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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Essent Group Ltd | NYSE:ESNT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 53.59 | 0 | 12:00:00 |
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Bermuda
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Not Applicable
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Clarendon House
2 Church Street
Hamilton HM11, Bermuda
(Address of principal executive offices and zip code)
(441) 297-9901
(Registrant’s telephone number, including area code)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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•
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changes in or to Fannie Mae and Freddie Mac, which we refer to collectively as the GSEs, whether through Federal legislation, restructurings or a shift in business practices;
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•
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failure to continue to meet the mortgage insurer eligibility requirements of the GSEs;
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•
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competition for our customers on the basis of price, terms and conditions or otherwise, or the loss of a significant customer;
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•
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lenders or investors seeking alternatives to private mortgage insurance;
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•
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increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration;
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•
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decline in the volume of low down payment mortgage originations;
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•
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uncertainty of loss reserve estimates;
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•
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decrease in the length of time our insurance policies are in force;
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•
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deteriorating economic conditions;
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•
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the impact of recently enacted U.S. Federal tax reform on us, our shareholders and our operations;
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•
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the definition of “Qualified Mortgage” reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs;
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•
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the definition of “Qualified Residential Mortgage” reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance;
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•
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the implementation of the Basel III Capital Accord, which may discourage the use of private mortgage insurance;
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•
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management of risk in our investment portfolio;
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•
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fluctuations in interest rates;
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•
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inadequacy of the premiums we charge to compensate for our losses incurred;
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•
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dependence on management team and qualified personnel;
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•
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disturbance to our information technology systems;
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•
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change in our customers’ capital requirements discouraging the use of mortgage insurance;
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•
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declines in the value of borrowers’ homes;
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•
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limited availability of capital;
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•
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unanticipated claims arise under and risks associated with our contract underwriting program;
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•
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industry practice that loss reserves are established only upon a loan default;
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•
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disruption in mortgage loan servicing;
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•
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risk of future legal proceedings;
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•
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customers’ technological demands;
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•
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our non-U.S. operations becoming subject to U.S. Federal income taxation;
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•
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becoming considered a passive foreign investment company for U.S. Federal income tax purposes; and
|
•
|
potential inability of our insurance subsidiaries to pay dividends.
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|
|
September 30,
|
|
December 31,
|
||||
(In thousands, except per share amounts)
|
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
|
|
|
||
Investments
|
|
|
|
|
|
|
||
Fixed maturities available for sale, at fair value (amortized cost: 2018 — $2,527,850; 2017 — $1,994,200)
|
|
$
|
2,473,840
|
|
|
$
|
1,992,371
|
|
Short-term investments available for sale, at fair value (amortized cost: 2018 — $191,911; 2017 — $312,714)
|
|
191,912
|
|
|
312,694
|
|
||
Total investments available for sale
|
|
2,665,752
|
|
|
2,305,065
|
|
||
Other invested assets
|
|
24,865
|
|
|
500
|
|
||
Total investments
|
|
2,690,617
|
|
|
2,305,565
|
|
||
Cash
|
|
29,797
|
|
|
43,524
|
|
||
Accrued investment income
|
|
17,125
|
|
|
12,807
|
|
||
Accounts receivable
|
|
35,597
|
|
|
29,752
|
|
||
Deferred policy acquisition costs
|
|
16,159
|
|
|
15,354
|
|
||
Property and equipment (at cost, less accumulated depreciation of $53,005 in 2018 and $50,466 in 2017)
|
|
7,387
|
|
|
6,979
|
|
||
Prepaid federal income tax
|
|
185,935
|
|
|
252,157
|
|
||
Other assets
|
|
10,806
|
|
|
8,230
|
|
||
Total assets
|
|
$
|
2,993,423
|
|
|
$
|
2,674,368
|
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
|
|
||
Reserve for losses and LAE
|
|
$
|
53,355
|
|
|
$
|
46,850
|
|
Unearned premium reserve
|
|
292,331
|
|
|
259,672
|
|
||
Net deferred tax liability
|
|
155,349
|
|
|
127,636
|
|
||
Credit facility borrowings (at carrying value, less unamortized deferred costs of $1,513 in 2018 and $1,409 in 2017)
|
|
223,487
|
|
|
248,591
|
|
||
Securities purchases payable
|
|
21,741
|
|
|
14,999
|
|
||
Other accrued liabilities
|
|
32,021
|
|
|
36,184
|
|
||
Total liabilities
|
|
778,284
|
|
|
733,932
|
|
||
Commitments and contingencies (see Note 7)
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|
||
Stockholders’ Equity
|
|
|
|
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|
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Common shares, $0.015 par value:
|
|
|
|
|
|
|
||
Authorized - 233,333; issued and outstanding - 98,128 shares in 2018 and 98,434 shares in 2017
|
|
1,472
|
|
|
1,476
|
|
||
Additional paid-in capital
|
|
1,107,206
|
|
|
1,127,137
|
|
||
Accumulated other comprehensive loss
|
|
(47,449
|
)
|
|
(3,252
|
)
|
||
Retained earnings
|
|
1,153,910
|
|
|
815,075
|
|
||
Total stockholders’ equity
|
|
2,215,139
|
|
|
1,940,436
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
2,993,423
|
|
|
$
|
2,674,368
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands, except per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
Net premiums written
|
|
$
|
175,221
|
|
|
$
|
155,055
|
|
|
$
|
508,850
|
|
|
$
|
408,415
|
|
Increase in unearned premiums
|
|
(8,546
|
)
|
|
(17,115
|
)
|
|
(32,659
|
)
|
|
(26,261
|
)
|
||||
Net premiums earned
|
|
166,675
|
|
|
137,940
|
|
|
476,191
|
|
|
382,154
|
|
||||
Net investment income
|
|
16,646
|
|
|
10,626
|
|
|
45,494
|
|
|
28,461
|
|
||||
Realized investment gains, net
|
|
524
|
|
|
564
|
|
|
1,160
|
|
|
1,763
|
|
||||
Other income
|
|
1,153
|
|
|
1,073
|
|
|
3,384
|
|
|
3,023
|
|
||||
Total revenues
|
|
184,998
|
|
|
150,203
|
|
|
526,229
|
|
|
415,401
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Losses and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for losses and LAE
|
|
5,452
|
|
|
4,313
|
|
|
12,574
|
|
|
9,776
|
|
||||
Other underwriting and operating expenses
|
|
36,899
|
|
|
37,035
|
|
|
111,451
|
|
|
109,053
|
|
||||
Interest expense
|
|
2,500
|
|
|
1,456
|
|
|
7,568
|
|
|
3,361
|
|
||||
Total losses and expenses
|
|
44,851
|
|
|
42,804
|
|
|
131,593
|
|
|
122,190
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
|
140,147
|
|
|
107,399
|
|
|
394,636
|
|
|
293,211
|
|
||||
Income tax expense
|
|
24,136
|
|
|
29,006
|
|
|
55,801
|
|
|
76,102
|
|
||||
Net income
|
|
$
|
116,011
|
|
|
$
|
78,393
|
|
|
$
|
338,835
|
|
|
$
|
217,109
|
|
|
|
|
|
|
|
|
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|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
1.19
|
|
|
$
|
0.83
|
|
|
$
|
3.48
|
|
|
$
|
2.35
|
|
Diluted
|
|
1.18
|
|
|
0.82
|
|
|
3.46
|
|
|
2.31
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
97,438
|
|
|
94,185
|
|
|
97,388
|
|
|
92,285
|
|
||||
Diluted
|
|
98,013
|
|
|
96,094
|
|
|
97,944
|
|
|
94,104
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
116,011
|
|
|
$
|
78,393
|
|
|
$
|
338,835
|
|
|
$
|
217,109
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in unrealized (depreciation) appreciation of investments, net of tax (benefit) expense of ($1,352) and $752 in the three months ended September 30, 2018 and 2017 and ($7,963) and $6,462 in the nine months ended September 30, 2018 and 2017
|
|
(8,201
|
)
|
|
1,978
|
|
|
(44,197
|
)
|
|
15,298
|
|
||||
Total other comprehensive (loss) income
|
|
(8,201
|
)
|
|
1,978
|
|
|
(44,197
|
)
|
|
15,298
|
|
||||
Comprehensive income
|
|
$
|
107,810
|
|
|
$
|
80,371
|
|
|
$
|
294,638
|
|
|
$
|
232,407
|
|
(In thousands)
|
|
Common
Shares
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Total
Stockholders’
Equity
|
||||||||||||
Balance at January 1, 2017
|
|
$
|
1,397
|
|
|
$
|
918,296
|
|
|
$
|
(12,255
|
)
|
|
$
|
436,335
|
|
|
$
|
—
|
|
|
$
|
1,343,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
379,747
|
|
|
|
|
|
379,747
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
8,068
|
|
|
|
|
|
|
|
|
8,068
|
|
||||||
Issuance of common shares, net of issuance cost of $1,802
|
|
75
|
|
|
197,623
|
|
|
|
|
|
|
|
|
197,698
|
|
|||||||||
Issuance of management incentive shares
|
|
8
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
18,688
|
|
|
|
|
|
|
|
|
|
|
|
18,688
|
|
||||||
Cumulative effect of ASU 2016-09 adoption
|
|
|
|
111
|
|
|
|
|
(72
|
)
|
|
|
|
39
|
|
|||||||||
Treasury stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,577
|
)
|
|
(7,577
|
)
|
||||||
Cancellation of treasury stock
|
|
(4
|
)
|
|
(7,573
|
)
|
|
|
|
|
|
|
|
7,577
|
|
|
—
|
|
||||||
Reclassification of certain income tax effects resulting from tax reform
|
|
|
|
|
|
935
|
|
|
(935
|
)
|
|
|
|
—
|
|
|||||||||
Balance at December 31, 2017
|
|
$
|
1,476
|
|
|
$
|
1,127,137
|
|
|
$
|
(3,252
|
)
|
|
$
|
815,075
|
|
|
$
|
—
|
|
|
$
|
1,940,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
338,835
|
|
|
|
|
|
338,835
|
|
||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(44,197
|
)
|
|
|
|
|
|
|
|
(44,197
|
)
|
||||||
Issuance of management incentive shares
|
|
6
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
11,269
|
|
|
|
|
|
|
|
|
|
|
|
11,269
|
|
||||||
Treasury stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31,204
|
)
|
|
(31,204
|
)
|
||||||
Cancellation of treasury stock
|
|
(10
|
)
|
|
(31,194
|
)
|
|
|
|
|
|
|
|
31,204
|
|
|
—
|
|
||||||
Balance at September 30, 2018
|
|
$
|
1,472
|
|
|
$
|
1,107,206
|
|
|
$
|
(47,449
|
)
|
|
$
|
1,153,910
|
|
|
$
|
—
|
|
|
$
|
2,215,139
|
|
|
|
Nine Months Ended September 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Operating Activities
|
|
|
|
|
|
|
||
Net income
|
|
$
|
338,835
|
|
|
$
|
217,109
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Gain on the sale of investments, net
|
|
(1,160
|
)
|
|
(1,763
|
)
|
||
Depreciation and amortization
|
|
2,539
|
|
|
2,955
|
|
||
Stock-based compensation expense
|
|
11,269
|
|
|
13,980
|
|
||
Amortization of premium on investment securities
|
|
10,701
|
|
|
8,752
|
|
||
Deferred income tax provision
|
|
35,676
|
|
|
49,032
|
|
||
Change in:
|
|
|
|
|
|
|
||
Accrued investment income
|
|
(4,318
|
)
|
|
(2,351
|
)
|
||
Accounts receivable
|
|
(5,842
|
)
|
|
(7,657
|
)
|
||
Deferred policy acquisition costs
|
|
(805
|
)
|
|
(1,431
|
)
|
||
Prepaid federal income tax
|
|
66,222
|
|
|
(52,185
|
)
|
||
Other assets
|
|
(2,439
|
)
|
|
21
|
|
||
Reserve for losses and LAE
|
|
6,505
|
|
|
3,437
|
|
||
Unearned premium reserve
|
|
32,659
|
|
|
26,261
|
|
||
Other accrued liabilities
|
|
(3,888
|
)
|
|
(4,139
|
)
|
||
Net cash provided by operating activities
|
|
485,954
|
|
|
252,021
|
|
||
|
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
|
||
Net change in short-term investments
|
|
120,782
|
|
|
(164,165
|
)
|
||
Purchase of investments available for sale
|
|
(861,042
|
)
|
|
(567,335
|
)
|
||
Proceeds from maturity of investments available for sale
|
|
82,746
|
|
|
51,440
|
|
||
Proceeds from sales of investments available for sale
|
|
241,865
|
|
|
197,623
|
|
||
Purchase of other invested assets
|
|
(24,751
|
)
|
|
—
|
|
||
Distributions from other invested assets
|
|
386
|
|
|
—
|
|
||
Purchase of property and equipment
|
|
(2,947
|
)
|
|
(2,661
|
)
|
||
Net cash used in investing activities
|
|
(442,961
|
)
|
|
(485,098
|
)
|
||
|
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
|
||
Issuance of common shares, net of costs
|
|
—
|
|
|
198,212
|
|
||
Credit facility borrowings
|
|
15,000
|
|
|
125,000
|
|
||
Credit facility repayments
|
|
(40,000
|
)
|
|
(50,000
|
)
|
||
Treasury stock acquired
|
|
(31,204
|
)
|
|
(7,329
|
)
|
||
Payment of issuance costs for credit facility
|
|
(516
|
)
|
|
(2,596
|
)
|
||
Net cash (used in) provided by financing activities
|
|
(56,720
|
)
|
|
263,287
|
|
||
|
|
|
|
|
||||
Net (decrease) increase in cash
|
|
(13,727
|
)
|
|
30,210
|
|
||
Cash at beginning of year
|
|
43,524
|
|
|
27,531
|
|
||
Cash at end of period
|
|
$
|
29,797
|
|
|
$
|
57,741
|
|
|
|
|
|
|
||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
||||
Income tax payments
|
|
$
|
(18,600
|
)
|
|
$
|
(28,300
|
)
|
Interest payments
|
|
(7,051
|
)
|
|
(3,120
|
)
|
||
|
|
|
|
|
||||
Noncash Transactions
|
|
|
|
|
||||
Repayment of borrowings with term loan proceeds (see Note 6)
|
|
$
|
(100,000
|
)
|
|
$
|
(125,000
|
)
|
September 30, 2018 (In thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
U.S. Treasury securities
|
|
$
|
275,423
|
|
|
$
|
—
|
|
|
$
|
(10,190
|
)
|
|
$
|
265,233
|
|
U.S. agency securities
|
|
33,651
|
|
|
—
|
|
|
(974
|
)
|
|
32,677
|
|
||||
U.S. agency mortgage-backed securities
|
|
588,499
|
|
|
117
|
|
|
(21,990
|
)
|
|
566,626
|
|
||||
Municipal debt securities(1)
|
|
462,546
|
|
|
2,096
|
|
|
(7,136
|
)
|
|
457,506
|
|
||||
Non-U.S. government securities
|
|
44,964
|
|
|
87
|
|
|
(253
|
)
|
|
44,798
|
|
||||
Corporate debt securities(2)
|
|
720,722
|
|
|
295
|
|
|
(14,687
|
)
|
|
706,330
|
|
||||
Residential and commercial mortgage securities
|
|
102,093
|
|
|
547
|
|
|
(991
|
)
|
|
101,649
|
|
||||
Asset-backed securities
|
|
299,952
|
|
|
280
|
|
|
(1,211
|
)
|
|
299,021
|
|
||||
Money market funds
|
|
191,911
|
|
|
1
|
|
|
—
|
|
|
191,912
|
|
||||
Total investments available for sale
|
|
$
|
2,719,761
|
|
|
$
|
3,423
|
|
|
$
|
(57,432
|
)
|
|
$
|
2,665,752
|
|
December 31, 2017 (In thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
U.S. Treasury securities
|
|
$
|
231,905
|
|
|
$
|
2
|
|
|
$
|
(4,102
|
)
|
|
$
|
227,805
|
|
U.S. agency securities
|
|
33,669
|
|
|
—
|
|
|
(555
|
)
|
|
33,114
|
|
||||
U.S. agency mortgage-backed securities
|
|
462,986
|
|
|
567
|
|
|
(7,516
|
)
|
|
456,037
|
|
||||
Municipal debt securities(1)
|
|
457,418
|
|
|
9,098
|
|
|
(1,261
|
)
|
|
465,255
|
|
||||
Corporate debt securities(2)
|
|
610,516
|
|
|
4,249
|
|
|
(3,037
|
)
|
|
611,728
|
|
||||
Residential and commercial mortgage securities
|
|
78,974
|
|
|
791
|
|
|
(358
|
)
|
|
79,407
|
|
||||
Asset-backed securities
|
|
167,638
|
|
|
467
|
|
|
(183
|
)
|
|
167,922
|
|
||||
Money market funds
|
|
263,808
|
|
|
—
|
|
|
(11
|
)
|
|
263,797
|
|
||||
Total investments available for sale
|
|
$
|
2,306,914
|
|
|
$
|
15,174
|
|
|
$
|
(17,023
|
)
|
|
$
|
2,305,065
|
|
|
|
|
September 30,
|
|
December 31,
|
||
(1) The following table summarizes municipal debt securities as of :
|
|
2018
|
|
2017
|
||
Special revenue bonds
|
|
66.3
|
%
|
|
63.6
|
%
|
General obligation bonds
|
|
28.6
|
|
|
30.7
|
|
Certificate of participation bonds
|
|
3.7
|
|
|
4.4
|
|
Tax allocation bonds
|
|
0.9
|
|
|
0.8
|
|
Special tax bonds
|
|
0.5
|
|
|
0.5
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
September 30,
|
|
December 31,
|
||
(2) The following table summarizes corporate debt securities as of :
|
|
2018
|
|
2017
|
||
Financial
|
|
37.7
|
%
|
|
45.9
|
%
|
Consumer, non-cyclical
|
|
21.4
|
|
|
16.2
|
|
Communications
|
|
12.4
|
|
|
7.3
|
|
Energy
|
|
6.9
|
|
|
7.8
|
|
Consumer, cyclical
|
|
5.5
|
|
|
5.3
|
|
Industrial
|
|
5.4
|
|
|
6.3
|
|
Utilities
|
|
4.7
|
|
|
5.3
|
|
Technology
|
|
3.5
|
|
|
3.9
|
|
Basic materials
|
|
2.5
|
|
|
2.0
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
(In thousands)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
U.S. Treasury securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
$
|
1,995
|
|
|
$
|
1,977
|
|
Due after 1 but within 5 years
|
|
173,681
|
|
|
170,686
|
|
||
Due after 5 but within 10 years
|
|
70,168
|
|
|
65,030
|
|
||
Due after 10 years
|
|
29,579
|
|
|
27,540
|
|
||
Subtotal
|
|
275,423
|
|
|
265,233
|
|
||
U.S. agency securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
—
|
|
|
—
|
|
||
Due after 1 but within 5 years
|
|
33,651
|
|
|
32,677
|
|
||
Subtotal
|
|
33,651
|
|
|
32,677
|
|
||
Municipal debt securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
27,808
|
|
|
27,768
|
|
||
Due after 1 but within 5 years
|
|
91,977
|
|
|
91,050
|
|
||
Due after 5 but within 10 years
|
|
174,111
|
|
|
172,250
|
|
||
Due after 10 years
|
|
168,650
|
|
|
166,438
|
|
||
Subtotal
|
|
462,546
|
|
|
457,506
|
|
||
Non-U.S. government securities:
|
|
|
|
|
||||
Due in 1 year
|
|
—
|
|
|
—
|
|
||
Due after 1 but within 5 years
|
|
19,770
|
|
|
19,790
|
|
||
Due after 5 but within 10 years
|
|
25,194
|
|
|
25,008
|
|
||
Subtotal
|
|
44,964
|
|
|
44,798
|
|
||
Corporate debt securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
76,859
|
|
|
76,455
|
|
||
Due after 1 but within 5 years
|
|
375,792
|
|
|
369,276
|
|
||
Due after 5 but within 10 years
|
|
259,457
|
|
|
252,293
|
|
||
Due after 10 years
|
|
8,614
|
|
|
8,306
|
|
||
Subtotal
|
|
720,722
|
|
|
706,330
|
|
||
U.S. agency mortgage-backed securities
|
|
588,499
|
|
|
566,626
|
|
||
Residential and commercial mortgage securities
|
|
102,093
|
|
|
101,649
|
|
||
Asset-backed securities
|
|
299,952
|
|
|
299,021
|
|
||
Money market funds
|
|
191,911
|
|
|
191,912
|
|
||
Total investments available for sale
|
|
$
|
2,719,761
|
|
|
$
|
2,665,752
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Realized gross gains
|
|
$
|
574
|
|
|
$
|
605
|
|
|
$
|
1,883
|
|
|
$
|
2,035
|
|
Realized gross losses
|
|
50
|
|
|
41
|
|
|
723
|
|
|
272
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
September 30, 2018 (In thousands)
|
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
U.S. Treasury securities
|
|
$
|
122,842
|
|
|
$
|
(1,525
|
)
|
|
$
|
142,391
|
|
|
$
|
(8,665
|
)
|
|
$
|
265,233
|
|
|
$
|
(10,190
|
)
|
U.S. agency securities
|
|
500
|
|
|
(15
|
)
|
|
32,177
|
|
|
(959
|
)
|
|
32,677
|
|
|
(974
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
266,952
|
|
|
(5,822
|
)
|
|
277,959
|
|
|
(16,168
|
)
|
|
544,911
|
|
|
(21,990
|
)
|
||||||
Municipal debt securities
|
|
277,700
|
|
|
(5,196
|
)
|
|
55,770
|
|
|
(1,940
|
)
|
|
333,470
|
|
|
(7,136
|
)
|
||||||
Non-U.S. government securities
|
|
23,316
|
|
|
(253
|
)
|
|
—
|
|
|
—
|
|
|
23,316
|
|
|
(253
|
)
|
||||||
Corporate debt securities
|
|
518,678
|
|
|
(10,146
|
)
|
|
139,222
|
|
|
(4,541
|
)
|
|
657,900
|
|
|
(14,687
|
)
|
||||||
Residential and commercial mortgage securities
|
|
50,881
|
|
|
(473
|
)
|
|
10,095
|
|
|
(518
|
)
|
|
60,976
|
|
|
(991
|
)
|
||||||
Asset-backed securities
|
|
214,400
|
|
|
(1,099
|
)
|
|
6,281
|
|
|
(112
|
)
|
|
220,681
|
|
|
(1,211
|
)
|
||||||
Total
|
|
$
|
1,475,269
|
|
|
$
|
(24,529
|
)
|
|
$
|
663,895
|
|
|
$
|
(32,903
|
)
|
|
$
|
2,139,164
|
|
|
$
|
(57,432
|
)
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
December 31, 2017 (In thousands)
|
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
U.S. Treasury securities
|
|
$
|
151,119
|
|
|
$
|
(1,240
|
)
|
|
$
|
69,454
|
|
|
$
|
(2,862
|
)
|
|
$
|
220,573
|
|
|
$
|
(4,102
|
)
|
U.S. agency securities
|
|
17,320
|
|
|
(190
|
)
|
|
15,794
|
|
|
(365
|
)
|
|
33,114
|
|
|
(555
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
180,443
|
|
|
(1,394
|
)
|
|
217,944
|
|
|
(6,122
|
)
|
|
398,387
|
|
|
(7,516
|
)
|
||||||
Municipal debt securities
|
|
124,171
|
|
|
(817
|
)
|
|
23,492
|
|
|
(444
|
)
|
|
147,663
|
|
|
(1,261
|
)
|
||||||
Corporate debt securities
|
|
214,371
|
|
|
(1,213
|
)
|
|
94,261
|
|
|
(1,824
|
)
|
|
308,632
|
|
|
(3,037
|
)
|
||||||
Residential and commercial mortgage securities
|
|
29,842
|
|
|
(179
|
)
|
|
5,988
|
|
|
(179
|
)
|
|
35,830
|
|
|
(358
|
)
|
||||||
Asset-backed securities
|
|
58,798
|
|
|
(133
|
)
|
|
5,828
|
|
|
(50
|
)
|
|
64,626
|
|
|
(183
|
)
|
||||||
Money market funds
|
|
59,489
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
59,489
|
|
|
(11
|
)
|
||||||
Total
|
|
$
|
835,553
|
|
|
$
|
(5,177
|
)
|
|
$
|
432,761
|
|
|
$
|
(11,846
|
)
|
|
$
|
1,268,314
|
|
|
$
|
(17,023
|
)
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Fixed maturities
|
|
$
|
16,476
|
|
|
$
|
10,982
|
|
|
$
|
44,615
|
|
|
$
|
29,964
|
|
Short-term investments
|
|
910
|
|
|
330
|
|
|
2,959
|
|
|
463
|
|
||||
Gross investment income
|
|
17,386
|
|
|
11,312
|
|
|
47,574
|
|
|
30,427
|
|
||||
Investment expenses
|
|
(740
|
)
|
|
(686
|
)
|
|
(2,080
|
)
|
|
(1,966
|
)
|
||||
Net investment income
|
|
$
|
16,646
|
|
|
$
|
10,626
|
|
|
$
|
45,494
|
|
|
$
|
28,461
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net premiums written:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
178,379
|
|
|
$
|
155,055
|
|
|
$
|
515,887
|
|
|
$
|
408,415
|
|
Ceded
|
|
(3,158
|
)
|
|
—
|
|
|
(7,037
|
)
|
|
—
|
|
||||
Net premiums written
|
|
$
|
175,221
|
|
|
$
|
155,055
|
|
|
$
|
508,850
|
|
|
$
|
408,415
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net premiums earned:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
169,833
|
|
|
$
|
137,940
|
|
|
$
|
483,228
|
|
|
$
|
382,154
|
|
Ceded
|
|
(3,158
|
)
|
|
—
|
|
|
(7,037
|
)
|
|
—
|
|
||||
Net premiums earned
|
|
$
|
166,675
|
|
|
$
|
137,940
|
|
|
$
|
476,191
|
|
|
$
|
382,154
|
|
|
|
|
|
Maximum Exposure to Loss
|
||||||||||||
(In thousands)
|
|
Total VIE Assets
|
|
On - Balance Sheet
|
|
Off - Balance Sheet
|
|
Total
|
||||||||
Radnor Re 2018-1 Ltd.
|
|
$
|
424,412
|
|
|
$
|
—
|
|
|
$
|
20,958
|
|
|
$
|
20,958
|
|
Total
|
|
$
|
424,412
|
|
|
$
|
—
|
|
|
$
|
20,958
|
|
|
$
|
20,958
|
|
($ in thousands)
|
|
2018
|
|
2017
|
||||
Reserve for losses and LAE at beginning of period
|
|
$
|
46,850
|
|
|
$
|
28,142
|
|
Less: Reinsurance recoverables
|
|
—
|
|
|
—
|
|
||
Net reserve for losses and LAE at beginning of period
|
|
46,850
|
|
|
28,142
|
|
||
Add provision for losses and LAE, net of reinsurance, occurring in:
|
|
|
|
|
|
|
||
Current period
|
|
25,199
|
|
|
19,266
|
|
||
Prior years
|
|
(12,625
|
)
|
|
(9,490
|
)
|
||
Net incurred losses and LAE during the current period
|
|
12,574
|
|
|
9,776
|
|
||
Deduct payments for losses and LAE, net of reinsurance, occurring in:
|
|
|
|
|
|
|
||
Current period
|
|
620
|
|
|
243
|
|
||
Prior years
|
|
5,449
|
|
|
6,096
|
|
||
Net loss and LAE payments during the current period
|
|
6,069
|
|
|
6,339
|
|
||
Net reserve for losses and LAE at end of period
|
|
53,355
|
|
|
31,579
|
|
||
Plus: Reinsurance recoverables
|
|
—
|
|
|
—
|
|
||
Reserve for losses and LAE at end of period
|
|
$
|
53,355
|
|
|
$
|
31,579
|
|
|
|
|
|
|
||||
Loans in default at end of period
|
|
3,538
|
|
|
2,153
|
|
|
|
Time and Performance-
Based Share Awards
|
|
Time-Based
Share Awards
|
|
Share Units
|
|||||||||||||||
(Shares in thousands)
|
|
Number of
Shares
|
|
Weighted
Average Grant Date Fair Value |
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Number of
Share Units
|
|
Weighted
Average Grant Date Fair Value |
|||||||||
Outstanding at beginning of year
|
|
1,595
|
|
|
$
|
17.03
|
|
|
410
|
|
|
$
|
21.12
|
|
|
536
|
|
|
$
|
29.13
|
|
Granted
|
|
113
|
|
|
45.02
|
|
|
73
|
|
|
45.02
|
|
|
161
|
|
|
42.19
|
|
|||
Vested
|
|
(1,226
|
)
|
|
14.71
|
|
|
(276
|
)
|
|
18.67
|
|
|
(222
|
)
|
|
28.27
|
|
|||
Forfeited
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
N/A
|
|
|
(7
|
)
|
|
31.31
|
|
|||
Outstanding at September 30, 2018
|
|
482
|
|
|
$
|
29.49
|
|
|
207
|
|
|
$
|
32.82
|
|
|
468
|
|
|
$
|
34.00
|
|
Performance level
|
|
|
Compounded Annual Book Value
Per Share Growth |
|
Nonvested Common
Shares Earned |
||
|
|
|
<15
|
%
|
|
0
|
%
|
Threshold
|
|
|
15
|
%
|
|
25
|
%
|
|
|
|
16
|
%
|
|
50
|
%
|
|
|
|
17
|
%
|
|
75
|
%
|
Maximum
|
|
|
≥18
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Compensation expense
|
|
$
|
3,837
|
|
|
$
|
4,692
|
|
|
$
|
11,269
|
|
|
$
|
13,980
|
|
Income tax benefit
|
|
713
|
|
|
1,513
|
|
|
2,098
|
|
|
4,498
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands, except per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
116,011
|
|
|
$
|
78,393
|
|
|
$
|
338,835
|
|
|
$
|
217,109
|
|
Less: dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income available to common shareholders
|
|
$
|
116,011
|
|
|
$
|
78,393
|
|
|
$
|
338,835
|
|
|
$
|
217,109
|
|
Basic earnings per share
|
|
$
|
1.19
|
|
|
$
|
0.83
|
|
|
$
|
3.48
|
|
|
$
|
2.35
|
|
Diluted earnings per share
|
|
$
|
1.18
|
|
|
$
|
0.82
|
|
|
$
|
3.46
|
|
|
$
|
2.31
|
|
Basic weighted average shares outstanding
|
|
97,438
|
|
|
94,185
|
|
|
97,388
|
|
|
92,285
|
|
||||
Dilutive effect of nonvested shares
|
|
575
|
|
|
1,909
|
|
|
556
|
|
|
1,819
|
|
||||
Diluted weighted average shares outstanding
|
|
98,013
|
|
|
96,094
|
|
|
97,944
|
|
|
94,104
|
|
|
|
Three Months Ended September 30, 2018
|
||||||||||
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
||||||
Balance at beginning of period
|
|
$
|
(44,456
|
)
|
|
$
|
5,208
|
|
|
$
|
(39,248
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Unrealized holding gains (losses) on investments:
|
|
|
|
|
|
|
||||||
Unrealized holding losses arising during the period
|
|
(9,029
|
)
|
|
1,241
|
|
|
(7,788
|
)
|
|||
Less: Reclassification adjustment for gains included in net income (1)
|
|
(524
|
)
|
|
111
|
|
|
(413
|
)
|
|||
Net unrealized losses on investments
|
|
(9,553
|
)
|
|
1,352
|
|
|
(8,201
|
)
|
|||
Other comprehensive loss
|
|
(9,553
|
)
|
|
1,352
|
|
|
(8,201
|
)
|
|||
Balance at end of period
|
|
$
|
(54,009
|
)
|
|
$
|
6,560
|
|
|
$
|
(47,449
|
)
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended September 30, 2018
|
||||||||||
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
||||||
Balance at beginning of year
|
|
$
|
(1,849
|
)
|
|
$
|
(1,403
|
)
|
|
$
|
(3,252
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Unrealized holding gains (losses) on investments:
|
|
|
|
|
|
|
||||||
Unrealized holding losses arising during the period
|
|
(51,000
|
)
|
|
7,686
|
|
|
(43,314
|
)
|
|||
Less: Reclassification adjustment for gains included in net income (1)
|
|
(1,160
|
)
|
|
277
|
|
|
(883
|
)
|
|||
Net unrealized losses on investments
|
|
(52,160
|
)
|
|
7,963
|
|
|
(44,197
|
)
|
|||
Other comprehensive loss
|
|
(52,160
|
)
|
|
7,963
|
|
|
(44,197
|
)
|
|||
Balance at end of period
|
|
$
|
(54,009
|
)
|
|
$
|
6,560
|
|
|
$
|
(47,449
|
)
|
|
|
Three Months Ended September 30, 2017
|
||||||||||
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
||||||
Balance at beginning of period
|
|
$
|
4,594
|
|
|
$
|
(3,529
|
)
|
|
$
|
1,065
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Unrealized holding gains (losses) on investments:
|
|
|
|
|
|
|
||||||
Unrealized holding gains arising during the period
|
|
3,294
|
|
|
(949
|
)
|
|
2,345
|
|
|||
Less: Reclassification adjustment for gains included in net income (1)
|
|
(564
|
)
|
|
197
|
|
|
(367
|
)
|
|||
Net unrealized gains on investments
|
|
2,730
|
|
|
(752
|
)
|
|
1,978
|
|
|||
Other comprehensive income
|
|
2,730
|
|
|
(752
|
)
|
|
1,978
|
|
|||
Balance at end of period
|
|
$
|
7,324
|
|
|
$
|
(4,281
|
)
|
|
$
|
3,043
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended September 30, 2017
|
||||||||||
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
||||||
Balance at beginning of year
|
|
$
|
(14,436
|
)
|
|
$
|
2,181
|
|
|
$
|
(12,255
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Unrealized holding gains (losses) on investments:
|
|
|
|
|
|
|
||||||
Unrealized holding gains arising during the period
|
|
23,523
|
|
|
(7,071
|
)
|
|
16,452
|
|
|||
Less: Reclassification adjustment for gains included in net income (1)
|
|
(1,763
|
)
|
|
609
|
|
|
(1,154
|
)
|
|||
Net unrealized gains on investments
|
|
21,760
|
|
|
(6,462
|
)
|
|
15,298
|
|
|||
Other comprehensive income
|
|
21,760
|
|
|
(6,462
|
)
|
|
15,298
|
|
|||
Balance at end of period
|
|
$
|
7,324
|
|
|
$
|
(4,281
|
)
|
|
$
|
3,043
|
|
|
(1)
|
Included in net realized investment gains on our condensed consolidated statements of comprehensive income.
|
•
|
Level 1 — Quoted prices for identical instruments in active markets accessible at the measurement date.
|
•
|
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and valuations in which all significant inputs are observable in active markets. Inputs are observable for substantially the full term of the financial instrument.
|
•
|
Level 3 — Valuations derived from one or more significant inputs that are unobservable.
|
•
|
Investments available for sale — Investments available for sale are valued using quoted market prices in active markets, when available, and those investments are classified as Level 1 of the fair value hierarchy. Level 1 investments available for sale include investments such as U.S. Treasury securities and money market funds. Investments available for sale are classified as Level 2 of the fair value hierarchy if quoted market prices are not available and fair values are estimated using quoted prices of similar securities or recently executed transactions for the securities. U.S. agency securities, U.S. agency mortgage-backed securities, municipal debt securities, non-U.S. government securities, corporate debt securities, residential and commercial mortgage securities and asset-backed securities are classified as Level 2 investments.
|
September 30, 2018 (In thousands)
|
|
Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Recurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities
|
|
$
|
265,233
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
265,233
|
|
U.S. agency securities
|
|
—
|
|
|
32,677
|
|
|
—
|
|
|
32,677
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
566,626
|
|
|
—
|
|
|
566,626
|
|
||||
Municipal debt securities
|
|
—
|
|
|
457,506
|
|
|
—
|
|
|
457,506
|
|
||||
Non-U.S. government securities
|
|
—
|
|
|
44,798
|
|
|
—
|
|
|
44,798
|
|
||||
Corporate debt securities
|
|
—
|
|
|
706,330
|
|
|
—
|
|
|
706,330
|
|
||||
Residential and commercial mortgage securities
|
|
—
|
|
|
101,649
|
|
|
—
|
|
|
101,649
|
|
||||
Asset-backed securities
|
|
—
|
|
|
299,021
|
|
|
—
|
|
|
299,021
|
|
||||
Money market funds
|
|
191,912
|
|
|
—
|
|
|
—
|
|
|
191,912
|
|
||||
Total assets at fair value
|
|
$
|
457,145
|
|
|
$
|
2,208,607
|
|
|
$
|
—
|
|
|
$
|
2,665,752
|
|
December 31, 2017 (In thousands)
|
|
Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
Recurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities
|
|
$
|
227,805
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
227,805
|
|
U.S. agency securities
|
|
—
|
|
|
33,114
|
|
|
—
|
|
|
33,114
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
456,037
|
|
|
—
|
|
|
456,037
|
|
||||
Municipal debt securities
|
|
—
|
|
|
465,255
|
|
|
—
|
|
|
465,255
|
|
||||
Corporate debt securities
|
|
—
|
|
|
611,728
|
|
|
—
|
|
|
611,728
|
|
||||
Residential and commercial mortgage securities
|
|
—
|
|
|
79,407
|
|
|
—
|
|
|
79,407
|
|
||||
Asset-backed securities
|
|
—
|
|
|
167,922
|
|
|
—
|
|
|
167,922
|
|
||||
Money market funds
|
|
263,797
|
|
|
—
|
|
|
—
|
|
|
263,797
|
|
||||
Total assets at fair value
|
|
$
|
491,602
|
|
|
$
|
1,813,463
|
|
|
$
|
—
|
|
|
$
|
2,305,065
|
|
(In thousands)
|
|
2018
|
|
2017
|
||||
Essent Guaranty
|
|
|
|
|
|
|
||
Statutory net income
|
|
$
|
275,130
|
|
|
$
|
194,131
|
|
Statutory surplus
|
|
832,403
|
|
|
684,421
|
|
||
Contingency reserve liability
|
|
853,422
|
|
|
623,934
|
|
||
|
|
|
|
|
||||
Essent PA
|
|
|
|
|
|
|
||
Statutory net income
|
|
$
|
7,087
|
|
|
$
|
7,959
|
|
Statutory surplus
|
|
48,390
|
|
|
45,047
|
|
||
Contingency reserve liability
|
|
47,294
|
|
|
41,593
|
|
•
|
NIW, which is the aggregate principal amount of the new mortgages that are insured during a period. Many factors affect NIW, including, among others, the volume of low down payment home mortgage originations and the competition to provide credit enhancement on those mortgages;
|
•
|
Cancellations of our insurance policies, which are impacted by payments on mortgages, home price appreciation, or refinancings, which in turn are affected by mortgage interest rates. Cancellations are also impacted by the levels of claim payments and rescissions;
|
•
|
Premium rates, which represent the amount of the premium due as a percentage of IIF. Premium rates are based on the risk characteristics of the loans insured, the percentage of coverage on the loans, competition from other mortgage insurers and general industry conditions; and
|
•
|
Premiums ceded or assumed under reinsurance arrangements. Prior to March 2018, we had not ceded any premiums under third-party reinsurance contracts. In March 2018, Essent Guaranty entered into a third-party reinsurance agreement. See
Note 4
to our condensed consolidated financial statements.
|
•
|
the overall state of the economy, which broadly affects the likelihood that borrowers may default on their loans and have the ability to cure such defaults;
|
•
|
changes in housing values, which affect our ability to mitigate our losses through the sale of properties with loans in default as well as borrower willingness to continue to make mortgage payments when the value of the home is below or perceived to be below the mortgage balance;
|
•
|
the product mix of IIF, with loans having higher risk characteristics generally resulting in higher defaults and claims;
|
•
|
the size of loans insured, with higher average loan amounts tending to increase losses incurred;
|
•
|
the loan-to-value ratio, with higher average loan-to-value ratios tending to increase losses incurred;
|
•
|
the percentage of coverage on insured loans, with deeper average coverage tending to increase losses incurred;
|
•
|
credit quality of borrowers, including higher debt-to-income ratios and lower FICO scores, which tend to increase incurred losses;
|
•
|
the level and amount of reinsurance coverage maintained with third parties;
|
•
|
the rate at which we rescind policies. Because of tighter underwriting standards generally in the mortgage lending industry and terms set forth in our master policy, we expect that our level of rescission activity will be lower than rescission activity seen in the mortgage insurance industry for vintages originated prior to the financial crisis; and
|
•
|
the distribution of claims over the life of a book. The average age of our insurance portfolio is young with
77%
of our IIF as of
September 30, 2018
having been originated since January 1,
2016
. As a result, based on historical industry performance, we expect the number of defaults and claims we experience, as well as our provision for losses and loss adjustment expenses, to increase as our portfolio seasons. See “— Mortgage Insurance Earnings and Cash Flow Cycle” below.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
IIF, beginning of period
|
|
$
|
122,501,246
|
|
|
$
|
95,494,390
|
|
|
$
|
110,461,950
|
|
|
$
|
83,265,522
|
|
NIW
|
|
13,913,191
|
|
|
13,221,038
|
|
|
36,099,983
|
|
|
32,623,467
|
|
||||
Cancellations
|
|
(5,164,480
|
)
|
|
(4,779,121
|
)
|
|
(15,311,976
|
)
|
|
(11,952,682
|
)
|
||||
IIF, end of period
|
|
$
|
131,249,957
|
|
|
$
|
103,936,307
|
|
|
$
|
131,249,957
|
|
|
$
|
103,936,307
|
|
Average IIF during the period
|
|
$
|
127,052,216
|
|
|
$
|
99,790,653
|
|
|
$
|
119,685,365
|
|
|
$
|
92,353,836
|
|
RIF, end of period
|
|
$
|
32,361,782
|
|
|
$
|
25,807,358
|
|
|
$
|
32,361,782
|
|
|
$
|
25,807,358
|
|
($ in thousands)
|
|
$
|
|
%
|
|||
2018 (through September 30)
|
|
$
|
35,189,027
|
|
|
26.8
|
%
|
2017
|
|
38,894,605
|
|
|
29.6
|
|
|
2016
|
|
26,510,429
|
|
|
20.2
|
|
|
2015
|
|
14,202,260
|
|
|
10.8
|
|
|
2014
|
|
8,726,281
|
|
|
6.7
|
|
|
2013 and prior
|
|
7,727,355
|
|
|
5.9
|
|
|
|
|
$
|
131,249,957
|
|
|
100.0
|
%
|
Summary of Operations
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
Net premiums written
|
|
$
|
175,221
|
|
|
$
|
155,055
|
|
|
$
|
508,850
|
|
|
$
|
408,415
|
|
Increase in unearned premiums
|
|
(8,546
|
)
|
|
(17,115
|
)
|
|
(32,659
|
)
|
|
(26,261
|
)
|
||||
Net premiums earned
|
|
166,675
|
|
|
137,940
|
|
|
476,191
|
|
|
382,154
|
|
||||
Net investment income
|
|
16,646
|
|
|
10,626
|
|
|
45,494
|
|
|
28,461
|
|
||||
Realized investment gains, net
|
|
524
|
|
|
564
|
|
|
1,160
|
|
|
1,763
|
|
||||
Other income
|
|
1,153
|
|
|
1,073
|
|
|
3,384
|
|
|
3,023
|
|
||||
Total revenues
|
|
184,998
|
|
|
150,203
|
|
|
526,229
|
|
|
415,401
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Losses and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for losses and LAE
|
|
5,452
|
|
|
4,313
|
|
|
12,574
|
|
|
9,776
|
|
||||
Other underwriting and operating expenses
|
|
36,899
|
|
|
37,035
|
|
|
111,451
|
|
|
109,053
|
|
||||
Interest expense
|
|
2,500
|
|
|
1,456
|
|
|
7,568
|
|
|
3,361
|
|
||||
Total losses and expenses
|
|
44,851
|
|
|
42,804
|
|
|
131,593
|
|
|
122,190
|
|
||||
Income before income taxes
|
|
140,147
|
|
|
107,399
|
|
|
394,636
|
|
|
293,211
|
|
||||
Income tax expense
|
|
24,136
|
|
|
29,006
|
|
|
55,801
|
|
|
76,102
|
|
||||
Net income
|
|
$
|
116,011
|
|
|
$
|
78,393
|
|
|
$
|
338,835
|
|
|
$
|
217,109
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Fixed maturities
|
|
$
|
16,476
|
|
|
$
|
10,982
|
|
|
$
|
44,615
|
|
|
$
|
29,964
|
|
Short-term investments
|
|
910
|
|
|
330
|
|
|
2,959
|
|
|
463
|
|
||||
Gross investment income
|
|
17,386
|
|
|
11,312
|
|
|
47,574
|
|
|
30,427
|
|
||||
Investment expenses
|
|
(740
|
)
|
|
(686
|
)
|
|
(2,080
|
)
|
|
(1,966
|
)
|
||||
Net investment income
|
|
$
|
16,646
|
|
|
$
|
10,626
|
|
|
$
|
45,494
|
|
|
$
|
28,461
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Beginning default inventory
|
|
3,519
|
|
|
1,776
|
|
|
4,783
|
|
|
1,757
|
|
Plus: new defaults
|
|
2,285
|
|
|
1,592
|
|
|
5,980
|
|
|
3,897
|
|
Less: cures
|
|
(2,201
|
)
|
|
(1,145
|
)
|
|
(7,043
|
)
|
|
(3,322
|
)
|
Less: claims paid
|
|
(64
|
)
|
|
(68
|
)
|
|
(179
|
)
|
|
(176
|
)
|
Less: rescissions and denials, net
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
Ending default inventory
|
|
3,538
|
|
|
2,153
|
|
|
3,538
|
|
|
2,153
|
|
|
|
As of September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Case reserves (in thousands)
|
|
$
|
48,765
|
|
|
$
|
29,024
|
|
Total reserves (in thousands)
|
|
$
|
53,355
|
|
|
$
|
31,579
|
|
Ending default inventory
|
|
3,538
|
|
|
2,153
|
|
||
Average case reserve per default (in thousands)
|
|
$
|
13.8
|
|
|
$
|
13.5
|
|
Average total reserve per default (in thousands)
|
|
$
|
15.1
|
|
|
$
|
14.7
|
|
Default rate
|
|
0.61
|
%
|
|
0.46
|
%
|
||
Claims received included in ending default inventory
|
|
49
|
|
|
40
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Reserve for losses and LAE at beginning of period
|
|
$
|
50,016
|
|
|
$
|
29,798
|
|
|
$
|
46,850
|
|
|
$
|
28,142
|
|
Add provision for losses and LAE occurring in:
|
|
|
|
|
|
|
|
|
||||||||
Current period
|
|
8,671
|
|
|
7,150
|
|
|
25,199
|
|
|
19,266
|
|
||||
Prior years
|
|
(3,219
|
)
|
|
(2,837
|
)
|
|
(12,625
|
)
|
|
(9,490
|
)
|
||||
Incurred losses and LAE during the current period
|
|
5,452
|
|
|
4,313
|
|
|
12,574
|
|
|
9,776
|
|
||||
Deduct payments for losses and LAE occurring in:
|
|
|
|
|
|
|
|
|
||||||||
Current period
|
|
409
|
|
|
146
|
|
|
620
|
|
|
243
|
|
||||
Prior years
|
|
1,704
|
|
|
2,386
|
|
|
5,449
|
|
|
6,096
|
|
||||
Loss and LAE payments during the current period
|
|
2,113
|
|
|
2,532
|
|
|
6,069
|
|
|
6,339
|
|
||||
Reserve for losses and LAE at end of period
|
|
$
|
53,355
|
|
|
$
|
31,579
|
|
|
$
|
53,355
|
|
|
$
|
31,579
|
|
|
|
As of September 30, 2018
|
||||||||||||||||||
($ in thousands)
|
|
Number of
Policies in Default |
|
Percentage of
Policies in Default |
|
Amount of
Reserves |
|
Percentage of
Reserves |
|
Defaulted
RIF |
|
Reserves as a
Percentage of Defaulted RIF |
||||||||
Missed payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Three payments or less
|
|
1,886
|
|
|
53
|
%
|
|
$
|
10,498
|
|
|
22
|
%
|
|
$
|
101,755
|
|
|
10
|
%
|
Four to eleven payments
|
|
1,252
|
|
|
36
|
|
|
24,531
|
|
|
50
|
|
|
68,670
|
|
|
36
|
|
||
Twelve or more payments
|
|
351
|
|
|
10
|
|
|
11,795
|
|
|
24
|
|
|
20,160
|
|
|
59
|
|
||
Pending claims
|
|
49
|
|
|
1
|
|
|
1,941
|
|
|
4
|
|
|
2,212
|
|
|
88
|
|
||
Total case reserves
|
|
3,538
|
|
|
100
|
%
|
|
48,765
|
|
|
100
|
%
|
|
$
|
192,797
|
|
|
25
|
|
|
IBNR
|
|
|
|
|
|
|
|
3,657
|
|
|
|
|
|
|
|
|
|
|
||
LAE and other
|
|
|
|
|
|
|
|
933
|
|
|
|
|
|
|
|
|
|
|
||
Total reserves for losses and LAE
|
|
|
|
|
|
|
|
$
|
53,355
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2017
|
||||||||||||||||||
($ in thousands)
|
|
Number of
Policies in
Default
|
|
Percentage of
Policies in
Default
|
|
Amount of
Reserves
|
|
Percentage of
Reserves
|
|
Defaulted
RIF
|
|
Reserves as a
Percentage of
Defaulted RIF
|
||||||||
Missed payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Three payments or less
|
|
1,228
|
|
|
57
|
%
|
|
$
|
7,935
|
|
|
27
|
%
|
|
$
|
68,317
|
|
|
12
|
%
|
Four to eleven payments
|
|
690
|
|
|
32
|
|
|
12,948
|
|
|
45
|
|
|
38,003
|
|
|
34
|
|
||
Twelve or more payments
|
|
195
|
|
|
9
|
|
|
6,105
|
|
|
21
|
|
|
10,087
|
|
|
61
|
|
||
Pending claims
|
|
40
|
|
|
2
|
|
|
2,036
|
|
|
7
|
|
|
2,376
|
|
|
86
|
|
||
Total case reserves
|
|
2,153
|
|
|
100
|
%
|
|
29,024
|
|
|
100
|
%
|
|
$
|
118,783
|
|
|
24
|
|
|
IBNR
|
|
|
|
|
|
|
|
2,177
|
|
|
|
|
|
|
|
|
|
|
||
LAE and other
|
|
|
|
|
|
|
|
378
|
|
|
|
|
|
|
|
|
|
|
||
Total reserves for losses and LAE
|
|
|
|
|
|
|
|
$
|
31,579
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Number of claims paid
|
|
64
|
|
|
68
|
|
|
179
|
|
|
176
|
|
||||
Amount of claims paid
|
|
$
|
2,029
|
|
|
$
|
2,468
|
|
|
$
|
5,848
|
|
|
$
|
6,155
|
|
Claim severity
|
|
69
|
%
|
|
76
|
%
|
|
70
|
%
|
|
81
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||
($ in thousands)
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Compensation and benefits
|
|
$
|
21,615
|
|
|
59
|
%
|
|
$
|
23,198
|
|
|
63
|
%
|
|
$
|
67,465
|
|
|
61
|
%
|
|
$
|
69,029
|
|
|
63
|
%
|
Other
|
|
15,284
|
|
|
41
|
|
|
13,837
|
|
|
37
|
|
|
43,986
|
|
|
39
|
|
|
40,024
|
|
|
37
|
|
||||
|
|
$
|
36,899
|
|
|
100
|
%
|
|
$
|
37,035
|
|
|
100
|
%
|
|
$
|
111,451
|
|
|
100
|
%
|
|
$
|
109,053
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of employees at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
394
|
|
|
|
|
|
398
|
|
•
|
Compensation and benefits decreased in the
three and nine
months ended
September 30, 2018
, as compared to the
three and nine
months ended
September 30, 2017
primarily due to a decrease in stock compensation expense associated with the full vesting of grants issued in 2013 and 2014, partially offset by an increase in payroll taxes associated with the vesting of these grants. Compensation and benefits includes salaries, wages and bonus, stock compensation expense, benefits and payroll taxes.
|
•
|
Other expenses increased as a result of the continued expansion of our business. Other expenses include premium taxes, travel, marketing, hardware, software, rent, depreciation and amortization and other facilities expenses.
|
•
|
our investment portfolio and interest income on the portfolio;
|
•
|
net premiums that we will receive from our existing IIF as well as policies that we write in the future;
|
•
|
borrowings under our Credit Facility; and
|
•
|
issuance of capital shares.
|
•
|
claim payments under our policies;
|
•
|
interest payments and repayment of borrowings under our Credit Facility; and
|
•
|
the other costs and operating expenses of our business.
|
•
|
significant decline in the value of our investments;
|
•
|
inability to sell investment assets to provide cash to fund operating needs;
|
•
|
decline in expected revenues generated from operations;
|
•
|
increase in expected claim payments related to our IIF; or
|
•
|
increase in operating expenses.
|
|
|
Nine Months Ended September 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
|
$
|
485,954
|
|
|
$
|
252,021
|
|
Net cash used in investing activities
|
|
(442,961
|
)
|
|
(485,098
|
)
|
||
Net cash (used in) provided by financing activities
|
|
(56,720
|
)
|
|
263,287
|
|
||
Net (decrease) increase in cash
|
|
$
|
(13,727
|
)
|
|
$
|
30,210
|
|
Combined statutory capital:
($ in thousands) |
|
||
Policyholders’ surplus
|
$
|
881,196
|
|
Contingency reserves
|
900,716
|
|
|
Combined statutory capital
|
$
|
1,781,912
|
|
Combined net risk in force
|
$
|
25,124,809
|
|
Combined risk-to-capital ratio
|
14.1:1
|
|
Asset Class
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
U.S. Treasury securities
|
|
$
|
265,233
|
|
|
9.9
|
%
|
|
$
|
227,805
|
|
|
9.9
|
%
|
U.S. agency securities
|
|
32,677
|
|
|
1.2
|
|
|
33,114
|
|
|
1.4
|
|
||
U.S. agency mortgage-backed securities
|
|
566,626
|
|
|
21.3
|
|
|
456,037
|
|
|
19.8
|
|
||
Municipal debt securities(1)
|
|
457,506
|
|
|
17.2
|
|
|
465,255
|
|
|
20.2
|
|
||
Non-U.S. government securities
|
|
44,798
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
||
Corporate debt securities(2)
|
|
706,330
|
|
|
26.5
|
|
|
611,728
|
|
|
26.5
|
|
||
Residential and commercial mortgage securities
|
|
101,649
|
|
|
3.8
|
|
|
79,407
|
|
|
3.5
|
|
||
Asset-backed securities
|
|
299,021
|
|
|
11.2
|
|
|
167,922
|
|
|
7.3
|
|
||
Money market funds
|
|
191,912
|
|
|
7.2
|
|
|
263,797
|
|
|
11.4
|
|
||
Total Investments Available for Sale
|
|
$
|
2,665,752
|
|
|
100.0
|
%
|
|
$
|
2,305,065
|
|
|
100.0
|
%
|
|
|
|
September 30,
|
|
December 31,
|
||
(1) The following table summarizes municipal debt securities as of :
|
|
2018
|
|
2017
|
||
Special revenue bonds
|
|
66.3
|
%
|
|
63.6
|
%
|
General obligation bonds
|
|
28.6
|
|
|
30.7
|
|
Certificate of participation bonds
|
|
3.7
|
|
|
4.4
|
|
Tax allocation bonds
|
|
0.9
|
|
|
0.8
|
|
Special tax bonds
|
|
0.5
|
|
|
0.5
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
September 30,
|
|
December 31,
|
||
(2) The following table summarizes corporate debt securities as of :
|
|
2018
|
|
2017
|
||
Financial
|
|
37.7
|
%
|
|
45.9
|
%
|
Consumer, non-cyclical
|
|
21.4
|
|
|
16.2
|
|
Communications
|
|
12.4
|
|
|
7.3
|
|
Energy
|
|
6.9
|
|
|
7.8
|
|
Consumer, cyclical
|
|
5.5
|
|
|
5.3
|
|
Industrial
|
|
5.4
|
|
|
6.3
|
|
Utilities
|
|
4.7
|
|
|
5.3
|
|
Technology
|
|
3.5
|
|
|
3.9
|
|
Basic materials
|
|
2.5
|
|
|
2.0
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
Rating(1)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
Aaa
|
|
$
|
1,314,053
|
|
|
49.3
|
%
|
|
$
|
1,160,200
|
|
|
50.3
|
%
|
Aa1
|
|
131,368
|
|
|
4.9
|
|
|
115,237
|
|
|
5.0
|
|
||
Aa2
|
|
187,542
|
|
|
7.0
|
|
|
123,551
|
|
|
5.4
|
|
||
Aa3
|
|
130,983
|
|
|
4.9
|
|
|
127,785
|
|
|
5.6
|
|
||
A1
|
|
223,943
|
|
|
8.4
|
|
|
205,369
|
|
|
8.9
|
|
||
A2
|
|
171,217
|
|
|
6.4
|
|
|
157,651
|
|
|
6.8
|
|
||
A3
|
|
148,670
|
|
|
5.6
|
|
|
148,246
|
|
|
6.4
|
|
||
Baa1
|
|
167,283
|
|
|
6.3
|
|
|
115,178
|
|
|
5.0
|
|
||
Baa2
|
|
127,092
|
|
|
4.8
|
|
|
87,869
|
|
|
3.8
|
|
||
Baa3
|
|
33,953
|
|
|
1.3
|
|
|
43,024
|
|
|
1.9
|
|
||
Below Baa3
|
|
29,648
|
|
|
1.1
|
|
|
20,955
|
|
|
0.9
|
|
||
Total Investments Available for Sale
|
|
$
|
2,665,752
|
|
|
100.0
|
%
|
|
$
|
2,305,065
|
|
|
100.0
|
%
|
|
(1)
|
Based on ratings issued by Moody’s, if available. S&P or Fitch Ratings ("Fitch") rating utilized if Moody’s not available.
|
Effective Duration
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
< 1 Year
|
|
$
|
598,900
|
|
|
22.5
|
%
|
|
$
|
628,958
|
|
|
27.3
|
%
|
1 to < 2 Years
|
|
259,820
|
|
|
9.7
|
|
|
164,856
|
|
|
7.2
|
|
||
2 to < 3 Years
|
|
250,341
|
|
|
9.4
|
|
|
280,177
|
|
|
12.2
|
|
||
3 to < 4 Years
|
|
217,233
|
|
|
8.2
|
|
|
263,799
|
|
|
11.4
|
|
||
4 to < 5 Years
|
|
461,890
|
|
|
17.3
|
|
|
263,273
|
|
|
11.4
|
|
||
5 or more Years
|
|
877,568
|
|
|
32.9
|
|
|
704,002
|
|
|
30.5
|
|
||
Total Investments Available for Sale
|
|
$
|
2,665,752
|
|
|
100.0
|
%
|
|
$
|
2,305,065
|
|
|
100.0
|
%
|
|
|
September 30, 2018
|
||||||||||||||
Rank
($ in thousands) |
|
Security
|
|
Fair Value
|
|
Amortized
Cost |
|
Unrealized
Gain (Loss)(1) |
|
Credit
Rating(2) |
||||||
1
|
|
U.S. Treasury 2.625% 7/15/2021
|
|
$
|
35,943
|
|
|
$
|
36,126
|
|
|
$
|
(183
|
)
|
|
Aaa
|
2
|
|
U.S. Treasury 5.250% 11/15/2028
|
|
27,540
|
|
|
29,579
|
|
|
(2,039
|
)
|
|
Aaa
|
|||
3
|
|
U.S. Treasury 2.625% 6/30/2023
|
|
26,116
|
|
|
26,337
|
|
|
(221
|
)
|
|
Aaa
|
|||
4
|
|
Fannie Mae 4.500% 5/1/2048
|
|
19,885
|
|
|
20,019
|
|
|
(134
|
)
|
|
Aaa
|
|||
5
|
|
U.S. Treasury 1.500% 8/15/2026
|
|
18,307
|
|
|
20,410
|
|
|
(2,103
|
)
|
|
Aaa
|
|||
6
|
|
Fannie Mae 4.000% 5/1/2056
|
|
14,681
|
|
|
14,594
|
|
|
87
|
|
|
Aaa
|
|||
7
|
|
Fannie Mae 3.000% 12/1/2032
|
|
13,065
|
|
|
13,109
|
|
|
(44
|
)
|
|
Aaa
|
|||
8
|
|
U.S. Treasury 2.000% 1/15/2021
|
|
11,280
|
|
|
11,436
|
|
|
(156
|
)
|
|
Aaa
|
|||
9
|
|
Fannie Mae 1.500% 6/22/2020
|
|
11,051
|
|
|
11,306
|
|
|
(255
|
)
|
|
Aaa
|
|||
10
|
|
Freddie Mac 4.000% 7/1/2037
|
|
10,824
|
|
|
11,194
|
|
|
(370
|
)
|
|
Aaa
|
|||
Total
|
|
|
|
$
|
188,692
|
|
|
$
|
194,110
|
|
|
$
|
(5,418
|
)
|
|
|
Percent of Investments Available for Sale
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
As of
September 30, 2018
, for securities in unrealized loss positions, management believes decline in fair values is principally associated with the changes in the interest rate environment subsequent to their purchase. Also, see
Note 3
to our condensed consolidated financial statements, which summarizes the aggregate amount of gross unrealized losses by asset class in which the fair value of investments has been less than cost for less than 12 months and for 12 months or more.
|
(2)
|
Based on ratings issued by Moody’s, if available. S&P or Fitch rating utilized if Moody’s not available
.
|
($ in thousands)
|
|
Fair Value
|
|
Amortized
Cost |
|
Credit
Rating (1), (2) |
||||
Texas
|
|
|
|
|
|
|
|
|
||
State of Texas
|
|
$
|
8,694
|
|
|
$
|
8,823
|
|
|
Baa1
|
The Texas A&M University System
|
|
5,917
|
|
|
6,120
|
|
|
Aaa
|
||
City of Houston
|
|
5,761
|
|
|
5,788
|
|
|
Aa3
|
||
University of Houston System
|
|
3,221
|
|
|
3,290
|
|
|
Aa2
|
||
La Joya Independent School District
|
|
2,377
|
|
|
2,399
|
|
|
Aaa
|
||
City of El Paso
|
|
2,369
|
|
|
2,385
|
|
|
Aa2
|
||
Dallas/Fort Worth International Airport
|
|
2,305
|
|
|
2,214
|
|
|
A1
|
||
City of Austin
|
|
2,248
|
|
|
2,185
|
|
|
Aa3
|
||
Harris County Cultural Education
|
|
2,004
|
|
|
2,000
|
|
|
A1
|
||
North Texas Municipal Water District
|
|
1,928
|
|
|
2,021
|
|
|
Aaa
|
||
Carrollton-Farmers Branch Independent School District
|
|
1,869
|
|
|
1,902
|
|
|
Aaa
|
||
Alamo Community College District
|
|
1,570
|
|
|
1,576
|
|
|
Aaa
|
||
Tarrant Regional Water District
|
|
1,490
|
|
|
1,497
|
|
|
Aaa
|
||
Fort Worth TX W&S Revenue
|
|
1,489
|
|
|
1,532
|
|
|
Aa1
|
||
City of College Station
|
|
1,373
|
|
|
1,414
|
|
|
Aa1
|
||
City of Garland
|
|
1,363
|
|
|
1,393
|
|
|
Aa1
|
||
Bryan Independent School District
|
|
1,248
|
|
|
1,314
|
|
|
Aaa
|
||
City of San Antonio
|
|
1,239
|
|
|
1,212
|
|
|
A1
|
||
Spring Independent School District
|
|
1,167
|
|
|
1,225
|
|
|
Aaa
|
||
City of Corpus Christi
|
|
1,115
|
|
|
1,099
|
|
|
A1
|
||
Harris County Toll Road Authority
|
|
1,059
|
|
|
1,074
|
|
|
Aa2
|
||
Pharr-San Juan-Alamo Independent School District
|
|
1,043
|
|
|
1,068
|
|
|
Aaa
|
||
Port Arthur Independent School District
|
|
960
|
|
|
978
|
|
|
Aaa
|
||
San Jacinto Community College District
|
|
840
|
|
|
839
|
|
|
Aa3
|
||
County of Fort Bend
|
|
798
|
|
|
823
|
|
|
Aa1
|
||
Austin-Bergstrom Landhost Enterprises, Inc.
|
|
589
|
|
|
603
|
|
|
A3
|
||
|
|
$
|
56,036
|
|
|
$
|
56,774
|
|
|
|
|
(1)
|
Certain of the above securities may include financial guaranty insurance or state enhancements. The above ratings include the effect of these credit enhancements, if applicable.
|
(2)
|
Based on ratings issued by Moody’s, if available. S&P or Fitch rating utilized if Moody’s not available
.
|
•
|
Changes to the level of interest rates.
Increasing interest rates may reduce the value of certain fixed-rate bonds held in the investment portfolio. Higher rates may cause variable-rate assets to generate additional income. Decreasing rates will have the reverse impact. Significant changes in interest rates can also affect persistency and claim rates which may in turn require that the investment portfolio be restructured to better align it with future liabilities and claim payments. Such restructuring may cause investments to be liquidated when market conditions are adverse.
|
•
|
Changes to the term structure of interest rates.
Rising or falling rates typically change by different amounts along the yield curve. These changes may have unforeseen impacts on the value of certain assets.
|
•
|
Market volatility/changes in the real or perceived credit quality of investments.
Deterioration in the quality of investments, identified through changes to our own or third-party (e.g., rating agency) assessments, will reduce the value and potentially the liquidity of investments.
|
•
|
Concentration Risk.
If the investment portfolio is highly concentrated in one asset, or in multiple assets whose values are highly correlated, the value of the total portfolio may be greatly affected by the change in value of just one asset or a group of highly correlated assets.
|
•
|
Prepayment Risk.
Bonds may have call provisions that permit debtors to repay prior to maturity when it is to their advantage. This typically occurs when rates fall below the interest rate of the debt.
|
Period
|
|
Total
Number of Shares Purchased |
|
Average Price
Paid Per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans or Programs |
|
Maximum Number
of Shares that May Yet Be Purchased Under the Plans or Programs |
|||||
July 1 - July 31, 2018
|
|
1,716
|
|
|
$
|
35.82
|
|
|
—
|
|
|
—
|
|
August 1 - August 31, 2018
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
—
|
|
|
September 1 - September 30, 2018
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
1,716
|
|
|
|
|
|
—
|
|
|
—
|
|
Exhibit
No.
|
|
Description
|
|
Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101†
|
|
The following financial information from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets (Unaudited); (ii) the Condensed Consolidated Statements of Comprehensive Income (Unaudited); (iii) the Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited); (iv) the Condensed Consolidated Statements of Cash Flows (Unaudited); and (v) the Notes to Condensed Consolidated Financial Statements (Unaudited), tagged as blocks of text.
|
|
†
|
|
Pursuant to applicable securities laws and regulations, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.
|
|
|
ESSENT GROUP LTD.
|
|
|
|
|
|
|
Date: November 9, 2018
|
|
/s/ MARK A. CASALE
|
|
|
Mark A. Casale
|
|
|
President, Chief Executive Officer and Chairman
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: November 9, 2018
|
|
/s/ LAWRENCE E. MCALEE
|
|
|
Lawrence E. McAlee
|
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
|
Date: November 9, 2018
|
|
/s/ DAVID B. WEINSTOCK
|
|
|
David B. Weinstock
|
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
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