|
|
|
|
Bermuda
|
|
Not Applicable
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
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)
|
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Shares, $0.015 par value
|
|
New York Stock Exchange
|
|
Large accelerated filer
ý
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if a
smaller reporting company)
|
|
Smaller reporting company
o
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
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;
|
•
|
failure to continue to meet the mortgage insurer eligibility requirements of the GSEs;
|
•
|
competition for our customers or the loss of a significant customer;
|
•
|
lenders or investors seeking alternatives to private mortgage insurance;
|
•
|
increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration;
|
•
|
decline in the volume of low down payment mortgage originations;
|
•
|
uncertainty of loss reserve estimates;
|
•
|
decrease in the length of time our insurance policies are in force;
|
•
|
deteriorating economic conditions;
|
•
|
the definition of "Qualified Mortgage" reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs;
|
•
|
the definition of "Qualified Residential Mortgage" reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance;
|
•
|
the implementation of the Basel III Capital Accord, which may discourage the use of private mortgage insurance;
|
•
|
management of risk in our investment portfolio;
|
•
|
fluctuations in interest rates;
|
•
|
inadequacy of the premiums we charge to compensate for our losses incurred;
|
•
|
dependence on management team and qualified personnel;
|
•
|
disturbance to our information technology systems;
|
•
|
change in our customers' capital requirements discouraging the use of mortgage insurance;
|
•
|
declines in the value of borrowers' homes;
|
•
|
limited availability of capital;
|
•
|
unanticipated claims arise under and risks associated with our contract underwriting program;
|
•
|
industry practice that loss reserves are established only upon a loan default;
|
•
|
disruption in mortgage loan servicing;
|
•
|
risk of future legal proceedings;
|
•
|
customers' technological demands;
|
•
|
our non-U.S. operations becoming subject to U.S. Federal income taxation;
|
•
|
becoming considered a passive foreign investment company for U.S. Federal income tax purposes; and
|
•
|
potential inability of our insurance subsidiaries to pay dividends.
|
($ in thousands)
|
|
$
|
|
%
|
|||
2016
|
|
$
|
33,609,553
|
|
|
40.4
|
%
|
2015
|
|
21,226,878
|
|
|
25.5
|
|
|
2014
|
|
14,543,735
|
|
|
17.5
|
|
|
2013
|
|
9,440,086
|
|
|
11.3
|
|
|
2012
|
|
3,843,570
|
|
|
4.6
|
|
|
2011
|
|
571,364
|
|
|
0.7
|
|
|
2010
|
|
30,336
|
|
|
0.0
|
|
|
|
|
$
|
83,265,522
|
|
|
100.0
|
%
|
|
|
December 31,
|
||||||||||||
Total IIF by FICO score
($ in thousands)
|
|
2016
|
|
2015
|
||||||||||
>=760
|
|
$
|
37,858,422
|
|
|
45.5
|
%
|
|
$
|
30,174,460
|
|
|
46.2
|
%
|
740-759
|
|
13,760,610
|
|
|
16.5
|
|
|
11,019,729
|
|
|
16.9
|
|
||
720-739
|
|
11,855,648
|
|
|
14.2
|
|
|
9,398,659
|
|
|
14.4
|
|
||
700-719
|
|
8,712,971
|
|
|
10.5
|
|
|
6,507,454
|
|
|
10.0
|
|
||
680-699
|
|
6,611,166
|
|
|
7.9
|
|
|
5,030,169
|
|
|
7.7
|
|
||
<=679
|
|
4,466,705
|
|
|
5.4
|
|
|
3,111,982
|
|
|
4.8
|
|
||
Total
|
|
$
|
83,265,522
|
|
|
100.0
|
%
|
|
$
|
65,242,453
|
|
|
100.0
|
%
|
|
|
December 31,
|
||||||||||||
Total IIF by LTV
($ in thousands)
|
|
2016
|
|
2015
|
||||||||||
85.00% and below
|
|
$
|
9,756,578
|
|
|
11.7
|
%
|
|
$
|
7,341,316
|
|
|
11.3
|
%
|
85.01% to 90.00%
|
|
27,409,202
|
|
|
32.9
|
|
|
22,337,975
|
|
|
34.2
|
|
||
90.01% to 95.00%
|
|
42,854,633
|
|
|
51.5
|
|
|
34,035,682
|
|
|
52.2
|
|
||
95.01% and above
|
|
3,245,109
|
|
|
3.9
|
|
|
1,527,480
|
|
|
2.3
|
|
||
Total
|
|
$
|
83,265,522
|
|
|
100.0
|
%
|
|
$
|
65,242,453
|
|
|
100.0
|
%
|
|
|
December 31,
|
||||||||||||
Total RIF by LTV
($ in thousands)
|
|
2016
|
|
2015
|
||||||||||
85.00% and below
|
|
$
|
1,101,947
|
|
|
5.3
|
%
|
|
$
|
826,531
|
|
|
5.2
|
%
|
85.01% to 90.00%
|
|
6,512,613
|
|
|
31.6
|
|
|
5,310,050
|
|
|
33.0
|
|
||
90.01% to 95.00%
|
|
12,234,306
|
|
|
59.3
|
|
|
9,646,406
|
|
|
60.0
|
|
||
95.01% and above
|
|
778,451
|
|
|
3.8
|
|
|
290,187
|
|
|
1.8
|
|
||
Total
|
|
$
|
20,627,317
|
|
|
100.0
|
%
|
|
$
|
16,073,174
|
|
|
100.0
|
%
|
|
|
December 31,
|
||||||||||||
Total IIF by Loan Amortization Period
($ in thousands)
|
|
2016
|
|
2015
|
||||||||||
FRM 30 years and higher
|
|
$
|
75,428,964
|
|
|
90.6
|
%
|
|
$
|
58,344,666
|
|
|
89.4
|
%
|
FRM 20-25 years
|
|
2,113,529
|
|
|
2.5
|
|
|
1,515,756
|
|
|
2.3
|
|
||
FRM 15 years
|
|
3,066,893
|
|
|
3.7
|
|
|
2,702,723
|
|
|
4.2
|
|
||
ARM 5 years and higher
|
|
2,656,136
|
|
|
3.2
|
|
|
2,679,308
|
|
|
4.1
|
|
||
Total
|
|
$
|
83,265,522
|
|
|
100.0
|
%
|
|
$
|
65,242,453
|
|
|
100.0
|
%
|
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||
IIF by State
|
|
|
|
|
|
|
CA
|
|
9.4
|
%
|
|
9.6
|
%
|
TX
|
|
8.2
|
|
|
8.3
|
|
FL
|
|
6.6
|
|
|
6.2
|
|
WA
|
|
4.8
|
|
|
4.6
|
|
IL
|
|
4.0
|
|
|
4.1
|
|
NC
|
|
3.7
|
|
|
3.9
|
|
NJ
|
|
3.5
|
|
|
3.4
|
|
GA
|
|
3.4
|
|
|
3.3
|
|
MN
|
|
3.2
|
|
|
2.9
|
|
AZ
|
|
3.2
|
|
|
3.2
|
|
All Others
|
|
50.0
|
|
|
50.5
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||
IIF by Metropolitan Statistical Area
|
|
|
|
|
|
|
Chicago-Naperville-Arlington Heights, IL
|
|
2.8
|
%
|
|
2.9
|
%
|
New York-Jersey City-White Plains, NY-NJ
|
|
2.8
|
|
|
2.7
|
|
Minneapolis-St. Paul-Bloomington, MN-WI
|
|
2.8
|
|
|
2.5
|
|
Phoenix-Mesa-Scottsdale, AZ
|
|
2.6
|
|
|
2.5
|
|
Houston-The Woodlands-Sugar Land, TX
|
|
2.5
|
|
|
2.7
|
|
Atlanta-Sandy Springs-Roswell, GA
|
|
2.5
|
|
|
2.5
|
|
Seattle-Bellevue-Everett, WA
|
|
2.3
|
|
|
2.3
|
|
Washington-Arlington-Alexandria, DC-VA-MD-WV
|
|
2.1
|
|
|
2.0
|
|
Los Angeles-Long Beach-Glendale, CA
|
|
1.9
|
|
|
2.1
|
|
Dallas-Plano-Irving, TX
|
|
1.9
|
|
|
2.0
|
|
All Others
|
|
75.8
|
|
|
75.8
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||
RIF by Metropolitan Statistical Area
|
|
|
|
|
|
|
Minneapolis-St. Paul-Bloomington, MN-WI
|
|
2.8
|
%
|
|
2.6
|
%
|
Chicago-Naperville-Arlington Heights, IL
|
|
2.8
|
|
|
2.9
|
|
New York-Jersey City-White Plains, NY-NJ
|
|
2.7
|
|
|
2.7
|
|
Houston-The Woodlands-Sugar Land, TX
|
|
2.6
|
|
|
2.7
|
|
Atlanta-Sandy Springs-Roswell, GA
|
|
2.6
|
|
|
2.6
|
|
Phoenix-Mesa-Scottsdale, AZ
|
|
2.5
|
|
|
2.5
|
|
Seattle-Bellevue-Everett, WA
|
|
2.3
|
|
|
2.3
|
|
Washington-Arlington-Alexandria, DC-VA-MD-WV
|
|
2.1
|
|
|
1.9
|
|
Dallas-Plano-Irving, TX
|
|
1.9
|
|
|
2.0
|
|
Los Angeles-Long Beach-Glendale, CA
|
|
1.8
|
|
|
2.0
|
|
All Others
|
|
75.9
|
|
|
75.8
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
Centralized
—Centralized customers make decisions regarding the placement and allocation of mortgage insurance among their approved private mortgage insurers at the corporate level. Generally, these customers consist of the larger, national mortgage originators which originate loans across multiple states, but there are several regional and mid-size lenders which use this method as well.
|
•
|
Decentralized
—Decentralized customers make mortgage insurance purchasing decisions at the field or branch level. These customers generally are more prevalent with regional and mid-size lenders which originate mortgages in a smaller geographic footprint, but are also seen, on a limited basis, among some national lenders.
|
•
|
Regular Portfolio and Risk Management Reviews.
We conduct periodic insured mortgage portfolio reviews with customers, including detailed loan performance metrics.
|
•
|
Joint Product Development and Marketing Initiatives.
We emphasize the development of specialized products and programs that provide increased opportunities for customers and address targeted segments of the market. We recognize the value in developing new products collaboratively with our customers. We also work closely with customers to understand their strategic priorities and business objectives while identifying opportunities that will enhance and complement the customers' marketing activities.
|
•
|
Customer Service, Support and Trainings.
We have an experienced and knowledgeable customer services team that strives to provide premier service to our customers. We dedicate service representatives to our customers so they can establish relationships with their customer peers and become thoroughly familiar with unique customer systems, processes and service needs. We have developed mortgage industry training courses that are offered to our customers as a value added service. We have an experienced team that maintains the course materials so that they are relevant and current and who facilitate training sessions for our customers.
|
•
|
investing in new customer-facing technology that enables our customers to transact business faster and easier, whether over an internet browser or through direct system-to-system interfacing with our customers' loan origination and servicing systems;
|
•
|
integrating our platform with third-party technology providers used by our customers in their loan origination process and for ordering mortgage insurance;
|
•
|
developing and implementing a business rules engine that automatically enforces our eligibility guidelines and pricing rules at the time the mortgage insurance application is submitted; and
|
•
|
implementing advanced business process management software that focuses on improving our underwriting productivity and that may also be used to improve our quality assurance and loss management functions.
|
•
|
Delegated Underwriting.
We delegate to eligible customers the ability to underwrite the loans based on agreed-upon underwriting guidelines. To perform delegated underwriting, customers must be approved by our risk management group. See "—Risk Management—Loan Life Cycle Risk Management" below. Some customers prefer to assume underwriting responsibilities because it is more efficient within their loan origination process. Because this delegated underwriting is performed by third parties, we regularly perform quality assurance reviews on a sample of delegated loans to assess compliance with our guidelines. As of December 31,
2016
, approximately
59%
of our insurance in force had been originated on a delegated basis, compared to
62%
as of December 31,
2015
. See "Risk Factors—Risks Relating to Our Business—
Our delegated underwriting program may subject our mortgage insurance business to unanticipated claims
."
|
•
|
Non-Delegated Underwriting.
Customers who choose not to participate in, or do not qualify for, our delegated underwriting program submit loan files to us so that we may reach a decision as to whether we will insure the loan. In addition, customers participating in our delegated underwriting program may choose not to use their delegated authority, and instead may submit loans for our independent underwriting. Some customers prefer our non-delegated program because we assume underwriting responsibility and will not rescind coverage if we make an underwriting error, subject to the terms of our master policy. We seek to ensure that our employees properly underwrite our loans through quality assurance sampling, loan performance monitoring and training. As of December 31,
2016
, approximately
41%
of our insurance in force had been originated on a non-delegated basis, compared to
38%
as of December 31,
2015
.
|
•
|
Customer qualification
—customer review and approval process;
|
•
|
Policy acquisition
—loan underwriting, valuation and risk approval; and
|
•
|
Portfolio management
—loan performance and lender monitoring with continuous oversight through the settlement of a claim.
|
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||
Number of policies in force
|
|
375,898
|
|
|
297,437
|
|
Loans in default
|
|
1,757
|
|
|
1,028
|
|
Percentage of loans in default
|
|
0.47
|
%
|
|
0.35
|
%
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||
Originating Year
|
|
Loans in
Default
|
|
Percentage
of policies
written in
period
|
|
Defaulted
RIF
(in thousands)
|
|
Loans in
Default
|
|
Percentage
of policies
written in
period
|
|
Defaulted
RIF
(in thousands)
|
||||||||
2010
|
|
1
|
|
|
0.1
|
%
|
|
$
|
23
|
|
|
4
|
|
|
0.3
|
%
|
|
$
|
186
|
|
2011
|
|
44
|
|
|
0.3
|
|
|
1,954
|
|
|
45
|
|
|
0.3
|
|
|
1,886
|
|
||
2012
|
|
156
|
|
|
0.3
|
|
|
7,700
|
|
|
154
|
|
|
0.3
|
|
|
7,639
|
|
||
2013
|
|
362
|
|
|
0.4
|
|
|
18,734
|
|
|
303
|
|
|
0.3
|
|
|
15,209
|
|
||
2014
|
|
677
|
|
|
0.6
|
|
|
37,740
|
|
|
421
|
|
|
0.4
|
|
|
24,525
|
|
||
2015
|
|
394
|
|
|
0.4
|
|
|
22,101
|
|
|
101
|
|
|
0.1
|
|
|
5,526
|
|
||
2016
|
|
123
|
|
|
0.1
|
|
|
7,165
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||
Total
|
|
1,757
|
|
|
|
|
|
$
|
95,417
|
|
|
1,028
|
|
|
|
|
|
$
|
54,971
|
|
•
|
Percentage option—determined by multiplying the claim amount by the applicable coverage percentage, with the customer retaining title to the property. The claim amount is defined in the master policy as consisting of the unpaid loan principal, plus past due interest, subject to a defined maximum, and certain expenses associated with the default;
|
•
|
Third-party sale option—pay the amount of the claim required to make the customer whole, commonly referred to as the "actual loss amount" (not to exceed our maximum liability as outlined under the percentage option), following an approved sale; or
|
•
|
Acquisition option—pay the full claim amount and acquire title to the property.
|
•
|
licenses to transact business;
|
•
|
producer licensing;
|
•
|
approval of policy forms;
|
•
|
approval of premium rates;
|
•
|
limits on insurable loans;
|
•
|
quarterly, annual and other reports on our financial condition;
|
•
|
the basis upon which assets and liabilities must be stated;
|
•
|
requirements regarding contingency reserves;
|
•
|
minimum capital levels and adequacy ratios;
|
•
|
limitations on the types of investment instruments which may be held in our investment portfolio;
|
•
|
special deposits of securities;
|
•
|
limits on dividends payable;
|
•
|
advertising compliance;
|
•
|
establishment of reserves;
|
•
|
claims handling;
|
•
|
hazardous financial condition; and
|
•
|
enterprise risk management.
|
•
|
the term of the mortgage is less than or equal to 30 years;
|
•
|
there is no negative amortization, interest only or balloon features;
|
•
|
the lender properly documents the loan in accordance with the requirements;
|
•
|
the total "points and fees" do not exceed certain thresholds, generally 3%; and
|
•
|
the total debt-to-income ratio does not exceed 43%.
|
•
|
the level of coverage when private mortgage insurance is used to satisfy the GSEs' charter requirements on low down payment mortgages;
|
•
|
the overall level of guaranty fees or the amount of loan level delivery fees that the GSEs assess on loans that require mortgage insurance;
|
•
|
the GSEs' influence in the mortgage lender's selection of the mortgage insurer providing coverage and, if so, any transactions that are related to that selection;
|
•
|
the underwriting standards that determine what loans are eligible for purchase by the GSEs, which can affect the volume and quality of the risk insured by the mortgage insurer;
|
•
|
the terms on which mortgage insurance coverage can be cancelled before reaching the cancellation thresholds established by law;
|
•
|
programs established by the GSEs intended to avoid or mitigate loss on insured mortgages and the circumstances in which mortgage servicers must implement such programs;
|
•
|
the extent to which the GSEs establish requirements for mortgage insurers' rescission practices or rescission settlement practices with lenders;
|
•
|
the size of loans that are eligible for purchase or guaranty by the GSEs, which if reduced or otherwise limited may reduce the overall level of business and the number of low down payment loans with mortgage insurance that the GSEs purchase or guaranty; and
|
•
|
requirements for a mortgage insurer to become and remain an approved eligible insurer for the GSEs, including, among other items, minimum capital adequacy targets and the terms that the GSEs require to be included in mortgage insurance master policies for loans that they purchase or guaranty.
|
•
|
Federal mortgage insurance programs, including those offered by the FHA and VA; and
|
•
|
state-supported mortgage insurance funds, including, but not limited to, those funds supported by the states of California and New York.
|
•
|
lenders and other investors holding mortgages in their portfolios and self-insuring;
|
•
|
investors using other risk mitigation techniques in conjunction with reduced levels of private mortgage insurance coverage, or accepting credit risk without credit enhancement;
|
•
|
mortgage sellers retaining at least a 10% participation in a loan or mortgage sellers agreeing to repurchase or replace a loan upon an event of default; and
|
•
|
lenders originating mortgages using "piggyback structures" which avoid private mortgage insurance, such as a first mortgage with an 80% loan-to-value ratio and a second mortgage with a 10%, 15% or 20% loan-to-value ratio (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather than a first mortgage with a 90%, 95% or 100% loan-to-value ratio that has private mortgage insurance.
|
•
|
a reduction in the premiums charged for government mortgage insurance or a loosening of underwriting guidelines;
|
•
|
past and potential future capital constraints in the private mortgage insurance industry;
|
•
|
increases in premium rates or tightening of underwriting guidelines by private mortgage insurers based on past loan performance or other risk concerns;
|
•
|
increased levels of loss mitigation activity by private mortgage insurers on older vintage portfolios when compared to the more limited loss mitigation activities of government insurance programs;
|
•
|
imposition of additional loan level delivery fees by the GSEs on loans that require mortgage insurance;
|
•
|
increases in GSE guaranty fees and the difference in the spread between Fannie Mae mortgage-backed securities and Ginnie Mae mortgage-backed securities;
|
•
|
the perceived operational ease of using government insurance compared to the products of private mortgage insurers;
|
•
|
differences in the enforcement of program requirements by the FHA relative to the enforcement of policy terms by private entities;
|
•
|
the implementation of new regulations under the Dodd-Frank Act (particularly the Qualified Mortgage and Qualified Residential Mortgage rules) and the Basel III Rules, which may be more favorable to the FHA than to private mortgage insurers (see "
—Our business prospects and operating results could be adversely impacted if, and to the extent that, the Consumer Financial Protection Bureau's ("CFPB") final rule defining a qualified mortgage ("QM") reduces the size of the origination market or creates incentives to use government mortgage insurance programs
", "—
The amount of insurance we write could be adversely affected by the implementation of the Dodd-Frank Act's risk retention requirements and the definition of Qualified Residential Mortgage ("QRM")
" and "—
The implementation of the Basel III Capital Accord, or other changes to our customers' capital requirements, may discourage the use of mortgage insurance
"); and
|
•
|
increases in FHA loan limits above GSE loan limits.
|
•
|
the level of home mortgage interest rates and the deductibility of mortgage interest and mortgage insurance for income tax purposes;
|
•
|
the health of the domestic economy as well as conditions in regional and local economies;
|
•
|
housing affordability;
|
•
|
population trends, including the rate of household formation;
|
•
|
the rate of home price appreciation, which in times of significant refinancing can affect whether refinance loans have loan-to-value ratios that require private mortgage insurance;
|
•
|
government housing policies encouraging loans to borrowers that may need low down payment financing, such as first-time homebuyers;
|
•
|
the extent to which the guaranty fees, loan-level price adjustments, credit underwriting guidelines and other business terms provided by the GSEs affect lenders' willingness to extend credit for low down payment mortgages;
|
•
|
requirements for ability-to-pay determinations prior to extending credit as discussed below;
|
•
|
restrictions on mortgage credit due to more stringent underwriting standards and the risk retention requirements for securitized mortgage loans affecting lenders as discussed below; and
|
•
|
changes in the credit standards, premiums or other terms of obtaining FHA, VA or USDA insurance, which competes directly with private mortgage insurance.
|
•
|
the term of the loan is less than or equal to 30 years;
|
•
|
there are no negative amortization, interest only or balloon features;
|
•
|
the lender properly documents the loan in accordance with the requirements;
|
•
|
the total "points and fees" do not exceed certain thresholds, generally 3% of the total loan amount; and
|
•
|
the total debt-to-income ratio of the borrower does not exceed 43%.
|
•
|
the level of current mortgage interest rates compared to the mortgage interest rates on the insurance in force, which affects the incentives of borrowers we have insured to refinance;
|
•
|
the amount of equity in a home, as homeowners with more equity in their homes can generally more readily move to a new residence or refinance their existing mortgage;
|
•
|
the rate at which homeowners sell their existing homes and move to new locations, generally referred to as housing turnover, with more rapid economic growth and stronger job markets tending to increase housing turnover;
|
•
|
the mortgage insurance cancellation policies of mortgage investors along with the current values of the homes underlying the mortgages in the insurance in force; and
|
•
|
the cancellation of borrower-paid mortgage insurance mandated by law based on the amortization schedule of the loan, which generally occurs sooner the lower the note rate of the insured loan.
|
•
|
general market conditions;
|
•
|
the market's perception of our growth potential;
|
•
|
our debt levels, if any;
|
•
|
our expected results of operations;
|
•
|
our cash flow; and
|
•
|
the market price of our common shares.
|
•
|
establish solvency requirements, including minimum reserves and capital and surplus requirements;
|
•
|
limit the amount of dividends, tax distributions, intercompany loans and other payments our insurance subsidiaries can make without prior regulatory approval; and
|
•
|
impose restrictions on the amount and type of investments we may hold.
|
•
|
maintain a minimum level of capital and surplus;
|
•
|
maintain an enhanced capital requirement, general business solvency margins and a minimum liquidity ratio;
|
•
|
restrict dividends and distributions;
|
•
|
obtain prior approval regarding the ownership and transfer of shares;
|
•
|
maintain a principal office and appoint and maintain a principal representative in Bermuda;
|
•
|
file annual financial statements, an annual statutory financial return and an annual capital and solvency return; and
|
•
|
allow for the performance of certain periodic examinations of Essent Reinsurance Ltd. and its financial condition.
|
•
|
actual or anticipated variations in our quarterly operating results;
|
•
|
changes in our earnings estimates or publication of research reports about us or the real estate industry;
|
•
|
changes in market valuations of similar companies;
|
•
|
any indebtedness we incur in the future;
|
•
|
changes in credit markets and interest rates;
|
•
|
changes in government policies, laws and regulations;
|
•
|
changes impacting Fannie Mae, Freddie Mac or Ginnie Mae;
|
•
|
additions to or departures of our key management personnel;
|
•
|
actions by shareholders;
|
•
|
speculation in the press or investment community;
|
•
|
strategic actions by us or our competitors;
|
•
|
changes in our credit ratings;
|
•
|
general market and economic conditions;
|
•
|
our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; and
|
•
|
price and volume fluctuations in the stock market generally.
|
•
|
the material facts as to such interested director's relationship or interests were disclosed or were known to the board of directors and the board of directors had in good faith authorized the transaction by the affirmative vote of a majority of the disinterested directors;
|
•
|
such material facts were disclosed or were known to the shareholders entitled to vote on such transaction and the transaction were specifically approved in good faith by vote of the majority of shares entitled to vote thereon; or
|
•
|
the transaction was fair as to the corporation as of the time it was authorized, approved or ratified. Under Delaware law, the interested director could be held liable for a transaction in which the director derived an improper personal benefit.
|
2016
|
|
High
|
|
Low
|
||||
First Quarter
|
|
$
|
21.66
|
|
|
$
|
16.48
|
|
Second Quarter
|
|
$
|
22.33
|
|
|
$
|
19.30
|
|
Third Quarter
|
|
$
|
28.62
|
|
|
$
|
20.96
|
|
Fourth Quarter
|
|
$
|
33.94
|
|
|
$
|
25.84
|
|
2015
|
|
High
|
|
Low
|
||||
First Quarter
|
|
$
|
25.94
|
|
|
$
|
22.06
|
|
Second Quarter
|
|
$
|
28.06
|
|
|
$
|
23.48
|
|
Third Quarter
|
|
$
|
29.67
|
|
|
$
|
24.49
|
|
Fourth Quarter
|
|
$
|
26.80
|
|
|
$
|
21.87
|
|
|
|
10/31/2013
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
||||||||
S&P 500
|
|
$100.00
|
|
$
|
105.23
|
|
|
$
|
117.21
|
|
|
$
|
116.36
|
|
|
$
|
127.46
|
|
Peer Index
|
|
$100.00
|
|
$
|
100.90
|
|
|
$
|
101.24
|
|
|
$
|
133.32
|
|
|
$
|
166.77
|
|
ESNT
|
|
$100.00
|
|
$
|
114.57
|
|
|
$
|
122.43
|
|
|
$
|
104.24
|
|
|
$
|
154.14
|
|
Plan Category
|
|
Number of Securities
to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
|
|
Weighted Average
Exercise Price of Outstanding Options, Warrants and Rights |
|
Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans |
|
|||
|
|
(a)
|
|
|
(b)
|
|
(c)
|
|
|||
Equity compensation plans approved by security holders
|
|
493,161
|
|
(1)
|
|
(2)
|
|
14,106,355
|
|
(3)
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
493,161
|
|
|
|
—
|
|
|
14,106,355
|
|
|
(1)
|
All of these shares are subject to outstanding restricted common share unit awards. This number does not include
2,107,876
shares that are subject to then-outstanding, but unvested, restricted common share awards because those securities have been subtracted from the number of securities remaining available for future issuance under Column (c).
|
(2)
|
Not applicable because all outstanding awards reflected in column (a) will be issued upon the vesting of outstanding restricted common share units.
|
(3)
|
All of the shares that remained available for future issuance as of December 31,
2016
, were available under the 2013 Essent Group Ltd. Long-Term Incentive Plan (the "2013 Plan"). Subject to certain express limits of the 2013 Plan, shares available for award purposes under the 2013 Plan generally may be used for any type of award authorized under that plan including options, stock appreciation rights, and other forms of awards granted or denominated in our common shares
|
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 |
|||
October 1 - October 31, 2016
|
|
555
|
|
|
$26.61
|
|
—
|
|
|
—
|
|
November 1 - November 30, 2016
|
|
—
|
|
|
N/A
|
|
—
|
|
|
—
|
|
December 1 - December 31, 2016
|
|
—
|
|
|
N/A
|
|
—
|
|
|
—
|
|
Total
|
|
555
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
Summary of Operations
(In thousands, except per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net premiums written
|
|
$
|
441,278
|
|
|
$
|
370,568
|
|
|
$
|
276,778
|
|
|
$
|
186,200
|
|
|
$
|
72,668
|
|
Increase in unearned premiums
|
|
(18,571
|
)
|
|
(44,097
|
)
|
|
(53,549
|
)
|
|
(62,829
|
)
|
|
(30,875
|
)
|
|||||
Net premiums earned
|
|
422,707
|
|
|
326,471
|
|
|
223,229
|
|
|
123,371
|
|
|
41,793
|
|
|||||
Net investment income
|
|
27,890
|
|
|
19,885
|
|
|
12,285
|
|
|
4,110
|
|
|
2,269
|
|
|||||
Realized investment gains, net
|
|
1,934
|
|
|
2,554
|
|
|
925
|
|
|
116
|
|
|
143
|
|
|||||
Other income
|
|
5,727
|
|
|
4,380
|
|
|
3,028
|
|
|
3,806
|
|
|
4,511
|
|
|||||
Total revenues
|
|
458,258
|
|
|
353,290
|
|
|
239,467
|
|
|
131,403
|
|
|
48,716
|
|
|||||
Losses and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision for losses and LAE
|
|
15,525
|
|
|
11,905
|
|
|
6,308
|
|
|
2,321
|
|
|
1,466
|
|
|||||
Other underwriting and operating expenses
|
|
130,851
|
|
|
112,987
|
|
|
97,232
|
|
|
71,055
|
|
|
61,126
|
|
|||||
Total losses and expenses
|
|
146,376
|
|
|
124,892
|
|
|
103,540
|
|
|
73,376
|
|
|
62,592
|
|
|||||
Income (loss) before income taxes
|
|
311,882
|
|
|
228,398
|
|
|
135,927
|
|
|
58,027
|
|
|
(13,876
|
)
|
|||||
Income tax expense (benefit)
|
|
89,276
|
|
|
71,067
|
|
|
47,430
|
|
|
(7,386
|
)
|
|
(333
|
)
|
|||||
Net income (loss)
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
|
$
|
65,413
|
|
|
$
|
(13,543
|
)
|
Earnings (loss) per share (EPS)(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Shares(2)
|
|
$
|
2.45
|
|
|
$
|
1.74
|
|
|
$
|
1.05
|
|
|
$
|
0.90
|
|
|
N/A
|
|
|
Class A common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
(0.49
|
)
|
||||
Class B-2 common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(0.01
|
)
|
|||||
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Shares(2)
|
|
$
|
2.41
|
|
|
$
|
1.72
|
|
|
$
|
1.03
|
|
|
$
|
0.70
|
|
|
N/A
|
|
|
Class A common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
(0.49
|
)
|
||||
Class B-2 common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(0.01
|
)
|
|||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Shares(2)
|
|
90,913
|
|
|
90,351
|
|
|
83,986
|
|
|
14,044
|
|
|
N/A
|
|
|||||
Class A common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
27,445
|
|
|||||
Class B-2 common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
393
|
|
|||||
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Shares(2)
|
|
92,245
|
|
|
91,738
|
|
|
85,602
|
|
|
18,103
|
|
|
N/A
|
|
|||||
Class A common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
27,445
|
|
|||||
Class B-2 common shares
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
393
|
|
|
|
December 31,
|
||||||||||||||||||
Balance sheet data
($ in thousands)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Total investments
|
|
$
|
1,615,102
|
|
|
$
|
1,276,634
|
|
|
$
|
1,057,613
|
|
|
$
|
332,555
|
|
|
$
|
247,414
|
|
Cash
|
|
27,531
|
|
|
24,606
|
|
|
24,411
|
|
|
477,655
|
|
|
22,315
|
|
|||||
Total assets
|
|
1,882,998
|
|
|
1,469,099
|
|
|
1,181,461
|
|
|
853,970
|
|
|
283,332
|
|
|||||
Reserve for losses and LAE
|
|
28,142
|
|
|
17,760
|
|
|
8,427
|
|
|
3,070
|
|
|
1,499
|
|
|||||
Unearned premium reserve
|
|
219,616
|
|
|
201,045
|
|
|
156,948
|
|
|
103,399
|
|
|
40,570
|
|
|||||
Revolving credit facility borrowings
|
|
100,000
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Amounts due under Asset Purchase Agreement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,949
|
|
|
9,841
|
|
|||||
Total stockholders' equity
|
|
$
|
1,343,773
|
|
|
$
|
1,119,241
|
|
|
$
|
955,738
|
|
|
$
|
722,141
|
|
|
$
|
219,123
|
|
|
|
December 31,
|
||||||||||||||||||
Selected additional data
($ in thousands)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
New insurance written(3)
|
|
$
|
34,949,319
|
|
|
$
|
26,193,656
|
|
|
$
|
24,799,434
|
|
|
$
|
21,152,638
|
|
|
$
|
11,241,161
|
|
Loss ratio(4)
|
|
3.7
|
%
|
|
3.6
|
%
|
|
2.8
|
%
|
|
1.9
|
%
|
|
3.5
|
%
|
|||||
Expense ratio(5)
|
|
30.9
|
%
|
|
34.6
|
%
|
|
43.6
|
%
|
|
57.6
|
%
|
|
146.3
|
%
|
|||||
Combined ratio
|
|
34.5
|
%
|
|
38.3
|
%
|
|
46.4
|
%
|
|
59.5
|
%
|
|
149.8
|
%
|
|
|
December 31,
|
||||||||||||||||||
Insurance portfolio
($ in thousands)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Insurance in force
|
|
$
|
83,265,522
|
|
|
$
|
65,242,453
|
|
|
$
|
50,762,594
|
|
|
$
|
32,028,196
|
|
|
$
|
13,628,980
|
|
Risk in force
|
|
$
|
20,627,317
|
|
|
$
|
16,073,174
|
|
|
$
|
12,227,270
|
|
|
$
|
7,768,605
|
|
|
$
|
3,221,631
|
|
Policies in force
|
|
375,898
|
|
|
297,437
|
|
|
229,721
|
|
|
141,417
|
|
|
59,764
|
|
|||||
Loans in default
|
|
1,757
|
|
|
1,028
|
|
|
457
|
|
|
159
|
|
|
56
|
|
|||||
Percentage of loans in default
|
|
0.47
|
%
|
|
0.35
|
%
|
|
0.20
|
%
|
|
0.11
|
%
|
|
0.09
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance company capital
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Combined statutory capital(6)
|
|
$
|
1,144,279
|
|
|
$
|
913,182
|
|
|
$
|
705,890
|
|
|
$
|
469,424
|
|
|
$
|
203,611
|
|
Risk-to-capital ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Essent Guaranty, Inc.
|
|
15.3:1
|
|
|
15.7:1
|
|
|
16.4:1
|
|
|
16.6:1
|
|
|
15.8:1
|
|
|||||
Essent Guaranty of PA, Inc.
|
|
6.8:1
|
|
|
9.7:1
|
|
|
14.6:1
|
|
|
17.1:1
|
|
|
16.2:1
|
|
|||||
Combined(7)
|
|
14.7:1
|
|
|
15.2:1
|
|
|
16.2:1
|
|
|
16.5:1
|
|
|
15.8:1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Essent Reinsurance Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stockholder's equity (GAAP basis)
|
|
$
|
401,273
|
|
|
$
|
220,178
|
|
|
$
|
155,123
|
|
|
$
|
389
|
|
|
$
|
366
|
|
Net risk in force(8)
|
|
$
|
4,181,737
|
|
|
$
|
2,364,692
|
|
|
$
|
835,976
|
|
|
N/A
|
|
|
N/A
|
|
(1)
|
Prior to the initial public offering ("IPO") which was completed on November 5, 2013, the Company had two classes of common shares outstanding: Class A common shares and Class B-2 common shares. The Class A common shares accrued a 10% cumulative dividend and the Class B-2 common shares had no stated dividend rate with any dividends being declared at the discretion of the Company's Board of Directors. Accordingly, earnings (loss) per common share was calculated using the "two-class" method which provides that earnings and losses be allocated to each class of common
|
(2)
|
The weighted average Common Shares outstanding for 2013 in the table above includes: (a) the weighted average Common Shares outstanding for the period from November 5, 2013 until December 31, 2013, and (b) the weighted average Class B-2 common shares outstanding (adjusted for the 2 for 3 share split) for the period from January 1, 2013 until the date of the conversion to Common Shares at the IPO. For purposes of determining EPS in 2013, the net income allocated to the Class B-2 common shares and all net income of the Company for the period following the IPO are allocated to the Common Shares.
|
(3)
|
New insurance written ("NIW") includes NIW on a flow basis (in which loans are insured in individual, loan-by-loan transactions) and bulk insurance that we write (in which each loan in a portfolio of loans is insured in a single transaction).
|
(4)
|
Loss ratio is calculated by dividing the provision for losses and loss adjustment expenses ("LAE") by net premiums earned.
|
(5)
|
Expense ratio is calculated by dividing other underwriting and operating expenses, excluding interest expense, by net premiums earned.
|
(6)
|
Combined statutory capital equals the sum of statutory capital of Essent Guaranty, Inc. plus Essent Guaranty of PA, Inc., after eliminating the impact of intercompany transactions.
|
(7)
|
Combined risk-to-capital ratio equals the sum of net risk in force of Essent Guaranty, Inc. and Essent Guaranty of PA, Inc. divided by combined statutory capital.
|
(8)
|
Net risk in force represents total risk in force, net of reinsurance ceded and net of exposures on policies for which loss reserves have been established.
|
•
|
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. To date, we have not ceded any premiums under third-party reinsurance contracts.
|
•
|
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 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
83%
of our IIF as of
December 31, 2016
having been originated since January 1,
2014
. 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.
|
|
|
Year Ended December 31,
|
||||||||||
($ in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
IIF, beginning of period
|
|
$
|
65,242,453
|
|
|
$
|
50,762,594
|
|
|
$
|
32,028,196
|
|
NIW
|
|
34,949,319
|
|
|
26,193,656
|
|
|
24,799,434
|
|
|||
Cancellations
|
|
(16,926,250
|
)
|
|
(11,713,797
|
)
|
|
(6,065,036
|
)
|
|||
IIF, end of period
|
|
$
|
83,265,522
|
|
|
$
|
65,242,453
|
|
|
$
|
50,762,594
|
|
Average IIF during the period
|
|
$
|
72,970,600
|
|
|
$
|
57,754,846
|
|
|
$
|
40,577,996
|
|
RIF, end of period
|
|
$
|
20,627,317
|
|
|
$
|
16,073,174
|
|
|
$
|
12,227,270
|
|
($ in thousands)
|
|
$
|
|
%
|
|||
2016
|
|
$
|
33,609,553
|
|
|
40.4
|
%
|
2015
|
|
21,226,878
|
|
|
25.5
|
|
|
2014
|
|
14,543,735
|
|
|
17.5
|
|
|
2013
|
|
9,440,086
|
|
|
11.3
|
|
|
2012
|
|
3,843,570
|
|
|
4.6
|
|
|
2011
|
|
571,364
|
|
|
0.7
|
|
|
2010
|
|
30,336
|
|
|
0.0
|
|
|
|
|
$
|
83,265,522
|
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
||||||||||
Summary of Operations
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written
|
|
$
|
441,278
|
|
|
$
|
370,568
|
|
|
$
|
276,778
|
|
Increase in unearned premiums
|
|
(18,571
|
)
|
|
(44,097
|
)
|
|
(53,549
|
)
|
|||
Net premiums earned
|
|
422,707
|
|
|
326,471
|
|
|
223,229
|
|
|||
Net investment income
|
|
27,890
|
|
|
19,885
|
|
|
12,285
|
|
|||
Realized investment gains, net
|
|
1,934
|
|
|
2,554
|
|
|
925
|
|
|||
Other income
|
|
5,727
|
|
|
4,380
|
|
|
3,028
|
|
|||
Total revenues
|
|
458,258
|
|
|
353,290
|
|
|
239,467
|
|
|||
|
|
|
|
|
|
|
||||||
Losses and expenses:
|
|
|
|
|
|
|
|
|
|
|||
Provision for losses and LAE
|
|
15,525
|
|
|
11,905
|
|
|
6,308
|
|
|||
Other underwriting and operating expenses
|
|
130,851
|
|
|
112,987
|
|
|
97,232
|
|
|||
Total losses and expenses
|
|
146,376
|
|
|
124,892
|
|
|
103,540
|
|
|||
Income before income taxes
|
|
311,882
|
|
|
228,398
|
|
|
135,927
|
|
|||
Income tax expense
|
|
89,276
|
|
|
71,067
|
|
|
47,430
|
|
|||
Net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Fixed maturities
|
|
$
|
29,865
|
|
|
$
|
21,693
|
|
Short-term investments
|
|
142
|
|
|
63
|
|
||
Gross investment income
|
|
30,007
|
|
|
21,756
|
|
||
Investment expenses
|
|
(2,117
|
)
|
|
(1,871
|
)
|
||
Net investment income
|
|
$
|
27,890
|
|
|
$
|
19,885
|
|
|
|
Year Ended December 31,
|
||||
|
|
2016
|
|
2015
|
||
Beginning default inventory
|
|
1,028
|
|
|
457
|
|
Plus: new defaults
|
|
3,746
|
|
|
2,034
|
|
Less: cures
|
|
(2,857
|
)
|
|
(1,384
|
)
|
Less: claims paid
|
|
(154
|
)
|
|
(79
|
)
|
Less: rescissions and denials
|
|
(6
|
)
|
|
—
|
|
Ending default inventory
|
|
1,757
|
|
|
1,028
|
|
|
|
As of December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Case reserves (in thousands)
|
|
$
|
25,758
|
|
|
$
|
16,272
|
|
Ending default inventory
|
|
1,757
|
|
|
1,028
|
|
||
Average case reserve per default (in thousands)
|
|
$
|
14.7
|
|
|
$
|
15.8
|
|
Default rate
|
|
0.47
|
%
|
|
0.35
|
%
|
||
Claims received included in ending default inventory
|
|
44
|
|
|
21
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Reserve for losses and LAE at beginning of year
|
|
$
|
17,760
|
|
|
$
|
8,427
|
|
Add provision for losses and LAE occurring in:
|
|
|
|
|
||||
Current year
|
|
21,889
|
|
|
14,956
|
|
||
Prior years
|
|
(6,364
|
)
|
|
(3,051
|
)
|
||
Incurred losses during the current year
|
|
15,525
|
|
|
11,905
|
|
||
Deduct payments for losses and LAE occurring in:
|
|
|
|
|
||||
Current year
|
|
927
|
|
|
544
|
|
||
Prior years
|
|
4,216
|
|
|
2,028
|
|
||
Loss and LAE payments during the current year
|
|
5,143
|
|
|
2,572
|
|
||
Reserve for losses and LAE at end of year
|
|
$
|
28,142
|
|
|
$
|
17,760
|
|
|
|
As of December 31, 2016
|
||||||||||||||||||
($ 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
|
|
914
|
|
|
52
|
%
|
|
$
|
6,615
|
|
|
26
|
%
|
|
$
|
50,737
|
|
|
13
|
%
|
Four to eleven payments
|
|
620
|
|
|
35
|
|
|
11,505
|
|
|
45
|
|
|
32,833
|
|
|
35
|
|
||
Twelve or more payments
|
|
179
|
|
|
10
|
|
|
5,678
|
|
|
22
|
|
|
9,575
|
|
|
59
|
|
||
Pending claims
|
|
44
|
|
|
3
|
|
|
1,960
|
|
|
7
|
|
|
2,272
|
|
|
86
|
|
||
Total case reserves
|
|
1,757
|
|
|
100
|
%
|
|
25,758
|
|
|
100
|
%
|
|
$
|
95,417
|
|
|
27
|
|
|
IBNR
|
|
|
|
|
|
|
|
1,932
|
|
|
|
|
|
|
|
|
|
|
||
LAE and other
|
|
|
|
|
|
|
|
452
|
|
|
|
|
|
|
|
|
|
|
||
Total reserves for losses and LAE
|
|
|
|
|
|
|
|
$
|
28,142
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
|
||||||||||||||||||
($ 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
|
|
535
|
|
|
52
|
%
|
|
$
|
4,492
|
|
|
28
|
%
|
|
$
|
29,003
|
|
|
15
|
%
|
Four to eleven payments
|
|
383
|
|
|
37
|
|
|
8,283
|
|
|
51
|
|
|
20,825
|
|
|
40
|
|
||
Twelve or more payments
|
|
89
|
|
|
9
|
|
|
2,688
|
|
|
16
|
|
|
4,299
|
|
|
63
|
|
||
Pending claims
|
|
21
|
|
|
2
|
|
|
809
|
|
|
5
|
|
|
844
|
|
|
96
|
|
||
Total case reserves
|
|
1,028
|
|
|
100
|
%
|
|
16,272
|
|
|
100
|
%
|
|
$
|
54,971
|
|
|
30
|
|
|
IBNR
|
|
|
|
|
|
|
|
1,220
|
|
|
|
|
|
|
|
|
|
|
||
LAE and other
|
|
|
|
|
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
||
Total reserves for losses and LAE
|
|
|
|
|
|
|
|
$
|
17,760
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||
($ in thousands)
|
|
2016
|
|
2015
|
||||
Number of claims paid
|
|
154
|
|
|
79
|
|
||
Amount of claims paid
|
|
$
|
5,028
|
|
|
$
|
2,498
|
|
Claim severity
|
|
73
|
%
|
|
92
|
%
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
2016
|
|
2015
|
||||||||||
($ in thousands)
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||
Compensation and benefits
|
|
$
|
84,044
|
|
|
64
|
%
|
|
$
|
72,229
|
|
|
64
|
%
|
Other
|
|
46,807
|
|
|
36
|
|
|
40,758
|
|
|
36
|
|
||
|
|
$
|
130,851
|
|
|
100
|
%
|
|
$
|
112,987
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Number of employees at end of period
|
|
|
|
376
|
|
|
|
|
|
366
|
|
•
|
Compensation and benefits increased primarily due to increases in incentive compensation, stock compensation and the size of our workforce, which increased to
376
at December 31,
2016
from
332
at January 1,
2015
, as additional employees were hired to support the growth in our business, including in our sales organization. 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.
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2015
|
|
2014
|
||||
Fixed maturities
|
|
$
|
21,693
|
|
|
$
|
13,356
|
|
Short-term investments
|
|
63
|
|
|
56
|
|
||
Gross investment income
|
|
21,756
|
|
|
13,412
|
|
||
Investment expenses
|
|
(1,871
|
)
|
|
(1,127
|
)
|
||
Net investment income
|
|
$
|
19,885
|
|
|
$
|
12,285
|
|
|
|
Year Ended December 31,
|
||||
|
|
2015
|
|
2014
|
||
Beginning default inventory
|
|
457
|
|
|
159
|
|
Plus: new defaults
|
|
2,034
|
|
|
904
|
|
Less: cures
|
|
(1,384
|
)
|
|
(578
|
)
|
Less: claims paid
|
|
(79
|
)
|
|
(28
|
)
|
Ending default inventory
|
|
1,028
|
|
|
457
|
|
|
|
As of December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Case reserves (in thousands)
|
|
$
|
16,272
|
|
|
$
|
7,700
|
|
Ending default inventory
|
|
1,028
|
|
|
457
|
|
||
Average case reserve per default (in thousands)
|
|
$
|
15.8
|
|
|
$
|
16.8
|
|
Default rate
|
|
0.35
|
%
|
|
0.20
|
%
|
||
Claims received included in ending default inventory
|
|
21
|
|
|
9
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2015
|
|
2014
|
||||
Reserve for losses and LAE at beginning of year
|
|
$
|
8,427
|
|
|
$
|
3,070
|
|
Add provision for losses and LAE occurring in:
|
|
|
|
|
|
|||
Current year
|
|
14,956
|
|
|
6,877
|
|
||
Prior years
|
|
(3,051
|
)
|
|
(569
|
)
|
||
Incurred losses during the current year
|
|
11,905
|
|
|
6,308
|
|
||
Deduct payments for losses and LAE occurring in:
|
|
|
|
|
|
|||
Current year
|
|
544
|
|
|
138
|
|
||
Prior years
|
|
2,028
|
|
|
813
|
|
||
Loss and LAE payments during the current year
|
|
2,572
|
|
|
951
|
|
||
Reserve for losses and LAE at end of year
|
|
$
|
17,760
|
|
|
$
|
8,427
|
|
|
|
As of December 31, 2015
|
||||||||||||||||||
($ 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
|
|
535
|
|
|
52
|
%
|
|
$
|
4,492
|
|
|
28
|
%
|
|
$
|
29,003
|
|
|
15
|
%
|
Four to eleven payments
|
|
383
|
|
|
37
|
|
|
8,283
|
|
|
51
|
|
|
20,825
|
|
|
40
|
|
||
Twelve or more payments
|
|
89
|
|
|
9
|
|
|
2,688
|
|
|
16
|
|
|
4,299
|
|
|
63
|
|
||
Pending claims
|
|
21
|
|
|
2
|
|
|
809
|
|
|
5
|
|
|
844
|
|
|
96
|
|
||
Total case reserves
|
|
1,028
|
|
|
100
|
%
|
|
16,272
|
|
|
100
|
%
|
|
$
|
54,971
|
|
|
30
|
|
|
IBNR
|
|
|
|
|
|
|
|
1,220
|
|
|
|
|
|
|
|
|
|
|
||
LAE and other
|
|
|
|
|
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
||
Total reserves for losses and LAE
|
|
|
|
|
|
|
|
$
|
17,760
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2014
|
||||||||||||||||||
($ 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
|
|
247
|
|
|
54
|
%
|
|
$
|
2,381
|
|
|
31
|
%
|
|
$
|
13,059
|
|
|
18
|
%
|
Four to eleven payments
|
|
167
|
|
|
37
|
|
|
3,748
|
|
|
49
|
|
|
8,132
|
|
|
46
|
|
||
Twelve or more payments
|
|
34
|
|
|
7
|
|
|
1,147
|
|
|
15
|
|
|
1,510
|
|
|
76
|
|
||
Pending claims
|
|
9
|
|
|
2
|
|
|
424
|
|
|
5
|
|
|
419
|
|
|
101
|
|
||
Total case reserves
|
|
457
|
|
|
100
|
%
|
|
7,700
|
|
|
100
|
%
|
|
$
|
23,120
|
|
|
33
|
|
|
IBNR
|
|
|
|
|
|
|
|
578
|
|
|
|
|
|
|
|
|
|
|
||
LAE and other
|
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
||
Total reserves for losses and LAE
|
|
|
|
|
|
|
|
$
|
8,427
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||
($ in thousands)
|
|
2015
|
|
2014
|
||||
Number of claims paid
|
|
79
|
|
|
28
|
|
||
Amount of claims paid
|
|
$
|
2,498
|
|
|
$
|
929
|
|
Claim severity
|
|
92
|
%
|
|
79
|
%
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
2015
|
|
2014
|
||||||||||
($ in thousands)
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||
Compensation and benefits
|
|
$
|
72,229
|
|
|
64
|
%
|
|
$
|
64,286
|
|
|
66
|
%
|
Other
|
|
40,758
|
|
|
36
|
|
|
32,946
|
|
|
34
|
|
||
|
|
$
|
112,987
|
|
|
100
|
%
|
|
$
|
97,232
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Number of employees at end of period
|
|
|
|
366
|
|
|
|
|
332
|
|
•
|
Compensation and benefits increased primarily due to the increase in our workforce to
366
at
December 31, 2015
from
332
at
December 31, 2014
. Additional employees were hired to support the growth in our business, particularly in our sales organization, as well as our underwriting and customer service teams. 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 revolving credit facility; and
|
•
|
issuance of capital shares.
|
•
|
claim payments under our policies;
|
•
|
repayment of borrowings under our revolving 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.
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by operating activities
|
|
$
|
273,476
|
|
|
$
|
224,139
|
|
|
$
|
153,704
|
|
Net cash used in investing activities
|
|
(365,316
|
)
|
|
(220,712
|
)
|
|
(727,700
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
94,765
|
|
|
(3,232
|
)
|
|
120,752
|
|
|||
Net increase (decrease) in cash
|
|
$
|
2,925
|
|
|
$
|
195
|
|
|
$
|
(453,244
|
)
|
Combined statutory capital:
($ in thousands) |
|
|
||
Policyholders’ surplus
|
|
$
|
627,049
|
|
Contingency reserves
|
|
517,230
|
|
|
Combined statutory capital
|
|
$
|
1,144,279
|
|
Combined net risk in force
|
|
$
|
16,801,992
|
|
Combined risk-to-capital ratio
|
|
14.7:1
|
|
Asset Class
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
U.S. Treasury securities
|
|
$
|
191,548
|
|
|
11.9
|
%
|
|
$
|
177,607
|
|
|
13.9
|
%
|
U.S. agency securities
|
|
18,441
|
|
|
1.1
|
|
|
13,782
|
|
|
1.1
|
|
||
U.S. agency mortgage-backed securities
|
|
316,494
|
|
|
19.6
|
|
|
159,602
|
|
|
12.5
|
|
||
Municipal debt securities(1)
|
|
334,324
|
|
|
20.7
|
|
|
279,828
|
|
|
21.9
|
|
||
Corporate debt securities(2)
|
|
456,357
|
|
|
28.3
|
|
|
396,732
|
|
|
31.1
|
|
||
Residential and commercial mortgage securities
|
|
68,336
|
|
|
4.2
|
|
|
55,356
|
|
|
4.3
|
|
||
Asset-backed securities
|
|
127,172
|
|
|
7.9
|
|
|
126,629
|
|
|
9.9
|
|
||
Money market funds
|
|
102,430
|
|
|
6.3
|
|
|
67,098
|
|
|
5.3
|
|
||
Total Investments
|
|
$
|
1,615,102
|
|
|
100.0
|
%
|
|
$
|
1,276,634
|
|
|
100.0
|
%
|
|
|
December 31,
|
|
December 31,
|
||
(1) The following table summarizes municipal debt securities as of :
|
|
2016
|
|
2015
|
||
Special revenue bonds
|
|
63.6
|
%
|
|
70.4
|
%
|
General obligation bonds
|
|
29.7
|
|
|
24.5
|
|
Certificate of participation bonds
|
|
4.9
|
|
|
4.0
|
|
Tax allocation bonds
|
|
1.1
|
|
|
1.1
|
|
Special tax bonds
|
|
0.7
|
|
|
—
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
December 31,
|
|
December 31,
|
||
(2) The following table summarizes corporate debt securities as of :
|
|
2016
|
|
2015
|
||
Financial
|
|
40.6
|
%
|
|
44.9
|
%
|
Consumer, non-cyclical
|
|
18.6
|
|
|
14.8
|
|
Energy
|
|
9.3
|
|
|
9.0
|
|
Consumer, cyclical
|
|
6.3
|
|
|
6.2
|
|
Utilities
|
|
6.0
|
|
|
5.0
|
|
Communications
|
|
6.0
|
|
|
7.1
|
|
Industrial
|
|
5.6
|
|
|
5.2
|
|
Technology
|
|
4.3
|
|
|
3.8
|
|
Basic materials
|
|
3.3
|
|
|
4.0
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
Rating(1)
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
Aaa
|
|
$
|
780,513
|
|
|
48.3
|
%
|
|
$
|
554,789
|
|
|
43.5
|
%
|
Aa1
|
|
88,977
|
|
|
5.5
|
|
|
74,322
|
|
|
5.8
|
|
||
Aa2
|
|
101,772
|
|
|
6.3
|
|
|
89,533
|
|
|
7.0
|
|
||
Aa3
|
|
89,421
|
|
|
5.5
|
|
|
68,587
|
|
|
5.4
|
|
||
A1
|
|
143,938
|
|
|
8.9
|
|
|
126,920
|
|
|
9.9
|
|
||
A2
|
|
126,113
|
|
|
7.8
|
|
|
122,745
|
|
|
9.6
|
|
||
A3
|
|
95,926
|
|
|
6.0
|
|
|
87,781
|
|
|
6.9
|
|
||
Baa1
|
|
85,864
|
|
|
5.3
|
|
|
80,137
|
|
|
6.3
|
|
||
Baa2
|
|
71,950
|
|
|
4.5
|
|
|
51,528
|
|
|
4.0
|
|
||
Baa3
|
|
24,544
|
|
|
1.5
|
|
|
19,662
|
|
|
1.5
|
|
||
Below Baa3
|
|
6,084
|
|
|
0.4
|
|
|
630
|
|
|
0.1
|
|
||
Total Investments
|
|
$
|
1,615,102
|
|
|
100.0
|
%
|
|
$
|
1,276,634
|
|
|
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
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
< 1 Year
|
|
$
|
329,901
|
|
|
20.4
|
%
|
|
$
|
235,001
|
|
|
18.4
|
%
|
1 to < 2 Years
|
|
153,184
|
|
|
9.5
|
|
|
141,995
|
|
|
11.1
|
|
||
2 to < 3 Years
|
|
156,620
|
|
|
9.7
|
|
|
214,274
|
|
|
16.8
|
|
||
3 to < 4 Years
|
|
176,896
|
|
|
11.0
|
|
|
104,772
|
|
|
8.2
|
|
||
4 to < 5 Years
|
|
139,115
|
|
|
8.6
|
|
|
141,428
|
|
|
11.1
|
|
||
5 or more Years
|
|
659,386
|
|
|
40.8
|
|
|
439,164
|
|
|
34.4
|
|
||
Total Investments
|
|
$
|
1,615,102
|
|
|
100.0
|
%
|
|
$
|
1,276,634
|
|
|
100.0
|
%
|
|
|
December 31, 2016
|
||||||||||||||
Rank
($ in thousands) |
|
Security
|
|
Fair Value
|
|
Amortized
Cost |
|
Unrealized
Gain (Loss)(1) |
|
Credit
Rating(2) |
||||||
1
|
|
U.S. Treasury 2.125% 5/15/2025
|
|
$
|
19,687
|
|
|
$
|
19,747
|
|
|
$
|
(60
|
)
|
|
Aaa
|
2
|
|
U.S. Treasury 1.500% 8/15/2026
|
|
18,833
|
|
|
20,392
|
|
|
(1,559
|
)
|
|
Aaa
|
|||
3
|
|
U.S. Treasury 2.250% 11/15/2024
|
|
16,385
|
|
|
16,841
|
|
|
(456
|
)
|
|
Aaa
|
|||
4
|
|
U.S. Treasury 0.000% 1/12/2017
|
|
14,998
|
|
|
14,999
|
|
|
(1
|
)
|
|
Aaa
|
|||
5
|
|
Ginnie Mae 4.000% 7/20/2045
|
|
14,504
|
|
|
14,776
|
|
|
(272
|
)
|
|
Aaa
|
|||
6
|
|
Ginnie Mae 4.000% 8/20/2045
|
|
14,374
|
|
|
14,607
|
|
|
(233
|
)
|
|
Aaa
|
|||
7
|
|
U.S. Treasury 5.250% 11/15/2028
|
|
13,119
|
|
|
13,727
|
|
|
(608
|
)
|
|
Aaa
|
|||
8
|
|
Freddie Mac 2.500% 10/1/2030
|
|
12,780
|
|
|
13,006
|
|
|
(226
|
)
|
|
Aaa
|
|||
9
|
|
Fannie Mae 3.000% 7/25/2045
|
|
10,953
|
|
|
11,230
|
|
|
(277
|
)
|
|
Aaa
|
|||
10
|
|
Freddie Mac 3.000% 8/1/2046
|
|
10,810
|
|
|
11,358
|
|
|
(548
|
)
|
|
Aaa
|
|||
Total
|
|
$
|
146,443
|
|
|
$
|
150,683
|
|
|
$
|
(4,240
|
)
|
|
|
||
Percent of Investment Portfolio
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
(1)
|
As of
December 31, 2016
, 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 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 more than 12 months and less than 12 months.
|
(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
|
|
$
|
7,319
|
|
|
$
|
7,414
|
|
|
Baa1
|
City of Houston
|
|
3,355
|
|
|
3,353
|
|
|
Aa3
|
||
University of Houston System
|
|
3,245
|
|
|
3,362
|
|
|
Aa2
|
||
Dallas/Fort Worth International Airport
|
|
2,903
|
|
|
2,752
|
|
|
A1
|
||
City of El Paso
|
|
2,498
|
|
|
2,512
|
|
|
Aa2
|
||
City of Austin
|
|
2,276
|
|
|
2,224
|
|
|
A1
|
||
Harris County Cultural Education
|
|
1,996
|
|
|
2,000
|
|
|
A1
|
||
Carrollton-Farmers Branch Independent School District
|
|
1,970
|
|
|
2,011
|
|
|
Aaa
|
||
City of Dallas
|
|
1,762
|
|
|
1,751
|
|
|
Aa1
|
||
Alamo Community College District
|
|
1,665
|
|
|
1,665
|
|
|
Aaa
|
||
Tarrant Regional Water District
|
|
1,542
|
|
|
1,543
|
|
|
Aaa
|
||
City of College Station
|
|
1,441
|
|
|
1,491
|
|
|
Aa2
|
||
Bryan Independent School District
|
|
1,292
|
|
|
1,356
|
|
|
Aaa
|
||
City of San Antonio
|
|
1,254
|
|
|
1,233
|
|
|
A1
|
||
Alvin Independent School District
|
|
1,228
|
|
|
1,233
|
|
|
Aaa
|
||
Spring Independent School District
|
|
1,213
|
|
|
1,270
|
|
|
Aaa
|
||
City of Corpus Christi
|
|
1,134
|
|
|
1,122
|
|
|
A1
|
||
Pharr-San Juan-Alamo Independent School District
|
|
1,086
|
|
|
1,118
|
|
|
Aaa
|
||
Port Arthur Independent School District
|
|
1,013
|
|
|
1,034
|
|
|
Aaa
|
||
Harlandale Independent School District
|
|
878
|
|
|
879
|
|
|
Aaa
|
||
San Jacinto Community College District
|
|
871
|
|
|
862
|
|
|
Aa3
|
||
|
|
$
|
41,941
|
|
|
$
|
42,185
|
|
|
|
(1)
|
None of the above securities include financial guaranty insurance. Certain securities include state enhancements. The above ratings exclude the effect of such state enhancements
.
|
(2)
|
Based on ratings issued by Moody’s, if available. S&P or Fitch rating utilized if Moody’s not available
.
|
|
|
Payments due by period
|
||||||||||||||||||
($ in thousands)
|
|
Total
|
|
Less than
1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than
5 years
|
||||||||||
Revolving credit facility borrowings
|
|
$
|
100,000
|
|
|
$
|
—
|
|
|
$
|
100,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Estimated loss and LAE payments(1)
|
|
28,142
|
|
|
16,189
|
|
|
11,953
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
|
19,029
|
|
|
2,356
|
|
|
4,882
|
|
|
4,910
|
|
|
6,881
|
|
|||||
Total
|
|
$
|
147,171
|
|
|
$
|
18,545
|
|
|
$
|
116,835
|
|
|
$
|
4,910
|
|
|
$
|
6,881
|
|
(1)
|
Our estimate of loss and LAE payments reflects the application of accounting policies described below in "—Critical Accounting Policies—Reserve for Losses and Loss Adjustment Expenses." The payments due by period are based on management's estimates and assume that all of the loss and LAE reserves included in the table will result in payments.
|
•
|
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;
|
•
|
extent and duration of the decline;
|
•
|
failure of the issuer to make scheduled interest or principal payments;
|
•
|
credit ratings from third-party rating agencies and changes in these credit ratings below investment-grade;
|
•
|
current credit spreads, downgrade trends, industry and asset sector trends, and issuer disclosures and financial reports to determine if credit ratings from third-party credit agencies are reasonable; and
|
•
|
adverse conditions specifically related to the security, an industry, or a geographic area.
|
•
|
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.
|
|
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Comprehensive Income
|
|
Consolidated Statements of Changes in Stockholders' Equity
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
FINANCIAL STATEMENT SCHEDULES
|
|
Schedule I—Summary of Investments—Other Than Investments in Related Parties
|
|
Schedule II—Condensed Financial Information of Registrant
|
|
|
December 31,
|
||||||
(In thousands, except per share amounts)
|
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
|
|
|
||
Investments available for sale, at fair value
|
|
|
|
|
|
|
||
Fixed maturities (amortized cost: 2016 — $1,497,186; 2015 — $1,189,978)
|
|
$
|
1,482,754
|
|
|
$
|
1,190,638
|
|
Short-term investments (amortized cost: 2016 — $132,352; 2015 — $85,994)
|
|
132,348
|
|
|
85,996
|
|
||
Total investments
|
|
1,615,102
|
|
|
1,276,634
|
|
||
Cash
|
|
27,531
|
|
|
24,606
|
|
||
Accrued investment income
|
|
9,488
|
|
|
7,768
|
|
||
Accounts receivable
|
|
21,632
|
|
|
16,637
|
|
||
Deferred policy acquisition costs
|
|
13,400
|
|
|
11,529
|
|
||
Property and equipment (at cost, less accumulated depreciation of $46,543 in 2016 and $42,479 in 2015)
|
|
8,119
|
|
|
9,021
|
|
||
Prepaid federal income tax
|
|
181,272
|
|
|
119,412
|
|
||
Other assets
|
|
6,454
|
|
|
3,492
|
|
||
Total assets
|
|
$
|
1,882,998
|
|
|
$
|
1,469,099
|
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
|
|
||
Reserve for losses and LAE
|
|
$
|
28,142
|
|
|
$
|
17,760
|
|
Unearned premium reserve
|
|
219,616
|
|
|
201,045
|
|
||
Net deferred tax liability
|
|
142,587
|
|
|
87,964
|
|
||
Revolving credit facility borrowings
|
|
100,000
|
|
|
—
|
|
||
Securities purchases payable
|
|
14,999
|
|
|
14,996
|
|
||
Other accrued liabilities
|
|
33,881
|
|
|
28,093
|
|
||
Total liabilities
|
|
539,225
|
|
|
349,858
|
|
||
Commitments and contingencies (see Note 8)
|
|
|
|
|
|
|
||
Stockholders' Equity
|
|
|
|
|
|
|
||
Common Shares, $0.015 par value:
|
|
|
|
|
|
|
||
Authorized - 233,333; issued and outstanding - 93,105 shares in 2016 and 92,650 shares in 2015
|
|
1,397
|
|
|
1,390
|
|
||
Additional paid-in capital
|
|
918,296
|
|
|
904,221
|
|
||
Accumulated other comprehensive loss
|
|
(12,255
|
)
|
|
(99
|
)
|
||
Retained earnings
|
|
436,335
|
|
|
213,729
|
|
||
Total stockholders' equity
|
|
1,343,773
|
|
|
1,119,241
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
1,882,998
|
|
|
$
|
1,469,099
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands, except per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||
Net premiums written
|
|
$
|
441,278
|
|
|
$
|
370,568
|
|
|
$
|
276,778
|
|
Increase in unearned premiums
|
|
(18,571
|
)
|
|
(44,097
|
)
|
|
(53,549
|
)
|
|||
Net premiums earned
|
|
422,707
|
|
|
326,471
|
|
|
223,229
|
|
|||
Net investment income
|
|
27,890
|
|
|
19,885
|
|
|
12,285
|
|
|||
Realized investment gains, net
|
|
1,934
|
|
|
2,554
|
|
|
925
|
|
|||
Other income
|
|
5,727
|
|
|
4,380
|
|
|
3,028
|
|
|||
Total revenues
|
|
458,258
|
|
|
353,290
|
|
|
239,467
|
|
|||
|
|
|
|
|
|
|
||||||
Losses and expenses:
|
|
|
|
|
|
|
|
|
|
|||
Provision for losses and LAE
|
|
15,525
|
|
|
11,905
|
|
|
6,308
|
|
|||
Other underwriting and operating expenses
|
|
130,851
|
|
|
112,987
|
|
|
97,232
|
|
|||
Total losses and expenses
|
|
146,376
|
|
|
124,892
|
|
|
103,540
|
|
|||
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
311,882
|
|
|
228,398
|
|
|
135,927
|
|
|||
Income tax expense
|
|
89,276
|
|
|
71,067
|
|
|
47,430
|
|
|||
Net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
|
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
$
|
2.45
|
|
|
$
|
1.74
|
|
|
$
|
1.05
|
|
Diluted
|
|
2.41
|
|
|
1.72
|
|
|
1.03
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
90,913
|
|
|
90,351
|
|
|
83,986
|
|
|||
Diluted
|
|
92,245
|
|
|
91,738
|
|
|
85,602
|
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Change in unrealized (depreciation) appreciation of investments, net of tax (benefit) expense of ($2,941) in 2016, ($1,285) in 2015 and $2,825 in 2014
|
|
(12,156
|
)
|
|
(4,766
|
)
|
|
6,114
|
|
|||
Total other comprehensive (loss) income
|
|
(12,156
|
)
|
|
(4,766
|
)
|
|
6,114
|
|
|||
Comprehensive income
|
|
$
|
210,450
|
|
|
$
|
152,565
|
|
|
$
|
94,611
|
|
(In thousands)
|
|
Common
Shares
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
(Accumulated
Deficit)
|
|
Treasury
Stock
|
|
Total
Stockholders'
Equity
|
||||||||||||
Balance at January 1, 2014
|
|
$
|
1,297
|
|
|
$
|
754,390
|
|
|
$
|
(1,447
|
)
|
|
$
|
(32,099
|
)
|
|
$
|
—
|
|
|
$
|
722,141
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
88,497
|
|
|
|
|
|
88,497
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
6,114
|
|
|
|
|
|
|
|
|
6,114
|
|
||||||
Issuance of Common Shares net of issuance cost of $6,761
|
|
90
|
|
|
126,649
|
|
|
|
|
|
|
|
|
|
|
|
126,739
|
|
||||||
Issuance of management incentive shares
|
|
2
|
|
|
414
|
|
|
|
|
|
|
|
|
|
|
|
416
|
|
||||||
Forfeiture of management incentive shares
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
12,520
|
|
|
|
|
|
|
|
|
|
|
|
12,520
|
|
||||||
Excess tax benefits from stock-based compensation expense
|
|
|
|
|
1,809
|
|
|
|
|
|
|
|
|
|
|
|
1,809
|
|
||||||
Treasury stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,498
|
)
|
|
(2,498
|
)
|
||||||
Cancellation of treasury stock
|
|
(1
|
)
|
|
(2,497
|
)
|
|
|
|
|
|
|
|
2,498
|
|
|
—
|
|
||||||
Balance at December 31, 2014
|
|
$
|
1,388
|
|
|
$
|
893,285
|
|
|
$
|
4,667
|
|
|
$
|
56,398
|
|
|
$
|
—
|
|
|
$
|
955,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
157,331
|
|
|
|
|
|
157,331
|
|
||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(4,766
|
)
|
|
|
|
|
|
|
|
(4,766
|
)
|
||||||
Issuance of management incentive shares
|
|
6
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||
Forfeiture of management incentive shares
|
|
(1
|
)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
13,633
|
|
|
|
|
|
|
|
|
|
|
|
13,633
|
|
||||||
Excess tax benefits from stock-based compensation expense
|
|
|
|
|
2,420
|
|
|
|
|
|
|
|
|
|
|
|
2,420
|
|
||||||
Treasury stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,168
|
)
|
|
(5,168
|
)
|
||||||
Cancellation of treasury stock
|
|
(3
|
)
|
|
(5,165
|
)
|
|
|
|
|
|
|
|
5,168
|
|
|
—
|
|
||||||
Other equity transactions
|
|
|
|
53
|
|
|
|
|
|
|
|
|
53
|
|
||||||||||
Balance at December 31, 2015
|
|
$
|
1,390
|
|
|
$
|
904,221
|
|
|
$
|
(99
|
)
|
|
$
|
213,729
|
|
|
$
|
—
|
|
|
$
|
1,119,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
222,606
|
|
|
|
|
222,606
|
|
||||||||||
Other comprehensive loss
|
|
|
|
|
|
(12,156
|
)
|
|
|
|
|
|
(12,156
|
)
|
||||||||||
Issuance of management incentive shares
|
|
10
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Forfeiture of management incentive shares
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
16,881
|
|
|
|
|
|
|
|
|
16,881
|
|
|||||||||
Excess tax benefits from stock-based compensation expense
|
|
|
|
|
1,083
|
|
|
|
|
|
|
|
|
1,083
|
|
|||||||||
Treasury stock acquired
|
|
|
|
|
|
|
|
|
|
|
|
(4,024
|
)
|
|
(4,024
|
)
|
||||||||
Cancellation of treasury stock
|
|
(3
|
)
|
|
(4,021
|
)
|
|
|
|
|
|
4,024
|
|
|
—
|
|
||||||||
Other equity transactions
|
|
|
|
|
142
|
|
|
|
|
|
|
|
|
142
|
|
|||||||||
Balance at December 31, 2016
|
|
$
|
1,397
|
|
|
$
|
918,296
|
|
|
$
|
(12,255
|
)
|
|
$
|
436,335
|
|
|
$
|
—
|
|
|
$
|
1,343,773
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
||||
Gain on the sale of investments, net
|
|
(1,934
|
)
|
|
(2,554
|
)
|
|
(925
|
)
|
|||
Depreciation and amortization
|
|
4,064
|
|
|
3,219
|
|
|
2,464
|
|
|||
Amortization of discount on payments due under Asset Purchase Agreement
|
|
—
|
|
|
—
|
|
|
51
|
|
|||
Stock-based compensation expense
|
|
16,881
|
|
|
13,633
|
|
|
12,520
|
|
|||
Amortization of premium on investment securities
|
|
10,486
|
|
|
10,004
|
|
|
6,840
|
|
|||
Deferred income tax provision
|
|
57,564
|
|
|
52,157
|
|
|
44,614
|
|
|||
Excess tax benefits from stock-based compensation
|
|
(1,083
|
)
|
|
(2,420
|
)
|
|
(1,809
|
)
|
|||
Change in:
|
|
|
|
|
|
|
|
|
||||
Accrued investment income
|
|
(1,720
|
)
|
|
(2,020
|
)
|
|
(3,770
|
)
|
|||
Accounts receivable
|
|
(4,955
|
)
|
|
(2,828
|
)
|
|
(3,803
|
)
|
|||
Deferred policy acquisition costs
|
|
(1,871
|
)
|
|
(1,932
|
)
|
|
(3,424
|
)
|
|||
Prepaid federal income tax
|
|
(61,860
|
)
|
|
(59,739
|
)
|
|
(51,673
|
)
|
|||
Other assets
|
|
(526
|
)
|
|
(724
|
)
|
|
78
|
|
|||
Reserve for losses and LAE
|
|
10,382
|
|
|
9,333
|
|
|
5,357
|
|
|||
Unearned premium reserve
|
|
18,571
|
|
|
44,097
|
|
|
53,549
|
|
|||
Other accrued liabilities
|
|
6,871
|
|
|
6,582
|
|
|
5,138
|
|
|||
Net cash provided by operating activities
|
|
273,476
|
|
|
224,139
|
|
|
153,704
|
|
|||
|
|
|
|
|
|
|
||||||
Investing Activities
|
|
|
|
|
|
|
|
|
|
|||
Net change in short-term investments
|
|
(46,352
|
)
|
|
124,692
|
|
|
(196,609
|
)
|
|||
Purchase of investments available for sale
|
|
(656,768
|
)
|
|
(798,891
|
)
|
|
(699,324
|
)
|
|||
Proceeds from maturity of investments available for sale
|
|
27,186
|
|
|
8,613
|
|
|
27,382
|
|
|||
Proceeds from sales of investments available for sale
|
|
313,780
|
|
|
449,834
|
|
|
144,744
|
|
|||
Purchase of property and equipment
|
|
(3,162
|
)
|
|
(4,960
|
)
|
|
(3,893
|
)
|
|||
Net cash used in investing activities
|
|
(365,316
|
)
|
|
(220,712
|
)
|
|
(727,700
|
)
|
|||
|
|
|
|
|
|
|
||||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
|||
Revolving credit facility borrowings
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|||
Treasury stock acquired
|
|
(4,024
|
)
|
|
(5,168
|
)
|
|
(2,498
|
)
|
|||
Payment of issuance costs for revolving credit facility
|
|
(2,436
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
|
1,083
|
|
|
2,420
|
|
|
1,809
|
|
|||
Issuance of common shares net of costs
|
|
—
|
|
|
(537
|
)
|
|
126,441
|
|
|||
Payments under Asset Purchase Agreement
|
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|||
Other financing activities
|
|
142
|
|
|
53
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
|
94,765
|
|
|
(3,232
|
)
|
|
120,752
|
|
|||
|
|
|
|
|
|
|
||||||
Net increase (decrease) in cash
|
|
2,925
|
|
|
195
|
|
|
(453,244
|
)
|
|||
Cash at beginning of year
|
|
24,606
|
|
|
24,411
|
|
|
477,655
|
|
|||
Cash at end of year
|
|
$
|
27,531
|
|
|
$
|
24,606
|
|
|
$
|
24,411
|
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|||
Income tax payments
|
|
$
|
(30,800
|
)
|
|
$
|
(15,500
|
)
|
|
$
|
(1,000
|
)
|
Interest payments
|
|
(324
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Noncash Transactions
|
|
|
|
|
|
|
|
|
|
|||
Issuance of management incentive shares (see Note 10)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
416
|
|
|
|
2016
|
|
2015
|
||||||||||||
(In thousands)
|
|
Cost
|
|
Accumulated
Depreciation/
Amortization
|
|
Cost
|
|
Accumulated
Depreciation/
Amortization
|
||||||||
Furniture and fixtures
|
|
$
|
2,042
|
|
|
$
|
(1,298
|
)
|
|
$
|
1,904
|
|
|
$
|
(1,005
|
)
|
Office equipment
|
|
625
|
|
|
(513
|
)
|
|
600
|
|
|
(345
|
)
|
||||
Computer hardware
|
|
5,700
|
|
|
(4,260
|
)
|
|
4,526
|
|
|
(3,254
|
)
|
||||
Purchased software
|
|
35,148
|
|
|
(33,304
|
)
|
|
34,155
|
|
|
(31,825
|
)
|
||||
Costs of internal-use software
|
|
7,140
|
|
|
(6,075
|
)
|
|
6,479
|
|
|
(5,298
|
)
|
||||
Leasehold improvements
|
|
4,007
|
|
|
(1,093
|
)
|
|
3,836
|
|
|
(752
|
)
|
||||
Total
|
|
$
|
54,662
|
|
|
$
|
(46,543
|
)
|
|
$
|
51,500
|
|
|
$
|
(42,479
|
)
|
December 31, 2016 (In thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
U.S. Treasury securities
|
|
$
|
195,990
|
|
|
$
|
55
|
|
|
$
|
(4,497
|
)
|
|
$
|
191,548
|
|
U.S. agency securities
|
|
18,785
|
|
|
—
|
|
|
(344
|
)
|
|
18,441
|
|
||||
U.S. agency mortgage-backed securities
|
|
324,654
|
|
|
335
|
|
|
(8,495
|
)
|
|
316,494
|
|
||||
Municipal debt securities(1)
|
|
334,048
|
|
|
3,649
|
|
|
(3,373
|
)
|
|
334,324
|
|
||||
Corporate debt securities(2)
|
|
457,842
|
|
|
2,343
|
|
|
(3,828
|
)
|
|
456,357
|
|
||||
Residential and commercial mortgage securities
|
|
68,430
|
|
|
488
|
|
|
(582
|
)
|
|
68,336
|
|
||||
Asset-backed securities
|
|
127,359
|
|
|
260
|
|
|
(447
|
)
|
|
127,172
|
|
||||
Money market funds
|
|
102,430
|
|
|
—
|
|
|
—
|
|
|
102,430
|
|
||||
Total investments available for sale
|
|
$
|
1,629,538
|
|
|
$
|
7,130
|
|
|
$
|
(21,566
|
)
|
|
$
|
1,615,102
|
|
December 31, 2015 (In thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
U.S. Treasury securities
|
|
$
|
178,460
|
|
|
$
|
235
|
|
|
$
|
(1,088
|
)
|
|
$
|
177,607
|
|
U.S. agency securities
|
|
13,955
|
|
|
5
|
|
|
(178
|
)
|
|
13,782
|
|
||||
U.S. agency mortgage-backed securities
|
|
160,181
|
|
|
474
|
|
|
(1,053
|
)
|
|
159,602
|
|
||||
Municipal debt securities(1)
|
|
272,733
|
|
|
7,357
|
|
|
(262
|
)
|
|
279,828
|
|
||||
Corporate debt securities(2)
|
|
399,246
|
|
|
1,338
|
|
|
(3,852
|
)
|
|
396,732
|
|
||||
Residential and commercial mortgage securities
|
|
56,380
|
|
|
97
|
|
|
(1,121
|
)
|
|
55,356
|
|
||||
Asset-backed securities
|
|
127,919
|
|
|
29
|
|
|
(1,319
|
)
|
|
126,629
|
|
||||
Money market funds
|
|
67,098
|
|
|
—
|
|
|
—
|
|
|
67,098
|
|
||||
Total investments available for sale
|
|
$
|
1,275,972
|
|
|
$
|
9,535
|
|
|
$
|
(8,873
|
)
|
|
$
|
1,276,634
|
|
|
|
December 31,
|
|
December 31,
|
||
(1) The following table summarizes municipal debt securities as of :
|
|
2016
|
|
2015
|
||
Special revenue bonds
|
|
63.6
|
%
|
|
70.4
|
%
|
General obligation bonds
|
|
29.7
|
|
|
24.5
|
|
Certificate of participation bonds
|
|
4.9
|
|
|
4.0
|
|
Tax allocation bonds
|
|
1.1
|
|
|
1.1
|
|
Special tax bonds
|
|
0.7
|
|
|
—
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
December 31,
|
|
December 31,
|
||
(2) The following table summarizes corporate debt securities as of :
|
|
2016
|
|
2015
|
||
Financial
|
|
40.6
|
%
|
|
44.9
|
%
|
Consumer, non-cyclical
|
|
18.6
|
|
|
14.8
|
|
Energy
|
|
9.3
|
|
|
9.0
|
|
Consumer, cyclical
|
|
6.3
|
|
|
6.2
|
|
Utilities
|
|
6.0
|
|
|
5.0
|
|
Communications
|
|
6.0
|
|
|
7.1
|
|
Industrial
|
|
5.6
|
|
|
5.2
|
|
Technology
|
|
4.3
|
|
|
3.8
|
|
Basic materials
|
|
3.3
|
|
|
4.0
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
(In thousands)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
U.S. Treasury securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
$
|
44,516
|
|
|
$
|
44,519
|
|
Due after 1 but within 5 years
|
|
31,380
|
|
|
31,075
|
|
||
Due after 5 but within 10 years
|
|
106,366
|
|
|
102,835
|
|
||
Due after 10 years
|
|
13,728
|
|
|
13,119
|
|
||
Subtotal
|
|
195,990
|
|
|
191,548
|
|
||
U.S. agency securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
—
|
|
|
—
|
|
||
Due after 1 but within 5 years
|
|
18,785
|
|
|
18,441
|
|
||
Subtotal
|
|
18,785
|
|
|
18,441
|
|
||
Municipal debt securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
4,475
|
|
|
4,478
|
|
||
Due after 1 but within 5 years
|
|
110,649
|
|
|
109,988
|
|
||
Due after 5 but within 10 years
|
|
130,963
|
|
|
132,079
|
|
||
Due after 10 years
|
|
87,961
|
|
|
87,779
|
|
||
Subtotal
|
|
334,048
|
|
|
334,324
|
|
||
Corporate debt securities:
|
|
|
|
|
|
|
||
Due in 1 year
|
|
42,229
|
|
|
42,209
|
|
||
Due after 1 but within 5 years
|
|
252,946
|
|
|
252,684
|
|
||
Due after 5 but within 10 years
|
|
157,582
|
|
|
156,512
|
|
||
Due after 10 years
|
|
5,085
|
|
|
4,952
|
|
||
Subtotal
|
|
457,842
|
|
|
456,357
|
|
||
U.S. agency mortgage-backed securities
|
|
324,654
|
|
|
316,494
|
|
||
Residential and commercial mortgage securities
|
|
68,430
|
|
|
68,336
|
|
||
Asset-backed securities
|
|
127,359
|
|
|
127,172
|
|
||
Money market funds
|
|
102,430
|
|
|
102,430
|
|
||
Total investments available for sale
|
|
$
|
1,629,538
|
|
|
$
|
1,615,102
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Realized gross gains
|
|
$
|
2,822
|
|
|
$
|
3,908
|
|
|
$
|
1,368
|
|
Realized gross losses
|
|
788
|
|
|
1,073
|
|
|
443
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
December 31, 2016 (In thousands)
|
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
U.S. Treasury securities
|
|
$
|
160,018
|
|
|
$
|
(4,497
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
160,018
|
|
|
$
|
(4,497
|
)
|
U.S. agency securities
|
|
18,441
|
|
|
(344
|
)
|
|
—
|
|
|
—
|
|
|
18,441
|
|
|
(344
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
289,282
|
|
|
(8,402
|
)
|
|
1,812
|
|
|
(93
|
)
|
|
291,094
|
|
|
(8,495
|
)
|
||||||
Municipal debt securities
|
|
149,368
|
|
|
(3,351
|
)
|
|
6,015
|
|
|
(22
|
)
|
|
155,383
|
|
|
(3,373
|
)
|
||||||
Corporate debt securities
|
|
213,965
|
|
|
(3,704
|
)
|
|
8,344
|
|
|
(124
|
)
|
|
222,309
|
|
|
(3,828
|
)
|
||||||
Residential and commercial mortgage securities
|
|
18,026
|
|
|
(434
|
)
|
|
14,014
|
|
|
(148
|
)
|
|
32,040
|
|
|
(582
|
)
|
||||||
Asset-backed securities
|
|
28,294
|
|
|
(57
|
)
|
|
47,597
|
|
|
(390
|
)
|
|
75,891
|
|
|
(447
|
)
|
||||||
Total
|
|
$
|
877,394
|
|
|
$
|
(20,789
|
)
|
|
$
|
77,782
|
|
|
$
|
(777
|
)
|
|
$
|
955,176
|
|
|
$
|
(21,566
|
)
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
December 31, 2015 (In thousands)
|
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
U.S. Treasury securities
|
|
$
|
110,699
|
|
|
$
|
(1,088
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
110,699
|
|
|
$
|
(1,088
|
)
|
U.S. agency securities
|
|
11,362
|
|
|
(178
|
)
|
|
—
|
|
|
—
|
|
|
11,362
|
|
|
(178
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
101,465
|
|
|
(915
|
)
|
|
3,683
|
|
|
(138
|
)
|
|
105,148
|
|
|
(1,053
|
)
|
||||||
Municipal debt securities
|
|
47,850
|
|
|
(255
|
)
|
|
1,254
|
|
|
(7
|
)
|
|
49,104
|
|
|
(262
|
)
|
||||||
Corporate debt securities
|
|
252,792
|
|
|
(3,447
|
)
|
|
9,404
|
|
|
(405
|
)
|
|
262,196
|
|
|
(3,852
|
)
|
||||||
Residential and commercial mortgage securities
|
|
23,360
|
|
|
(458
|
)
|
|
26,075
|
|
|
(663
|
)
|
|
49,435
|
|
|
(1,121
|
)
|
||||||
Asset-backed securities
|
|
86,431
|
|
|
(871
|
)
|
|
26,364
|
|
|
(448
|
)
|
|
112,795
|
|
|
(1,319
|
)
|
||||||
Total
|
|
$
|
633,959
|
|
|
$
|
(7,212
|
)
|
|
$
|
66,780
|
|
|
$
|
(1,661
|
)
|
|
$
|
700,739
|
|
|
$
|
(8,873
|
)
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Fixed maturities
|
|
$
|
29,865
|
|
|
$
|
21,693
|
|
|
$
|
13,356
|
|
Short-term investments
|
|
142
|
|
|
63
|
|
|
56
|
|
|||
Gross investment income
|
|
30,007
|
|
|
21,756
|
|
|
13,412
|
|
|||
Investment expenses
|
|
(2,117
|
)
|
|
(1,871
|
)
|
|
(1,127
|
)
|
|||
Net investment income
|
|
$
|
27,890
|
|
|
$
|
19,885
|
|
|
$
|
12,285
|
|
(In thousands)
|
|
2016
|
|
2015
|
||||
Premiums receivable
|
|
$
|
21,265
|
|
|
$
|
16,034
|
|
Other receivables
|
|
367
|
|
|
603
|
|
||
Total accounts receivable
|
|
21,632
|
|
|
16,637
|
|
||
Less: Allowance for doubtful accounts
|
|
—
|
|
|
—
|
|
||
Accounts receivable, net
|
|
$
|
21,632
|
|
|
$
|
16,637
|
|
($ in thousands)
|
|
2016
|
|
2015
|
||||
Reserve for losses and LAE at beginning of year
|
|
$
|
17,760
|
|
|
$
|
8,427
|
|
Less: Reinsurance recoverables
|
|
—
|
|
|
—
|
|
||
Net reserve for losses and LAE at beginning of year
|
|
17,760
|
|
|
8,427
|
|
||
Add provision for losses and LAE, net of reinsurance, occurring in:
|
|
|
|
|
|
|
||
Current year
|
|
21,889
|
|
|
14,956
|
|
||
Prior years
|
|
(6,364
|
)
|
|
(3,051
|
)
|
||
Net incurred losses during the current year
|
|
15,525
|
|
|
11,905
|
|
||
Deduct payments for losses and LAE, net of reinsurance, occurring in:
|
|
|
|
|
|
|
||
Current year
|
|
927
|
|
|
544
|
|
||
Prior years
|
|
4,216
|
|
|
2,028
|
|
||
Net loss and LAE payments during the current year
|
|
5,143
|
|
|
2,572
|
|
||
Net reserve for losses and LAE at end of year
|
|
28,142
|
|
|
17,760
|
|
||
Plus: Reinsurance recoverables
|
|
—
|
|
|
—
|
|
||
Reserve for losses and LAE at end of year
|
|
$
|
28,142
|
|
|
$
|
17,760
|
|
|
|
|
|
|
||||
Loans in default at end of year
|
|
1,757
|
|
|
1,028
|
|
($ in thousands)
|
|
Cumulative Paid Losses and Allocated LAE
For the Years Ended December 31,
|
||||||||||||||||||||||||||
Accident Year
|
|
2010
Unaudited
|
|
2011
Unaudited
|
|
2012
Unaudited
|
|
2013
Unaudited
|
|
2014
Unaudited
|
|
2015
Unaudited
|
|
2016
|
||||||||||||||
2010
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2011
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
2012
|
|
|
|
|
|
24
|
|
|
535
|
|
|
659
|
|
|
665
|
|
|
665
|
|
|||||||||
2013
|
|
|
|
|
|
|
|
239
|
|
|
928
|
|
|
1,501
|
|
|
1,775
|
|
||||||||||
2014
|
|
|
|
|
|
|
|
|
|
138
|
|
|
1,587
|
|
|
2,463
|
|
|||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
544
|
|
|
3,610
|
|
||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
927
|
|
|||||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,440
|
|
|||||||||||
All outstanding liabilities before 2010, net of reinsurance
|
|
|
—
|
|
||||||||||||||||||||||||
Reserve for losses and LAE, net of reinsurance
|
|
|
$
|
28,142
|
|
Average Annual Percentage Payout of Incurred Losses and Allocated LAE by Year
|
|||||||||||||||
Year
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Average Payout
|
|
6
|
%
|
|
45
|
%
|
|
24
|
%
|
|
7
|
%
|
|
0
|
%
|
Year Ended December 31 (In thousands)
|
|
|
||
2017
|
|
$
|
2,356
|
|
2018
|
|
2,414
|
|
|
2019
|
|
2,468
|
|
|
2020
|
|
2,427
|
|
|
2021
|
|
2,483
|
|
|
2022 and thereafter
|
|
6,881
|
|
|
Total minimum payments required
|
|
$
|
19,029
|
|
|
|
2016 Performance-Based Grants
|
|
2013, 2014 and 2015 Performance-Based Grants
|
||||||||
Performance level
|
|
Compounded Annual Book Value
Per Share Growth
|
|
Nonvested Common
Shares Earned
|
|
Compounded Annual Book Value
Per Share Growth
|
|
Nonvested Common
Shares Earned
|
||||
|
|
<13
|
%
|
|
0
|
%
|
|
<11
|
%
|
|
0
|
%
|
Threshold
|
|
13
|
%
|
|
25
|
%
|
|
11
|
%
|
|
10
|
%
|
|
|
14
|
%
|
|
50
|
%
|
|
12
|
%
|
|
36
|
%
|
|
|
15
|
%
|
|
75
|
%
|
|
13
|
%
|
|
61
|
%
|
|
|
|
|
|
|
14
|
%
|
|
87
|
%
|
||
Maximum
|
|
≥16
|
%
|
|
100
|
%
|
|
≥15
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|||||||||||||||||||
|
|
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
|
|
1,294
|
|
|
$
|
15.15
|
|
|
890
|
|
|
$
|
12.31
|
|
|
544
|
|
|
$
|
19.84
|
|
Granted
|
|
209
|
|
|
17.01
|
|
|
181
|
|
|
17.01
|
|
|
215
|
|
|
18.21
|
|
|||
Vested
|
|
—
|
|
|
N/A
|
|
|
(461
|
)
|
|
9.04
|
|
|
(254
|
)
|
|
19.71
|
|
|||
Forfeited
|
|
—
|
|
|
N/A
|
|
|
(5
|
)
|
|
0.23
|
|
|
(12
|
)
|
|
18.12
|
|
|||
Outstanding at end of year
|
|
1,503
|
|
|
$
|
15.41
|
|
|
605
|
|
|
$
|
16.32
|
|
|
493
|
|
|
$
|
19.24
|
|
|
|
2015
|
|||||||||||||||||||
|
|
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
|
|
1,290
|
|
|
$
|
14.83
|
|
|
1,472
|
|
|
$
|
9.04
|
|
|
664
|
|
|
$
|
18.32
|
|
Granted
|
|
50
|
|
|
24.58
|
|
|
109
|
|
|
24.51
|
|
|
129
|
|
|
24.47
|
|
|||
Vested
|
|
—
|
|
|
N/A
|
|
|
(644
|
)
|
|
6.67
|
|
|
(239
|
)
|
|
18.18
|
|
|||
Forfeited
|
|
(46
|
)
|
|
16.40
|
|
|
(47
|
)
|
|
15.50
|
|
|
(10
|
)
|
|
17.89
|
|
|||
Outstanding at end of year
|
|
1,294
|
|
|
$
|
15.15
|
|
|
890
|
|
|
$
|
12.31
|
|
|
544
|
|
|
$
|
19.84
|
|
|
|
2014
|
|||||||||||||||||||
|
|
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
|
|
1,238
|
|
|
$
|
14.50
|
|
|
2,839
|
|
|
$
|
4.82
|
|
|
528
|
|
|
$
|
17.03
|
|
Granted
|
|
52
|
|
|
22.68
|
|
|
82
|
|
|
23.47
|
|
|
188
|
|
|
21.95
|
|
|||
Vested
|
|
—
|
|
|
N/A
|
|
|
(1,434
|
)
|
|
1.57
|
|
|
(26
|
)
|
|
19.00
|
|
|||
Forfeited
|
|
—
|
|
|
N/A
|
|
|
(15
|
)
|
|
2.70
|
|
|
(26
|
)
|
|
17.83
|
|
|||
Outstanding at end of year
|
|
1,290
|
|
|
$
|
14.83
|
|
|
1,472
|
|
|
$
|
9.04
|
|
|
664
|
|
|
$
|
18.32
|
|
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Compensation expense
|
|
$
|
16,881
|
|
|
$
|
13,633
|
|
|
$
|
12,520
|
|
Income tax benefit
|
|
5,455
|
|
|
4,378
|
|
|
4,382
|
|
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current
|
|
$
|
31,712
|
|
|
$
|
18,910
|
|
|
$
|
2,816
|
|
Deferred
|
|
57,564
|
|
|
52,157
|
|
|
44,614
|
|
|||
Total income tax expense
|
|
$
|
89,276
|
|
|
$
|
71,067
|
|
|
$
|
47,430
|
|
($ in thousands)
|
|
2016
|
|
% of pretax
income
|
|
2015
|
|
% of pretax
income
|
|
2014
|
|
% of pretax
income
|
|||||||||
Tax provision at weighted average statutory rates
|
|
$
|
91,092
|
|
|
29.2
|
%
|
|
$
|
72,461
|
|
|
31.7
|
%
|
|
$
|
47,930
|
|
|
35.3
|
%
|
Non-deductible expenses
|
|
378
|
|
|
0.1
|
|
|
381
|
|
|
0.2
|
|
|
398
|
|
|
0.3
|
|
|||
Tax exempt interest, net of proration
|
|
(2,181
|
)
|
|
(0.7
|
)
|
|
(1,741
|
)
|
|
(0.8
|
)
|
|
(961
|
)
|
|
(0.7
|
)
|
|||
Other
|
|
(13
|
)
|
|
0.0
|
|
|
(34
|
)
|
|
0.0
|
|
|
63
|
|
|
0.0
|
|
|||
Total income tax provision
|
|
$
|
89,276
|
|
|
28.6
|
%
|
|
$
|
71,067
|
|
|
31.1
|
%
|
|
$
|
47,430
|
|
|
34.9
|
%
|
(In thousands)
|
|
2016
|
|
2015
|
||||
Deferred tax assets
|
|
$
|
43,291
|
|
|
$
|
36,908
|
|
Deferred tax liabilities
|
|
(185,878
|
)
|
|
(124,872
|
)
|
||
Net deferred tax liability
|
|
$
|
(142,587
|
)
|
|
$
|
(87,964
|
)
|
(In thousands)
|
|
2016
|
|
2015
|
||||
Contingency reserves
|
|
$
|
(181,031
|
)
|
|
$
|
(119,896
|
)
|
Unearned premium reserve
|
|
19,722
|
|
|
17,801
|
|
||
Nonvested shares
|
|
8,445
|
|
|
5,842
|
|
||
Fixed assets
|
|
4,702
|
|
|
5,879
|
|
||
Deferred policy acquisition costs
|
|
(4,690
|
)
|
|
(4,035
|
)
|
||
Start-up expenditures, net
|
|
3,705
|
|
|
4,158
|
|
||
Unearned ceding commissions
|
|
3,568
|
|
|
2,557
|
|
||
Unrealized (gain) loss on investments
|
|
2,181
|
|
|
(760
|
)
|
||
Accrued expenses
|
|
775
|
|
|
519
|
|
||
Prepaid expenses
|
|
(157
|
)
|
|
(181
|
)
|
||
Loss reserves
|
|
170
|
|
|
126
|
|
||
Organizational expenditures
|
|
23
|
|
|
26
|
|
||
Net deferred tax liability
|
|
$
|
(142,587
|
)
|
|
$
|
(87,964
|
)
|
(In thousands, except per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
Less: Common Shares dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Undistributed net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
Net income allocable to Common
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic earnings per share
|
|
$
|
2.45
|
|
|
$
|
1.74
|
|
|
$
|
1.05
|
|
Diluted earnings per share
|
|
$
|
2.41
|
|
|
$
|
1.72
|
|
|
$
|
1.03
|
|
Basic weighted average Common Shares outstanding
|
|
90,913
|
|
|
90,351
|
|
|
83,986
|
|
|||
Dilutive effect of nonvested shares
|
|
1,332
|
|
|
1,387
|
|
|
1,616
|
|
|||
Diluted weighted average Common Shares outstanding
|
|
92,245
|
|
|
91,738
|
|
|
85,602
|
|
|
|
2016
|
||||||||||
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
||||||
Balance at beginning of year
|
|
$
|
661
|
|
|
$
|
(760
|
)
|
|
$
|
(99
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Unrealized holding losses arising during the period
|
|
(13,156
|
)
|
|
2,376
|
|
|
(10,780
|
)
|
|||
Less: Reclassification adjustment for gains included in net income (1)
|
|
(1,941
|
)
|
|
565
|
|
|
(1,376
|
)
|
|||
Net unrealized losses on investments
|
|
(15,097
|
)
|
|
2,941
|
|
|
(12,156
|
)
|
|||
Other comprehensive loss
|
|
(15,097
|
)
|
|
2,941
|
|
|
(12,156
|
)
|
|||
Balance at end of year
|
|
$
|
(14,436
|
)
|
|
$
|
2,181
|
|
|
$
|
(12,255
|
)
|
|
|
2015
|
||||||||||
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
||||||
Balance at beginning of year
|
|
$
|
6,712
|
|
|
$
|
(2,045
|
)
|
|
$
|
4,667
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Unrealized holding losses arising during the period
|
|
(3,216
|
)
|
|
664
|
|
|
(2,552
|
)
|
|||
Less: Reclassification adjustment for gains included in net income (1)
|
|
(2,835
|
)
|
|
621
|
|
|
(2,214
|
)
|
|||
Net unrealized losses on investments
|
|
(6,051
|
)
|
|
1,285
|
|
|
(4,766
|
)
|
|||
Other comprehensive loss
|
|
(6,051
|
)
|
|
1,285
|
|
|
(4,766
|
)
|
|||
Balance at end of year
|
|
$
|
661
|
|
|
$
|
(760
|
)
|
|
$
|
(99
|
)
|
(1)
|
Included in net realized investments gains on our 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, corporate debt securities, residential and commercial mortgage securities and asset-backed securities are classified as Level 2 investments.
|
•
|
Derivative liabilities—Through June 30, 2016, certain of our Freddie Mac ACIS contracts were accounted for as derivatives. In determining an exit market, we considered the fact that there is not a principal market for these contracts. In the absence of a principal market, we valued these ACIS contracts in a hypothetical market where market participants, and potential counterparties, included other mortgage guaranty insurers or reinsurers with similar credit quality to us. We believed that in the absence of a principal market, this hypothetical market provided the most relevant information with respect to fair value estimates. These ACIS contracts were classified as Level 3 of the fair value hierarchy. During the quarter ended September 30, 2016, these contracts were amended and are now accounted for as insurance contracts rather than as derivatives. As of December 31,
2016
, the Company had no derivative instruments.
|
December 31, 2016 (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
|
|
$
|
191,548
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
191,548
|
|
U.S. agency securities
|
|
—
|
|
|
18,441
|
|
|
—
|
|
|
18,441
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
316,494
|
|
|
—
|
|
|
316,494
|
|
||||
Municipal debt securities
|
|
—
|
|
|
334,324
|
|
|
—
|
|
|
334,324
|
|
||||
Corporate debt securities
|
|
—
|
|
|
456,357
|
|
|
—
|
|
|
456,357
|
|
||||
Residential and commercial mortgage securities
|
|
—
|
|
|
68,336
|
|
|
—
|
|
|
68,336
|
|
||||
Asset-backed securities
|
|
—
|
|
|
127,172
|
|
|
—
|
|
|
127,172
|
|
||||
Money market funds
|
|
102,430
|
|
|
—
|
|
|
—
|
|
|
102,430
|
|
||||
Total assets at fair value
|
|
$
|
293,978
|
|
|
$
|
1,321,124
|
|
|
$
|
—
|
|
|
$
|
1,615,102
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Derivative liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
December 31, 2015 (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
|
|
$
|
177,607
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
177,607
|
|
U.S. agency securities
|
|
—
|
|
|
13,782
|
|
|
—
|
|
|
13,782
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
159,602
|
|
|
—
|
|
|
159,602
|
|
||||
Municipal debt securities
|
|
—
|
|
|
279,828
|
|
|
—
|
|
|
279,828
|
|
||||
Corporate debt securities
|
|
—
|
|
|
396,732
|
|
|
—
|
|
|
396,732
|
|
||||
Residential and commercial mortgage securities
|
|
—
|
|
|
55,356
|
|
|
—
|
|
|
55,356
|
|
||||
Asset-backed securities
|
|
—
|
|
|
126,629
|
|
|
—
|
|
|
126,629
|
|
||||
Money market funds
|
|
67,098
|
|
|
—
|
|
|
—
|
|
|
67,098
|
|
||||
Total assets at fair value
|
|
$
|
244,705
|
|
|
$
|
1,031,929
|
|
|
$
|
—
|
|
|
$
|
1,276,634
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,232
|
|
|
$
|
1,232
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,232
|
|
|
$
|
1,232
|
|
|
Year Ended
December 31, |
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Level 3 Liabilities
|
|
|
|
||||
Fair value of derivative liabilities at beginning of period
|
$
|
1,232
|
|
|
$
|
661
|
|
Net realized and unrealized losses (gains) included in income
|
(1,934
|
)
|
|
(1,092
|
)
|
||
Other comprehensive (income) loss
|
—
|
|
|
—
|
|
||
Purchases, sales, issues and settlements, net
|
702
|
|
|
1,663
|
|
||
Gross transfers in
|
—
|
|
|
—
|
|
||
Gross transfers out
|
—
|
|
|
—
|
|
||
Fair value of derivative liabilities at end of period
|
$
|
—
|
|
|
$
|
1,232
|
|
|
|
|
|
||||
Changes in net unrealized losses (gains) included in income on instruments held at end of period
|
$
|
(1,934
|
)
|
|
$
|
(1,092
|
)
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|||
($ in thousands)
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Weighted
Average
|
|||
Derivative Liabilities
|
|
$
|
1,232
|
|
|
Discounted cash flows
|
|
Constant prepayment rate
|
|
10.60
|
%
|
|
|
|
|
|
|
|
Default rate
|
|
0.50
|
%
|
|
|
|
|
|
|
|
|
Reference STACR credit spread
|
|
3.93
|
%
|
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Essent Guaranty
|
|
|
|
|
|
|
|
|
||||
Statutory net income
|
|
$
|
215,951
|
|
|
$
|
172,688
|
|
|
$
|
118,204
|
|
Statutory surplus
|
|
578,887
|
|
|
522,172
|
|
|
465,226
|
|
|||
Contingency reserve liability
|
|
480,829
|
|
|
315,058
|
|
|
179,221
|
|
|||
|
|
|
|
|
|
|
||||||
Essent PA
|
|
|
|
|
|
|
|
|
||||
Statutory net income
|
|
$
|
12,978
|
|
|
$
|
15,200
|
|
|
$
|
13,299
|
|
Statutory surplus
|
|
47,387
|
|
|
47,139
|
|
|
42,672
|
|
|||
Contingency reserve liability
|
|
36,401
|
|
|
27,502
|
|
|
16,909
|
|
|
|
2016
|
||||||||||||||
(In thousands, except per share amounts)
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
Net premiums earned
|
|
$
|
116,792
|
|
|
$
|
110,801
|
|
|
$
|
100,711
|
|
|
$
|
94,403
|
|
Other revenues
|
|
9,581
|
|
|
10,453
|
|
|
7,454
|
|
|
8,063
|
|
||||
Provision for losses and LAE
|
|
3,865
|
|
|
4,965
|
|
|
2,964
|
|
|
3,731
|
|
||||
Other underwriting and operating expenses
|
|
35,206
|
|
|
32,848
|
|
|
31,409
|
|
|
31,388
|
|
||||
Income before income taxes
|
|
87,302
|
|
|
83,441
|
|
|
73,792
|
|
|
67,347
|
|
||||
Net income
|
|
62,686
|
|
|
59,711
|
|
|
52,258
|
|
|
47,951
|
|
||||
Basic earnings per Common Share
|
|
$
|
0.69
|
|
|
$
|
0.66
|
|
|
$
|
0.57
|
|
|
$
|
0.53
|
|
Diluted earnings per Common Share
|
|
$
|
0.68
|
|
|
$
|
0.65
|
|
|
$
|
0.57
|
|
|
$
|
0.52
|
|
Basic weighted average Common Shares outstanding
|
|
90,991
|
|
|
90,961
|
|
|
90,912
|
|
|
90,785
|
|
||||
Diluted weighted average Common Shares outstanding
|
|
92,577
|
|
|
92,399
|
|
|
92,138
|
|
|
91,859
|
|
|
|
2015
|
||||||||||||||
(In thousands, except per share amounts)
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
Net premiums earned
|
|
$
|
89,378
|
|
|
$
|
83,694
|
|
|
$
|
78,361
|
|
|
$
|
75,038
|
|
Other revenues
|
|
8,098
|
|
|
8,042
|
|
|
5,706
|
|
|
4,973
|
|
||||
Provision for losses and LAE
|
|
4,199
|
|
|
3,393
|
|
|
2,314
|
|
|
1,999
|
|
||||
Other underwriting and operating expenses
|
|
29,627
|
|
|
28,714
|
|
|
27,148
|
|
|
27,498
|
|
||||
Income before income taxes
|
|
63,650
|
|
|
59,629
|
|
|
54,605
|
|
|
50,514
|
|
||||
Net income
|
|
44,479
|
|
|
40,821
|
|
|
37,193
|
|
|
34,838
|
|
||||
Basic earnings per Common Share
|
|
$
|
0.49
|
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
$
|
0.39
|
|
Diluted earnings per Common Share
|
|
$
|
0.48
|
|
|
$
|
0.44
|
|
|
$
|
0.41
|
|
|
$
|
0.38
|
|
Basic weighted average Common Shares outstanding
|
|
90,454
|
|
|
90,418
|
|
|
90,344
|
|
|
90,185
|
|
||||
Diluted weighted average Common Shares outstanding
|
|
91,918
|
|
|
91,841
|
|
|
91,674
|
|
|
91,514
|
|
Type of Investment
(In thousands)
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amount at which
shown in the
Balance Sheet
|
||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|||
Bonds:
|
|
|
|
|
|
|
|
|
|
|||
United States Government and government agencies and authorities
|
|
$
|
509,507
|
|
|
$
|
496,565
|
|
|
$
|
496,565
|
|
States, municipalities and political subdivisions
|
|
334,048
|
|
|
334,324
|
|
|
334,324
|
|
|||
Residential and commercial mortgage securities
|
|
68,430
|
|
|
68,336
|
|
|
68,336
|
|
|||
Asset-backed securities
|
|
127,359
|
|
|
127,172
|
|
|
127,172
|
|
|||
All other corporate bonds
|
|
457,842
|
|
|
456,357
|
|
|
456,357
|
|
|||
Total fixed maturities
|
|
1,497,186
|
|
|
1,482,754
|
|
|
1,482,754
|
|
|||
Short-term investments
|
|
132,352
|
|
|
132,348
|
|
|
132,348
|
|
|||
Total investments
|
|
$
|
1,629,538
|
|
|
$
|
1,615,102
|
|
|
$
|
1,615,102
|
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
|
|
|
||
Investments
|
|
|
|
|
||||
Fixed maturities
|
|
$
|
10,004
|
|
|
$
|
36,549
|
|
Short-term investments
|
|
32,036
|
|
|
25,511
|
|
||
Total investments
|
|
42,040
|
|
|
62,060
|
|
||
Cash
|
|
4,521
|
|
|
8,541
|
|
||
Due from affiliates
|
|
1,750
|
|
|
1,021
|
|
||
Investment in consolidated subsidiaries
|
|
1,393,720
|
|
|
1,047,114
|
|
||
Other assets
|
|
2,452
|
|
|
866
|
|
||
Total Assets
|
|
$
|
1,444,483
|
|
|
$
|
1,119,602
|
|
|
|
|
|
|
||||
Liabilities and stockholders' equity
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
|
|
||
Revolving credit facility borrowings
|
|
$
|
100,000
|
|
|
$
|
—
|
|
Other accrued liabilities
|
|
710
|
|
|
361
|
|
||
Total liabilities
|
|
100,710
|
|
|
361
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders' Equity
|
|
|
|
|
|
|
||
Common shares
|
|
1,397
|
|
|
1,390
|
|
||
Additional paid-in capital
|
|
918,296
|
|
|
904,221
|
|
||
Accumulated other comprehensive loss
|
|
(12,255
|
)
|
|
(99
|
)
|
||
Retained earnings
|
|
436,335
|
|
|
213,729
|
|
||
Total stockholders' equity
|
|
1,343,773
|
|
|
1,119,241
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
1,444,483
|
|
|
$
|
1,119,602
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||
Net investment income
|
|
$
|
284
|
|
|
$
|
421
|
|
|
$
|
1,019
|
|
Realized investment gains (losses), net
|
|
111
|
|
|
(181
|
)
|
|
218
|
|
|||
Administrative service fees from subsidiaries
|
|
473
|
|
|
437
|
|
|
1,020
|
|
|||
Total revenues
|
|
868
|
|
|
677
|
|
|
2,257
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|
|||
Administrative service fees to subsidiaries
|
|
1,760
|
|
|
1,762
|
|
|
826
|
|
|||
Other operating expenses
|
|
5,258
|
|
|
3,554
|
|
|
4,085
|
|
|||
Total expenses
|
|
7,018
|
|
|
5,316
|
|
|
4,911
|
|
|||
Loss before income taxes and equity in undistributed net income in subsidiaries
|
|
(6,150
|
)
|
|
(4,639
|
)
|
|
(2,654
|
)
|
|||
Loss before equity in undistributed net income of subsidiaries
|
|
(6,150
|
)
|
|
(4,639
|
)
|
|
(2,654
|
)
|
|||
Equity in undistributed net income of subsidiaries
|
|
228,756
|
|
|
161,970
|
|
|
91,151
|
|
|||
Net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Change in unrealized (depreciation) appreciation of investments, net of tax (benefit) expense of ($2,941) in 2016, ($1,285) in 2015 and $2,825 in 2014
|
|
(12,156
|
)
|
|
(4,766
|
)
|
|
6,114
|
|
|||
Total other comprehensive (loss) income
|
|
(12,156
|
)
|
|
(4,766
|
)
|
|
6,114
|
|
|||
Comprehensive income
|
|
$
|
210,450
|
|
|
$
|
152,565
|
|
|
$
|
94,611
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
222,606
|
|
|
$
|
157,331
|
|
|
$
|
88,497
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Equity in net income of subsidiaries
|
|
(228,756
|
)
|
|
(161,970
|
)
|
|
(91,151
|
)
|
|||
(Gain) loss on the sale of investments, net
|
|
(111
|
)
|
|
181
|
|
|
(218
|
)
|
|||
Stock-based compensation expense
|
|
880
|
|
|
880
|
|
|
1,076
|
|
|||
Amortization of premium on investment securities
|
|
169
|
|
|
399
|
|
|
502
|
|
|||
Excess tax benefits from stock-based compensation
|
|
(1,083
|
)
|
|
(2,420
|
)
|
|
(1,809
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Other assets
|
|
121
|
|
|
(40
|
)
|
|
(358
|
)
|
|||
Other accrued liabilities
|
|
17,433
|
|
|
15,153
|
|
|
13,252
|
|
|||
Net cash provided by operating activities
|
|
11,259
|
|
|
9,514
|
|
|
9,791
|
|
|||
Investing Activities
|
|
|
|
|
|
|
|
|
|
|||
Net change in short-term investments
|
|
(6,525
|
)
|
|
91,119
|
|
|
(114,628
|
)
|
|||
Investments in subsidiaries
|
|
(130,101
|
)
|
|
(61,328
|
)
|
|
(255,155
|
)
|
|||
Purchase of investments available for sale
|
|
—
|
|
|
(130,461
|
)
|
|
(95,128
|
)
|
|||
Proceeds from maturity of investments available for sale
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of investments available for sale
|
|
16,582
|
|
|
94,429
|
|
|
93,650
|
|
|||
Net cash used in investing activities
|
|
(110,044
|
)
|
|
(6,241
|
)
|
|
(371,261
|
)
|
|||
Financing Activities
|
|
|
|
|
|
|
|
|
|
|||
Revolving credit facility borrowings
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|||
Treasury stock acquired
|
|
(4,024
|
)
|
|
(5,168
|
)
|
|
(2,498
|
)
|
|||
Payment of issuance costs for revolving credit facility
|
|
(2,436
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
|
1,083
|
|
|
2,420
|
|
|
1,809
|
|
|||
Issuance of common shares net of costs
|
|
—
|
|
|
(537
|
)
|
|
126,441
|
|
|||
Other financing activities
|
|
142
|
|
|
53
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
|
94,765
|
|
|
(3,232
|
)
|
|
125,752
|
|
|||
Net (decrease) increase in cash
|
|
(4,020
|
)
|
|
41
|
|
|
(235,718
|
)
|
|||
Cash at beginning of year
|
|
8,541
|
|
|
8,500
|
|
|
244,218
|
|
|||
Cash at end of year
|
|
$
|
4,521
|
|
|
$
|
8,541
|
|
|
$
|
8,500
|
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
(a)
|
The following documents are filed as part of this Annual Report:
|
1.
|
Financial Statements. See the "Index to Financial Statements—Consolidated Financial Statements" included in Item 8 of Part II of this Annual Report for a list of the financial statements filed as a part of this Annual Report.
|
2.
|
Financial Statements Schedules. See the "Index to Financial Statements—Financial Statement Schedules" included in Item 8 of Part II of this Annual Report for a list of the financial statements filed as a part of this Annual Report.
|
3.
|
Exhibits. See the "Exhibit Index" immediately following the signature page to this Annual Report.
|
|
|
ESSENT GROUP LTD.
|
||||
|
|
By:
|
|
/s/ MARK A. CASALE
|
||
|
|
|
|
Name:
|
|
Mark A. Casale
|
|
|
|
|
Title:
|
|
Chairman of the Board of Directors, Chief Executive Officer and President
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ MARK A. CASALE
|
|
Chairman of the Board of Directors,
Chief Executive Officer and President
|
|
February 15, 2017
|
Mark A. Casale
|
|
|
||
|
|
|
|
|
/s/ LAWRENCE E. MCALEE
|
|
Senior Vice President, Chief Financial Officer
|
|
February 15, 2017
|
Lawrence E. McAlee
|
|
|
||
|
|
|
|
|
/s/ DAVID B. WEINSTOCK
|
|
Vice President, Chief Accounting Officer
|
|
February 15, 2017
|
David B. Weinstock
|
|
|
||
|
|
|
|
|
/s/ ADITYA DUTT
|
|
Director
|
|
February 15, 2017
|
Aditya Dutt
|
|
|
||
|
|
|
|
|
/s/ ROBERT GLANVILLE
|
|
Director
|
|
February 15, 2017
|
Robert Glanville
|
|
|
||
|
|
|
|
|
/s/ ROY J. KASMAR
|
|
Director
|
|
February 15, 2017
|
Roy J. Kasmar
|
|
|
||
|
|
|
|
|
/s/ ALLAN LEVINE
|
|
Director
|
|
February 15, 2017
|
Allan Levine
|
|
|
||
|
|
|
|
|
/s/ ADOLFO MARZOL
|
|
Director
|
|
February 15, 2017
|
Adolfo Marzol
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ DOUGLAS J. PAULS
|
|
Director
|
|
February 15, 2017
|
Douglas J. Pauls
|
|
|
||
|
|
|
|
|
/s/ WILLIAM SPIEGEL
|
|
Director
|
|
February 15, 2017
|
William Spiegel
|
|
|
||
|
|
|
|
|
/s/ ANDREW TURNBULL
|
|
Director
|
|
February 15, 2017
|
Andrew Turnbull
|
|
|
Exhibit No.
|
|
Description
|
3.1
|
|
Memorandum of Association (incorporated herein by reference to Exhibit 3.1 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
3.2
|
|
Certificate of Deposit of Memorandum of Increase of Share Capital, dated as of February 18, 2009 (incorporated herein by reference to Exhibit 3.2 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
3.2.1
|
|
Certificate of Deposit of Memorandum of Increase of Share Capital, dated as of October 3, 2013 (incorporated herein by reference to Exhibit 3.2.1 of Amendment No.3 to the Registration Statement on Form S-1 (File No. 333-191193) filed on October 21, 2013)
|
3.3
|
|
Amended and Restated Bye-laws (incorporated herein by reference to Exhibit 3.3 of the Form 10-K (File No. 001-36157) filed on March 10, 2014)
|
4.1
|
|
Form of Common Share Certificate (incorporated herein by reference to Exhibit 4.1 of Amendment No.3 to the Registration Statement on Form S-1 (File No. 333-191193) filed on October 21, 2013)
|
4.2
|
|
Shareholders Agreement, dated as of February 6, 2009, among Essent Group Ltd. and the shareholders party thereto (incorporated herein by reference to Exhibit 4.2 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
4.3
|
|
Amendment No. 1 to Shareholders Agreement, dated as of March 25, 2010, among Essent Group Ltd. and the shareholders party thereto (incorporated herein by reference to Exhibit 4.3 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
4.4
|
|
Amendment No. 2 to Shareholders Agreement, effective as of June 24, 2013, among Essent Group Ltd. and the shareholders party thereto (incorporated herein by reference to Exhibit 4.4 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
4.5
|
|
Third Amended and Restated Registration Rights Agreement, dated as of November 11, 2014, among Essent Group Ltd. and the shareholders party thereto (incorporated herein by reference to Exhibit 4.1 of the Form 10-Q (File No. 001-36157) filed on November 14, 2014)
|
4.6
|
|
Shareholders Agreement by and among Essent Group Ltd. and Essent Intermediate, L.P. and Pine Brook Essent Co-Invest, L.P. (incorporated herein by reference to Exhibit 4.6 of the Form 10-K (File No. 001-36157) filed on March 10, 2014)
|
10.1
|
|
Amended and Restated Class A Common Share Subscription Agreement, dated as of March 25, 2010, among Essent Group Ltd. and the investors party thereto (incorporated herein by reference to Exhibit 10.1 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
10.2
|
|
Fee Agreement, dated as of February 6, 2009, among Essent Group Ltd. and the Investors party thereto (incorporated herein by reference to Exhibit 10.2 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
10.3
|
|
Amendment and Waiver to Fee Agreement, dated as of December 18, 2012, among Essent Group Ltd. and the Investors party thereto (incorporated herein by reference to Exhibit 10.3 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
10.4
|
|
Asset Purchase Agreement, dated as of October 7, 2009, between Essent Guaranty, Inc. and Triad Guaranty Insurance Corporation (incorporated herein by reference to Exhibit 10.4 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
10.5
|
†
|
Amended and Restated 2009 Restricted Share Plan (incorporated herein by reference to Exhibit 10.5 of Amendment No.1 to the Registration Statement on Form S-1 (File No. 333-191193) filed on September 26, 2013)
|
10.6
|
†
|
Form of Class B-2 Restricted Share Award Agreement (incorporated herein by reference to Exhibit 10.6 of Amendment No.1 to the Registration Statement on Form S-1 (File No. 333-191193) filed on September 26, 2013)
|
10.7
|
†
|
2015 Annual Leadership Bonus Program (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q (File No. 001-36157) filed on August 10, 2015)
|
10.8
|
†
|
Leadership Bonus Program (incorporated herein by reference to Exhibit 10.8 of the Annual Report on Form 10-K (File No. 001-36157) filed on February 29, 2016)
|
10.9
|
†
|
Form of Class A Restricted Share Bonus Award Agreement (incorporated herein by reference to Exhibit 10.9 of Amendment No.1 to the Registration Statement on Form S-1 (File No. 333-191193) filed on September 26, 2013)
|
10.10
|
†
|
2013 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.10 of Amendment No.1 to the Registration Statement on Form S-1 (File No. 333-191193) filed on September 26, 2013)
|
10.11
|
†
|
Form of Time-Based Restricted Share Agreement (incorporated herein by reference to Exhibit 10.11 of Amendment No.1 to the Registration Statement on Form S-1 (File No. 333-191193) filed on September 26, 2013)
|
Exhibit No.
|
|
Description
|
10.12
|
†
|
Form of Performance-Based Restricted Share Agreement (incorporated herein by reference to Exhibit 10.11 of the Annual Report on Form 10-K (File No. 001-36157) filed on February 27, 2015)
|
10.13
|
†
|
Annual Incentive Plan (incorporated herein by reference to Exhibit 10.13 of Amendment No.1 to the Registration Statement on Form S-1 (File No. 333-191193) filed on September 26, 2013)
|
10.14
|
†
|
Employment Agreement, dated as of September 25, 2013, by and between Essent US Holdings, Inc. and Mark Casale (incorporated herein by reference to Exhibit 10.14 of Amendment No.2 to the Registration Statement on Form S-1 (File No. 333-191193) filed on October 4, 2013)
|
10.15
|
†
|
Employment Agreement, dated as of September 26, 2013, by and between Essent US Holdings, Inc. and Vijay Bhasin (incorporated herein by reference to Exhibit 10.16 of Amendment No.2 to the Registration Statement on Form S-1 (File No. 333-191193) filed on October 4, 2013)
|
10.16
|
†
|
Employment Agreement, dated as of September 26, 2013, by and between Essent US Holdings, Inc. and Lawrence E. McAlee (incorporated herein by reference to Exhibit 10.16 of the Annual Report on Form 10-K (File No. 001-36157) filed on February 27, 2015)
|
10.17
|
†
|
Employment Agreement, dated as of September 26, 2013, by and between Essent US Holdings, Inc. and Mary Lourdes Gibbons (incorporated herein by reference to Exhibit 10.17 of the Annual Report on Form 10-K (File No. 001-36157) filed on February 27, 2015)
|
10.18
|
†
|
Employment Agreement, dated as of March 13, 2015, by and between Essent Reinsurance Ltd. and Joseph Hissong (incorporated herein by reference to Exhibit 10.18 of the Annual Report on Form 10-K (File No. 001-36157) filed on February 29, 2016)
|
10.19
|
†
|
Employment Agreement, dated as of September 26, 2013, by and between Essent Guaranty, Inc. and Jeff Cashmer (filed herewith)
|
10.20
|
†
|
Letter Agreement, dated as of August 4, 2016, between Essent Guaranty, Inc. and Adolfo Marzol (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q (File No. 001-36157) filed on August 5, 2016)
|
10.21
|
†
|
Form of Director and Officer Indemnification Agreement (incorporated herein by reference to Exhibit 10.17 of the Registration Statement on Form S-1 (File No. 333-191193) filed on September 16, 2013)
|
10.22
|
†
|
Section 409A Specified Employee Policy (incorporated herein by reference to Exhibit 10.18 of Amendment No.2 to the Registration Statement on Form S-1 (File No. 333-191193) filed on October 4, 2013)
|
10.23
|
|
Letter Agreement, dated as of October 2, 2013, by and between Essent Group Ltd. and The Goldman Sachs Group, Inc. (incorporated herein by reference to Exhibit 10.19 of Amendment No.2 to the Registration Statement on Form S-1 (File No. 333-191193) filed on October 4, 2013)
|
10.24
|
|
Credit Agreement, dated as of April 19, 2016, by and among Essent Group Ltd., Essent Irish Intermediate Holdings Limited, and Essent US Holdings, Inc., as borrowers, the several banks and other financial institutions or entities from time to time parties to this agreement, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No. 001-36157) filed on April 21, 2016)
|
21.1
|
|
List of Subsidiaries (filed herewith)
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23.1
|
|
Consent of PricewaterhouseCoopers LLP (filed herewith)
|
31.1
|
|
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 (filed herewith)
|
31.2
|
|
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 (filed herewith)
|
32.1
|
|
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 (filed herewith)
|
101
|
*
|
The following financial information from this Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets as of December 31, 2016 and December 31, 2015; (ii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014; (iii) the Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2016, 2015 and 2014; (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014; and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text.
|
†
|
|
Management contract or compensatory plan or arrangement.
|
|
|
|
*
|
|
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.
|
Subsidiary
|
|
Jurisdiction of Incorporation/Formation
|
Essent Reinsurance Ltd. (1)
|
|
Bermuda
|
Essent Agency (Bermuda) Ltd. (2)
|
|
Bermuda
|
Essent Irish Intermediate Holdings Ltd. (1)
|
|
Republic of Ireland
|
Essent US Holdings, Inc. (3)
|
|
Delaware
|
Essent Guaranty of PA, Inc. (4)
|
|
Pennsylvania
|
CUW Solutions, LLC (4)
|
|
Delaware
|
Essent Guaranty, Inc. (4)
|
|
Pennsylvania
|
Essent Solutions, LLC (5)
|
|
Delaware
|
Date:
|
February 15, 2017
|
|
|
|
|
/s/ MARK A. CASALE
|
|
|
Mark A. Casale
|
|
|
President, Chief Executive Officer and Chairman
|
|
|
(Principal Executive Officer)
|
|
Date:
|
February 15, 2017
|
|
|
|
|
/s/ LAWRENCE E. MCALEE
|
|
|
Lawrence E. McAlee
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
/s/ MARK A. CASALE
|
|
Mark A. Casale
|
|
President, Chief Executive Officer and Chairman
|
|
|
|
/s/ LAWRENCE E. MCALEE
|
|
Lawrence E. McAlee
|
|
Senior Vice President and Chief Financial Officer
|
|