholders' surplus 1,622,115 1,506,475 1,608,214 (1) Contingency reserve 1,896,701 1,360,088 826,706 (1) The dissolution of an MGIC non-insurance subsidiary in 2015 had no impact on statutory surplus as the equity value of the investment was fully reflected in surplus as an unrealized loss prior to 2015. The surplus contributions made to MGIC, dividends paid by MGIC, and distributions from other insurance subsidiaries to us, are shown in table 14.2 below. Table 14.2 Surplus contributions and dividends of insurance subsidiaries Years Ended December 31, (in thousands) 2017 2016 2015 Additions to the surplus of MGIC from parent company funds $ — 36,025 — Dividends paid by MGIC to the parent company $ 140,000 64,000 — Distributions from other insurance subsidiaries to the parent company $ — 52,001 38,500 |
Share-based Compensation Plans
Share-based Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of restricted stock or restricted stock unit activity | Table 15.1 summarizes restricted stock or restricted stock unit (collectively called “restricted stock”) activity during 2017 . Table 15.1 Weighted Average Grant Date Fair Market Value Shares Restricted stock outstanding at December 31, 2016 $ 7.44 3,146,672 Granted 10.41 1,631,744 Vested 7.71 (1,409,347 ) Forfeited 8.43 (68,460 ) Restricted stock outstanding at December 31, 2017 $ 8.78 3,300,609 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Minimum future operating lease payments | Table 16.1 shows minimum the future operating lease payments as of December 31, 2017 . Table 16.1 Minimum future operating lease payments (in thousands) Amount 2018 $ 808 2019 823 2020 583 2021 48 2022 and thereafter — Total $ 2,262 |
Unaudited Quarterly Financial43
Unaudited Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited quarterly financial data | Table: 18.1a Unaudited quarterly financial data - current year 2017: Quarter Full (in thousands, except per share data) First Second Third Fourth Year Net premiums earned $ 229,103 $ 231,136 $ 237,083 $ 237,425 $ 934,747 Investment income, net of expenses 29,477 29,716 30,402 31,276 120,871 Realized (losses) gains (122 ) (42 ) (47 ) 460 249 Other revenue 2,422 2,502 2,922 2,341 10,187 Loss incurred, net 27,619 27,339 29,747 (30,996 ) 53,709 Underwriting and other expenses, net 59,304 55,292 56,146 57,042 227,784 Loss on debt extinguishment — 65 — — 65 Provision for income tax 84,159 61,994 64,440 218,142 428,735 Net income 89,798 118,622 120,027 27,314 355,761 Income per share (a) (b) : Basic 0.26 0.32 0.32 0.07 0.98 Diluted 0.24 0.31 0.32 0.07 0.95 Table: 18.1b Unaudited quarterly financial data - prior year 2016: Quarter Full (in thousands, except per share data) First Second Third Fourth Year Net premiums earned $ 221,341 $ 231,456 $ 237,376 $ 235,053 $ 925,226 Investment income, net of expenses 27,809 27,248 27,515 28,094 110,666 Realized gains (losses) 3,056 836 5,092 (52 ) 8,932 Other revenue 6,373 3,994 3,867 3,425 17,659 Loss incurred, net 85,012 46,590 60,897 47,658 240,157 Underwriting and other expenses, net 56,439 49,837 53,981 56,824 217,081 Loss on debt extinguishment 13,440 1,868 75,223 — 90,531 Provision for income tax 34,497 56,018 27,131 54,551 172,197 Net income 69,191 109,221 56,618 107,487 342,517 Income per share (a) (b) : Basic 0.20 0.32 0.16 0.31 1.00 Diluted 0.17 0.26 0.14 0.28 0.86 (a) Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of the quarterly per share data may not equal the per share data for the year. (b) In periods where convertible debt instruments are dilutive to earnings per share the “if-converted” method of computing diluted EPS requires an interest expense adjustment, net of tax, to net income available to shareholders. See Note 4 – “Earnings Per Share” for further discussion on our calculation of diluted EPS. |
Nature of Business (Details)
Nature of Business (Details) $ in Billions | Dec. 31, 2017USD ($) |
Nature of Business [Abstract] | |
Direct domestic primary insurance in force | $ 194.9 |
Direct domestic primary risk in force | $ 50.3 |
Significant Accounting Polici45
Significant Accounting Policies (Details) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2017USD ($)Payment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Home office and equipment [Abstract] | ||||
Accumulated depreciation of home office and equipment | $ 33,900,000 | $ 33,900,000 | $ 30,600,000 | $ 26,100,000 |
Depreciation expense of home office and equipment | $ 5,400,000 | 4,600,000 | 3,200,000 | |
Minimum number of payments past due to be in default | Payment | 2 | |||
Decrease in premium deficiency reserve | $ 0 | 0 | 23,751,000 | |
Maximum age for qualified employees for both medical and dental benefits | 65 years | |||
Related party transaction amount | $ 0 | $ 0 | $ 0 | |
Discrete tax benefits realized upon adoption of ASU | 1,600,000 | |||
Accumulated other comprehensive loss | ||||
Home office and equipment [Abstract] | ||||
Cumulative effect to reclassify certain tax effects from accumulated other comprehensive loss | (10,400,000) | (10,422,000) | ||
Retained earnings (deficit) | ||||
Home office and equipment [Abstract] | ||||
Cumulative effect to reclassify certain tax effects from accumulated other comprehensive loss | $ 10,400,000 | $ 10,422,000 | ||
Minimum | ||||
Home office and equipment [Abstract] | ||||
Estimated useful life | 3 years | |||
Award vesting period | 1 year | |||
Maximum | ||||
Home office and equipment [Abstract] | ||||
Estimated useful life | 45 years | |||
Award vesting period | 3 years |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic earnings per share [Abstract] | |||||||||||
Net income | $ 27,314 | $ 120,027 | $ 118,622 | $ 89,798 | $ 107,487 | $ 56,618 | $ 109,221 | $ 69,191 | $ 355,761 | $ 342,517 | $ 1,172,000 |
Weighted average common shares outstanding - basic (in shares) | 362,380 | 342,890 | 339,552 | ||||||||
Basic income per share (in dollars per share) | $ 0.07 | $ 0.32 | $ 0.32 | $ 0.26 | $ 0.31 | $ 0.16 | $ 0.32 | $ 0.20 | $ 0.98 | $ 1 | $ 3.45 |
Diluted earnings per share [Abstract] | |||||||||||
Net income | $ 27,314 | $ 120,027 | $ 118,622 | $ 89,798 | $ 107,487 | $ 56,618 | $ 109,221 | $ 69,191 | $ 355,761 | $ 342,517 | $ 1,172,000 |
Diluted income available to common shareholders | $ 373,404 | $ 370,883 | $ 1,214,942 | ||||||||
Weighted-average shares - Basic (in shares) | 362,380 | 342,890 | 339,552 | ||||||||
Effect of dilutive securities [Abstract] | |||||||||||
Weighted-average shares - Diluted (in shares) | 394,766 | 431,992 | 468,039 | ||||||||
Diluted income per share (in dollars per share) | $ 0.07 | $ 0.32 | $ 0.31 | $ 0.24 | $ 0.28 | $ 0.14 | $ 0.26 | $ 0.17 | $ 0.95 | $ 0.86 | $ 2.60 |
Federal statutory income tax rate (in hundredths) | 35.00% | 35.00% | 35.00% | ||||||||
2% Convertible Senior Notes due 2020 | |||||||||||
Diluted earnings per share [Abstract] | |||||||||||
Dilutive securities | $ 907 | $ 6,111 | $ 7,928 | ||||||||
Effect of dilutive securities [Abstract] | |||||||||||
Dilutive securities (in shares) | 8,317 | 54,450 | 71,917 | ||||||||
Stated interest rate (in hundredths) | 2.00% | 2.00% | |||||||||
5% Convertible Senior Notes due 2017 | |||||||||||
Diluted earnings per share [Abstract] | |||||||||||
Dilutive securities | $ 1,709 | $ 6,362 | $ 12,228 | ||||||||
Effect of dilutive securities [Abstract] | |||||||||||
Dilutive securities (in shares) | 3,548 | 13,107 | 25,603 | ||||||||
Stated interest rate (in hundredths) | 5.00% | 5.00% | |||||||||
9% Convertible Junior Subordinated Debentures due 2063 | |||||||||||
Diluted earnings per share [Abstract] | |||||||||||
Dilutive securities | $ 15,027 | $ 15,893 | $ 22,786 | ||||||||
Effect of dilutive securities [Abstract] | |||||||||||
Dilutive securities (in shares) | 19,028 | 20,075 | 28,854 | ||||||||
Stated interest rate (in hundredths) | 9.00% | 9.00% | |||||||||
Unvested Restricted Stock Units | |||||||||||
Effect of dilutive securities [Abstract] | |||||||||||
Dilutive securities - Share based compensation (in shares) | 1,493 | 1,470 | 2,113 |
Investments (Details)
Investments (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Feb. 29, 2016 | Dec. 31, 2017USD ($)security | Dec. 31, 2016USD ($)security | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | $ 4,946,278 | $ 4,717,211 | |
Total at end of period | 4,983,315 | 4,685,222 | |
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract] | |||
Fair Value | 7,246 | 7,128 | |
Total Investment Portfolio [Abstract] | |||
Amortized Cost | 4,953,501 | 4,724,355 | |
Gross Unrealized Gains | 68,623 | 28,628 | |
Gross Unrealized Losses | (31,563) | (60,633) | |
Fair Value | 4,990,561 | 4,692,350 | |
Other than temporary impairments recorded in other comprehensive (loss) income | $ 0 | 0 | |
Collateral, principal balance of FHLB (as a percent) | 102.00% | 102.00% | |
Collateral, principal balance of FHLB | $ 166,900 | ||
Assets held by insurance regulatory requirements | 13,600 | 13,600 | |
Maturities, Amortized Cost [Abstract] | |||
Due in one year or less | 541,755 | ||
Due after one year through five years | 1,547,712 | ||
Due after five years through ten years | 925,751 | ||
Due after ten years | 1,335,170 | ||
Total debt securities with single maturity date | 4,350,388 | ||
Total at end of period | 4,946,278 | 4,717,211 | |
Maturities, Fair Value [Abstract] | |||
Due in one year or less | 541,695 | ||
Due after one year through five years | 1,544,943 | ||
Due after five years through ten years | 929,883 | ||
Due after ten years | 1,381,687 | ||
Total debt securities with single maturity date | 4,398,208 | ||
Total at end of period | 4,983,315 | 4,685,222 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 1,667,170 | 2,370,345 | |
12 months or greater | 752,693 | 294,916 | |
Total investment portfolio | 2,419,863 | 2,665,261 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (9,357) | (50,915) | |
12 months or greater | (22,206) | (9,718) | |
Total investment portfolio | $ (31,563) | $ (60,633) | |
Number of securities in unrealized loss position | security | 586 | 607 | |
For securities in an unrealized loss position, percentage of fair value to amortized cost (in hundredths) | 99.00% | ||
For securities in an unrealized loss position, percentage backed by the U.S. Government (in hundredths) | 27.00% | ||
Total debt securities | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | $ 4,946,278 | $ 4,717,211 | |
Gross Unrealized Gains | 68,584 | 28,620 | |
Gross Unrealized Losses | (31,547) | (60,609) | |
Total at end of period | 4,983,315 | 4,685,222 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 4,983,315 | 4,685,222 | |
Maturities, Amortized Cost [Abstract] | |||
Total at end of period | 4,946,278 | 4,717,211 | |
Maturities, Fair Value [Abstract] | |||
Total at end of period | 4,983,315 | 4,685,222 | |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | 179,850 | 73,847 | |
Gross Unrealized Gains | 274 | 407 | |
Gross Unrealized Losses | (1,278) | (724) | |
Total at end of period | 178,846 | 73,530 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 178,846 | 73,530 | |
Maturities, Amortized Cost [Abstract] | |||
Total at end of period | 179,850 | 73,847 | |
Maturities, Fair Value [Abstract] | |||
Total at end of period | 178,846 | 73,530 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 144,042 | 48,642 | |
12 months or greater | 31,196 | 0 | |
Total investment portfolio | 175,238 | 48,642 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (796) | (724) | |
12 months or greater | (482) | 0 | |
Total investment portfolio | (1,278) | (724) | |
Obligations of U.S. states and political subdivisions | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | 2,105,063 | 2,147,458 | |
Gross Unrealized Gains | 56,210 | 20,983 | |
Gross Unrealized Losses | (8,749) | (25,425) | |
Total at end of period | 2,152,524 | 2,143,016 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 2,152,524 | 2,143,016 | |
Maturities, Amortized Cost [Abstract] | |||
Total at end of period | 2,105,063 | 2,147,458 | |
Maturities, Fair Value [Abstract] | |||
Total at end of period | 2,152,524 | 2,143,016 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 505,311 | 1,136,676 | |
12 months or greater | 211,684 | 13,681 | |
Total investment portfolio | 716,995 | 1,150,357 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (3,624) | (24,918) | |
12 months or greater | (5,125) | (507) | |
Total investment portfolio | (8,749) | (25,425) | |
Corporate debt securities | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | 2,065,475 | 1,756,461 | |
Gross Unrealized Gains | 10,532 | 6,059 | |
Gross Unrealized Losses | (9,169) | (18,610) | |
Total at end of period | 2,066,838 | 1,743,910 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 2,066,838 | 1,743,910 | |
Maturities, Amortized Cost [Abstract] | |||
Total at end of period | 2,065,475 | 1,756,461 | |
Maturities, Fair Value [Abstract] | |||
Total at end of period | 2,066,838 | 1,743,910 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 932,350 | 915,777 | |
12 months or greater | 200,716 | 35,769 | |
Total investment portfolio | 1,133,066 | 951,546 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (4,288) | (16,771) | |
12 months or greater | (4,881) | (1,839) | |
Total investment portfolio | (9,169) | (18,610) | |
ABS | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | 4,925 | 59,519 | |
Gross Unrealized Gains | 0 | 74 | |
Gross Unrealized Losses | (2) | (28) | |
Total at end of period | 4,923 | 59,565 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 4,923 | 59,565 | |
Maturities, Amortized Cost [Abstract] | |||
Debt securities without single maturity date | 4,925 | ||
Total at end of period | 4,925 | 59,519 | |
Maturities, Fair Value [Abstract] | |||
Debt securities without single maturity date | 4,923 | ||
Total at end of period | 4,923 | 59,565 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 4,923 | 3,366 | |
12 months or greater | 0 | 656 | |
Total investment portfolio | 4,923 | 4,022 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (2) | (28) | |
12 months or greater | 0 | 0 | |
Total investment portfolio | (2) | (28) | |
RMBS | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | 189,153 | 231,733 | |
Gross Unrealized Gains | 60 | 102 | |
Gross Unrealized Losses | (7,364) | (7,626) | |
Total at end of period | 181,849 | 224,209 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 181,849 | 224,209 | |
Maturities, Amortized Cost [Abstract] | |||
Debt securities without single maturity date | 189,153 | ||
Total at end of period | 189,153 | 231,733 | |
Maturities, Fair Value [Abstract] | |||
Debt securities without single maturity date | 181,849 | ||
Total at end of period | 181,849 | 224,209 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 14,979 | 46,493 | |
12 months or greater | 166,329 | 171,326 | |
Total investment portfolio | 181,308 | 217,819 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (280) | (857) | |
12 months or greater | (7,084) | (6,769) | |
Total investment portfolio | (7,364) | (7,626) | |
CMBS | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | 301,014 | 327,042 | |
Gross Unrealized Gains | 1,204 | 769 | |
Gross Unrealized Losses | (4,906) | (7,994) | |
Total at end of period | 297,312 | 319,817 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 297,312 | 319,817 | |
Maturities, Amortized Cost [Abstract] | |||
Debt securities without single maturity date | 301,014 | ||
Total at end of period | 301,014 | 327,042 | |
Maturities, Fair Value [Abstract] | |||
Debt securities without single maturity date | 297,312 | ||
Total at end of period | 297,312 | 319,817 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 51,096 | 205,545 | |
12 months or greater | 138,769 | 38,587 | |
Total investment portfolio | 189,865 | 244,132 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (358) | (7,529) | |
12 months or greater | (4,548) | (465) | |
Total investment portfolio | (4,906) | (7,994) | |
CLOs | |||
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] | |||
Total at end of period | 100,798 | 121,151 | |
Gross Unrealized Gains | 304 | 226 | |
Gross Unrealized Losses | (79) | (202) | |
Total at end of period | 101,023 | 121,175 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 101,023 | 121,175 | |
Maturities, Amortized Cost [Abstract] | |||
Debt securities without single maturity date | 100,798 | ||
Total at end of period | 100,798 | 121,151 | |
Maturities, Fair Value [Abstract] | |||
Debt securities without single maturity date | 101,023 | ||
Total at end of period | 101,023 | 121,175 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 14,243 | 13,278 | |
12 months or greater | 3,568 | 34,760 | |
Total investment portfolio | 17,811 | 48,038 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (7) | (73) | |
12 months or greater | (72) | (129) | |
Total investment portfolio | (79) | (202) | |
Equity securities | |||
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract] | |||
Amortized Cost | 7,223 | 7,144 | |
Gross Unrealized Gains | 39 | 8 | |
Gross Unrealized Losses | (16) | (24) | |
Fair Value | 7,246 | 7,128 | |
Total Investment Portfolio [Abstract] | |||
Fair Value | 7,246 | 7,128 | |
Continuous Unrealized Loss Portion, Fair Value [Abstract] | |||
Less than 12 months | 226 | 568 | |
12 months or greater | 431 | 137 | |
Total investment portfolio | 657 | 705 | |
Continuous Unrealized Loss Portion, Unrealized Loses [Abstract] | |||
Less than 12 months | (2) | (15) | |
12 months or greater | (14) | (9) | |
Total investment portfolio | $ (16) | $ (24) |
Investments, Investment Income
Investments, Investment Income By Category (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||||||||||
Investment income | $ 124,378 | $ 113,882 | $ 106,736 | ||||||||
Investment expenses | (3,507) | (3,216) | (2,995) | ||||||||
Net investment income | $ 31,276 | $ 30,402 | $ 29,716 | $ 29,477 | $ 28,094 | $ 27,515 | $ 27,248 | $ 27,809 | 120,871 | 110,666 | 103,741 |
Fixed income | |||||||||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||||||||||
Investment income | 122,105 | 112,513 | 105,882 | ||||||||
Equity securities | |||||||||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||||||||||
Investment income | 206 | 182 | 208 | ||||||||
Cash equivalents | |||||||||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||||||||||
Investment income | 1,447 | 754 | 191 | ||||||||
Other | |||||||||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||||||||||
Investment income | $ 620 | $ 433 | $ 455 |
Investments, Gain (Loss) on Inv
Investments, Gain (Loss) on Investments (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Gain (Loss) on Investments [Line Items] | |||||||||||
Recognized other than temporary impairments | $ 0 | $ 0 | $ 0 | ||||||||
Realized gains (losses) | $ 460,000 | $ (47,000) | $ (42,000) | $ (122,000) | $ (52,000) | $ 5,092,000 | $ 836,000 | $ 3,056,000 | 249,000 | 8,932,000 | 28,361,000 |
Change in unrealized gains (losses) | 69,052,000 | (5,425,000) | (33,718,000) | ||||||||
Gross realized gains, gross realized losses and impairment losses [Abstract] | |||||||||||
Gross realized gains | 1,599,000 | 11,909,000 | 30,039,000 | ||||||||
Gross realized losses | (1,350,000) | (2,977,000) | (1,678,000) | ||||||||
Net realized investment gains | $ 460,000 | $ (47,000) | $ (42,000) | $ (122,000) | $ (52,000) | $ 5,092,000 | $ 836,000 | $ 3,056,000 | 249,000 | 8,932,000 | 28,361,000 |
Available-for-Sale Securities | |||||||||||
Gain (Loss) on Investments [Line Items] | |||||||||||
Realized gains (losses) | 249,000 | 8,932,000 | 28,361,000 | ||||||||
Gross realized gains, gross realized losses and impairment losses [Abstract] | |||||||||||
Net realized investment gains | 249,000 | 8,932,000 | 28,361,000 | ||||||||
Available-for-Sale Securities | Fixed income | |||||||||||
Gain (Loss) on Investments [Line Items] | |||||||||||
Realized gains (losses) | 228,000 | 5,310,000 | 28,335,000 | ||||||||
Change in unrealized gains (losses) | 69,026,000 | (5,403,000) | (33,687,000) | ||||||||
Gross realized gains, gross realized losses and impairment losses [Abstract] | |||||||||||
Net realized investment gains | 228,000 | 5,310,000 | 28,335,000 | ||||||||
Available-for-Sale Securities | Equity Securities | |||||||||||
Gain (Loss) on Investments [Line Items] | |||||||||||
Realized gains (losses) | 21,000 | 3,622,000 | 26,000 | ||||||||
Change in unrealized gains (losses) | 39,000 | (36,000) | (32,000) | ||||||||
Gross realized gains, gross realized losses and impairment losses [Abstract] | |||||||||||
Net realized investment gains | 21,000 | 3,622,000 | 26,000 | ||||||||
Available-for-Sale Securities | Other | |||||||||||
Gain (Loss) on Investments [Line Items] | |||||||||||
Realized gains (losses) | 0 | 0 | 0 | ||||||||
Change in unrealized gains (losses) | (13,000) | 14,000 | 1,000 | ||||||||
Gross realized gains, gross realized losses and impairment losses [Abstract] | |||||||||||
Net realized investment gains | $ 0 | $ 0 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | $ 4,990,561 | $ 4,692,350 |
Real estate acquired | 12,713 | 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] | ||
Total investments | 84,576 | 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] | ||
Total investments | 4,901,446 | 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] | ||
Total investments | 4,539 | 4,959 |
Real estate acquired | 12,713 | 11,748 |
Total debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 4,983,315 | 4,685,222 |
Total debt securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 81,598 | 30,690 |
Total debt securities | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 4,901,446 | 4,653,841 |
Total debt securities | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 271 | 691 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 178,846 | 73,530 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 81,598 | 30,690 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 97,248 | 42,840 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
Obligations of U.S. states and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 2,152,524 | 2,143,016 |
Obligations of U.S. states and political subdivisions | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
Obligations of U.S. states and political subdivisions | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 2,152,253 | 2,142,325 |
Obligations of U.S. states and political subdivisions | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 271 | 691 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 2,066,838 | 1,743,910 |
Corporate debt securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
Corporate debt securities | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 2,066,838 | 1,743,910 |
Corporate debt securities | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
ABS | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 4,923 | 59,565 |
ABS | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
ABS | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 4,923 | 59,565 |
ABS | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
RMBS | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 181,849 | 224,209 |
RMBS | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
RMBS | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 181,849 | 224,209 |
RMBS | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
CMBS | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 297,312 | 319,817 |
CMBS | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
CMBS | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 297,312 | 319,817 |
CMBS | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
CLOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 101,023 | 121,175 |
CLOs | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
CLOs | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 101,023 | 121,175 |
CLOs | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 7,246 | 7,128 |
Equity securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 2,978 | 2,860 |
Equity securities | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
Equity securities | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | $ 4,268 | $ 4,268 |
Fair Value Measurements - Unobs
Fair Value Measurements - Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Total Investments | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | $ 4,959 | $ 4,083 | $ 2,167 |
Total realized/unrealized gains (losses) [Abstract] | |||
Included in earnings and reported as net realized investment gains | 3,579 | ||
Included in earnings and reported as losses incurred, net | 0 | 0 | 0 |
Purchases | 0 | 4,258 | 2,541 |
Sales | (420) | (6,961) | (625) |
Balance at end of period | 4,539 | 4,959 | 4,083 |
Total debt securities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | 691 | 1,228 | 1,846 |
Total realized/unrealized gains (losses) [Abstract] | |||
Included in earnings and reported as net realized investment gains | 0 | ||
Included in earnings and reported as losses incurred, net | 0 | 0 | 0 |
Purchases | 0 | 0 | 7 |
Sales | (420) | (537) | (625) |
Balance at end of period | 271 | 691 | 1,228 |
Equity securities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | 4,268 | 2,855 | 321 |
Total realized/unrealized gains (losses) [Abstract] | |||
Included in earnings and reported as net realized investment gains | 3,579 | ||
Included in earnings and reported as losses incurred, net | 0 | 0 | 0 |
Purchases | 0 | 4,258 | 2,534 |
Sales | 0 | (6,424) | 0 |
Balance at end of period | 4,268 | 4,268 | 2,855 |
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 | 12,658 |
Total realized/unrealized gains (losses) [Abstract] | |||
Included in earnings and reported as net realized investment gains | 0 | ||
Included in earnings and reported as losses incurred, net | (1,315) | (1,142) | (2,322) |
Purchases | 34,749 | 36,859 | 34,624 |
Sales | (32,469) | (36,118) | (32,811) |
Balance at end of period | $ 12,713 | $ 11,748 | $ 12,149 |
Fair Value Measurements - Liabi
Fair Value Measurements - Liabilities Not Measured at Fair Value (Details) - USD ($) $ in Thousands | Dec. 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% Convertible Senior Notes due 2020 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate (in hundredths) | 2.00% | |
Senior Notes | 5.75% Senior Notes due 2023 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate (in hundredths) | 5.75% | |
9% Convertible Junior Subordinated Debentures due 2063 | ||
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] | ||
FHLB Advance | $ 155,000 | $ 155,000 |
5% Notes | 0 | 144,789 |
2% Notes | 0 | 204,672 |
5.75% Notes | 418,560 | 417,406 |
9% Debentures | 256,872 | 256,872 |
Total financial liabilities | 830,432 | 1,178,739 |
Fair Value | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
FHLB Advance | 152,124 | 151,905 |
5% Notes | 0 | 147,679 |
2% Notes | 0 | 308,605 |
5.75% Notes | 465,473 | 445,987 |
9% Debentures | 353,507 | 323,040 |
Total financial liabilities | $ 971,104 | $ 1,377,216 |
Debt Summary of Obligations (De
Debt Summary of Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 836.9 | $ 1,189.5 |
Deferred issuance costs | (6.5) | (10.8) |
Total long-term debt | 830.4 | 1,178.7 |
Interest payments made | 57.8 | 49.5 |
Federal Home Loan Bank Advances (FHLB) | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 155 | 155 |
Interest payments made | 3 | 2.4 |
5% Convertible Senior Notes due 2017 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 0 | 145 |
Stated interest rate (in hundredths) | 5.00% | |
Interest payments made | $ 3.6 | 10.6 |
2% Convertible Senior Notes due 2020 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 0 | 207.6 |
Stated interest rate (in hundredths) | 2.00% | |
Interest payments made | $ 2.1 | 9.1 |
Senior Notes | 5.75% Senior Notes due 2023 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 425 | 425 |
Stated interest rate (in hundredths) | 5.75% | |
Interest payments made | $ 25.1 | 0 |
Convertible Junior Subordinated Debentures, at 9% per annum, Due 2063 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 256.9 | 256.9 |
Stated interest rate (in hundredths) | 9.00% | |
Interest payments made | $ 23.1 | 27.4 |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Interest payments made | $ 0.9 | $ 0 |
Debt (Details)
Debt (Details) | May 01, 2017USD ($) | Apr. 30, 2017USD ($)shares | Aug. 31, 2016USD ($) | Feb. 29, 2016USD ($) | Dec. 31, 2017USD ($)Period$ / sharesshares | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($)shares | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)Period$ / sharesshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($) | Mar. 21, 2017USD ($) | Feb. 26, 2016USD ($) |
Debt Instrument [Line Items] | |||||||||||||||||
Loss on debt extinguishment | $ 0 | $ 0 | $ 65,000 | $ 0 | $ 0 | $ 75,223,000 | $ 1,868,000 | $ 13,440,000 | $ 65,000 | $ 90,531,000 | $ 507,000 | ||||||
Repayments of Convertible Debt | $ 145,620,000 | 363,778,000 | 11,152,000 | ||||||||||||||
FHLBC advances | $ 155,000,000 | ||||||||||||||||
FHLBC fixed interest rate | 1.91% | ||||||||||||||||
Collateral, principal balance of FHLB (as a percent) | 102.00% | 102.00% | |||||||||||||||
Long-term debt, gross | $ 836,900,000 | 1,189,500,000 | $ 836,900,000 | 1,189,500,000 | |||||||||||||
Repayment of long-term debt | $ 0 | 0 | $ 61,953,000 | ||||||||||||||
2% Convertible Senior Notes due 2020 | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Stated interest rate (in hundredths) | 2.00% | 2.00% | |||||||||||||||
Principal amount of notes converted into shares | $ 202,500,000 | ||||||||||||||||
Principal amount of notes redeemed for cash | $ 5,100,000 | ||||||||||||||||
Conversion rate (in shares per $1,000 note) | shares | 143.8332 | ||||||||||||||||
Principal amount of notes used in determining conversion rate | $ 1,000 | $ 1,000 | |||||||||||||||
Shares issued during period upon conversion of convertible debt (in shares) | shares | 29,100,000 | ||||||||||||||||
Loss on debt extinguishment | $ 70,000 | $ 74,300,000 | |||||||||||||||
Extinguishment of debt, amount | 292,400,000 | ||||||||||||||||
Repayments of long-term debt | 362,100,000 | ||||||||||||||||
Repayments of Convertible Debt | $ 230,700,000 | ||||||||||||||||
Repayments of debt (in shares) | shares | 18,300,000 | 18,300,000 | |||||||||||||||
Reduction in shares for computation of earnings per share | shares | 42,100,000 | ||||||||||||||||
Long-term debt, gross | $ 0 | 207,600,000 | $ 0 | $ 207,600,000 | |||||||||||||
Line of Credit | Revolving Credit Facility | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Maximum borrowing capacity | $ 175,000,000 | ||||||||||||||||
Revolving credit facility | $ 150,000,000 | ||||||||||||||||
5% Convertible Senior Notes due 2017 | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Stated interest rate (in hundredths) | 5.00% | 5.00% | |||||||||||||||
Loss on debt extinguishment | 7,900,000 | ||||||||||||||||
Extinguishment of debt, amount | 188,500,000 | ||||||||||||||||
Repayments of Convertible Debt | $ 145,000,000 | $ 195,500,000 | |||||||||||||||
Reduction in shares for computation of earnings per share | shares | 14,000,000 | ||||||||||||||||
Long-term debt, gross | $ 0 | 145,000,000 | $ 0 | $ 145,000,000 | |||||||||||||
Senior Notes | 5.75% Senior Notes due 2023 | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Stated interest rate (in hundredths) | 5.75% | 5.75% | |||||||||||||||
Outstanding principal amount | $ 425,000,000 | ||||||||||||||||
Proceeds from issuance of debt | 418,100,000 | ||||||||||||||||
Redemption price, percentage (in hundredths) | 100.00% | ||||||||||||||||
Other expenses associated with the issuance of notes | $ 1,200,000 | ||||||||||||||||
Ownership percentage threshold for declaration of due and payable | 25.00% | ||||||||||||||||
Long-term debt, gross | $ 425,000,000 | 425,000,000 | $ 425,000,000 | 425,000,000 | |||||||||||||
Senior Notes | 5.75% Senior Notes due 2023 | U.S. Treasury Rate | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Basis spread on redemption premium (as a percent) | 0.50% | ||||||||||||||||
Convertible Junior Subordinated Debentures, at 9% per annum, Due 2063 | |||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||
Stated interest rate (in hundredths) | 9.00% | 9.00% | |||||||||||||||
Conversion rate (in shares per $1,000 note) | shares | 74.0741 | ||||||||||||||||
Principal amount of notes used in determining conversion rate | $ 1,000 | $ 1,000 | |||||||||||||||
Loss on debt extinguishment | 8,300,000 | ||||||||||||||||
Extinguishment of debt, amount | $ 132,700,000 | ||||||||||||||||
Reduction in shares for computation of earnings per share | shares | 9,800,000 | ||||||||||||||||
Redemption price, percentage (in hundredths) | 100.00% | ||||||||||||||||
Long-term debt, gross | $ 256,900,000 | $ 256,900,000 | $ 256,900,000 | 256,900,000 | |||||||||||||
Repayment of long-term debt | $ 150,700,000 | ||||||||||||||||
Reacquisition of convertible junior subordinated debentures-equity component | $ 6,300,000 | ||||||||||||||||
Initial conversion price (in dollars per share) | $ / shares | $ 13.50 | $ 13.50 | |||||||||||||||
Period preceding election to convert | 5 days | ||||||||||||||||
Convertible debt, number of equity instruments reserved for conversion | shares | 19,000,000 | 19,000,000 | |||||||||||||||
Closing sale price of our common stock for consideration of redemption (in dollars per share) | $ / shares | $ 17.55 | $ 17.55 | |||||||||||||||
Minimum number of trading days | 20 days | ||||||||||||||||
Maximum number of trading days | 30 days | ||||||||||||||||
Minimum number of consecutive interest periods for which interest payments may be deferred | Period | 1 | 1 | |||||||||||||||
Maximum period for which interest payments may be deferred without giving rise to an event of default | 10 years | ||||||||||||||||
Period in which reasonable commercial efforts must begin, maximum | 1 day | ||||||||||||||||
Anniversary payment release of the start of the interest deferral to the Alternative Payment Mechanism in lieu of the final maturity of the debentures | 10 years | ||||||||||||||||
Net proceeds cap (in hundredths) | 2.00% | 2.00% | |||||||||||||||
Maximum number of shares of common stock issuable under the Alternative Payment Mechanism (in shares) | shares | 10,000,000 | 10,000,000 | |||||||||||||||
Maximum percentage of aggregate principal amount of the debentures (in hundredths) | 25.00% | 25.00% |
Loss Reserves - Narrative (Deta
Loss Reserves - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)loan | Dec. 31, 2016USD ($)loan | Dec. 31, 2015USD ($)loan | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Premium refund liability, expected claim payments | $ 61,000 | $ 85,000 | |
Other items removed from inventory | loan | 1,337 | 1,273 | 1,121 |
Losses for unpaid claims and adjustment expense | $ 493,300 | $ 689,258 | $ 823,058 |
Percent of inventory in default for more than 36 consecutive months | 45.00% | 47.00% | 50.00% |
Pool insurance notice inventory (in number of loans) | loan | 1,309 | 1,883 | 2,739 |
Settlements for commutations of coverage, pools of nonperforming loans | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Losses for unpaid claims and adjustment expense | $ 54,000 | ||
Settlements for commutations of coverage, pools of nonperforming loans, and claims paying practices | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Losses for unpaid claims and adjustment expense | $ 53,000 | ||
Payments for settlements | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Losses for unpaid claims and adjustment expense | $ 10,000 | ||
Payments for settlements | Freddie Mac | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Losses for unpaid claims and adjustment expense | $ 42,000 | $ 42,000 | |
Decrease in estimated claim rate on primary delinquencies | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Percentage of prior year default inventory resolved (in hundredths) | 67.00% | 63.00% | 60.00% |
Loss Reserves - Reconciliation
Loss Reserves - Reconciliation of Changes in Loss Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Loss Reserve [Roll Forward] | ||||
Reserve at beginning of year | $ 1,438,813 | $ 1,893,402 | $ 2,396,807 | |
Less reinsurance recoverable | 48,474 | 50,493 | 44,487 | $ 57,841 |
Net reserve at beginning of year | 937,161 | 1,388,320 | 1,848,915 | $ 2,338,966 |
Losses incurred: [Abstract] | ||||
Current year | 284,913 | 387,815 | 453,849 | |
Prior years | (231,204) | (147,658) | (110,302) | |
Total losses incurred | 53,709 | 240,157 | 343,547 | |
Losses paid [Abstract] | ||||
Current year | 11,267 | 14,823 | 25,980 | |
Prior years | 493,300 | 689,258 | 823,058 | |
Reinsurance terminations | 301 | (3,329) | (15,440) | |
Total losses paid | 504,868 | 700,752 | 833,598 | |
Reserve at end of year | $ 985,635 | $ 1,438,813 | $ 1,893,402 |
Loss Reserves - Prior Year Loss
Loss Reserves - Prior Year Loss Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | $ (231,204) | $ (147,658) | $ (110,302) |
Decrease in estimated claim rate on primary delinquencies | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | (248,000) | (148,000) | (141,000) |
Increase in estimated severity on primary delinquencies | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | 9,000 | 9,000 | 43,000 |
Change in estimates related to pool reserves, LAE reserves, reinsurance and other | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Prior years | $ 8,000 | $ (9,000) | $ (12,000) |
Loss Reserves - Default Invento
Loss Reserves - Default Inventory Reconciliation (Details) - loan | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Primary Default Inventory [Roll Forward] | |||
Delinquent inventory at beginning of year | 50,282 | 62,633 | 79,901 |
New Notices | 68,268 | 67,434 | 74,315 |
Cures | (61,094) | (65,516) | (73,610) |
Paids (including those charged to a deductible or captive) | (9,206) | (12,367) | (16,004) |
Rescissions and denials | (357) | (629) | (848) |
Other items removed from inventory | (1,337) | (1,273) | (1,121) |
Delinquent inventory at end of year | 46,556 | 50,282 | 62,633 |
Loss Reserves - Aging of Primar
Loss Reserves - Aging of Primary Default Inventory and Number of Delinquent Payments (Details) - loan | 3 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Default notices for loans in IADAs | 9,294 | 1,968 | ||
Primary Default Inventory In FEMA Individual Assistance Disaster Areas | 12,446 | 7,162 | ||
Aging of the Primary Default Inventory [Abstract] | ||||
3 months or less | 17,119 | 12,194 | 13,053 | |
3 months or less (in hundredths) | 37.00% | 24.00% | 21.00% | |
4 - 11 months | 12,050 | 13,450 | 15,763 | |
4 - 11 months (in hundredths) | 26.00% | 27.00% | 25.00% | |
12 months or more | 17,387 | 24,638 | 33,817 | |
12 months or more (in hundredths) | 37.00% | 49.00% | 54.00% | |
Total primary default inventory | 46,556 | 50,282 | 62,633 | 79,901 |
Total primary default inventory (in hundredths) | 100.00% | 100.00% | 100.00% | |
Primary claims received inventory included in ending default inventory | 954 | 1,385 | 2,769 | |
Primary claims received inventory included in ending default inventory (in hundredths) | 2.00% | 3.00% | 4.00% | |
Number of Payments Delinquent [Abstract] | ||||
3 payments or less | 21,678 | 18,419 | 20,360 | |
3 payments or less (in hundredths) | 46.00% | 36.00% | 33.00% | |
4 - 11 payments | 12,446 | 12,892 | 15,092 | |
4 - 11 payments (in hundredths) | 27.00% | 26.00% | 24.00% | |
12 payments or more | 12,432 | 18,971 | 27,181 | |
12 payments or more (in hundredths) | 27.00% | 38.00% | 43.00% | |
Total primary default inventory | 46,556 | 50,282 | 62,633 | 79,901 |
Total primary default inventory (in hundredths) | 100.00% | 100.00% | 100.00% |
Reinsurance - Summary of Reinsu
Reinsurance - Summary of Reinsurance Agreements (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Premiums Earned, Net [Abstract] | |||||||||||
Premiums earned, direct | $ 1,059,973 | $ 1,058,545 | $ 997,892 | ||||||||
Premiums earned, assumed | 509 | 662 | 1,178 | ||||||||
Premiums earned, ceded | (125,735) | (133,981) | (102,848) | ||||||||
Net premiums earned | $ 237,425 | $ 237,083 | $ 231,136 | $ 229,103 | $ 235,053 | $ 237,376 | $ 231,456 | $ 221,341 | 934,747 | 925,226 | 896,222 |
Policyholder Benefits and Claims Incurred, Net [Abstract] | |||||||||||
Losses incurred, direct | 74,727 | 273,207 | 369,680 | ||||||||
Losses incurred, assumed | 183 | 1,138 | 1,552 | ||||||||
Losses incurred, ceded | (21,201) | (34,188) | (27,685) | ||||||||
Net losses incurred | $ (30,996) | $ 29,747 | $ 27,339 | $ 27,619 | $ 47,658 | $ 60,897 | $ 46,590 | $ 85,012 | 53,709 | 240,157 | 343,547 |
Ceded premiums written, net of profit commission | 125,726 | 133,885 | 55,391 | ||||||||
Ceded premiums earned, net of profit commission (1) | 125,735 | 133,981 | 102,848 | ||||||||
Ceded losses incurred | 21,201 | 34,188 | 27,685 | ||||||||
Quota Share Reinsurance Agreements, Excluding Captives | |||||||||||
Premiums Earned, Net [Abstract] | |||||||||||
Premiums earned, ceded | (120,974) | (125,460) | (88,587) | ||||||||
Policyholder Benefits and Claims Incurred, Net [Abstract] | |||||||||||
Losses incurred, ceded | (22,336) | (30,201) | (17,484) | ||||||||
Ceded premiums written, net of profit commission | 120,974 | 125,460 | 41,233 | ||||||||
Ceded premiums earned, net of profit commission (1) | 120,974 | 125,460 | 88,587 | ||||||||
Ceded losses incurred | 22,336 | 30,201 | 17,484 | ||||||||
Ceding commissions | 49,321 | 47,629 | 30,816 | ||||||||
Profit commission | $ 125,629 | $ 112,685 | $ 112,847 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) | Jul. 01, 2015 | Mar. 31, 2018 | Sep. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Effects of Reinsurance [Line Items] | |||||||
Ceded premiums written, net of profit commission | $ 125,726,000 | $ 133,885,000 | $ 55,391,000 | ||||
Ceded to Other Companies | 125,735,000 | 133,981,000 | 102,848,000 | ||||
Reinsurance recoverable on loss reserves | $ 48,474,000 | $ 50,493,000 | 44,487,000 | $ 57,841,000 | |||
Period of existing captive reinsurance agreement | 10 years | 10 years | |||||
Fair value of trust fund assets under our captive agreements | $ 80,000,000 | $ 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 | 90.00% | ||||||
Quota share, percentage | 30.00% | ||||||
Ceding commission, percentage | 20.00% | ||||||
Loss ratio | 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 | 90.00% | ||||||
Quota share, percentage | 30.00% | ||||||
Ceding commission, percentage | 20.00% | ||||||
Loss ratio | 60.00% | ||||||
Quota Share Reinsurance Agreement, 2013 | |||||||
Effects of Reinsurance [Line Items] | |||||||
Ceded premiums written, net of profit commission | $ 69,400,000 | ||||||
Ceded to Other Companies | 11,600,000 | ||||||
Ceding commissions | $ 11,600,000 | ||||||
Profit commission | $ 142,500,000 | ||||||
Quota Share Reinsurance Agreement, 2018 | Forecast | |||||||
Effects of Reinsurance [Line Items] | |||||||
Contingent termination fee | $ 0 | ||||||
Threshold for private mortgage insurer eligibility requirements for termination election | 90.00% | ||||||
Quota share, percentage | 30.00% | ||||||
Ceding commission, percentage | 20.00% | ||||||
Loss ratio | 54.00% | ||||||
Quota Share Reinsurance Agreements, Excluding Captives | |||||||
Effects of Reinsurance [Line Items] | |||||||
Ceded premiums written, net of profit commission | $ 120,974,000 | 125,460,000 | 41,233,000 | ||||
Ceded to Other Companies | 120,974,000 | 125,460,000 | 88,587,000 | ||||
Ceding commissions | 49,321,000 | 47,629,000 | 30,816,000 | ||||
Profit commission | 125,629,000 | 112,685,000 | $ 112,847,000 | ||||
Reinsurance recoverable on loss reserves | 39,300,000 | 31,800,000 | |||||
Reinsurance Agreements, Captive Agreements | |||||||
Effects of Reinsurance [Line Items] | |||||||
Reinsurance recoverable on loss reserves | $ 9,000,000 | $ 19,000,000 |
Other Comprehensive Income (L62
Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of Other Comprehensive Income (Loss) [Abstract] | |||||||||||
Net unrealized investment gains (losses) arising during the year | $ 69,052 | $ (5,425) | $ (33,718) | ||||||||
Income tax (expense) benefit | (21,505) | 1,776 | 11,738 | ||||||||
Valuation allowance | 0 | 0 | 62,383 | ||||||||
Net of taxes | 47,547 | (3,649) | 40,403 | ||||||||
Net changes in benefit plan assets and obligations | (8,983) | (14,799) | (12,818) | ||||||||
Income tax benefit | 3,144 | 5,179 | 4,487 | ||||||||
Valuation allowance | 0 | 0 | (7,383) | ||||||||
Net of taxes | (5,839) | (9,620) | (15,714) | ||||||||
Net changes in unrealized foreign currency translation adjustment | 45 | (1,463) | (5,699) | ||||||||
Income tax (expense) benefit | (14) | 512 | 2,000 | ||||||||
Valuation allowance | 0 | 0 | (529) | ||||||||
Net of taxes | 31 | (951) | (4,228) | ||||||||
Total other comprehensive income (loss) | 60,114 | (21,687) | (52,235) | ||||||||
Total income tax (expense) benefit, net of valuation allowance | (18,375) | 7,467 | 72,696 | ||||||||
Other comprehensive income (loss), net of tax | 41,739 | (14,220) | 20,461 | ||||||||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | |||||||||||
Total reclassifications | 784,496 | 514,714 | 487,687 | ||||||||
Total income tax benefit (expense), net of valuation allowance | $ (218,142) | $ (64,440) | $ (61,994) | $ (84,159) | $ (54,551) | $ (27,131) | $ (56,018) | $ (34,497) | (428,735) | (172,197) | 684,313 |
Valuation allowance | 161,158 | ||||||||||
Net income | 27,314 | $ 120,027 | $ 118,622 | 89,798 | 107,487 | $ 56,618 | $ 109,221 | 69,191 | 355,761 | 342,517 | 1,172,000 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||||||
Balance, beginning of year | 2,548,842 | 2,236,140 | 2,548,842 | 2,236,140 | |||||||
Balance, end of year | 3,154,526 | 2,548,842 | 3,154,526 | 2,548,842 | 2,236,140 | ||||||
Accumulated other comprehensive loss | |||||||||||
Components of Other Comprehensive Income (Loss) [Abstract] | |||||||||||
Other comprehensive income (loss), net of tax | 41,739 | (14,220) | 20,461 | ||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||||||
Balance, beginning of year | (75,100) | (60,880) | (75,100) | (60,880) | (81,341) | ||||||
Other comprehensive income (loss) before reclassifications | 40,651 | (8,147) | 33,707 | ||||||||
Less: Amounts reclassified from AOCL | (1,088) | 6,073 | 13,246 | ||||||||
Less: Amounts reclassified for lower enacted corporate tax rate | 10,400 | 10,422 | |||||||||
Balance, end of year | (43,783) | (75,100) | (43,783) | (75,100) | (60,880) | ||||||
Net unrealized gains and losses on available-for-sale securities | |||||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||||||
Balance, beginning of year | (20,797) | (17,148) | (20,797) | (17,148) | (57,551) | ||||||
Other comprehensive income (loss) before reclassifications | 45,870 | 508 | 51,655 | ||||||||
Less: Amounts reclassified from AOCL | (1,677) | 4,157 | 11,252 | ||||||||
Less: Amounts reclassified for lower enacted corporate tax rate | (2,525) | ||||||||||
Balance, end of year | 29,275 | (20,797) | 29,275 | (20,797) | (17,148) | ||||||
Net benefit plan assets and obligations recognized in shareholders' equity | |||||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||||||
Balance, beginning of year | (54,272) | (44,652) | (54,272) | (44,652) | (28,938) | ||||||
Other comprehensive income (loss) before reclassifications | (5,250) | (8,658) | (13,720) | ||||||||
Less: Amounts reclassified from AOCL | 589 | 962 | 1,994 | ||||||||
Less: Amounts reclassified for lower enacted corporate tax rate | 12,947 | ||||||||||
Balance, end of year | (73,058) | (54,272) | (73,058) | (54,272) | (44,652) | ||||||
Net unrealized foreign currency translation | |||||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||||||
Balance, beginning of year | $ (31) | $ 920 | (31) | 920 | 5,148 | ||||||
Other comprehensive income (loss) before reclassifications | 31 | 3 | (4,228) | ||||||||
Less: Amounts reclassified from AOCL | 0 | 954 | 0 | ||||||||
Less: Amounts reclassified for lower enacted corporate tax rate | 0 | ||||||||||
Balance, end of year | $ 0 | $ (31) | 0 | (31) | 920 | ||||||
Reclassification from Accumulated Other Comprehensive Income | |||||||||||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | |||||||||||
Total reclassifications | (1,674) | 9,154 | 13,877 | ||||||||
Total income tax benefit (expense), net of valuation allowance | 586 | (3,081) | (631) | ||||||||
Net income | (1,088) | 6,073 | 13,246 | ||||||||
Reclassification from Accumulated Other Comprehensive Income | Net unrealized gains and losses on available-for-sale securities | |||||||||||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | |||||||||||
Total reclassifications | (2,580) | 6,207 | 11,693 | ||||||||
Total income tax benefit (expense), net of valuation allowance | 903 | (2,050) | (4,076) | ||||||||
Valuation allowance | 0 | 0 | 3,635 | ||||||||
Net income | (1,677) | 4,157 | 11,252 | ||||||||
Reclassification from Accumulated Other Comprehensive Income | Net benefit plan assets and obligations recognized in shareholders' equity | |||||||||||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | |||||||||||
Total reclassifications | 906 | 1,480 | 2,184 | ||||||||
Total income tax benefit (expense), net of valuation allowance | (317) | (518) | (764) | ||||||||
Valuation allowance | 0 | 0 | 574 | ||||||||
Net income | 589 | 962 | 1,994 | ||||||||
Reclassification from Accumulated Other Comprehensive Income | Net unrealized foreign currency translation | |||||||||||
Amounts Reclassified From Accumulated Other Comprehensive Income [Abstract] | |||||||||||
Total reclassifications | 0 | 1,467 | 0 | ||||||||
Total income tax benefit (expense), net of valuation allowance | 0 | (513) | 0 | ||||||||
Net income | $ 0 | $ 954 | $ 0 |
Benefit Plans - Components of N
Benefit Plans - Components of Net Periodic Benefit Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension and Supplemental Executive Retirement Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Company Service Cost | $ 9,556 | $ 9,130 | $ 10,256 |
Interest Cost | 15,475 | 15,906 | 15,847 |
Expected Return on Assets | (20,099) | (19,508) | (21,109) |
Other Adjustments | 0 | 0 | 0 |
Subtotal | 4,932 | 5,528 | 4,994 |
Amortization of Net Transition Obligation/(Asset) | 0 | 0 | 0 |
Amortization of Net Prior Service Cost/(Credit) | (426) | (687) | (845) |
Amortization of Net Losses/(Gains) | 6,169 | 5,856 | 5,485 |
Total Amortization | 5,743 | 5,169 | 4,640 |
Net Periodic Benefit Cost | 10,675 | 10,697 | 9,634 |
Cost of settlements | 0 | 1,277 | 3,172 |
Total Expense for Year | 10,675 | 11,974 | 12,806 |
Other Postretirement Benefit Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Company Service Cost | 813 | 751 | 833 |
Interest Cost | 706 | 704 | 697 |
Expected Return on Assets | (5,248) | (4,886) | (4,991) |
Other Adjustments | 0 | 0 | 0 |
Subtotal | (3,729) | (3,431) | (3,461) |
Amortization of Net Transition Obligation/(Asset) | 0 | 0 | 0 |
Amortization of Net Prior Service Cost/(Credit) | (6,649) | (6,649) | (6,649) |
Amortization of Net Losses/(Gains) | 0 | 0 | (175) |
Total Amortization | (6,649) | (6,649) | (6,824) |
Net Periodic Benefit Cost | (10,378) | (10,080) | (10,285) |
Cost of settlements | 0 | 0 | 0 |
Total Expense for Year | $ (10,378) | $ (10,080) | $ (10,285) |
Benefit Plans - Development of
Benefit Plans - Development of Funded Status (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Pension and Supplemental Executive Retirement Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Accumulated Benefit Obligation | $ 411,996 | $ 360,423 | |
Projected Benefit Obligation | (417,770) | (369,808) | $ (349,483) |
Plan Assets at Fair Value | 401,142 | 360,900 | 350,107 |
Funded Status - Overfunded/(Underfunded) | (16,628) | (8,908) | |
Other Postretirement Benefit Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Accumulated Benefit Obligation | 24,716 | 17,378 | |
Projected Benefit Obligation | (24,716) | (17,378) | (16,423) |
Plan Assets at Fair Value | 85,303 | 70,408 | $ 65,568 |
Funded Status - Overfunded/(Underfunded) | $ 60,587 | $ 53,030 |
Benefit Plans - Accumulated Oth
Benefit Plans - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Pension and Supplemental Executive Retirement Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net Actuarial (Gain)/Loss | $ 109,904 | $ 103,861 | |
Net Prior Service Cost/(Credit) | (1,850) | (2,286) | |
Net Transition Obligation/(Asset) | 0 | 0 | |
Total at Year End | 108,054 | 101,575 | $ 92,647 |
Other Postretirement Benefit Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net Actuarial (Gain)/Loss | (10,234) | (6,088) | |
Net Prior Service Cost/(Credit) | (5,342) | (11,991) | |
Net Transition Obligation/(Asset) | 0 | 0 | |
Total at Year End | $ (15,576) | $ (18,079) | $ (23,951) |
Benefit Plans - Change in Proje
Benefit Plans - Change in Project Benefit/Accumulated Benefit Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension and Supplemental Executive Retirement Plans | |||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Benefit Obligation at Beginning of Year | $ 369,808 | $ 349,483 | |
Company Service Cost | 9,556 | 9,130 | $ 10,256 |
Interest Cost | 15,475 | 15,906 | 15,847 |
Plan Participants' Contributions | 0 | 0 | |
Net Actuarial (Gain)/Loss due to Assumption Changes | 38,496 | 14,450 | |
Net Actuarial (Gain)/Loss due to Plan Experience | 2,338 | 5,428 | |
Benefit Payments from Fund | (17,578) | (21,831) | |
Benefit Payments Directly by Company | (335) | (2,669) | |
Plan Amendments | 10 | 16 | |
Other Adjustment | 0 | (105) | |
Benefit Obligation at End of Year | 417,770 | 369,808 | 349,483 |
Other Postretirement Benefit Plan | |||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Benefit Obligation at Beginning of Year | 17,378 | 16,423 | |
Company Service Cost | 813 | 751 | 833 |
Interest Cost | 706 | 704 | 697 |
Plan Participants' Contributions | 395 | 408 | |
Net Actuarial (Gain)/Loss due to Assumption Changes | 5,981 | 497 | |
Net Actuarial (Gain)/Loss due to Plan Experience | 924 | 357 | |
Benefit Payments from Fund | (1,404) | (1,678) | |
Benefit Payments Directly by Company | 0 | 0 | |
Plan Amendments | 0 | 0 | |
Other Adjustment | (77) | (84) | |
Benefit Obligation at End of Year | $ 24,716 | $ 17,378 | $ 16,423 |
Benefit Plans - Change in Plan
Benefit Plans - Change in Plan Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pension and Supplemental Executive Retirement Plans | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair Value of Plan Assets at Beginning of Year | $ 360,900 | $ 350,107 |
Company Contributions | 9,435 | 11,369 |
Plan Participants' Contributions | 0 | 0 |
Benefit Payments from Fund | (17,578) | (21,831) |
Benefit Payments paid directly by Company | (335) | (2,669) |
Actual Return on Assets | 48,720 | 23,924 |
Other Adjustment | 0 | 0 |
Fair Value of Plan Assets at End of Year | 401,142 | 360,900 |
Other Postretirement Benefit Plan | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair Value of Plan Assets at Beginning of Year | 70,408 | 65,568 |
Company Contributions | 0 | 0 |
Plan Participants' Contributions | 395 | 408 |
Benefit Payments from Fund | (1,404) | (1,678) |
Benefit Payments paid directly by Company | 0 | 0 |
Actual Return on Assets | 16,299 | 6,518 |
Other Adjustment | (395) | (408) |
Fair Value of Plan Assets at End of Year | $ 85,303 | $ 70,408 |
Benefit Plans - Change in Accum
Benefit Plans - Change in Accumulated Other Comprehensive Income (AOCI) and Expected Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pension and Supplemental Executive Retirement Plans | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
AOCI in Prior Year | $ 101,575 | $ 92,647 |
Recognized during year - Prior Service (Cost)/Credit | 426 | 687 |
Recognized during year - Net Actuarial (Losses)/Gains | (6,169) | (5,856) |
Occurring during year - Prior Service Cost | 10 | 16 |
Occurring during year - Net Actuarial Losses/(Gains) | 12,212 | 15,358 |
Occurring during year - Net Settlement Losses/(Gains) | 0 | (1,277) |
Other adjustments | 0 | 0 |
AOCI in Current Year | 108,054 | 101,575 |
Amortization of Net Transition Obligation/(Asset) | 0 | |
Amortization of Prior Service Cost/(Credit) | (349) | |
Amortization of Net Losses/(Gains) | 7,140 | |
Other Postretirement Benefit Plan | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
AOCI in Prior Year | (18,079) | (23,951) |
Recognized during year - Prior Service (Cost)/Credit | 6,649 | 6,649 |
Recognized during year - Net Actuarial (Losses)/Gains | 0 | 0 |
Occurring during year - Prior Service Cost | 0 | 0 |
Occurring during year - Net Actuarial Losses/(Gains) | (4,146) | (777) |
Occurring during year - Net Settlement Losses/(Gains) | 0 | 0 |
Other adjustments | 0 | 0 |
AOCI in Current Year | (15,576) | $ (18,079) |
Amortization of Net Transition Obligation/(Asset) | 0 | |
Amortization of Prior Service Cost/(Credit) | (4,104) | |
Amortization of Net Losses/(Gains) | $ (183) |
Benefit Plans - Actuarial Assum
Benefit Plans - Actuarial Assumptions and Year-End Asset Allocations (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pension and Supplemental Executive Retirement Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount Rate (in hundredths) | 3.75% | 4.30% |
Rate of Compensation Increase (in hundredths) | 3.00% | 3.00% |
Discount Rate (in hundredths) | 4.30% | 4.65% |
Expected Long-term Return on Plan Assets (in hundredths) | 5.75% | 5.75% |
Rate of Compensation Increase (in hundredths) | 3.00% | 3.00% |
Other Postretirement Benefit Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount Rate (in hundredths) | 3.55% | 3.95% |
Discount Rate (in hundredths) | 3.95% | 4.30% |
Expected Long-term Return on Plan Assets (in hundredths) | 7.50% | 7.50% |
Health Care Cost Trend Rate Assumed for Next Year (in hundredths) | 6.50% | 6.50% |
Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate) (in hundredths) | 5.00% | 5.00% |
Year That the Rate Reaches the Ultimate Trend Rate | 2,024 | 2,020 |
Weighted-average asset allocations of plans (in hundredths) | 100.00% | 100.00% |
Other Postretirement Benefit Plan | Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted-average asset allocations of plans (in hundredths) | 100.00% | 100.00% |
Other Postretirement Benefit Plan | Total debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted-average asset allocations of plans (in hundredths) | 0.00% | 0.00% |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted-average asset allocations of plans (in hundredths) | 100.00% | 100.00% |
Pension Plan | Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted-average asset allocations of plans (in hundredths) | 21.00% | 23.00% |
Pension Plan | Total debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Weighted-average asset allocations of plans (in hundredths) | 79.00% | 77.00% |
Benefit Plans - Fair Value of P
Benefit Plans - Fair Value of Plan Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | $ 401,142 | $ 360,900 | |
Pension Plan | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 24,736 | 24,260 | |
Pension Plan | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 376,406 | 336,640 | |
Pension Plan | Domestic Mutual Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 1,006 | 11,805 | |
Pension Plan | Domestic Mutual Funds | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 1,006 | 11,805 | |
Pension Plan | Domestic Mutual Funds | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 0 | 0 | |
Pension Plan | Corporate Bonds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 202,840 | 178,412 | |
Pension Plan | Corporate Bonds | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 0 | 0 | |
Pension Plan | Corporate Bonds | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 202,840 | 178,412 | |
Pension Plan | U.S. Government Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 19,396 | 7,115 | |
Pension Plan | U.S. Government Securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 17,996 | 6,761 | |
Pension Plan | U.S. Government Securities | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 1,400 | 354 | |
Pension Plan | Municipal Bonds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 62,293 | 63,492 | |
Pension Plan | Municipal Bonds | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 0 | 0 | |
Pension Plan | Municipal Bonds | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 62,293 | 63,492 | |
Pension Plan | Foreign Bonds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 32,949 | 27,917 | |
Pension Plan | Foreign Bonds | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 0 | 0 | |
Pension Plan | Foreign Bonds | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 32,949 | 27,917 | |
Pension Plan | Exchange traded fund | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 5,734 | 5,694 | |
Pension Plan | Exchange traded fund | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 5,734 | 5,694 | |
Pension Plan | Exchange traded fund | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 0 | 0 | |
Pension Plan | Pooled Equity Accounts | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 76,924 | 66,465 | |
Pension Plan | Pooled Equity Accounts | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 0 | 0 | |
Pension Plan | Pooled Equity Accounts | Significant Other Observable Inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 76,924 | 66,465 | |
Other Postretirement Benefit Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 85,303 | 70,408 | $ 65,568 |
Other Postretirement Benefit Plan | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 85,303 | 70,408 | |
Other Postretirement Benefit Plan | Domestic Mutual Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 64,489 | 54,426 | |
Other Postretirement Benefit Plan | Domestic Mutual Funds | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 64,489 | 54,426 | |
Other Postretirement Benefit Plan | International Mutual Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | 20,814 | 15,982 | |
Other Postretirement Benefit Plan | International Mutual Funds | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan Assets at Fair Value | $ 20,814 | $ 15,982 |
Benefit Plans - Additional Disc
Benefit Plans - Additional Disclosures (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Other Postretirement Benefit Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Company Contributions | $ 0 | $ 0 |
Current plus 1 | 0 | |
Actual Benefit Payments for the Year Ending: Current | 1,086 | |
Expected Benefit Payments for the Year Ending: Current plus 1 | 1,174 | |
Expected Benefit Payments for the Year Ending: Current plus 2 | 1,368 | |
Expected Benefit Payments for the Year Ending: Current plus 3 | 1,689 | |
Expected Benefit Payments for the Year Ending: Current plus 4 | 1,944 | |
Expected Benefit Payments for the Year Ending: Current plus 5 | 2,044 | |
Expected Benefit Payments for the Year Ending: Current plus 6 - 10 | 11,914 | |
Effect of 1-percentage point increase on total service and interest cost component | 252 | |
Effect of 1-percentage point decrease on total service and interest cost components | (217) | |
Effect of 1-percentage point increase on postretirement benefit obligation | 3,093 | |
Effect of 1-percentage point decrease on postretirement benefit obligation | $ (2,748) | |
Other Postretirement Benefit Plan | Equity securities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 70.00% | |
Other Postretirement Benefit Plan | Equity securities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 100.00% | |
Other Postretirement Benefit Plan | Real Estate | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 0.00% | |
Other Postretirement Benefit Plan | Real Estate | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 15.00% | |
Other Postretirement Benefit Plan | Commodities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 0.00% | |
Other Postretirement Benefit Plan | Commodities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 10.00% | |
Other Postretirement Benefit Plan | Fixed Income/Cash | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 0.00% | |
Other Postretirement Benefit Plan | Fixed Income/Cash | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target asset allocations (in hundredths) | 10.00% | |
Pension and Supplemental Executive Retirement Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Company Contributions | $ 9,435 | $ 11,369 |
Current plus 1 | 10,950 | |
Actual Benefit Payments for the Year Ending: Current | 17,913 | |
Expected Benefit Payments for the Year Ending: Current plus 1 | 28,639 | |
Expected Benefit Payments for the Year Ending: Current plus 2 | 33,127 | |
Expected Benefit Payments for the Year Ending: Current plus 3 | 29,669 | |
Expected Benefit Payments for the Year Ending: Current plus 4 | 31,085 | |
Expected Benefit Payments for the Year Ending: Current plus 5 | 31,899 | |
Expected Benefit Payments for the Year Ending: Current plus 6 - 10 | $ 151,512 |
Benefit Plans - Narrative (Deta
Benefit Plans - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Minimum percentages of gain loss consider for amortization (in hundredths) | 10.00% | ||
Minimum value of outstanding noncallable bonds used in hypothetical cash flow bond matching exercise | $ 50,000,000 | ||
Future earnings period used in determining the expected average rate of earnings | 20 years | ||
Minimum percentage return should exceed growth in consumer price index annually (in hundredths) | 5.75% | ||
Maximum investment in international mutual funds (in hundredths) | 30.00% | ||
Percent of international mutual funds equity allocation in emerging markets (in hundredths) | 3.00% | ||
Percent of international mutual funds equity allocation in companies primarily based in Europe and the Pacific Basin (in hundredths) | 21.00% | ||
Discretionary profit sharing contribution as a percentage of participant's eligible compensation (in hundredths) | 5.00% | ||
Matching contribution rate on employees' before-tax contributions, first contribution level (in hundredths) | 80.00% | ||
Employee contributions subject to employer match, first contribution level | $ 1,000 | ||
Matching contribution rate on employees' before-tax contributions, second contribution level (in hundredths) | 40.00% | ||
Employee contributions subject to employer match, second contribution level | $ 2,000 | ||
Matching contribution rate on employees' before-tax contributions, hired after 01/01/2014 (in hundredths) | 100.00% | ||
Employee contributions subject to employer match for employees hired after 01/01/2014 (in hundredths) | 4.00% | ||
Profit sharing and 401(k) savings plan expenses | $ 6,000,000 | $ 5,900,000 | $ 5,100,000 |
Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Lump sum pension plan benefit payments | $ 6,300,000 | $ 11,200,000 | |
Pension Plan | Equity securities | Maximum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target asset allocations (in hundredths) | 40.00% | ||
Other Postretirement Benefit Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Health care trend rate used for current year (in hundredths) | 6.50% | ||
Health Care Cost Trend Rate Assumed for Next Year (in hundredths) | 6.50% | 6.50% | |
Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate) (in hundredths) | 5.00% | 5.00% | |
Other Postretirement Benefit Plan | Equity securities | Maximum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target asset allocations (in hundredths) | 100.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2007 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net deferred tax assets and liabilities [Abstract] | ||||||||||||||
Total deferred tax assets | $ 258,663 | $ 636,449 | ||||||||||||
Total deferred tax liabilities | (24,282) | (28,794) | ||||||||||||
Net deferred tax asset | 234,381 | 607,655 | ||||||||||||
Components of net deferred tax asset [Abstract] | ||||||||||||||
Unearned premium reserves | 29,196 | 40,153 | ||||||||||||
Benefit plans | (7,162) | (12,350) | ||||||||||||
Federal net operating loss | 155,839 | 520,812 | ||||||||||||
Loss reserves | 4,994 | 10,883 | ||||||||||||
Unrealized (appreciation) depreciation in investments | (7,782) | 11,211 | ||||||||||||
Mortgage investments | 8,963 | 17,751 | ||||||||||||
Deferred compensation | 7,265 | 12,517 | ||||||||||||
AMT credit carryforward | 37,017 | 2,215 | ||||||||||||
Other, net | 6,051 | 4,463 | ||||||||||||
Tax provision (benefit) [Abstract] | ||||||||||||||
Provision for income taxes before valuation allowance | $ 163,497 | |||||||||||||
Change in valuation allowance | (161,158) | |||||||||||||
Reversal of the valuation allowance | (686,652) | |||||||||||||
Provision for (benefit from) income taxes | $ 218,142 | $ 64,440 | $ 61,994 | $ 84,159 | $ 54,551 | $ 27,131 | $ 56,018 | $ 34,497 | $ 428,735 | $ 172,197 | (684,313) | |||
Change in deferred tax valuation allowance, included in other comprehensive income | (54,500) | |||||||||||||
Net operating loss carryforwards, regular tax basis | 742,000 | |||||||||||||
Components of provisions for (benefit from) income taxes [Abstract] | ||||||||||||||
Current Federal | 73,348 | 9,470 | 8,067 | |||||||||||
Deferred Federal | 351,677 | 160,657 | (686,652) | |||||||||||
Other | 3,710 | 2,070 | (5,728) | |||||||||||
Provision for (benefit from) income taxes | 218,142 | $ 64,440 | $ 61,994 | 84,159 | 54,551 | $ 27,131 | $ 56,018 | 34,497 | 428,735 | 172,197 | (684,313) | |||
Income tax expense due to remeasurement of net deferred tax assets | 133,000 | |||||||||||||
Income taxes paid | $ 22,000 | $ 4,500 | $ 5,400 | |||||||||||
Reconciliation of effective income tax rate [Abstract] | ||||||||||||||
Federal statutory income tax rate (in hundredths) | 35.00% | 35.00% | 35.00% | |||||||||||
Additional income tax provision related to the rate decrease included in the Tax Act | 17.00% | 0.00% | 0.00% | |||||||||||
Additional income tax provision related to IRS litigation (in hundredths) | 3.70% | 0.10% | 0.10% | |||||||||||
Valuation allowance (in hundredths) | 0.00% | 0.00% | (173.80%) | |||||||||||
Tax exempt municipal bond interest (in hundredths) | (1.40%) | (1.90%) | (0.80%) | |||||||||||
Other, net (in hundredths) | 0.40% | 0.30% | (0.80%) | |||||||||||
Effective income tax provision (benefit) rate (in hundredths) | 54.70% | 33.50% | (140.30%) | |||||||||||
Information regarding income tax examinations [Abstract] | ||||||||||||||
Amount of IRS assessment for unpaid taxes and penalties related to REMIC issue | 197,500 | |||||||||||||
Estimate of federal interest that may be due | 205,000 | |||||||||||||
Amount of payment made related to the IRS assessment on the REMIC issue | $ 65,200 | |||||||||||||
Amount of IRS assessment for unpaid taxes and penalties related to disallowance of carryback of 2009 net operating loss | 261,400 | |||||||||||||
Estimate of additional state income taxes and interest that may be due | 85,800 | |||||||||||||
Unrecognized tax benefits | 142,821 | 108,245 | 108,245 | 107,120 | $ 108,245 | $ 107,120 | $ 106,230 | 142,821 | 108,245 | |||||
Provision for additional taxes and interest | 29,000 | |||||||||||||
Unrecognized tax benefits [Roll Forward] | ||||||||||||||
Balance at beginning of year | $ 108,245 | $ 107,120 | 108,245 | 107,120 | 106,230 | |||||||||
Additions based on tax positions related to the current year | 0 | 0 | 0 | |||||||||||
Additions for tax positions of prior years | 35,003 | 1,125 | 890 | |||||||||||
Reductions for tax positions of prior years | (427) | 0 | 0 | |||||||||||
Settlements | 0 | 0 | 0 | |||||||||||
Balance at end of year | $ 142,821 | $ 108,245 | 142,821 | $ 108,245 | 107,120 | |||||||||
Unrecognized tax benefits [Abstract] | ||||||||||||||
Total amount of unrecognized tax benefits that would affect effective tax rate | 129,300 | |||||||||||||
Interest expense recognized during period | $ 23,100 | |||||||||||||
Unrecognized tax benefits, accrued interest | 52,000 | $ 28,900 | ||||||||||||
Significant change in unrecognized tax benefits | 142,800 | |||||||||||||
Approximate net cash outflows upon resolution of IRS matters | $ 55,000 | |||||||||||||
Deferred Tax Asset, Changes In Current Period | ||||||||||||||
Tax provision (benefit) [Abstract] | ||||||||||||||
Change in valuation allowance | 154,800 | |||||||||||||
Deferred Tax Asset, Changes In Current Period | Other Comprehensive Income (Loss) | ||||||||||||||
Tax provision (benefit) [Abstract] | ||||||||||||||
Change in valuation allowance | (6,300) | |||||||||||||
Deferred Tax Asset, Changes In Current Period | Income Tax Expense (Benefit) | ||||||||||||||
Tax provision (benefit) [Abstract] | ||||||||||||||
Change in valuation allowance | 161,100 | |||||||||||||
Deferred Tax Asset, Changes In Future Periods | ||||||||||||||
Tax provision (benefit) [Abstract] | ||||||||||||||
Change in valuation allowance | 747,500 | |||||||||||||
Deferred Tax Asset, Changes In Future Periods | Other Comprehensive Income (Loss) | ||||||||||||||
Tax provision (benefit) [Abstract] | ||||||||||||||
Change in valuation allowance | 60,800 | |||||||||||||
Deferred Tax Asset, Changes In Future Periods | Income Tax Expense (Benefit) | ||||||||||||||
Tax provision (benefit) [Abstract] | ||||||||||||||
Change in valuation allowance | $ 686,700 |
Income Taxes - Summary of Chang
Income Taxes - Summary of Changes In Tax Provisions (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Movement In Deferred Tax Asset [Roll Forward] | |
Balance at December 31, 2014 | $ 902,300 |
Valuation allowance | 161,158 |
Balance at December 31, 2015 | 0 |
Deferred Tax Asset, Changes In Current Period | |
Movement In Deferred Tax Asset [Roll Forward] | |
Valuation allowance | (154,800) |
Deferred Tax Asset, Changes In Current Period | Other Comprehensive Income (Loss) | |
Movement In Deferred Tax Asset [Roll Forward] | |
Valuation allowance | 6,300 |
Deferred Tax Asset, Changes In Current Period | Income Tax Expense (Benefit) | |
Movement In Deferred Tax Asset [Roll Forward] | |
Valuation allowance | (161,100) |
Deferred Tax Asset, Changes In Future Periods | |
Movement In Deferred Tax Asset [Roll Forward] | |
Valuation allowance | (747,500) |
Deferred Tax Asset, Changes In Future Periods | Other Comprehensive Income (Loss) | |
Movement In Deferred Tax Asset [Roll Forward] | |
Valuation allowance | (60,800) |
Deferred Tax Asset, Changes In Future Periods | Income Tax Expense (Benefit) | |
Movement In Deferred Tax Asset [Roll Forward] | |
Valuation allowance | $ (686,700) |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Apr. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||||
Shares repurchased, weighted average price per share | $ 8.03 | ||||
Shares repurchased, value | $ 147,100 | ||||
Shareholder rights accompanying each outstanding share of the company's common stock (in number of Rights) | 1 | 1 | |||
Common stock, beneficial ownership threshold to be considered an Acquiring Person (in hundredths) | 5.00% | 5.00% | |||
Purchase price (in dollars per share) | $ 45 | $ 45 | |||
Purchase price (in dollars per one-tenth share) | 4.50 | 4.50 | |||
Redemption price (in dollars per Right) | $ 0.001 | $ 0.001 | |||
Rights | |||||
Debt Instrument [Line Items] | |||||
Period after person becomes acquiring person | 10 days | ||||
Common stock purchased per right | 0.1 | 0.1 | |||
2% Convertible Senior Notes due 2020 | |||||
Debt Instrument [Line Items] | |||||
Principal amount of notes converted into shares | $ 202,500 | ||||
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, new issues (in shares) | 10,400,000 | ||||
Repayments of debt (in shares) | 18,300,000 | 18,300,000 | |||
Stated interest rate (in hundredths) | 2.00% | 2.00% | |||
Convertible Junior Subordinated Debentures, at 9% per annum, Due 2063 | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate (in hundredths) | 9.00% | 9.00% | |||
Reacquisition of convertible junior subordinated debentures-equity component | $ 6,300 | ||||
Accumulated other comprehensive loss | |||||
Debt Instrument [Line Items] | |||||
Cumulative effect to reclassify certain tax effects from accumulated other comprehensive loss | $ (10,400) | $ (10,422) | |||
Retained earnings (deficit) | |||||
Debt Instrument [Line Items] | |||||
Cumulative effect to reclassify certain tax effects from accumulated other comprehensive loss | $ 10,400 | $ 10,422 |
Statutory Information (Details)
Statutory Information (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)jurisdiction | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Statutory Capital [Abstract] | |||
Percentage of premiums earned required to be maintained as contingency loss reserves (in hundredths) | 50.00% | ||
Period that contingency loss reserves must be held (in years) | 10 years | ||
Percentage of net premiums earned that incurred losses must exceed to enable early withdrawals from contingency loss reserves (in hundredths) | 35.00% | ||
Related Party Transaction [Line Items] | |||
Statutory net income (loss) | $ 310,776,000 | $ 106,326,000 | $ (72,767,000) |
Statutory policyholders' surplus | 1,622,115,000 | 1,506,475,000 | 1,608,214,000 |
Contingency reserve | $ 1,896,701,000 | 1,360,088,000 | 826,706,000 |
Statutory capital requirements [Abstract] | |||
Number of jurisdictions with risk-to-capital requirements | jurisdiction | 16 | ||
Maximum permitted risk-to-capital ratio commonly applied | 25 to 1 | ||
Risk-to-capital ratio on a combined basis at end of period | 10.5 to 1 | ||
Risk-to-capital ratio on combined insurance operations | 10.5 | ||
Percentage of statutory policyholders surplus used to determine maximum allowable dividends | 10.00% | ||
Maximum | |||
Statutory capital requirements [Abstract] | |||
Risk to capital ratio | 25 | ||
Other Insurance Subsidiaries | |||
Related Party Transaction [Line Items] | |||
Dividends paid to the parent company | 6,500,000 | ||
Distributions from other insurance subsidiaries to the parent company | $ 0 | 52,001,000 | 38,500,000 |
Mortgage Guaranty Insurance Corporation | |||
Related Party Transaction [Line Items] | |||
Loss ratio | 5.00% | ||
Additions to the surplus of MGIC from parent company funds | $ 0 | 36,025,000 | 0 |
Dividends paid to the parent company | $ 140,000,000 | $ 64,000,000 | $ 0 |
Statutory capital requirements [Abstract] | |||
Risk to capital ratio | 9.5 | ||
Risk to capital ratio at end of period | 9.5 to 1 | ||
Amount of policyholders position above or below required MPP | $ 2,100,000,000 | ||
Amount of required MPP | $ 1,200,000,000 | ||
Adjusted statutory net income measurement period | 3 years | ||
Adjusted statutory net income dividend payment measurement period | 2 years | ||
Adjustment to statutory net income | $ 473,000,000 |
Share-based Compensation Plan77
Share-based Compensation Plans (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost | $ 14.9 | $ 11.4 | $ 11.9 |
Income tax benefit from compensation cost | $ 5.2 | $ 4 | $ 4.2 |
Shares [Roll Forward] | |||
Restricted stock outstanding at end of period (in shares) | 3,300,000 | ||
Restricted Stock/Restricted Stock Units | |||
Weighted average grant date fair market value [Abstract] | |||
Restricted stock outstanding at end of period (in dollars per share) | $ 7.44 | ||
Granted (in dollars per share) | 10.41 | $ 5.66 | $ 9.03 |
Vested (in dollars per share) | 7.71 | ||
Forfeited (in dollars per share) | 8.43 | ||
Restricted stock outstanding at end of period (in dollars per share) | $ 8.78 | $ 7.44 | |
Shares [Roll Forward] | |||
Restricted stock outstanding at beginning of period (in shares) | 3,146,672 | ||
Granted (in shares) | 1,631,744 | ||
Vested (in shares) | (1,409,347) | ||
Forfeited (in shares) | (68,460) | ||
Restricted stock outstanding at end of period (in shares) | 3,300,609 | 3,146,672 | |
Additional disclosures [Abstract] | |||
Restricted stock, performance shares (in shares) | 2,500,000 | ||
Restricted stock, time vested shares (in shares) | 800,000 | ||
Total fair value of restricted stock vested | $ 15.3 | $ 12.2 | $ 17.2 |
Unrecognized compensation cost | 13.2 | ||
Unrecognized compensation cost, performance shares | 9.9 | ||
Unrecognized compensation cost, time vested shares | $ 3.3 | ||
Weighted-average period for recognition of compensation cost | 1 year 6 months | ||
2015 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum number of shares can be awarded under the plan (in shares) | 10,000,000 | ||
Additional disclosures [Abstract] | |||
Shares available for future grants (in shares) | 6,700,000 | ||
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 1 year | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Leases [Abstract] | |||
Remaining term of operating leases (in years) | 5 years | ||
Minimum future operating lease payments [Abstract] | |||
2,018 | $ 808 | ||
2,019 | 823 | ||
2,020 | 583 | ||
2,021 | 48 | ||
2022 and thereafter | 0 | ||
Total | 2,262 | ||
Total rental expense under operating leases | $ 2,000 | $ 2,100 | $ 2,200 |
Litigation and Contingencies (D
Litigation and Contingencies (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Average paid claim reduction due to curtailments (in hundredths) | 5.60% | 5.50% |
Maximum exposure to loss | $ 285 |
Unaudited Quarterly Financial80
Unaudited Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net premiums earned | $ 237,425 | $ 237,083 | $ 231,136 | $ 229,103 | $ 235,053 | $ 237,376 | $ 231,456 | $ 221,341 | $ 934,747 | $ 925,226 | $ 896,222 |
Investment income, net of expenses | 31,276 | 30,402 | 29,716 | 29,477 | 28,094 | 27,515 | 27,248 | 27,809 | 120,871 | 110,666 | 103,741 |
Realized gains (losses) | 460 | (47) | (42) | (122) | (52) | 5,092 | 836 | 3,056 | 249 | 8,932 | 28,361 |
Other revenue | 2,341 | 2,922 | 2,502 | 2,422 | 3,425 | 3,867 | 3,994 | 6,373 | 10,187 | 17,659 | 12,964 |
Loss incurred, net | (30,996) | 29,747 | 27,339 | 27,619 | 47,658 | 60,897 | 46,590 | 85,012 | 53,709 | 240,157 | 343,547 |
Underwriting and other expenses, net | 57,042 | 56,146 | 55,292 | 59,304 | 56,824 | 53,981 | 49,837 | 56,439 | 227,784 | 217,081 | |
Loss on debt extinguishment | 0 | 0 | 65 | 0 | 0 | 75,223 | 1,868 | 13,440 | 65 | 90,531 | 507 |
Provision for income tax | 218,142 | 64,440 | 61,994 | 84,159 | 54,551 | 27,131 | 56,018 | 34,497 | 428,735 | 172,197 | (684,313) |
Net income | $ 27,314 | $ 120,027 | $ 118,622 | $ 89,798 | $ 107,487 | $ 56,618 | $ 109,221 | $ 69,191 | $ 355,761 | $ 342,517 | $ 1,172,000 |
Earnings per Share [Abstract] | |||||||||||
Basic (in dollars per share) | $ 0.07 | $ 0.32 | $ 0.32 | $ 0.26 | $ 0.31 | $ 0.16 | $ 0.32 | $ 0.20 | $ 0.98 | $ 1 | $ 3.45 |
Diluted (in dollars per share) | $ 0.07 | $ 0.32 | $ 0.31 | $ 0.24 | $ 0.28 | $ 0.14 | $ 0.26 | $ 0.17 | $ 0.95 | $ 0.86 | $ 2.60 |
SCHEDULE I - SUMMARY OF INVES81
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | $ 4,953,501 |
Fair Value | 4,990,561 |
Amount at which shown in the balance sheet | 4,990,561 |
Fixed income | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 4,946,278 |
Fair Value | 4,983,315 |
Amount at which shown in the balance sheet | 4,983,315 |
Fixed income | U.S. Treasury securities and obligations of U.S. government corporations and agencies | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 179,850 |
Fair Value | 178,846 |
Amount at which shown in the balance sheet | 178,846 |
Fixed income | Obligations of U.S. states and political subdivisions | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 2,105,063 |
Fair Value | 2,152,524 |
Amount at which shown in the balance sheet | 2,152,524 |
Fixed income | Public utilities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 222,619 |
Fair Value | 222,806 |
Amount at which shown in the balance sheet | 222,806 |
Fixed income | ABS | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 4,925 |
Fair Value | 4,923 |
Amount at which shown in the balance sheet | 4,923 |
Fixed income | Collateralized loan obligations | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 100,798 |
Fair Value | 101,023 |
Amount at which shown in the balance sheet | 101,023 |
Fixed income | Mortgage-backed | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 490,167 |
Fair Value | 479,161 |
Amount at which shown in the balance sheet | 479,161 |
Fixed income | All other corporate bonds | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 1,842,856 |
Fair Value | 1,844,032 |
Amount at which shown in the balance sheet | 1,844,032 |
Equity Securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 7,223 |
Fair Value | 7,246 |
Amount at which shown in the balance sheet | 7,246 |
Equity Securities | Industrial, miscellaneous and all other | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized Cost | 7,223 |
Fair Value | 7,246 |
Amount at which shown in the balance sheet | $ 7,246 |
SCHEDULE II - CONDENSED FINAN82
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets | ||||||||||||||
Fixed income (amortized cost, 2017 – $195,846; 2016 – $247,396) | $ 4,983,315 | $ 4,685,222 | ||||||||||||
Cash and cash equivalents | $ 99,851 | $ 155,410 | $ 155,410 | $ 181,120 | $ 155,410 | $ 181,120 | $ 197,882 | 99,851 | 155,410 | $ 181,120 | ||||
Accrued investment income | 46,060 | 44,073 | ||||||||||||
Other assets | 78,478 | 73,345 | ||||||||||||
Total assets | 5,619,499 | 5,734,529 | ||||||||||||
Liabilities: | ||||||||||||||
Senior notes | 418,560 | 417,406 | ||||||||||||
Convertible senior notes | 0 | 349,461 | ||||||||||||
Convertible junior subordinated debentures | 256,872 | 256,872 | ||||||||||||
Total liabilities | 2,464,973 | 3,185,687 | ||||||||||||
Shareholders’ equity: | ||||||||||||||
Common stock (one dollar par value, shares authorized 1,000,000; shares issued 2017 - 370,567; 2016 - 359,400; outstanding 2017 - 370,567; 2016 - 340,663) | 370,567 | 359,400 | ||||||||||||
Paid-in capital | 1,850,582 | 1,782,337 | ||||||||||||
Treasury stock (shares at cost 2016 – 18,737) | 0 | (150,359) | ||||||||||||
Accumulated other comprehensive loss, net of tax | (43,783) | (75,100) | ||||||||||||
Retained earnings | 977,160 | 632,564 | ||||||||||||
Total shareholders' equity | 3,154,526 | 2,548,842 | 2,236,140 | |||||||||||
Total liabilities and shareholders' equity | 5,619,499 | 5,734,529 | ||||||||||||
Parenthetical information [Abstract] | ||||||||||||||
Fixed income, amortized cost | $ 4,946,278 | $ 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) | 370,567,000 | 359,400,000 | ||||||||||||
Common stock, shares outstanding (in shares) | 370,567,000 | 340,663,000 | ||||||||||||
Treasury stock, shares at cost (in shares) | 0 | 18,737,000 | ||||||||||||
Revenues: | ||||||||||||||
Investment income, net of expenses | 31,276 | $ 30,402 | $ 29,716 | 29,477 | 28,094 | $ 27,515 | $ 27,248 | 27,809 | 120,871 | 110,666 | 103,741 | |||
Realized gains (losses) | 460 | (47) | (42) | (122) | (52) | 5,092 | 836 | 3,056 | 249 | 8,932 | 28,361 | |||
Total revenues | 1,066,054 | 1,062,483 | 1,041,288 | |||||||||||
Expenses: | ||||||||||||||
Interest expense | 57,035 | 56,672 | 68,932 | |||||||||||
Loss on debt extinguishment | 0 | 0 | 65 | 0 | 0 | 75,223 | 1,868 | 13,440 | 65 | 90,531 | 507 | |||
Total losses and expenses | 281,558 | 547,769 | 553,601 | |||||||||||
Income before tax | 784,496 | 514,714 | 487,687 | |||||||||||
Provision for (benefit from) income taxes | 218,142 | 64,440 | 61,994 | 84,159 | 54,551 | 27,131 | 56,018 | 34,497 | 428,735 | 172,197 | (684,313) | |||
Net income | 27,314 | 120,027 | 118,622 | 89,798 | 107,487 | 56,618 | 109,221 | 69,191 | 355,761 | 342,517 | 1,172,000 | |||
Other comprehensive income (loss), net of tax | 41,739 | (14,220) | 20,461 | |||||||||||
Comprehensive income | 397,500 | 328,297 | 1,192,461 | |||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | 27,314 | 120,027 | 118,622 | 89,798 | 107,487 | 56,618 | 109,221 | 69,191 | 355,761 | 342,517 | 1,172,000 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
Deferred Federal | 351,677 | 160,657 | (686,652) | |||||||||||
Loss on debt extinguishment | 0 | $ 0 | $ 65 | 0 | 0 | $ 75,223 | $ 1,868 | 13,440 | 65 | 90,531 | 507 | |||
Change in certain assets and liabilities: | ||||||||||||||
Accrued investment income | (1,987) | (3,849) | (9,706) | |||||||||||
Net cash provided by operating activities | 406,657 | 224,760 | 161,395 | |||||||||||
Cash flows from investing activities: | ||||||||||||||
Purchase of fixed income | (1,293,616) | (1,360,386) | (2,462,844) | |||||||||||
Sale of fixed income | 246,908 | 728,042 | 1,796,153 | |||||||||||
Net cash used in investing activities | (303,641) | (93,392) | (96,958) | |||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from revolving credit facility | 150,000 | 0 | 0 | |||||||||||
Repayment of revolving credit facility | (150,000) | 0 | 0 | |||||||||||
Proceeds from issuance of long-term debt | 0 | 573,094 | 0 | |||||||||||
Repayment of long-term debt | 0 | 0 | (61,953) | |||||||||||
Purchase or repayment of convertible senior notes | (145,620) | (363,778) | (11,152) | |||||||||||
Repurchase of common stock | 0 | (147,127) | 0 | |||||||||||
Payment of debt issuance costs | (1,630) | (1,127) | 0 | |||||||||||
Payment of withholding taxes related to share-based compensation net share settlement | (6,821) | (5,030) | (7,242) | |||||||||||
Net cash used in financing activities | (158,575) | (157,078) | (81,199) | |||||||||||
Net decrease in cash and cash equivalents | (55,559) | (25,710) | (16,762) | |||||||||||
Cash and cash equivalents at beginning of year | 155,410 | 181,120 | 155,410 | 181,120 | 197,882 | |||||||||
Cash and cash equivalents at end of year | 99,851 | 155,410 | 99,851 | 155,410 | 181,120 | |||||||||
Parent Company | ||||||||||||||
Assets | ||||||||||||||
Fixed income (amortized cost, 2017 – $195,846; 2016 – $247,396) | $ 194,061 | $ 245,435 | ||||||||||||
Cash and cash equivalents | 22,247 | 37,666 | 37,666 | 19,417 | 37,666 | 19,417 | 10,507 | 22,247 | 37,666 | $ 19,417 | ||||
Investment in subsidiaries, at equity in net assets | 3,567,034 | 3,150,671 | ||||||||||||
Accounts receivable - affiliates | 1,414 | 780 | ||||||||||||
Income taxes - current and deferred | 192,570 | 289,703 | ||||||||||||
Accrued investment income | 1,941 | 1,749 | ||||||||||||
Other assets | 1,275 | 80 | ||||||||||||
Total assets | 3,980,542 | 3,726,084 | ||||||||||||
Liabilities: | ||||||||||||||
Senior notes | 418,560 | 417,406 | ||||||||||||
Convertible senior notes | 0 | 349,461 | ||||||||||||
Convertible junior subordinated debentures | 389,522 | 389,522 | ||||||||||||
Accrued interest | 17,934 | 20,853 | ||||||||||||
Total liabilities | 826,016 | 1,177,242 | ||||||||||||
Shareholders’ equity: | ||||||||||||||
Common stock (one dollar par value, shares authorized 1,000,000; shares issued 2017 - 370,567; 2016 - 359,400; outstanding 2017 - 370,567; 2016 - 340,663) | 370,567 | 359,400 | ||||||||||||
Paid-in capital | 1,850,582 | 1,782,337 | ||||||||||||
Treasury stock (shares at cost 2016 – 18,737) | 0 | (150,359) | ||||||||||||
Accumulated other comprehensive loss, net of tax | (43,783) | (75,100) | ||||||||||||
Retained earnings | 977,160 | 632,564 | ||||||||||||
Total shareholders' equity | 3,154,526 | 2,548,842 | ||||||||||||
Total liabilities and shareholders' equity | 3,980,542 | 3,726,084 | ||||||||||||
Parenthetical information [Abstract] | ||||||||||||||
Fixed income, amortized cost | $ 195,846 | $ 247,396 | ||||||||||||
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) | 370,567,000 | 359,400,000 | ||||||||||||
Common stock, shares outstanding (in shares) | 370,567,000 | 340,663,000 | ||||||||||||
Treasury stock, shares at cost (in shares) | 0 | 18,737,000 | ||||||||||||
Revenues: | ||||||||||||||
Investment income, net of expenses | 3,177 | 3,807 | 7,586 | |||||||||||
Realized gains (losses) | (13) | 646 | 357 | |||||||||||
Total revenues | 3,164 | 4,453 | 7,943 | |||||||||||
Expenses: | ||||||||||||||
Operating expenses | 642 | 1,409 | 582 | |||||||||||
Interest expense | 65,972 | 64,598 | 68,932 | |||||||||||
Loss on debt extinguishment | 65 | 82,234 | 507 | |||||||||||
Total losses and expenses | 66,679 | 148,241 | 70,021 | |||||||||||
Income before tax | (63,515) | (143,788) | (62,078) | |||||||||||
Provision for (benefit from) income taxes | 95,517 | (52,575) | (125,487) | |||||||||||
Equity in net income of subsidiaries | 514,793 | 433,730 | 1,108,591 | |||||||||||
Net income | 355,761 | 342,517 | 1,172,000 | |||||||||||
Other comprehensive income (loss), net of tax | 41,739 | (14,220) | 20,461 | |||||||||||
Comprehensive income | 397,500 | 328,297 | 1,192,461 | |||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | 355,761 | 342,517 | 1,172,000 | |||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
Equity in net income of subsidiaries | (514,793) | (433,730) | (1,108,591) | |||||||||||
Dividends received from subsidiaries | 110,145 | 64,000 | 6,500 | |||||||||||
Deferred Federal | 96,741 | (55,988) | (125,532) | |||||||||||
Loss on debt extinguishment | 65 | 82,234 | 507 | |||||||||||
Other | 18,716 | 16,722 | 31,701 | |||||||||||
Change in certain assets and liabilities: | ||||||||||||||
Accounts receivable - affiliates | (634) | 158 | (626) | |||||||||||
Income taxes receivable | 297 | 3,602 | (8,308) | |||||||||||
Accrued investment income | (192) | 1,951 | (265) | |||||||||||
Accrued interest | (2,819) | 6,811 | (652) | |||||||||||
Net cash provided by operating activities | 63,287 | 28,277 | (33,266) | |||||||||||
Cash flows from investing activities: | ||||||||||||||
Capital distributions from subsidiaries | 0 | 51,987 | 32,000 | |||||||||||
Capital contributions to subsidiaries | 0 | (36,025) | 0 | |||||||||||
Purchase of fixed income | (97,091) | (194,751) | (295,010) | |||||||||||
Sale of fixed income | 176,960 | 330,142 | 386,385 | |||||||||||
Net cash used in investing activities | 79,869 | 151,353 | 123,375 | |||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from revolving credit facility | 150,000 | 0 | 0 | |||||||||||
Repayment of revolving credit facility | (150,000) | 0 | 0 | |||||||||||
Proceeds from issuance of long-term debt | 0 | 418,094 | 0 | |||||||||||
Repayment of long-term debt | 0 | 0 | (61,953) | |||||||||||
Purchase or repayment of convertible senior notes | (150,124) | (426,191) | (12,004) | |||||||||||
Repurchase of common stock | 0 | (147,127) | 0 | |||||||||||
Payment of debt issuance costs | (1,630) | (1,127) | 0 | |||||||||||
Payment of withholding taxes related to share-based compensation net share settlement | (6,821) | (5,030) | (7,242) | |||||||||||
Net cash used in financing activities | (158,575) | (161,381) | (81,199) | |||||||||||
Net decrease in cash and cash equivalents | (15,419) | 18,249 | 8,910 | |||||||||||
Cash and cash equivalents at beginning of year | $ 37,666 | $ 19,417 | 37,666 | 19,417 | 10,507 | |||||||||
Cash and cash equivalents at end of year | $ 22,247 | $ 37,666 | $ 22,247 | $ 37,666 | $ 19,417 |
SCHEDULE II - CONDENSED FINAN83
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - SUPPLEMENTARY NOTES (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Feb. 29, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Supplementary Insurance Information, by Segment [Line Items] | ||||
Percentage of statutory policyholders surplus used to determine maximum allowable dividends | 10.00% | |||
Convertible junior subordinated debentures | $ 256,872,000 | $ 256,872,000 | ||
Other Insurance Subsidiaries | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Dividends paid to the parent company | $ 6,500,000 | |||
Distributions from other insurance subsidiaries to the parent company | 0 | 52,001,000 | 38,500,000 | |
Proceeds from contribution from parent | 0 | 0 | ||
Parent Company | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Convertible junior subordinated debentures | $ 389,522,000 | 389,522,000 | ||
Mortgage Guaranty Insurance Corporation | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Adjusted statutory net income measurement period | 3 years | |||
Adjusted statutory net income dividend payment measurement period | 2 years | |||
Dividends paid to the parent company | $ 140,000,000 | 64,000,000 | 0 | |
Additions to the surplus of MGIC from parent company funds | $ 0 | $ 36,025,000 | $ 0 | |
Convertible Junior Subordinated Debentures, at 9% per annum, Due 2063 | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Stated interest rate (in hundredths) | 9.00% | |||
Extinguishment of debt, amount | $ 132,700,000 |
SCHEDULE IV - REINSURANCE (Deta
SCHEDULE IV - REINSURANCE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract] | |||
Gross Amount | $ 1,059,973 | $ 1,058,545 | $ 997,892 |
Ceded to Other Companies | 125,735 | 133,981 | 102,848 |
Assumed From Other Companies | 509 | 662 | 1,178 |
Net Amount | $ 934,747 | $ 925,226 | $ 896,222 |
Percentage of Amount Assumed to Net | 0.10% | 0.10% | 0.10% |