Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 01, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36157 | |
Entity Registrant Name | ESSENT GROUP LTD. | |
Entity Incorporation, State or Country Code | D0 | |
Entity Address, Address Line One | Clarendon House | |
Entity Address, Address Line Two | 2 Church Street | |
Entity Address, City or Town | Hamilton | |
Entity Address, Postal Zip Code | HM11 | |
Entity Address, Country | BM | |
City Area Code | 441 | |
Local Phone Number | 297-9901 | |
Title of 12(b) Security | Common Shares, $0.015 par value | |
Trading Symbol | ESNT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 98,623,303 | |
Entity Central Index Key | 0001448893 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Investments | ||
Total investments available for sale | $ 3,705,527 | $ 3,350,747 |
Other invested assets | 75,380 | 78,873 |
Total investments | 3,780,907 | 3,429,620 |
Cash | 31,055 | 71,350 |
Accrued investment income | 18,572 | 18,535 |
Accounts receivable | 41,228 | 40,655 |
Deferred policy acquisition costs | 15,147 | 15,705 |
Property and equipment (at cost, less accumulated depreciation of $58,517 in 2020 and $57,639 in 2019) | 16,325 | 17,308 |
Prepaid federal income tax | 261,885 | 261,885 |
Other assets | 21,815 | 18,367 |
Total assets | 4,186,934 | 3,873,425 |
Liabilities | ||
Reserve for losses and LAE | 73,341 | 69,362 |
Unearned premium reserve | 264,134 | 278,887 |
Net deferred tax liability | 259,688 | 249,620 |
Credit facility borrowings (at carrying value, less unamortized deferred costs of $620 in 2020 and $763 in 2019) | 424,380 | 224,237 |
Other accrued liabilities | 58,317 | 66,474 |
Total liabilities | 1,079,860 | 888,580 |
Commitments and contingencies (see Note 7) | ||
Stockholders’ Equity | ||
Common shares, $0.015 par value: Authorized - 233,333; issued and outstanding - 98,602 shares in 2020 and 98,394 shares in 2019 | 1,479 | 1,476 |
Additional paid-in capital | 1,117,286 | 1,118,655 |
Accumulated other comprehensive income | 46,113 | 56,187 |
Retained earnings | 1,942,196 | 1,808,527 |
Total stockholders’ equity | 3,107,074 | 2,984,845 |
Total liabilities and stockholders’ equity | 4,186,934 | 3,873,425 |
Fixed maturities available for sale, at fair value (amortized cost: 2020 — $3,061,177; 2019 — $2,967,225) | ||
Investments | ||
Total investments available for sale | 3,110,362 | 3,035,385 |
Short-term investments available for sale, at fair value (amortized cost: 2020 — $595,173; 2019 — $315,360) | ||
Investments | ||
Total investments available for sale | $ 595,165 | $ 315,362 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Investment available for sale | ||
Amortized cost | $ 3,656,350 | $ 3,282,585 |
Property and equipment | ||
Accumulated depreciation | 58,517 | 57,639 |
Credit Facility Borrowings | ||
Unamortized deferred costs | $ 620 | $ 763 |
Stockholders’ Equity | ||
Common shares, par value (in dollars per share) | $ 0.015 | $ 0.015 |
Common shares, authorized (in shares) | 233,333 | 233,333 |
Common shares, issued (in shares) | 98,602 | 98,394 |
Common shares, outstanding (in shares) | 98,602 | 98,394 |
Fixed maturities | ||
Investment available for sale | ||
Amortized cost | $ 3,061,177 | $ 2,967,225 |
Short-term investments | ||
Investment available for sale | ||
Amortized cost | $ 595,173 | $ 315,360 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Net premiums written | $ 191,743 | $ 177,644 |
Decrease in unearned premiums | 14,753 | 147 |
Net premiums earned | 206,496 | 177,791 |
Net investment income | 20,633 | 19,880 |
Realized investment gains, net | 3,135 | 660 |
Other income (loss) | (1,424) | 2,195 |
Total revenues | 228,840 | 200,526 |
Losses and expenses: | ||
Provision for losses and LAE | 8,063 | 7,107 |
Other underwriting and operating expenses | 41,947 | 41,030 |
Interest expense | 2,132 | 2,670 |
Total losses and expenses | 52,142 | 50,807 |
Income before income taxes | 176,698 | 149,719 |
Income tax expense | 27,175 | 21,999 |
Net income | $ 149,523 | $ 127,720 |
Earnings per share: | ||
Basic (in dollars per share) | $ 1.53 | $ 1.31 |
Diluted (in dollars per share) | $ 1.52 | $ 1.30 |
Weighted average shares outstanding: | ||
Basic (in shares) | 97,949 | 97,595 |
Diluted (in shares) | 98,326 | 98,104 |
Net income | $ 149,523 | $ 127,720 |
Other comprehensive income (loss): | ||
Change in unrealized (depreciation) appreciation of investments, net of tax (benefit) expense of ($6,979) in 2020 and $7,951 in 2019 | (10,074) | 38,366 |
Total other comprehensive income (loss) | (10,074) | 38,366 |
Comprehensive income | $ 139,449 | $ 166,086 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Change in unrealized appreciation (depreciation) of investments, tax expense (benefit) | $ (6,979) | $ 7,951 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Shares | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock |
Stockholders equity, beginning of period at Dec. 31, 2018 | $ 1,472 | $ 1,110,800 | $ (28,993) | $ 1,282,438 | $ 0 | |
Changes in Stockholders' Equity | ||||||
Issuance of management incentive shares | 6 | (6) | ||||
Cancellation of treasury stock | (3) | (8,097) | 8,100 | |||
Stock-based compensation expense | 4,100 | |||||
Other comprehensive (loss) income | $ 38,366 | 38,366 | ||||
Net income | 127,720 | 127,720 | ||||
Treasury stock acquired | (8,100) | |||||
Stockholders equity, end of period at Mar. 31, 2019 | 2,527,803 | 1,475 | 1,106,797 | 9,373 | 1,410,158 | 0 |
Stockholders equity, beginning of period at Dec. 31, 2019 | 2,984,845 | 1,476 | 1,118,655 | 56,187 | 1,808,527 | 0 |
Changes in Stockholders' Equity | ||||||
Issuance of management incentive shares | 5 | (5) | ||||
Cancellation of treasury stock | (2) | (6,304) | 6,306 | |||
Dividends and dividend equivalents declared | 160 | (15,854) | ||||
Stock-based compensation expense | 4,780 | |||||
Other comprehensive (loss) income | (10,074) | (10,074) | ||||
Net income | 149,523 | 149,523 | ||||
Treasury stock acquired | (6,306) | |||||
Stockholders equity, end of period at Mar. 31, 2020 | $ 3,107,074 | $ 1,479 | $ 1,117,286 | $ 46,113 | $ 1,942,196 | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Activities | ||
Net income | $ 149,523 | $ 127,720 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on the sale of investments, net | (3,135) | (660) |
Equity in net loss (income) of other invested assets | 96 | 159 |
Distribution of income from other invested assets | 339 | 0 |
Depreciation and amortization | 878 | 901 |
Stock-based compensation expense | 4,780 | 4,100 |
Amortization of premium on investment securities | 5,840 | 3,551 |
Deferred income tax provision | 17,047 | 15,447 |
Change in: | ||
Accrued investment income | (37) | (549) |
Accounts receivable | 805 | (1,319) |
Deferred policy acquisition costs | 558 | 392 |
Other assets | (2,877) | 2,370 |
Reserve for losses and LAE | 3,979 | 4,020 |
Unearned premium reserve | (14,753) | (147) |
Other accrued liabilities | 88 | (17,303) |
Net cash provided by operating activities | 163,131 | 138,682 |
Investing Activities | ||
Net change in short-term investments | (279,803) | (56,422) |
Purchase of investments available for sale | (294,746) | (192,530) |
Proceeds from maturity of investments available for sale | 29,472 | 17,014 |
Proceeds from sales of investments available for sale | 159,127 | 79,714 |
Purchase of other invested assets | (2,310) | (1,983) |
Return of investment from other invested assets | 7,300 | 179 |
Purchase of property and equipment | (466) | (1,011) |
Net cash used in investing activities | (381,426) | (155,039) |
Financing Activities | ||
Credit facility borrowings | 200,000 | 0 |
Treasury stock acquired | (6,306) | (8,100) |
Dividends paid | (15,694) | 0 |
Net cash provided by (used in) financing activities | 178,000 | (8,100) |
Net decrease in cash | (40,295) | (24,457) |
Cash at beginning of year | 71,350 | 64,946 |
Cash at end of period | 31,055 | 40,489 |
Supplemental Disclosure of Cash Flow Information | ||
Income tax payments | 0 | (5) |
Interest payments | $ (1,641) | $ (2,532) |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Essent Group Ltd. (“ Essent Group ”) is a Bermuda-based holding company, which, through its wholly-owned subsidiaries, offers private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Mortgage insurance facilitates the sale of low down payment (generally less than 20% ) mortgage loans into the secondary mortgage market, primarily to two government-sponsored enterprises (“ GSEs ”), Fannie Mae and Freddie Mac . The primary mortgage insurance operations are conducted through Essent Guaranty, Inc. (“Essent Guaranty”), a wholly-owned subsidiary approved as a qualified mortgage insurer by the GSEs and is licensed to write mortgage insurance in all 50 states and the District of Columbia. Essent Guaranty reinsures 25% of new insurance written to Essent Reinsurance Ltd. (“Essent Re”), an affiliated Bermuda domiciled Class 3A Insurer licensed pursuant to Section 4 of the Bermuda Insurance Act 1978 that provides insurance and reinsurance coverage of mortgage credit risk. Essent Re also provides insurance and reinsurance to Freddie Mac and Fannie Mae. In 2016, Essent Re formed Essent Agency (Bermuda) Ltd., a wholly-owned subsidiary, which provides underwriting consulting services to third-party reinsurers. In accordance with certain state law requirements then in effect, Essent Guaranty also reinsures that portion of the risk that is in excess of 25% of the mortgage balance with respect to loans insured prior to April 1, 2019, after consideration of other reinsurance, to Essent Guaranty of PA, Inc. (“Essent PA”), an affiliate. In addition to offering mortgage insurance, we provide contract underwriting services on a limited basis through CUW Solutions, LLC ("CUW Solutions"), a Delaware limited liability company, that provides, among other things, mortgage contract underwriting services to lenders and mortgage insurance underwriting services to affiliates. We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). We have condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“ GAAP ”) pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair statement of financial position, results of operations and cash flows for the interim periods presented. These statements should be read in conjunction with the consolidated financial statements and notes thereto, including Note 1 and Note 2 to the consolidated financial statements, included in our Annual Report on Form 10-K for the year ended December 31, 2019 , which discloses the principles of consolidation and a summary of significant accounting policies. The results of operations for the interim periods are not necessarily indicative of the results for the full year. We evaluated the need to recognize or disclose events that occurred subsequent to March 31, 2020 prior to the issuance of these condensed consolidated financial statements. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Accounting Standards Adopted During 2020 In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) . This update is intended to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected through the use of an allowance for credit losses. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance rather than as a write-down of the amortized cost of the securities. The accounting for insurance losses and loss adjustment expenses ("LAE") are not within the scope of this ASU. The provisions of this update were effective for annual and interim periods beginning after December 15, 2019 and we adopted this standard on January 1, 2020 using the modified retrospective approach. The adoption of this ASU did not have a material effect on the Company's consolidated operating results or financial position. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The provisions of this update were effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for the removed disclosures. We adopted this standard on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. Accounting Standards Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The amendments in this update provide temporary optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform. It provides optional expedients and exceptions for applying generally accepted accounting principles to contract, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective as of March 12, 2020 through December 31, 2022. The Company is evaluating the impact the adoption of this ASU will have on our consolidated operating results and financial position. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Investments available for sale consist of the following : March 31, 2020 (In thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury securities $ 224,192 $ 11,373 $ — $ 235,565 U.S. agency securities 33,614 278 — 33,892 U.S. agency mortgage-backed securities 838,547 37,865 (114 ) 876,298 Municipal debt securities (1) 398,245 23,497 (2,054 ) 419,688 Non-U.S. government securities 51,937 1,504 (1,232 ) 52,209 Corporate debt securities (2) 880,944 15,992 (17,433 ) 879,503 Residential and commercial mortgage securities 281,061 6,596 (12,125 ) 275,532 Asset-backed securities 352,637 644 (15,606 ) 337,675 Money market funds 595,173 — (8 ) 595,165 Total investments available for sale $ 3,656,350 $ 97,749 $ (48,572 ) $ 3,705,527 December 31, 2019 (In thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury securities $ 239,087 $ 3,526 $ (407 ) $ 242,206 U.S. agency securities 33,620 36 (51 ) 33,605 U.S. agency mortgage-backed securities 836,710 13,956 (2,332 ) 848,334 Municipal debt securities (1) 339,511 22,245 (118 ) 361,638 Non-U.S. government securities 52,230 2,812 (47 ) 54,995 Corporate debt securities (2) 856,638 24,255 (592 ) 880,301 Residential and commercial mortgage securities 282,840 6,542 (1,101 ) 288,281 Asset-backed securities 326,589 857 (1,421 ) 326,025 Money market funds 315,360 2 — 315,362 Total investments available for sale $ 3,282,585 $ 74,231 $ (6,069 ) $ 3,350,747 March 31, December 31, (1) The following table summarizes municipal debt securities as of : 2020 2019 Special revenue bonds 73.7 % 74.5 % General obligation bonds 22.6 21.3 Certificate of participation bonds 3.0 3.4 Tax allocation bonds 0.7 0.8 Total 100.0 % 100.0 % March 31, December 31, (2) The following table summarizes corporate debt securities as of : 2020 2019 Financial 34.1 % 34.4 % Consumer, non-cyclical 20.3 20.1 Communications 11.3 10.3 Consumer, cyclical 7.9 7.6 Energy 7.3 8.3 Utilities 6.7 6.2 Technology 5.0 4.8 Basic materials 3.8 4.1 Industrial 3.6 4.2 Total 100.0 % 100.0 % The amortized cost and fair value of investments available for sale at March 31, 2020 , by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most U.S. agency mortgage-backed securities, residential and commercial mortgage securities and asset-backed securities provide for periodic payments throughout their lives, they are listed below in separate categories . (In thousands) Amortized Cost Fair Value U.S. Treasury securities: Due in 1 year $ 72,085 $ 72,752 Due after 1 but within 5 years 84,353 89,094 Due after 5 but within 10 years 66,770 72,529 Due after 10 years 984 1,190 Subtotal 224,192 235,565 U.S. agency securities: Due in 1 year 21,074 21,125 Due after 1 but within 5 years 12,540 12,767 Subtotal 33,614 33,892 Municipal debt securities: Due in 1 year 589 561 Due after 1 but within 5 years 33,841 35,210 Due after 5 but within 10 years 205,608 216,334 Due after 10 years 158,207 167,583 Subtotal 398,245 419,688 Non-U.S. government securities: Due in 1 year — — Due after 1 but within 5 years 22,261 22,575 Due after 5 but within 10 years 24,229 24,941 Due after 10 years 5,447 4,693 Subtotal 51,937 52,209 Corporate debt securities: Due in 1 year 150,962 151,107 Due after 1 but within 5 years 429,020 432,300 Due after 5 but within 10 years 277,323 274,528 Due after 10 years 23,639 21,568 Subtotal 880,944 879,503 U.S. agency mortgage-backed securities 838,547 876,298 Residential and commercial mortgage securities 281,061 275,532 Asset-backed securities 352,637 337,675 Money market funds 595,173 595,165 Total investments available for sale $ 3,656,350 $ 3,705,527 Gross gains and losses realized on the sale of investments available for sale were as follows: Three Months Ended March 31, (In thousands) 2020 2019 Realized gross gains $ 3,262 $ 671 Realized gross losses 127 11 The fair value of investments available for sale in an unrealized loss position and the related unrealized losses were as follows : Less than 12 months 12 months or more Total March 31, 2020 (In thousands) Fair Gross Fair Gross Fair Gross U.S. agency mortgage-backed securities 14,136 (63 ) 2,265 (51 ) 16,401 (114 ) Municipal debt securities 48,622 (2,053 ) 627 (1 ) 49,249 (2,054 ) Non-U.S. government securities 10,302 (1,232 ) — — 10,302 (1,232 ) Corporate debt securities 331,951 (17,431 ) 1,423 (2 ) 333,374 (17,433 ) Residential and commercial mortgage securities 120,241 (11,323 ) 3,011 (802 ) 123,252 (12,125 ) Asset-backed securities 213,185 (9,029 ) 69,388 (6,577 ) 282,573 (15,606 ) Money market funds 20,545 (8 ) — — 20,545 (8 ) Total $ 758,982 $ (41,139 ) $ 76,714 $ (7,433 ) $ 835,696 $ (48,572 ) Less than 12 months 12 months or more Total December 31, 2019 (In thousands) Fair Gross Fair Gross Fair Gross U.S. Treasury securities $ 29,013 $ (331 ) $ 42,981 $ (76 ) $ 71,994 $ (407 ) U.S. agency securities — — 25,605 (51 ) 25,605 (51 ) U.S. agency mortgage-backed securities 101,684 (1,042 ) 113,866 (1,290 ) 215,550 (2,332 ) Municipal debt securities 10,651 (112 ) 624 (6 ) 11,275 (118 ) Non-U.S. government securities 9,664 (47 ) — — 9,664 (47 ) Corporate debt securities 83,013 (576 ) 14,531 (16 ) 97,544 (592 ) Residential and commercial mortgage securities 59,341 (1,059 ) 3,442 (42 ) 62,783 (1,101 ) Asset-backed securities 78,813 (202 ) 109,536 (1,219 ) 188,349 (1,421 ) Total $ 372,179 $ (3,369 ) $ 310,585 $ (2,700 ) $ 682,764 $ (6,069 ) At March 31, 2020 and December 31, 2019 , we held 601 and 365 individual investment securities, respectively, that were in an unrealized loss position. We assess our intent to sell these securities and whether we will be required to sell these securities before the recovery of their amortized cost basis when determining whether to record an impairment on the securities in an unrealized loss position. In assessing whether the decline in the fair value at March 31, 2020 of any of these securities resulted from a credit loss or other factors, we made inquiries of our investment managers to determine that each issuer was current on its scheduled interest and principal payments. We reviewed the credit rating of these securities noting that over 98% of the securities at March 31, 2020 had investment grade ratings. For certain mortgage and asset-backed securities, we reviewed the available credit enhancement for the security, noting that each lot reviewed had enhancement available in the form of subordinated tranches and concluded that a credit loss had not been incurred as of March 31, 2020 . For certain corporate debt securities, we obtained the current business outlook for the issuers from our investment managers, including whether an issuer's ability to make scheduled principal and interest payments had been impaired as of March 31, 2020 . For the issuers reviewed, we concluded that their ability to make their scheduled principal and interest payments was not impaired as of March 31, 2020 and that a credit loss had not been incurred. Accordingly, we concluded that the decline in the market values experienced at March 31, 2020 was largely due to widening of credit spreads associated with COVID-19 along with a decline in trading activity for certain security types rather than due to credit impairment. To support our assessment, we obtained April 2020 fair values for the securities individually reviewed, noting that the fair value of virtually all those reviewed had increased since March 31, 2020 . There was no other-than-temporary impairment recorded by the Company in the three months ended March 31, 2019 . The Company's other invested assets at March 31, 2020 and December 31, 2019 totaled $75.4 million and $78.9 million , respectively. Other invested assets are comprised of limited partnership interests which are accounted for under the equity method of accounting with changes in value reported in other income. Due to the timing of receiving financial information from these partnerships, the results are generally reported on a one month or quarter lag. The fair value of investments deposited with insurance regulatory authorities to meet statutory requirements was $9.9 million at March 31, 2020 and $9.4 million at December 31, 2019 . In connection with its insurance and reinsurance activities, Essent Re is required to maintain assets in trusts for the benefit of its contractual counterparties. The fair value of the investments on deposit in these trusts was $872.7 million at March 31, 2020 and $805.5 million at December 31, 2019 . Essent Guaranty is required to maintain assets on deposit in connection with its fully collateralized reinsurance agreements (see Note 4 ). The fair value of the assets on deposit was $8.5 million at March 31, 2020 and $6.4 million at December 31, 2019 . Essent Guaranty is also required to maintain assets on deposit for the benefit of the sponsor of a fixed income investment commitment. The fair value of the assets on deposit was $6.4 million at March 31, 2020 and $6.4 million at December 31, 2019 . Net investment income consists of: Three Months Ended March 31, (In thousands) 2020 2019 Fixed maturities $ 20,614 $ 19,743 Short-term investments 1,122 1,058 Gross investment income 21,736 20,801 Investment expenses (1,103 ) (921 ) Net investment income $ 20,633 $ 19,880 |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2020 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance In the ordinary course of business, our insurance subsidiaries may use reinsurance to provide protection against adverse loss experience and to expand our capital sources. Reinsurance recoverables are recorded as assets, predicated on a reinsurer's ability to meet their obligations under the reinsurance agreements. If the reinsurers are unable to satisfy their obligations under the agreements, our insurance subsidiaries would be liable for such defaulted amounts. The effect of reinsurance on net premiums written and earned is as follows: Three Months Ended (In thousands) 2020 2019 Net premiums written: Direct $ 205,980 $ 183,682 Ceded (1) (14,237 ) (6,038 ) Net premiums written $ 191,743 $ 177,644 Net premiums earned: Direct $ 220,733 $ 183,829 Ceded (1) (14,237 ) (6,038 ) Net premiums earned $ 206,496 $ 177,791 (1) Net of profit commission. Quota Share Reinsurance Effective September 1, 2019, Essent Guaranty entered into a quota share reinsurance agreement with a panel of third-party reinsurers (the "QSR Agreement"). Each of the third-party reinsurers has an insurer financial strength rating of A or better by S&P Global Ratings, A.M. Best or both. Under the QSR Agreement, Essent Guaranty will cede premiums earned related to 40% of risk on eligible single premium policies and 20% of risk on all other eligible policies written September 1, 2019 through December 31, 2020, in exchange for reimbursement of ceded claims and claims expenses on covered policies, a 20% ceding commission, and a profit commission of up to 60% that varies directly and inversely with ceded claims. The QSR Agreement is scheduled to terminate on December 31, 2030. Essent Guaranty has certain termination rights under the QSR Agreement, including the option to terminate the QSR Agreement with no termination fee on December 31, 2021, and the option, subject to a termination fee, to terminate the QSR Agreement on December 31, 2022, or annually thereafter. Should Essent Guaranty not exercise its option to terminate the QSR Agreement on December 31, 2021, the maximum profit commission that Essent Guaranty could earn would increase to 63% in 2022 and thereafter. RIF ceded under the QSR Agreement was $1.9 billion as of March 31, 2020 . Excess of Loss Reinsurance Essent Guaranty has entered into fully collateralized reinsurance agreements ("Radnor Re Transactions") with unaffiliated special purpose insurers domiciled in Bermuda. For the reinsurance coverage periods, Essent Guaranty and its affiliates retain the first layer of the respective aggregate losses, and a Radnor Re special purpose insurer will then provide second layer coverage up to the outstanding reinsurance coverage amount. Essent Guaranty and its affiliates retain losses in excess of the outstanding reinsurance coverage amount. The reinsurance premium due to each Radnor Re special purpose insurer is calculated by multiplying the outstanding reinsurance coverage amount at the beginning of a period by a coupon rate, which is the sum of one-month LIBOR plus a risk margin, and then subtracting actual investment income collected on the assets in the related reinsurance trust during that period. The aggregate excess of loss reinsurance coverage decreases over a ten -year period as the underlying covered mortgages amortize. Essent Guaranty has rights to terminate the Radnor Re Transactions. The Radnor Re entities collateralized the coverage by issuing mortgage insurance-linked notes ("ILNs") in an aggregate amount equal to the initial coverage to unaffiliated investors. The notes have ten -year legal maturities and are non-recourse to any assets of Essent Guaranty or its affiliates. The proceeds of the notes were deposited into reinsurance trusts for the benefit of Essent Guaranty and will be the source of reinsurance claim payments to Essent Guaranty and principal repayments on the ILNs. Essent Guaranty has also entered into reinsurance agreements with panels of reinsurers that provide aggregate excess of loss coverage immediately above or pari-passu to the coverage provided by the Radnor Re Transactions. The aggregate excess of loss reinsurance coverage decreases over a ten -year period as the underlying covered mortgages amortize. Essent Guaranty has rights to terminate these reinsurance agreements. The following table summarizes Essent Guaranty's excess of loss reinsurance agreements as of March 31, 2020 : Vintage Year Reinsurer Effective Date Optional Termination Date 2015 & 2016 Radnor Re 2019-2 Ltd. June 20, 2019 June 25, 2024 2017 Radnor Re 2018-1 Ltd. March 22, 2018 March 25, 2023 (1) 2017 Panel of Reinsurers November 1, 2018 October 1, 2023 (2) 2018 Radnor Re 2019-1 Ltd. February 28, 2019 February 25, 2026 2018 Panel of Reinsurers February 28, 2019 February 25, 2026 2019 Radnor Re 2020-1 Ltd. January 30, 2020 January 25, 2027 2019 Panel of Reinsurers January 30, 2020 January 25, 2027 (1) If the reinsurance agreement is not terminated at the optional termination date, the risk margin component of the reinsurance premium increases by 50% . (2) If the reinsurance agreement is not terminated at the optional termination date, the reinsurance premium increases by 50% . The following table summarizes Essent Guaranty's excess of loss reinsurance coverages and retentions as of March 31, 2020 : (In thousands) Remaining Reinsurance in Force Vintage Year Remaining Insurance in Force Remaining Risk in Force ILN Other Reinsurance Total Remaining 2015 & 2016 $ 25,025,497 $ 6,762,026 $ 244,105 $ — $ 244,105 $ 208,111 2017 26,279,318 6,665,183 280,180 165,167 (4) 445,347 221,852 2018 31,375,687 7,923,964 377,509 87,941 (5) 465,450 253,081 2019 (3) 34,916,398 8,826,958 495,889 55,102 (6) 550,991 215,605 Total $ 117,596,900 $ 30,178,131 $ 1,397,683 $ 308,210 $ 1,705,893 $ 898,649 (3) Reinsurance coverage on new insurance written from January 1, 2019 through August 31, 2019. (4) Coverage provided immediately above the coverage provided by Radnor Re 2018-1 Ltd. (5) Coverage provided pari-passu to the coverage provided by Radnor Re 2019-1 Ltd. (6) Coverage provided pari-passu to the coverage provided by Radnor Re 2020-1 Ltd. The amount of monthly reinsurance premium ceded to the Radnor Re entities will fluctuate due to changes in one-month LIBOR and changes in money market rates that affect investment income collected on the assets in the reinsurance trusts. As the reinsurance premium will vary based on changes in these rates, we concluded that the Radnor Re Transactions contain embedded derivatives that will be accounted for separately like freestanding derivatives. In connection with the Radnor Re Transactions, we concluded that the risk transfer requirements for reinsurance accounting were met as each Radnor Re entity is assuming significant insurance risk and a reasonable possibility of a significant loss. In addition, we assessed whether each Radnor Re entity was a variable interest entity ("VIE") and the appropriate accounting for the Radnor Re entities if they were VIEs. A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity. A VIE is consolidated by its primary beneficiary. The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of the decision-making ability and ability to influence activities that significantly affect the economic performance of the VIE. We concluded that the Radnor Re entities are VIEs. However, given that Essent Guaranty (1) does not have the unilateral power to direct the activities that most significantly affect their economic performance and (2) does not have the obligation to absorb losses or the right to receive benefits that could be potentially significant to these entities, the Radnor Re entities are not consolidated in these financial statements. The following table presents total assets of each Radnor Re special purpose insurer as well as our maximum exposure to loss associated with each Radnor Re entity, representing the fair value of the embedded derivative included in other assets (other accrued liabilities) on our condensed consolidated balance sheet and the estimated net present value of investment earnings on the assets in the reinsurance trust, each as of March 31, 2020 : Maximum Exposure to Loss (In thousands) Total VIE Assets On - Balance Sheet Off - Balance Sheet Total Radnor Re 2018-1 Ltd. $ 280,180 $ 169 $ 1,580 $ 1,749 Radnor Re 2019-1 Ltd. 377,509 (2,441 ) 1,967 (474 ) Radnor Re 2019-2 Ltd. 244,105 (1,771 ) 1,210 (561 ) Radnor Re 2020-1 Ltd. 495,889 (1,918 ) 6,059 4,141 Total $ 1,397,683 $ (5,961 ) $ 10,816 $ 4,855 |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 3 Months Ended |
Mar. 31, 2020 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Reserve for Losses and Loss Adjustment Expenses | Reserve for Losses and Loss Adjustment Expenses The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“ LAE ”) for the three months ended March 31 : ($ in thousands) 2020 2019 Reserve for losses and LAE at beginning of period $ 69,362 $ 49,464 Less: Reinsurance recoverables 71 — Net reserve for losses and LAE at beginning of period 69,291 49,464 Add provision for losses and LAE, net of reinsurance, occurring in: Current period 15,419 11,828 Prior years (7,356 ) (4,721 ) Net incurred losses and LAE during the current period 8,063 7,107 Deduct payments for losses and LAE, net of reinsurance, occurring in: Current period 1 15 Prior years 4,110 3,072 Net loss and LAE payments during the current period 4,111 3,087 Net reserve for losses and LAE at end of period 73,243 53,484 Plus: Reinsurance recoverables 98 — Reserve for losses and LAE at end of period $ 73,341 $ 53,484 Loans in default at end of period 5,841 4,096 For the three months ended March 31, 2020 , $4.1 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There has been a $7.4 million favorable prior year development during the three months ended March 31, 2020 . Reserves remaining as of March 31, 2020 for prior years are $57.8 million as a result of re-estimation of unpaid losses and loss adjustment expenses. For the three months ended March 31, 2019 , $3.1 million was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There was a $4.7 million favorable prior year development during the three months ended March 31, 2019 . Reserves remaining as of March 31, 2019 for prior years were $41.7 million as a result of re-estimation of unpaid losses and loss adjustment expenses. In both periods, the favorable prior years' loss development was the result of a re-estimation of amounts ultimately to be paid on prior year defaults in the default inventory, including the impact of previously identified defaults that cured. Original estimates are increased or decreased as additional information becomes known regarding individual claims. Due to business restrictions, stay-at-home orders and travel restrictions implemented as a result of COVID-19, unemployment in the United States has increased significantly. As unemployment is one of the most common reasons for borrowers to default on their mortgage, the increase in unemployment has the potential to increase the number of delinquencies and claim frequencies on the mortgages we insure. We expect to experience increased defaults beginning in the second quarter of 2020. COVID-19 has not materially affected our reserves as of March 31, 2020. The impact on our reserves in future periods will be dependent upon the amount of borrowers that default on their mortgage, our expectations at each reporting date for the losses we will experience on those delinquencies and the ultimate claims we pay. |
Debt Obligations
Debt Obligations | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations Credit Facility Essent Group and its subsidiaries, Essent Irish Intermediate Holdings Limited and Essent US Holdings, Inc. (collectively, the "Borrowers"), are parties to a secured credit facility (the “Credit Facility”) with committed capacity of $500 million . The Credit Facility provides for a $275 million revolving credit facility, $225 million of term loans and a $100 million uncommitted line that may be exercised at the Borrowers’ option so long as the Borrowers receive commitments from the lenders. Borrowings under the Credit Facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to Essent’s insurance and reinsurance subsidiaries. Borrowings accrue interest at a floating rate tied to a standard short-term borrowing index, selected at the Company’s option, plus an applicable margin. A commitment fee is due quarterly on the average daily amount of the undrawn revolving commitment. The applicable margin and the commitment fee are based on the senior unsecured debt rating or long-term issuer rating of Essent Group to the extent available, or the insurer financial strength rating of Essent Guaranty. The annual commitment fee rate at March 31, 2020 was 0.25% . The obligations under the Credit Facility are secured by certain assets of the Borrowers, excluding the stock and assets of its insurance and reinsurance subsidiaries. The Credit Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and Essent Guaranty's compliance with the PMIERs (see Note 14 ). The borrowings under the Credit Facility contractually mature on May 17, 2021. As of March 31, 2020 , the Company was in compliance with the covenants and $425 million had been borrowed under the Credit Facility with a weighted average interest rate of 2.87% . As of December 31, 2019 , $225 million had been borrowed with a weighted average interest rate of 3.51% . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Obligations under Guarantees Under the terms of CUW Solutions' contract underwriting agreements with lenders and subject to contractual limitations on liability, we agree to indemnify certain lenders against losses incurred in the event that we make an error in determining whether loans processed meet specified underwriting criteria, to the extent that such error materially restricts or impairs the salability of such loan, results in a material reduction in the value of such loan or results in the lender repurchasing the loan. The indemnification may be in the form of monetary or other remedies. We paid less than $0.1 million related to remedies for each of the three months ended March 31, 2020 and 2019 , respectively. As of March 31, 2020 , management believes any potential claims for indemnification related to contract underwriting services through March 31, 2020 are not material to our consolidated financial position or results of operations. In addition to the indemnifications discussed above, in the normal course of business, we enter into agreements or other relationships with third parties pursuant to which we may be obligated under specified circumstances to indemnify the counterparties with respect to certain matters. Our contractual indemnification obligations typically arise in the context of agreements entered into by us to, among other things, purchase or sell services, finance our business and business transactions, lease real property and license intellectual property. The agreements we enter into in the normal course of business generally require us to pay certain amounts to the other party associated with claims or losses if they result from our breach of the agreement, including the inaccuracy of representations or warranties. The agreements we enter into may also contain other indemnification provisions that obligate us to pay amounts upon the occurrence of certain events, such as the negligence or willful misconduct of our employees, infringement of third-party intellectual property rights or claims that performance of the agreement constitutes a violation of law. Generally, payment by us under an indemnification provision is conditioned upon the other party making a claim, and typically we can challenge the other party’s claims. Further, our indemnification obligations may be limited in time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us under an indemnification agreement or obligation. As of March 31, 2020 , contingencies triggering material indemnification obligations or payments have not occurred historically and are not expected to occur. The nature of the indemnification provisions in the various types of agreements and relationships described above are believed to be low risk and pervasive, and we consider them to have a remote risk of loss or payment. We have not recorded any provisions on the condensed consolidated balance sheets related to indemnifications. Commitments We lease office space for use in our operations under leases accounted for as operating leases. These leases generally include options to extend them for periods of up to ten years . Our option to extend the term of our primary office locations at the greater of existing or prevailing market rates was not recognized in our right-of-use asset and lease liability. When establishing the value of our right-of-use asset and lease liability, we determine the discount rate for the underlying leases using the prevailing market interest rate for a borrowing of the same duration of the lease plus the risk premium inherent in the borrowings under our Credit Facility. Operating lease right-of-use assets of $9.5 million and $10.0 million as of March 31, 2020 and December 31, 2019 , respectively, are reported on our consolidated balance sheet as property and equipment. Operating lease liabilities of $11.9 million and $12.6 million as of March 31, 2020 and December 31, 2019 , respectively, are reported on our consolidated balance sheet as other accrued liabilities. Total rent expense was $0.7 million and $0.6 million for the three months ended March 31, 2020 and 2019 , respectively. The following table presents lease cost and other lease information for the three months ended March 31, 2020 and 2019 : Three Months Ended ($ in thousands) 2020 2019 Lease cost: Operating lease cost $ 700 $ 591 Short-term lease cost 5 42 Sublease income (33 ) (32 ) Total lease cost $ 672 $ 601 Other information: Weighted average remaining lease term - operating leases 4.5 years 5.5 years Weighted average discount rate - operating leases 4.0 % 4.1 % The following table presents a maturity analysis of our lease liabilities as follows at March 31, 2020 : (In thousands) 2020 (April 1 through December 31) $ 2,229 2021 2,999 2022 3,003 2023 2,752 2024 1,334 2025 and thereafter 793 Total lease payments to be paid 13,110 Less: Future interest expense (1,173 ) Present value of lease liabilities $ 11,937 |
Capital Stock
Capital Stock | 3 Months Ended |
Mar. 31, 2020 | |
Capital [Abstract] | |
Capital Stock | Capital Stock Dividends In February 2020, the Board of Directors declared a quarterly cash dividend of $0.16 per common share which was paid on March 20, 2020. In May 2020, the Board of Directors declared a quarterly cash dividend of $0.16 per common share payable on June 12, 2020, to shareholders of record on June 2, 2020. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation In connection with the IPO in 2013, Essent Group's Board of Directors adopted, and Essent Group's shareholders approved, the Essent Group Ltd. 2013 Long-Term Incentive Plan (the "2013 Plan"), which was effective upon completion of the initial public offering. The types of awards available under the 2013 Plan include nonvested shares, nonvested share units, non- qualified share options, incentive stock options, share appreciation rights, and other share-based or cash-based awards. Nonvested shares and nonvested share units granted under the 2013 Plan have rights to dividends, which entitle holders to the same dividend value per share as holders of common shares in the form of dividend equivalent units ("DEUs"). DEUs are subject to the same vesting and other terms and conditions as the corresponding nonvested shares and nonvested share units. DEUs vest when the underlying shares or share units vest and are forfeited if the underlying share or share units forfeit prior to vesting. The following table summarizes nonvested common share, nonvested common share unit and DEU activity for the three months ended March 31, 2020 : Time and Performance- Based Share Awards Time-Based Share Awards Share Units DEUs (Shares in thousands) Number of Shares Weighted Number of Shares Weighted Average Grant Date Fair Value Number of Share Units Weighted Dividend Equivalent Units Weighted Outstanding at beginning of year 394 $ 42.02 169 $ 41.31 351 $ 39.78 5 $ 51.11 Granted 109 51.52 69 51.52 312 51.50 6 26.83 Vested (140 ) 36.29 (85 ) 40.47 (169 ) 36.70 (2 ) 51.11 Forfeited — N/A — N/A (8 ) 49.23 — 42.06 Outstanding at March 31, 2020 363 $ 47.09 153 $ 46.34 486 $ 48.21 9 $ 35.02 In February 2020, certain members of senior management were granted nonvested common shares under the Essent Group Ltd. 2013 Long-Term Incentive Plan ("2013 Plan") that were subject to time-based and performance-based vesting. The time-based share awards granted in February 2020 vest in three equal installments on March 1, 2021, 2022 and 2023. The performance-based share awards granted in February 2020 vest based upon our compounded annual book value per share growth percentage during a three -year performance period that commenced on January 1, 2020 and vest on March 1, 2023. The portion of these nonvested performance-based share awards that will be earned based upon the achievement of compounded annual book value per share growth is as follows: Performance level Compounded Annual Book Value Nonvested Common <13 % 0 % Threshold 13 % 10 % 14 % 35 % 15 % 60 % 16 % 85 % Maximum ≥17 % 100 % In the event that the compounded annual book value per share growth falls between the performance levels shown above, the nonvested common shares earned will be determined on a straight-line basis between the respective levels shown. In January 2020, time-based share units were issued to all vice president and staff level employees and vest in three equal installments on January 2021, 2022 and 2023. In connection with our incentive program covering bonus awards for performance year 2019, in February 2020, time-based share units were issued to certain employees that vest in three equal installments on March 1, 2021, 2022 and 2023. In May 2020, 38,128 time-based share units were granted to non-employee directors that vest one year from the date of grant. The total fair value on the vesting date of nonvested shares, share units or DEUs that vested was $17.8 million and $22.0 million for the three months ended March 31, 2020 and 2019 , respectively. As of March 31, 2020 , there was $37.5 million of total unrecognized compensation expense related to nonvested shares or share units outstanding at March 31, 2020 and we expect to recognize the expense over a weighted average period of 2.4 years. Employees have the option to tender shares to Essent Group to pay the minimum employee statutory withholding taxes associated with shares upon vesting. Common shares tendered by employees to pay employee withholding taxes totaled 139,853 in the three months ended March 31, 2020 . The tendered shares were recorded at cost and included in treasury stock. All treasury stock has been cancelled as of March 31, 2020 . Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares was as follows: Three Months Ended March 31, (In thousands) 2020 2019 Compensation expense $ 4,780 $ 4,100 Income tax benefit 918 765 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes As of March 31, 2020 , the statutory income tax rates of the countries where the Company does business are 21% in the United States and 0.0% in Bermuda. The statutory income tax rate of each country is applied against the taxable income from each country to calculate the income tax expense. For the three months ended March 31, 2020 , our provision for income taxes was not based on an estimated annual effective rate due to uncertainty regarding the potential impacts of COVID-19 on our results of operations. Due to that uncertainty, we were unable to make a reliable estimate of pretax income and the annual effective tax rate for the full year 2020. Accordingly, the provision for income taxes for the three months ended March 31, 2020 was based on the actual effective tax rate for the year to date period. Income tax expense consists of the following components: Three Months Ended March 31, (In thousands) 2020 2019 Current $ 10,128 $ 6,552 Deferred 17,047 15,447 Total income tax expense $ 27,175 $ 21,999 Income tax expense is different from that which would be obtained by applying the applicable statutory income tax rates to income before taxes by jurisdiction (i.e. U.S. 21% ; Bermuda 0.0% ). The reconciliation of the difference between income tax expense and the expected tax provision at the weighted average tax rate was as follows: Three Months Ended March 31, 2020 2019 ($ in thousands) $ % of pretax income $ % of pretax income Tax provision at weighted average statutory rates $ 27,376 15.5 % $ 23,938 16.0 % Non-deductible expenses 714 0.4 324 0.2 Excess tax benefits from stock-based compensation (620 ) (0.3 ) (1,956 ) (1.3 ) Tax exempt interest, net of proration (342 ) (0.2 ) (443 ) (0.3 ) Other 47 0.0 136 0.1 Total income tax expense $ 27,175 15.4 % $ 21,999 14.7 % We provide deferred taxes to reflect the estimated future tax effects of the differences between the financial statement and tax bases of assets and liabilities using currently enacted tax laws. The net deferred tax liability was comprised of the following: March 31, December 31, (In thousands) 2020 2019 Deferred tax assets $ 27,863 $ 29,392 Deferred tax liabilities (287,551 ) (279,012 ) Net deferred tax liability $ (259,688 ) $ (249,620 ) The components of the net deferred tax liability were as follows: March 31, December 31, (In thousands) 2020 2019 Contingency reserves $ (277,496 ) $ (261,855 ) Unearned premium reserve 15,897 16,641 Unrealized (gain) loss on investments (6,235 ) (13,214 ) Accrued expenses 4,065 3,391 Deferred policy acquisition costs (3,181 ) (3,298 ) Unearned ceding commissions 3,066 3,227 Fixed assets 1,383 1,502 Start-up expenditures, net 1,342 1,410 Change in fair market value of derivatives 1,252 370 Loss reserves 440 416 Nonvested shares 410 2,426 Investments in limited partnerships (400 ) (400 ) Prepaid expenses (131 ) (132 ) Loss reserves - TCJA transition adjustment (108 ) (113 ) Organizational expenditures 8 9 Net deferred tax liability $ (259,688 ) $ (249,620 ) As a mortgage guaranty insurer, we are eligible for a tax deduction, subject to certain limitations, under Section 832(e) of the IRC for amounts required by state law or regulation to be set aside in statutory contingency reserves. The deduction is allowed only to the extent that we purchase non-interest-bearing United States Mortgage Guaranty Tax and Loss Bonds ("T&L Bonds") issued by the Treasury Department in an amount equal to the tax benefit derived from deducting any portion of our statutory contingency reserves. During the three months ended March 31, 2020 , we had no t purchased or sold any T&L Bonds and for the year ended December 31, 2019 , we had a net purchases of T&L Bonds in the amount of $59.5 million . As of March 31, 2020 and December 31, 2019 , we held $261.9 million of T&L Bonds. In evaluating our ability to realize the benefit of our deferred tax assets, we consider the relevant impact of all available positive and negative evidence including our past operating results and our forecasts of future taxable income. At March 31, 2020 and December 31, 2019 |
Earnings per Share (EPS)
Earnings per Share (EPS) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share (EPS) | Earnings per Share (EPS) The following table reconciles the net income and the weighted average common shares outstanding used in the computations of basic and diluted earnings per common share: Three Months Ended (In thousands, except per share amounts) 2020 2019 Net income $ 149,523 $ 127,720 Basic weighted average shares outstanding 97,949 97,595 Dilutive effect of nonvested shares 377 509 Diluted weighted average shares outstanding 98,326 98,104 Basic earnings per share $ 1.53 $ 1.31 Diluted earnings per share $ 1.52 $ 1.30 There were 353,230 and 142,642 antidilutive shares for the three months ended March 31, 2020 and 2019 , respectively. The nonvested performance-based share awards are considered contingently issuable for purposes of the EPS calculation. Based on the compounded annual book value per share growth as of March 31, 2020 and 2019 , 100% of the performance-based share awards would be issuable under the terms of the arrangements at each date if March 31 was the end of the contingency period. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table presents the rollforward of accumulated other comprehensive income (loss) for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, 2020 2019 (In thousands) Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax Balance at beginning of period $ 69,401 $ (13,214 ) $ 56,187 $ (33,276 ) $ 4,283 $ (28,993 ) Other comprehensive income (loss): Unrealized holding gains (losses) on investments: Unrealized holding gains (losses) arising during the period (13,918 ) 6,403 (7,515 ) 46,977 (8,071 ) 38,906 Less: Reclassification adjustment for gains included in net income (1) (3,135 ) 576 (2,559 ) (660 ) 120 (540 ) Net unrealized gains (losses) on investments (17,053 ) 6,979 (10,074 ) 46,317 (7,951 ) 38,366 Other comprehensive income (loss) (17,053 ) 6,979 (10,074 ) 46,317 (7,951 ) 38,366 Balance at end of period $ 52,348 $ (6,235 ) $ 46,113 $ 13,041 $ (3,668 ) $ 9,373 (1) Included in net realized investment gains on our condensed consolidated statements of comprehensive income. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We carry certain of our financial instruments at fair value. We define fair value as the current amount that would be exchanged to sell an asset or transfer a liability, other than in a forced liquidation. Fair Value Hierarchy ASC No. 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The level within the fair value hierarchy to measure the financial instrument shall be determined based on the lowest level input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows: • 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. Determination of Fair Value When available, we generally use quoted market prices to determine fair value and classify the financial instrument in Level 1. In cases where quoted market prices for similar financial instruments are available, we utilize these inputs for valuation techniques and classify the financial instrument in Level 2. In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flows, present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rates and estimates of future cash flows and we classify the financial instrument in Level 3. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. We used the following methods and assumptions in estimating fair values of financial instruments: • Investments available for sale — Investments available for sale are valued using quoted market prices in active markets, when available, and those investments are classified as Level 1 of the fair value hierarchy. Level 1 investments available for sale include investments such as U.S. Treasury securities and money market funds. Investments available for sale are classified as Level 2 of the fair value hierarchy if quoted market prices are not available and fair values are estimated using quoted prices of similar securities or recently executed transactions for the securities. U.S. agency securities, U.S. agency mortgage-backed securities, municipal debt securities, non-U.S. government securities, corporate debt securities, residential and commercial mortgage securities and asset-backed securities are classified as Level 2 investments. We use independent pricing sources to determine the fair value of securities available for sale in Level 1 and Level 2 of the fair value hierarchy. We use one primary pricing service to provide individual security pricing based on observable market data and receive one quote per security. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing service and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. U.S. agency securities, U.S. agency mortgage-backed securities, municipal debt securities, non-U.S. government securities and corporate debt securities are valued by our primary vendor using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves and credit risk. Residential and commercial mortgage securities and asset-backed securities are valued by our primary vendor using proprietary models based on observable inputs, such as interest rate spreads, prepayment speeds and credit risk. As part of our evaluation of investment prices provided by our primary pricing service, we obtained and reviewed their pricing methodologies which include a description of how each security type is evaluated and priced. We review the reasonableness of prices received from our primary pricing service by comparison to prices obtained from additional pricing sources. We have not made any adjustments to the prices obtained from our primary pricing service. Assets and Liabilities Measured at Fair Value All assets measured at fair value are categorized in the table below based upon the lowest level of significant input to the valuations. All fair value measurements at the reporting date were on a recurring basis. March 31, 2020 (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 $ 235,565 $ — $ — $ 235,565 U.S. agency securities — 33,892 — 33,892 U.S. agency mortgage-backed securities — 876,298 — 876,298 Municipal debt securities — 419,688 — 419,688 Non-U.S. government securities — 52,209 — 52,209 Corporate debt securities — 879,503 — 879,503 Residential and commercial mortgage securities — 275,532 — 275,532 Asset-backed securities — 337,675 — 337,675 Money market funds 595,165 — — 595,165 Total assets at fair value (1) $ 830,730 $ 2,874,797 $ — $ 3,705,527 (1) Does not include the fair value of embedded derivatives, which we have accounted for separately as freestanding derivatives and included in other assets or other accrued liabilities in our condensed consolidated balance sheet. See Note 4 for more information. December 31, 2019 (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 $ 242,206 $ — $ — $ 242,206 U.S. agency securities — 33,605 — 33,605 U.S. agency mortgage-backed securities — 848,334 — 848,334 Municipal debt securities — 361,638 — 361,638 Non-U.S. government securities — 54,995 — 54,995 Corporate debt securities — 880,301 — 880,301 Residential and commercial mortgage securities — 288,281 — 288,281 Asset-backed securities — 326,025 — 326,025 Money market funds 315,362 — — 315,362 Total assets at fair value (1) $ 557,568 $ 2,793,179 $ — $ 3,350,747 (1) Does not include the fair value of embedded derivatives, which we have accounted for separately as freestanding derivatives and included in other assets or other accrued liabilities in our condensed consolidated balance sheet. See Note 4 for more information. |
Statutory Accounting
Statutory Accounting | 3 Months Ended |
Mar. 31, 2020 | |
Insurance [Abstract] | |
Statutory Accounting | Statutory Accounting Our U.S. insurance subsidiaries prepare statutory-basis financial statements in accordance with the accounting practices prescribed or permitted by their respective state’s department of insurance, which is a comprehensive basis of accounting other than GAAP. We did not use any prescribed or permitted statutory accounting practices (individually or in the aggregate) that resulted in reported statutory surplus or capital that was significantly different from the statutory surplus or capital that would have been reported had National Association of Insurance Commissioners’ statutory accounting practices been followed. The following table presents Essent Guaranty’s and Essent PA’s statutory net income, statutory surplus and contingency reserve liability as of and for the three months ended March 31 : (In thousands) 2020 2019 Essent Guaranty Statutory net income $ 122,644 $ 101,989 Statutory surplus 1,074,153 905,534 Contingency reserve liability 1,270,864 981,207 Essent PA Statutory net income $ 1,627 $ 2,093 Statutory surplus 53,648 50,216 Contingency reserve liability 53,854 49,744 Net income determined in accordance with statutory accounting practices differs from GAAP. In 2020 and 2019 , the more significant differences between net income determined under statutory accounting practices and GAAP for Essent Guaranty and Essent PA relate to policy acquisition costs and income taxes. Under statutory accounting practices, policy acquisition costs are expensed as incurred while such costs are capitalized and amortized to expense over the life of the policy under GAAP. We are eligible for a tax deduction, subject to certain limitations for amounts required by state law or regulation to be set aside in statutory contingency reserves when we purchase non-interest-bearing United States Mortgage Guaranty Tax and Loss Bonds (“T&L Bonds”) issued by the Treasury Department. Under statutory accounting practices, this deduction reduces the tax provision recorded by Essent Guaranty and Essent PA and, as a result, increases statutory net income and surplus as compared to net income and equity determined in accordance with GAAP. At March 31, 2020 and 2019 , the statutory capital of our U.S. insurance subsidiaries, which is defined as the total of statutory surplus and contingency reserves, was in excess of the statutory capital necessary to satisfy their regulatory requirements. Effective December 31, 2015, Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency, implemented new coordinated Private Mortgage Insurer Eligibility Requirements, which we refer to as the "PMIERs." The PMIERs represent the standards by which private mortgage insurers are eligible to provide mortgage insurance on loans owned or guaranteed by Fannie Mae and Freddie Mac. The PMIERs include financial strength requirements incorporating a risk-based framework that require approved insurers to have a sufficient level of liquid assets from which to pay claims. The PMIERs also include enhanced operational performance expectations and define remedial actions that apply should an approved insurer fail to comply with these requirements. In 2018, the GSEs released revised PMIERs framework ("PMIERs 2.0") which became effective on March 31, 2019. As of March 31, 2020 , Essent Guaranty, our GSE-approved mortgage insurance company, was in compliance with PMIERs 2.0. Due to business restrictions, stay-at-home orders and travel restrictions implemented as a result of COVID-19, we expect to experience increased defaults beginning in the second quarter of 2020. An increase in defaults increases our Minimum Required Assets under PMIERs, and, accordingly, we expect our Minimum Required Assets to increase in future periods. Statement of Statutory Accounting Principles No. 58 , Mortgage Guaranty Insurance, requires mortgage insurers to establish a special contingency reserve for statutory accounting purposes included in total liabilities equal to 50% of earned premium for that year. During the three months ended March 31, 2020 , Essent Guaranty increased its contingency reserve by $73.6 million and Essent PA increased its contingency reserve by $0.9 million . This reserve is required to be maintained for a period of 120 months to protect against the effects of adverse economic cycles. After 120 months , the reserve is released to unassigned funds. In the event an insurer’s loss ratio in any calendar year exceeds 35% , however, the insurer may, after regulatory approval, release from its contingency reserves an amount equal to the excess portion of such losses. Essent Guaranty and Essent PA did not release any amounts from their contingency reserves in the three months ended March 31, 2020 or 2019 . Under The Insurance Act 1978, as amended, and related regulations of Bermuda (the "Insurance Act"), Essent Re is required to annually prepare statutory financial statements and a statutory financial return in accordance with the financial reporting provisions of the Insurance Act, which is a basis other than GAAP. The Insurance Act also requires that Essent Re maintain minimum share capital of $1 million and must ensure that the value of its general business assets exceeds the amount of its general business liabilities by an amount greater than the prescribed minimum solvency margins and enhanced capital requirement pertaining to its general business. At December 31, 2019 , all such requirements were met. Essent Re's statutory capital and surplus was $1.0 billion as of March 31, 2020 and $939.2 million as of December 31, 2019 . Essent Re's statutory net income was $49.5 million and $39.5 million for the three months ended March 31, 2020 and 2019 , respectively. Statutory capital and surplus as of March 31, 2020 and December 31, 2019 and statutory net income in the three months ended March 31, 2020 and 2019 |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Accounting Standards Adopted During 2020 In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) . This update is intended to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected through the use of an allowance for credit losses. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance rather than as a write-down of the amortized cost of the securities. The accounting for insurance losses and loss adjustment expenses ("LAE") are not within the scope of this ASU. The provisions of this update were effective for annual and interim periods beginning after December 15, 2019 and we adopted this standard on January 1, 2020 using the modified retrospective approach. The adoption of this ASU did not have a material effect on the Company's consolidated operating results or financial position. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The provisions of this update were effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for the removed disclosures. We adopted this standard on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. Accounting Standards Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The amendments in this update provide temporary optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform. It provides optional expedients and exceptions for applying generally accepted accounting principles to contract, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective as of March 12, 2020 through December 31, 2022. The Company is evaluating the impact the adoption of this ASU will have on our consolidated operating results and financial position. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of investments available for sale | Investments available for sale consist of the following : March 31, 2020 (In thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury securities $ 224,192 $ 11,373 $ — $ 235,565 U.S. agency securities 33,614 278 — 33,892 U.S. agency mortgage-backed securities 838,547 37,865 (114 ) 876,298 Municipal debt securities (1) 398,245 23,497 (2,054 ) 419,688 Non-U.S. government securities 51,937 1,504 (1,232 ) 52,209 Corporate debt securities (2) 880,944 15,992 (17,433 ) 879,503 Residential and commercial mortgage securities 281,061 6,596 (12,125 ) 275,532 Asset-backed securities 352,637 644 (15,606 ) 337,675 Money market funds 595,173 — (8 ) 595,165 Total investments available for sale $ 3,656,350 $ 97,749 $ (48,572 ) $ 3,705,527 December 31, 2019 (In thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury securities $ 239,087 $ 3,526 $ (407 ) $ 242,206 U.S. agency securities 33,620 36 (51 ) 33,605 U.S. agency mortgage-backed securities 836,710 13,956 (2,332 ) 848,334 Municipal debt securities (1) 339,511 22,245 (118 ) 361,638 Non-U.S. government securities 52,230 2,812 (47 ) 54,995 Corporate debt securities (2) 856,638 24,255 (592 ) 880,301 Residential and commercial mortgage securities 282,840 6,542 (1,101 ) 288,281 Asset-backed securities 326,589 857 (1,421 ) 326,025 Money market funds 315,360 2 — 315,362 Total investments available for sale $ 3,282,585 $ 74,231 $ (6,069 ) $ 3,350,747 March 31, December 31, (1) The following table summarizes municipal debt securities as of : 2020 2019 Special revenue bonds 73.7 % 74.5 % General obligation bonds 22.6 21.3 Certificate of participation bonds 3.0 3.4 Tax allocation bonds 0.7 0.8 Total 100.0 % 100.0 % March 31, December 31, (2) The following table summarizes corporate debt securities as of : 2020 2019 Financial 34.1 % 34.4 % Consumer, non-cyclical 20.3 20.1 Communications 11.3 10.3 Consumer, cyclical 7.9 7.6 Energy 7.3 8.3 Utilities 6.7 6.2 Technology 5.0 4.8 Basic materials 3.8 4.1 Industrial 3.6 4.2 Total 100.0 % 100.0 % |
Schedule of amortized cost and fair value of investments available for sale by contractual maturity | The amortized cost and fair value of investments available for sale at March 31, 2020 , by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most U.S. agency mortgage-backed securities, residential and commercial mortgage securities and asset-backed securities provide for periodic payments throughout their lives, they are listed below in separate categories . (In thousands) Amortized Cost Fair Value U.S. Treasury securities: Due in 1 year $ 72,085 $ 72,752 Due after 1 but within 5 years 84,353 89,094 Due after 5 but within 10 years 66,770 72,529 Due after 10 years 984 1,190 Subtotal 224,192 235,565 U.S. agency securities: Due in 1 year 21,074 21,125 Due after 1 but within 5 years 12,540 12,767 Subtotal 33,614 33,892 Municipal debt securities: Due in 1 year 589 561 Due after 1 but within 5 years 33,841 35,210 Due after 5 but within 10 years 205,608 216,334 Due after 10 years 158,207 167,583 Subtotal 398,245 419,688 Non-U.S. government securities: Due in 1 year — — Due after 1 but within 5 years 22,261 22,575 Due after 5 but within 10 years 24,229 24,941 Due after 10 years 5,447 4,693 Subtotal 51,937 52,209 Corporate debt securities: Due in 1 year 150,962 151,107 Due after 1 but within 5 years 429,020 432,300 Due after 5 but within 10 years 277,323 274,528 Due after 10 years 23,639 21,568 Subtotal 880,944 879,503 U.S. agency mortgage-backed securities 838,547 876,298 Residential and commercial mortgage securities 281,061 275,532 Asset-backed securities 352,637 337,675 Money market funds 595,173 595,165 Total investments available for sale $ 3,656,350 $ 3,705,527 |
Schedule of realized gross gains and losses on sale of investments available for sale | Gross gains and losses realized on the sale of investments available for sale were as follows: Three Months Ended March 31, (In thousands) 2020 2019 Realized gross gains $ 3,262 $ 671 Realized gross losses 127 11 |
Schedule of fair value of investments in an unrealized loss position and related unrealized losses | The fair value of investments available for sale in an unrealized loss position and the related unrealized losses were as follows : Less than 12 months 12 months or more Total March 31, 2020 (In thousands) Fair Gross Fair Gross Fair Gross U.S. agency mortgage-backed securities 14,136 (63 ) 2,265 (51 ) 16,401 (114 ) Municipal debt securities 48,622 (2,053 ) 627 (1 ) 49,249 (2,054 ) Non-U.S. government securities 10,302 (1,232 ) — — 10,302 (1,232 ) Corporate debt securities 331,951 (17,431 ) 1,423 (2 ) 333,374 (17,433 ) Residential and commercial mortgage securities 120,241 (11,323 ) 3,011 (802 ) 123,252 (12,125 ) Asset-backed securities 213,185 (9,029 ) 69,388 (6,577 ) 282,573 (15,606 ) Money market funds 20,545 (8 ) — — 20,545 (8 ) Total $ 758,982 $ (41,139 ) $ 76,714 $ (7,433 ) $ 835,696 $ (48,572 ) Less than 12 months 12 months or more Total December 31, 2019 (In thousands) Fair Gross Fair Gross Fair Gross U.S. Treasury securities $ 29,013 $ (331 ) $ 42,981 $ (76 ) $ 71,994 $ (407 ) U.S. agency securities — — 25,605 (51 ) 25,605 (51 ) U.S. agency mortgage-backed securities 101,684 (1,042 ) 113,866 (1,290 ) 215,550 (2,332 ) Municipal debt securities 10,651 (112 ) 624 (6 ) 11,275 (118 ) Non-U.S. government securities 9,664 (47 ) — — 9,664 (47 ) Corporate debt securities 83,013 (576 ) 14,531 (16 ) 97,544 (592 ) Residential and commercial mortgage securities 59,341 (1,059 ) 3,442 (42 ) 62,783 (1,101 ) Asset-backed securities 78,813 (202 ) 109,536 (1,219 ) 188,349 (1,421 ) Total $ 372,179 $ (3,369 ) $ 310,585 $ (2,700 ) $ 682,764 $ (6,069 ) |
Schedule of net investment income | Net investment income consists of: Three Months Ended March 31, (In thousands) 2020 2019 Fixed maturities $ 20,614 $ 19,743 Short-term investments 1,122 1,058 Gross investment income 21,736 20,801 Investment expenses (1,103 ) (921 ) Net investment income $ 20,633 $ 19,880 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Reinsurance Disclosures [Abstract] | |
Effect of reinsurance | The effect of reinsurance on net premiums written and earned is as follows: Three Months Ended (In thousands) 2020 2019 Net premiums written: Direct $ 205,980 $ 183,682 Ceded (1) (14,237 ) (6,038 ) Net premiums written $ 191,743 $ 177,644 Net premiums earned: Direct $ 220,733 $ 183,829 Ceded (1) (14,237 ) (6,038 ) Net premiums earned $ 206,496 $ 177,791 (1) Net of profit commission. |
Schedule of coverages and retentions | The following table summarizes Essent Guaranty's excess of loss reinsurance agreements as of March 31, 2020 : Vintage Year Reinsurer Effective Date Optional Termination Date 2015 & 2016 Radnor Re 2019-2 Ltd. June 20, 2019 June 25, 2024 2017 Radnor Re 2018-1 Ltd. March 22, 2018 March 25, 2023 (1) 2017 Panel of Reinsurers November 1, 2018 October 1, 2023 (2) 2018 Radnor Re 2019-1 Ltd. February 28, 2019 February 25, 2026 2018 Panel of Reinsurers February 28, 2019 February 25, 2026 2019 Radnor Re 2020-1 Ltd. January 30, 2020 January 25, 2027 2019 Panel of Reinsurers January 30, 2020 January 25, 2027 (1) If the reinsurance agreement is not terminated at the optional termination date, the risk margin component of the reinsurance premium increases by 50% . (2) If the reinsurance agreement is not terminated at the optional termination date, the reinsurance premium increases by 50% . The following table summarizes Essent Guaranty's excess of loss reinsurance coverages and retentions as of March 31, 2020 : (In thousands) Remaining Reinsurance in Force Vintage Year Remaining Insurance in Force Remaining Risk in Force ILN Other Reinsurance Total Remaining 2015 & 2016 $ 25,025,497 $ 6,762,026 $ 244,105 $ — $ 244,105 $ 208,111 2017 26,279,318 6,665,183 280,180 165,167 (4) 445,347 221,852 2018 31,375,687 7,923,964 377,509 87,941 (5) 465,450 253,081 2019 (3) 34,916,398 8,826,958 495,889 55,102 (6) 550,991 215,605 Total $ 117,596,900 $ 30,178,131 $ 1,397,683 $ 308,210 $ 1,705,893 $ 898,649 (3) Reinsurance coverage on new insurance written from January 1, 2019 through August 31, 2019. (4) Coverage provided immediately above the coverage provided by Radnor Re 2018-1 Ltd. (5) Coverage provided pari-passu to the coverage provided by Radnor Re 2019-1 Ltd. (6) Coverage provided pari-passu to the coverage provided by Radnor Re 2020-1 Ltd. |
Schedule of VIE assets and maximum exposure | The following table presents total assets of each Radnor Re special purpose insurer as well as our maximum exposure to loss associated with each Radnor Re entity, representing the fair value of the embedded derivative included in other assets (other accrued liabilities) on our condensed consolidated balance sheet and the estimated net present value of investment earnings on the assets in the reinsurance trust, each as of March 31, 2020 : Maximum Exposure to Loss (In thousands) Total VIE Assets On - Balance Sheet Off - Balance Sheet Total Radnor Re 2018-1 Ltd. $ 280,180 $ 169 $ 1,580 $ 1,749 Radnor Re 2019-1 Ltd. 377,509 (2,441 ) 1,967 (474 ) Radnor Re 2019-2 Ltd. 244,105 (1,771 ) 1,210 (561 ) Radnor Re 2020-1 Ltd. 495,889 (1,918 ) 6,059 4,141 Total $ 1,397,683 $ (5,961 ) $ 10,816 $ 4,855 |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Schedule of reconciliation of beginning and ending reserve balances for losses and loss adjustment expenses (LAE) | The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“ LAE ”) for the three months ended March 31 : ($ in thousands) 2020 2019 Reserve for losses and LAE at beginning of period $ 69,362 $ 49,464 Less: Reinsurance recoverables 71 — Net reserve for losses and LAE at beginning of period 69,291 49,464 Add provision for losses and LAE, net of reinsurance, occurring in: Current period 15,419 11,828 Prior years (7,356 ) (4,721 ) Net incurred losses and LAE during the current period 8,063 7,107 Deduct payments for losses and LAE, net of reinsurance, occurring in: Current period 1 15 Prior years 4,110 3,072 Net loss and LAE payments during the current period 4,111 3,087 Net reserve for losses and LAE at end of period 73,243 53,484 Plus: Reinsurance recoverables 98 — Reserve for losses and LAE at end of period $ 73,341 $ 53,484 Loans in default at end of period 5,841 4,096 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease cost and other information | The following table presents lease cost and other lease information for the three months ended March 31, 2020 and 2019 : Three Months Ended ($ in thousands) 2020 2019 Lease cost: Operating lease cost $ 700 $ 591 Short-term lease cost 5 42 Sublease income (33 ) (32 ) Total lease cost $ 672 $ 601 Other information: Weighted average remaining lease term - operating leases 4.5 years 5.5 years Weighted average discount rate - operating leases 4.0 % 4.1 % |
Schedule of lease liability maturity | The following table presents a maturity analysis of our lease liabilities as follows at March 31, 2020 : (In thousands) 2020 (April 1 through December 31) $ 2,229 2021 2,999 2022 3,003 2023 2,752 2024 1,334 2025 and thereafter 793 Total lease payments to be paid 13,110 Less: Future interest expense (1,173 ) Present value of lease liabilities $ 11,937 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of nonvested Common Share and nonvested Common Share unit activity | The following table summarizes nonvested common share, nonvested common share unit and DEU activity for the three months ended March 31, 2020 : Time and Performance- Based Share Awards Time-Based Share Awards Share Units DEUs (Shares in thousands) Number of Shares Weighted Number of Shares Weighted Average Grant Date Fair Value Number of Share Units Weighted Dividend Equivalent Units Weighted Outstanding at beginning of year 394 $ 42.02 169 $ 41.31 351 $ 39.78 5 $ 51.11 Granted 109 51.52 69 51.52 312 51.50 6 26.83 Vested (140 ) 36.29 (85 ) 40.47 (169 ) 36.70 (2 ) 51.11 Forfeited — N/A — N/A (8 ) 49.23 — 42.06 Outstanding at March 31, 2020 363 $ 47.09 153 $ 46.34 486 $ 48.21 9 $ 35.02 |
Schedule of portion of nonvested Common Shares earned based upon achievement of compounded annual book value per share growth | The portion of these nonvested performance-based share awards that will be earned based upon the achievement of compounded annual book value per share growth is as follows: Performance level Compounded Annual Book Value Nonvested Common <13 % 0 % Threshold 13 % 10 % 14 % 35 % 15 % 60 % 16 % 85 % Maximum ≥17 % 100 % |
Schedule of compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares | Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares was as follows: Three Months Ended March 31, (In thousands) 2020 2019 Compensation expense $ 4,780 $ 4,100 Income tax benefit 918 765 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense | Income tax expense consists of the following components: Three Months Ended March 31, (In thousands) 2020 2019 Current $ 10,128 $ 6,552 Deferred 17,047 15,447 Total income tax expense $ 27,175 $ 21,999 |
Schedule of reconciliation of difference between income tax expense and expected tax provision at weighted average tax rate | The reconciliation of the difference between income tax expense and the expected tax provision at the weighted average tax rate was as follows: Three Months Ended March 31, 2020 2019 ($ in thousands) $ % of pretax income $ % of pretax income Tax provision at weighted average statutory rates $ 27,376 15.5 % $ 23,938 16.0 % Non-deductible expenses 714 0.4 324 0.2 Excess tax benefits from stock-based compensation (620 ) (0.3 ) (1,956 ) (1.3 ) Tax exempt interest, net of proration (342 ) (0.2 ) (443 ) (0.3 ) Other 47 0.0 136 0.1 Total income tax expense $ 27,175 15.4 % $ 21,999 14.7 % |
Schedule of net deferred tax (liability) asset and components | We provide deferred taxes to reflect the estimated future tax effects of the differences between the financial statement and tax bases of assets and liabilities using currently enacted tax laws. The net deferred tax liability was comprised of the following: March 31, December 31, (In thousands) 2020 2019 Deferred tax assets $ 27,863 $ 29,392 Deferred tax liabilities (287,551 ) (279,012 ) Net deferred tax liability $ (259,688 ) $ (249,620 ) The components of the net deferred tax liability were as follows: March 31, December 31, (In thousands) 2020 2019 Contingency reserves $ (277,496 ) $ (261,855 ) Unearned premium reserve 15,897 16,641 Unrealized (gain) loss on investments (6,235 ) (13,214 ) Accrued expenses 4,065 3,391 Deferred policy acquisition costs (3,181 ) (3,298 ) Unearned ceding commissions 3,066 3,227 Fixed assets 1,383 1,502 Start-up expenditures, net 1,342 1,410 Change in fair market value of derivatives 1,252 370 Loss reserves 440 416 Nonvested shares 410 2,426 Investments in limited partnerships (400 ) (400 ) Prepaid expenses (131 ) (132 ) Loss reserves - TCJA transition adjustment (108 ) (113 ) Organizational expenditures 8 9 Net deferred tax liability $ (259,688 ) $ (249,620 ) |
Earnings per Share (EPS) (Table
Earnings per Share (EPS) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of net income and weighted average common shares outstanding used in computations of basic and diluted earnings per common share | The following table reconciles the net income and the weighted average common shares outstanding used in the computations of basic and diluted earnings per common share: Three Months Ended (In thousands, except per share amounts) 2020 2019 Net income $ 149,523 $ 127,720 Basic weighted average shares outstanding 97,949 97,595 Dilutive effect of nonvested shares 377 509 Diluted weighted average shares outstanding 98,326 98,104 Basic earnings per share $ 1.53 $ 1.31 Diluted earnings per share $ 1.52 $ 1.30 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Rollforward of accumulated other comprehensive income (loss) | The following table presents the rollforward of accumulated other comprehensive income (loss) for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, 2020 2019 (In thousands) Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax Balance at beginning of period $ 69,401 $ (13,214 ) $ 56,187 $ (33,276 ) $ 4,283 $ (28,993 ) Other comprehensive income (loss): Unrealized holding gains (losses) on investments: Unrealized holding gains (losses) arising during the period (13,918 ) 6,403 (7,515 ) 46,977 (8,071 ) 38,906 Less: Reclassification adjustment for gains included in net income (1) (3,135 ) 576 (2,559 ) (660 ) 120 (540 ) Net unrealized gains (losses) on investments (17,053 ) 6,979 (10,074 ) 46,317 (7,951 ) 38,366 Other comprehensive income (loss) (17,053 ) 6,979 (10,074 ) 46,317 (7,951 ) 38,366 Balance at end of period $ 52,348 $ (6,235 ) $ 46,113 $ 13,041 $ (3,668 ) $ 9,373 (1) Included in net realized investment gains on our condensed consolidated statements of comprehensive income. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair vale on a recurring basis | All assets measured at fair value are categorized in the table below based upon the lowest level of significant input to the valuations. All fair value measurements at the reporting date were on a recurring basis. March 31, 2020 (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 $ 235,565 $ — $ — $ 235,565 U.S. agency securities — 33,892 — 33,892 U.S. agency mortgage-backed securities — 876,298 — 876,298 Municipal debt securities — 419,688 — 419,688 Non-U.S. government securities — 52,209 — 52,209 Corporate debt securities — 879,503 — 879,503 Residential and commercial mortgage securities — 275,532 — 275,532 Asset-backed securities — 337,675 — 337,675 Money market funds 595,165 — — 595,165 Total assets at fair value (1) $ 830,730 $ 2,874,797 $ — $ 3,705,527 (1) Does not include the fair value of embedded derivatives, which we have accounted for separately as freestanding derivatives and included in other assets or other accrued liabilities in our condensed consolidated balance sheet. See Note 4 for more information. December 31, 2019 (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 $ 242,206 $ — $ — $ 242,206 U.S. agency securities — 33,605 — 33,605 U.S. agency mortgage-backed securities — 848,334 — 848,334 Municipal debt securities — 361,638 — 361,638 Non-U.S. government securities — 54,995 — 54,995 Corporate debt securities — 880,301 — 880,301 Residential and commercial mortgage securities — 288,281 — 288,281 Asset-backed securities — 326,025 — 326,025 Money market funds 315,362 — — 315,362 Total assets at fair value (1) $ 557,568 $ 2,793,179 $ — $ 3,350,747 (1) Does not include the fair value of embedded derivatives, which we have accounted for separately as freestanding derivatives and included in other assets or other accrued liabilities in our condensed consolidated balance sheet. See Note 4 for more information. |
Statutory Accounting (Tables)
Statutory Accounting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Insurance [Abstract] | |
Schedule of statutory net income, statutory surplus and contingency reserve liability | The following table presents Essent Guaranty’s and Essent PA’s statutory net income, statutory surplus and contingency reserve liability as of and for the three months ended March 31 : (In thousands) 2020 2019 Essent Guaranty Statutory net income $ 122,644 $ 101,989 Statutory surplus 1,074,153 905,534 Contingency reserve liability 1,270,864 981,207 Essent PA Statutory net income $ 1,627 $ 2,093 Statutory surplus 53,648 50,216 Contingency reserve liability 53,854 49,744 |
Nature of Operations and Basi_2
Nature of Operations and Basis of Presentation (Details) - state | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Essent Guaranty | ||
Insurance Premium Revenue Recognition | ||
Number of states in which the entity is licensed to write mortgage insurance | 50 | |
Affiliated Entity | Essent Re | Quota share reinsurance | ||
Insurance Premium Revenue Recognition | ||
Reinsurance percentage | 25.00% | |
Affiliated Entity | Essent PA | Reinsurance for mortgage insurance coverage in excess of 25% | ||
Insurance Premium Revenue Recognition | ||
Reinsurance for mortgage insurance coverage threshold (in excess of) | 25.00% | |
Maximum | ||
Insurance Premium Revenue Recognition | ||
Residential mortgage down payment percentage for which mortgage insurance is generally required (less than) | 20.00% |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Investments available for sale | ||
Amortized Cost | $ 3,656,350 | $ 3,282,585 |
Unrealized Gains | 97,749 | 74,231 |
Unrealized Losses | (48,572) | (6,069) |
Fair Value | 3,705,527 | 3,350,747 |
U.S. Treasury securities | ||
Investments available for sale | ||
Amortized Cost | 224,192 | 239,087 |
Unrealized Gains | 11,373 | 3,526 |
Unrealized Losses | 0 | (407) |
Fair Value | 235,565 | 242,206 |
U.S. agency securities | ||
Investments available for sale | ||
Amortized Cost | 33,614 | 33,620 |
Unrealized Gains | 278 | 36 |
Unrealized Losses | 0 | (51) |
Fair Value | 33,892 | 33,605 |
U.S. agency mortgage-backed securities | ||
Investments available for sale | ||
Amortized Cost | 838,547 | 836,710 |
Unrealized Gains | 37,865 | 13,956 |
Unrealized Losses | (114) | (2,332) |
Fair Value | 876,298 | 848,334 |
Municipal debt securities | ||
Investments available for sale | ||
Amortized Cost | 398,245 | 339,511 |
Unrealized Gains | 23,497 | 22,245 |
Unrealized Losses | (2,054) | (118) |
Fair Value | 419,688 | 361,638 |
Non-U.S. government securities | ||
Investments available for sale | ||
Amortized Cost | 51,937 | 52,230 |
Unrealized Gains | 1,504 | 2,812 |
Unrealized Losses | (1,232) | (47) |
Fair Value | 52,209 | 54,995 |
Corporate debt securities | ||
Investments available for sale | ||
Amortized Cost | 880,944 | 856,638 |
Unrealized Gains | 15,992 | 24,255 |
Unrealized Losses | (17,433) | (592) |
Fair Value | 879,503 | 880,301 |
Residential and commercial mortgage securities | ||
Investments available for sale | ||
Amortized Cost | 281,061 | 282,840 |
Unrealized Gains | 6,596 | 6,542 |
Unrealized Losses | (12,125) | (1,101) |
Fair Value | 275,532 | 288,281 |
Asset-backed securities | ||
Investments available for sale | ||
Amortized Cost | 352,637 | 326,589 |
Unrealized Gains | 644 | 857 |
Unrealized Losses | (15,606) | (1,421) |
Fair Value | 337,675 | 326,025 |
Money market funds | ||
Investments available for sale | ||
Amortized Cost | 595,173 | 315,360 |
Unrealized Gains | 0 | 2 |
Unrealized Losses | (8) | 0 |
Fair Value | $ 595,165 | $ 315,362 |
Investments (Details 2)
Investments (Details 2) | Mar. 31, 2020 | Dec. 31, 2019 |
Municipal debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 100.00% | 100.00% |
Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 100.00% | 100.00% |
Special revenue bonds | Municipal debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 73.70% | 74.50% |
General obligation bonds | Municipal debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 22.60% | 21.30% |
Certificate of participation bonds | Municipal debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 3.00% | 3.40% |
Tax allocation bonds | Municipal debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 0.70% | 0.80% |
Financial | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 34.10% | 34.40% |
Consumer, non-cyclical | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 20.30% | 20.10% |
Communications | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 11.30% | 10.30% |
Consumer, cyclical | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 7.90% | 7.60% |
Energy | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 7.30% | 8.30% |
Utilities | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 6.70% | 6.20% |
Technology | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 5.00% | 4.80% |
Basic materials | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 3.80% | 4.10% |
Industrial | Corporate debt securities | ||
Investments available for sale | ||
Percentage of debt securities | 3.60% | 4.20% |
Investments (Details 3)
Investments (Details 3) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Amortized Cost | $ 3,656,350 | $ 3,282,585 |
Fair Value | ||
Fair Value | 3,705,527 | 3,350,747 |
U.S. agency mortgage-backed securities | ||
Amortized Cost | ||
Amortized Cost | 838,547 | 836,710 |
Fair Value | ||
Fair Value | 876,298 | 848,334 |
Municipal debt securities | ||
Amortized Cost | ||
Due in 1 year | 589 | |
Due after 1 but within 5 years | 33,841 | |
Due after 5 but within 10 years | 205,608 | |
Due after 10 years | 158,207 | |
Subtotal | 398,245 | |
Amortized Cost | 398,245 | 339,511 |
Fair Value | ||
Due in 1 year | 561 | |
Due after 1 but within 5 years | 35,210 | |
Due after 5 but within 10 years | 216,334 | |
Due after 10 years | 167,583 | |
Subtotal | 419,688 | |
Fair Value | 419,688 | 361,638 |
Non-U.S. government securities: | ||
Amortized Cost | ||
Due in 1 year | 0 | |
Due after 1 but within 5 years | 22,261 | |
Due after 5 but within 10 years | 24,229 | |
Due after 10 years | 5,447 | |
Subtotal | 51,937 | |
Amortized Cost | 51,937 | 52,230 |
Fair Value | ||
Due in 1 year | 0 | |
Due after 1 but within 5 years | 22,575 | |
Due after 5 but within 10 years | 24,941 | |
Due after 10 years | 4,693 | |
Subtotal | 52,209 | |
Fair Value | 52,209 | 54,995 |
Corporate debt securities | ||
Amortized Cost | ||
Due in 1 year | 150,962 | |
Due after 1 but within 5 years | 429,020 | |
Due after 5 but within 10 years | 277,323 | |
Due after 10 years | 23,639 | |
Subtotal | 880,944 | |
Amortized Cost | 880,944 | 856,638 |
Fair Value | ||
Due in 1 year | 151,107 | |
Due after 1 but within 5 years | 432,300 | |
Due after 5 but within 10 years | 274,528 | |
Due after 10 years | 21,568 | |
Subtotal | 879,503 | |
Fair Value | 879,503 | 880,301 |
Residential and commercial mortgage securities | ||
Amortized Cost | ||
Amortized Cost | 281,061 | 282,840 |
Fair Value | ||
Fair Value | 275,532 | 288,281 |
Asset-backed securities | ||
Amortized Cost | ||
Amortized Cost | 352,637 | 326,589 |
Fair Value | ||
Fair Value | 337,675 | 326,025 |
Money market funds | ||
Amortized Cost | ||
Amortized Cost | 595,173 | 315,360 |
Fair Value | ||
Fair Value | 595,165 | 315,362 |
U.S. Treasury securities | ||
Amortized Cost | ||
Due in 1 year | 72,085 | |
Due after 1 but within 5 years | 84,353 | |
Due after 5 but within 10 years | 66,770 | |
Due after 10 years | 984 | |
Subtotal | 224,192 | |
Amortized Cost | 224,192 | 239,087 |
Fair Value | ||
Due in 1 year | 72,752 | |
Due after 1 but within 5 years | 89,094 | |
Due after 5 but within 10 years | 72,529 | |
Due after 10 years | 1,190 | |
Subtotal | 235,565 | |
Fair Value | 235,565 | 242,206 |
U.S. agency securities | ||
Amortized Cost | ||
Due in 1 year | 21,074 | |
Due after 1 but within 5 years | 12,540 | |
Subtotal | 33,614 | |
Amortized Cost | 33,614 | 33,620 |
Fair Value | ||
Due in 1 year | 21,125 | |
Due after 1 but within 5 years | 12,767 | |
Subtotal | 33,892 | |
Fair Value | $ 33,892 | $ 33,605 |
Investments (Details 4)
Investments (Details 4) | 3 Months Ended | ||
Mar. 31, 2020USD ($)security | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)security | |
Investments, Debt and Equity Securities [Abstract] | |||
Realized gross gains | $ 3,262,000 | $ 671,000 | |
Realized gross losses | 127,000 | 11,000 | |
Fair Value | |||
Less than 12 months | 758,982,000 | $ 372,179,000 | |
12 months or more | 76,714,000 | 310,585,000 | |
Total | 835,696,000 | 682,764,000 | |
Gross Unrealized Losses | |||
Less than 12 months | (41,139,000) | (3,369,000) | |
12 months or more | (7,433,000) | (2,700,000) | |
Total | $ (48,572,000) | $ (6,069,000) | |
Other Information | |||
Number of investment securities in an unrealized loss position | security | 601 | 365 | |
Other-than-temporary impairments | $ 0 | ||
Other invested assets | $ 75,380,000 | $ 78,873,000 | |
Fair value of investments deposited with insurance regulatory authorities | 9,900,000 | 9,400,000 | |
U.S. Treasury securities | |||
Fair Value | |||
Less than 12 months | 29,013,000 | ||
12 months or more | 42,981,000 | ||
Total | 71,994,000 | ||
Gross Unrealized Losses | |||
Less than 12 months | (331,000) | ||
12 months or more | (76,000) | ||
Total | (407,000) | ||
U.S. agency securities | |||
Fair Value | |||
Less than 12 months | 0 | ||
12 months or more | 25,605,000 | ||
Total | 25,605,000 | ||
Gross Unrealized Losses | |||
Less than 12 months | 0 | ||
12 months or more | (51,000) | ||
Total | (51,000) | ||
U.S. agency mortgage-backed securities | |||
Fair Value | |||
Less than 12 months | 14,136,000 | 101,684,000 | |
12 months or more | 2,265,000 | 113,866,000 | |
Total | 16,401,000 | 215,550,000 | |
Gross Unrealized Losses | |||
Less than 12 months | (63,000) | (1,042,000) | |
12 months or more | (51,000) | (1,290,000) | |
Total | (114,000) | (2,332,000) | |
Municipal debt securities | |||
Fair Value | |||
Less than 12 months | 48,622,000 | 10,651,000 | |
12 months or more | 627,000 | 624,000 | |
Total | 49,249,000 | 11,275,000 | |
Gross Unrealized Losses | |||
Less than 12 months | (2,053,000) | (112,000) | |
12 months or more | (1,000) | (6,000) | |
Total | (2,054,000) | (118,000) | |
Non-U.S. government securities: | |||
Fair Value | |||
Less than 12 months | 10,302,000 | 9,664,000 | |
12 months or more | 0 | 0 | |
Total | 10,302,000 | 9,664,000 | |
Gross Unrealized Losses | |||
Less than 12 months | (1,232,000) | (47,000) | |
12 months or more | 0 | 0 | |
Total | (1,232,000) | (47,000) | |
Corporate debt securities | |||
Fair Value | |||
Less than 12 months | 331,951,000 | 83,013,000 | |
12 months or more | 1,423,000 | 14,531,000 | |
Total | 333,374,000 | 97,544,000 | |
Gross Unrealized Losses | |||
Less than 12 months | (17,431,000) | (576,000) | |
12 months or more | (2,000) | (16,000) | |
Total | (17,433,000) | (592,000) | |
Residential and commercial mortgage securities | |||
Fair Value | |||
Less than 12 months | 120,241,000 | 59,341,000 | |
12 months or more | 3,011,000 | 3,442,000 | |
Total | 123,252,000 | 62,783,000 | |
Gross Unrealized Losses | |||
Less than 12 months | (11,323,000) | (1,059,000) | |
12 months or more | (802,000) | (42,000) | |
Total | (12,125,000) | (1,101,000) | |
Asset-backed securities | |||
Fair Value | |||
Less than 12 months | 213,185,000 | 78,813,000 | |
12 months or more | 69,388,000 | 109,536,000 | |
Total | 282,573,000 | 188,349,000 | |
Gross Unrealized Losses | |||
Less than 12 months | (9,029,000) | (202,000) | |
12 months or more | (6,577,000) | (1,219,000) | |
Total | (15,606,000) | (1,421,000) | |
Money market funds | |||
Fair Value | |||
Less than 12 months | 20,545,000 | ||
12 months or more | 0 | ||
Total | 20,545,000 | ||
Gross Unrealized Losses | |||
Less than 12 months | (8,000) | ||
12 months or more | 0 | ||
Total | (8,000) | ||
Essent Re | |||
Other Information | |||
Fair value of the required investments on deposit in trusts | 872,700,000 | 805,500,000 | |
Essent Guaranty | |||
Other Information | |||
Assets on deposit under reinsurance agreement | 8,500,000 | 6,400,000 | |
Assets on deposit for the benefit of the sponsor | $ 6,400,000 | $ 6,400,000 | |
Internal Investment Grade | Credit Concentration Risk | Accounts Receivable | |||
Other Information | |||
Concentration risk, percentage | 98.00% |
Investments (Details 5)
Investments (Details 5) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Components of net investment income | ||
Gross investment income | $ 21,736 | $ 20,801 |
Investment expenses | (1,103) | (921) |
Net investment income | 20,633 | 19,880 |
Fixed maturities | ||
Components of net investment income | ||
Gross investment income | 20,614 | 19,743 |
Short-term investments | ||
Components of net investment income | ||
Gross investment income | $ 1,122 | $ 1,058 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net premiums written: | ||
Direct | $ 205,980 | $ 183,682 |
Ceded | (14,237) | (6,038) |
Net premiums written | 191,743 | 177,644 |
Net premiums earned: | ||
Direct | 220,733 | 183,829 |
Ceded | (14,237) | (6,038) |
Net premiums earned | $ 206,496 | $ 177,791 |
Reinsurance (Details 2)
Reinsurance (Details 2) - USD ($) $ in Billions | Sep. 01, 2019 | Mar. 31, 2020 | Dec. 31, 2022 |
Quota Share Reinsurance | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Ceded premiums earned related to percent of risk on eligible single premium policies | 40.00% | ||
Ceded premiums earned related to percent of risk on all other eligible policies written | 20.00% | ||
Ceding commission, percent | 20.00% | ||
Profit commission, percent, maximum | 60.00% | ||
RIF ceded | $ 1.9 | ||
Other Reinsurance | Essent Guaranty | Mortgage Insurance | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Amortization period | 10 years | ||
Variable Interest Entity, Not Primary Beneficiary | Radnor Re | Essent Guaranty | Mortgage Insurance | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Amortization period | 10 years | ||
Mortgage Insurance Linked Notes | Variable Interest Entity, Not Primary Beneficiary | Radnor Re | Mortgage Insurance | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Reinsurance retention policy, debt issued to cover insurance, term | 10 years | ||
Forecast | Quota Share Reinsurance | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Profit commission, percent, maximum | 63.00% |
Reinsurance (Details 3)
Reinsurance (Details 3) - 2017 | Mar. 31, 2020 |
Radnor Re 2018-1 Ltd. | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Increase of margin component of reinsurance premium | 50.00% |
Panel of Reinsurers | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Increase of margin component of reinsurance premium | 50.00% |
Reinsurance (Details 4)
Reinsurance (Details 4) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Insurance in Force | $ 117,596,900 |
Remaining Risk in Force | 30,178,131 |
Remaining Reinsurance in Force | 1,705,893 |
Remaining First Layer Retention | 898,649 |
Radnor Entities | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 1,397,683 |
Other Reinsurance | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 308,210 |
2015 & 2016 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Insurance in Force | 25,025,497 |
Remaining Risk in Force | 6,762,026 |
Remaining Reinsurance in Force | 244,105 |
Remaining First Layer Retention | 208,111 |
2015 & 2016 | Radnor Re 2019-2 Ltd | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 244,105 |
2015 & 2016 | Other Reinsurance | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 0 |
2017 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Insurance in Force | 26,279,318 |
Remaining Risk in Force | 6,665,183 |
Remaining Reinsurance in Force | 445,347 |
Remaining First Layer Retention | 221,852 |
2017 | Radnor Re 2018-1 Ltd. | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 280,180 |
2017 | Other Reinsurance | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 165,167 |
2018 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Insurance in Force | 31,375,687 |
Remaining Risk in Force | 7,923,964 |
Remaining Reinsurance in Force | 465,450 |
Remaining First Layer Retention | 253,081 |
2018 | Radnor Re 2019-1 Ltd. | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 377,509 |
2018 | Other Reinsurance | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 87,941 |
2019 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Insurance in Force | 34,916,398 |
Remaining Risk in Force | 8,826,958 |
Remaining Reinsurance in Force | 550,991 |
Remaining First Layer Retention | 215,605 |
2019 | Radnor Re 2020-1 Ltd. | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | 495,889 |
2019 | Other Reinsurance | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |
Remaining Reinsurance in Force | $ 55,102 |
Reinsurance (Details 5)
Reinsurance (Details 5) $ in Thousands | Mar. 31, 2020USD ($) |
Variable Interest Entity [Line Items] | |
Total VIE Assets | $ 1,397,683 |
Maximum Exposure to Loss, On - Balance Sheet | (5,961) |
Maximum Exposure to Loss, Off - Balance Sheet | 10,816 |
Maximum Exposure to Loss | 4,855 |
Radnor Re 2018-1 Ltd. | Variable Interest Entity, Not Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Total VIE Assets | 280,180 |
Maximum Exposure to Loss, On - Balance Sheet | 169 |
Maximum Exposure to Loss, Off - Balance Sheet | 1,580 |
Maximum Exposure to Loss | 1,749 |
Radnor Re 2019-1 Ltd. | Variable Interest Entity, Not Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Total VIE Assets | 377,509 |
Maximum Exposure to Loss, On - Balance Sheet | (2,441) |
Maximum Exposure to Loss, Off - Balance Sheet | 1,967 |
Maximum Exposure to Loss | (474) |
Radnor Re 2019-2 Ltd. | Variable Interest Entity, Not Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Total VIE Assets | 244,105 |
Maximum Exposure to Loss, On - Balance Sheet | (1,771) |
Maximum Exposure to Loss, Off - Balance Sheet | 1,210 |
Maximum Exposure to Loss | (561) |
Radnor Re 2020-1 Ltd. | Variable Interest Entity, Not Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Total VIE Assets | 495,889 |
Maximum Exposure to Loss, On - Balance Sheet | (1,918) |
Maximum Exposure to Loss, Off - Balance Sheet | 6,059 |
Maximum Exposure to Loss | $ 4,141 |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020USD ($)loan | Mar. 31, 2019USD ($)loan | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (LAE) | ||||
Reserve for losses and LAE at beginning of period | $ 69,362 | $ 49,464 | ||
Less: Reinsurance recoverables | 98 | 0 | $ 71 | $ 0 |
Net reserve for losses and LAE at beginning of period | 69,291 | 49,464 | ||
Add provision for losses and LAE, net of reinsurance, occurring in: | ||||
Current period | 15,419 | 11,828 | ||
Prior years | (7,356) | (4,721) | ||
Net incurred losses and LAE during the current period | 8,063 | 7,107 | ||
Deduct payments for losses and LAE, net of reinsurance, occurring in: | ||||
Current period | 1 | 15 | ||
Prior years | 4,110 | 3,072 | ||
Net loss and LAE payments during the current period | 4,111 | 3,087 | ||
Net reserve for losses and LAE at end of period | 73,243 | 53,484 | ||
Plus: Reinsurance recoverables | 98 | 0 | $ 71 | $ 0 |
Reserve for losses and LAE at end of period | $ 73,341 | $ 53,484 | ||
Loans in default at end of period | loan | 5,841 | 4,096 |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | ||
Incurred claims and claim adjustment expenses | $ 4,110 | $ 3,072 |
Favorable prior year development | 7,356 | 4,721 |
Reserve for losses and LAE, for prior years | $ 57,800 | $ 41,700 |
Debt Obligations (Details)
Debt Obligations (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 500,000,000 | |
Amount outstanding, gross | $ 425,000,000 | $ 225,000,000 |
Weighted average interest during period | 2.87% | 3.51% |
Revolving Credit Facility | ||
Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 275,000,000 | |
Credit facility, commitment fee rate | 0.25% | |
Term Loan | ||
Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 225,000,000 | |
Uncommited Line | ||
Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 100,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | |||
Renewal term (up to) | 10 years | ||
Operating lease | $ 9,500 | $ 10,000 | |
Present value of lease liabilities | 11,937 | $ 12,600 | |
Lease cost | 672 | $ 601 | |
Indemnifications related to contract underwriting services | |||
Loss Contingencies [Line Items] | |||
Amount paid for remedies (less than) | $ 100 | $ 100 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lease cost: | ||
Operating lease cost | $ 700 | $ 591 |
Short-term lease cost | 5 | 42 |
Sublease income | (33) | (32) |
Total lease cost | $ 672 | $ 601 |
Other information: | ||
Weighted average remaining lease term - operating leases | 4 years 6 months | 5 years 6 months |
Weighted average discount rate - operating leases | 4.00% | 4.10% |
Commitments and Contingencies_4
Commitments and Contingencies (Details 3) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
2020 (April 1 through December 31) | $ 2,229 | |
2021 | 2,999 | |
2022 | 3,003 | |
2023 | 2,752 | |
2024 | 1,334 | |
2025 and thereafter | 793 | |
Total lease payments to be paid | 13,110 | |
Less: Future interest expense | (1,173) | |
Present value of lease liabilities | $ 11,937 | $ 12,600 |
Capital Stock (Details)
Capital Stock (Details) - $ / shares | Jun. 12, 2020 | May 08, 2020 | Mar. 10, 2020 | Feb. 29, 2020 |
Dividends Payable [Line Items] | ||||
Quarterly cash dividends declared (in dollars per share) | $ 0.16 | |||
Quarterly cash dividends paid (in dollars per share) | $ 0.16 | |||
Subsequent Event | ||||
Dividends Payable [Line Items] | ||||
Quarterly cash dividends declared (in dollars per share) | $ 0.16 | |||
Forecast | ||||
Dividends Payable [Line Items] | ||||
Quarterly cash dividends paid (in dollars per share) | $ 0.16 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) shares in Thousands | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Share Units | |
Number of Shares | |
Outstanding at beginning of year (in shares) | 351 |
Granted (in shares) | 312 |
Vested (in shares) | (169) |
Forfeited (in shares) | (8) |
Outstanding at end of period (in shares) | 486 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 39.78 |
Granted (in dollars per share) | $ / shares | 51.50 |
Vested (in dollars per share) | $ / shares | 36.70 |
Forfeited (in dollars per share) | $ / shares | 49.23 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 48.21 |
DEUs | |
Number of Shares | |
Outstanding at beginning of year (in shares) | 5 |
Granted (in shares) | 6 |
Vested (in shares) | (2) |
Forfeited (in shares) | 0 |
Outstanding at end of period (in shares) | 9 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 51.11 |
Granted (in dollars per share) | $ / shares | 26.83 |
Vested (in dollars per share) | $ / shares | 51.11 |
Forfeited (in dollars per share) | $ / shares | 42.06 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 35.02 |
Time and Performance- Based Share Awards | Nonvested shares | |
Number of Shares | |
Outstanding at beginning of year (in shares) | 394 |
Granted (in shares) | 109 |
Vested (in shares) | (140) |
Forfeited (in shares) | 0 |
Outstanding at end of period (in shares) | 363 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 42.02 |
Granted (in dollars per share) | $ / shares | 51.52 |
Vested (in dollars per share) | $ / shares | 36.29 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 47.09 |
Time-Based Share Awards | Nonvested shares | |
Number of Shares | |
Outstanding at beginning of year (in shares) | 169 |
Granted (in shares) | 69 |
Vested (in shares) | (85) |
Forfeited (in shares) | 0 |
Outstanding at end of period (in shares) | 153 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 41.31 |
Granted (in dollars per share) | $ / shares | 51.52 |
Vested (in dollars per share) | $ / shares | 40.47 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 46.34 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 2) - 2013 Plan - Nonvested shares - Certain members of senior management | 1 Months Ended |
Feb. 29, 2020 | |
Time-Based | |
Stock-based compensation | |
Performance period | 3 years |
Performance -Based | |
Stock-based compensation | |
Performance period | 3 years |
First Vesting Period | Time-Based | |
Stock-based compensation | |
Vesting (as a percent) | 33.33% |
Second Vesting Period | Time-Based | |
Stock-based compensation | |
Vesting (as a percent) | 33.33% |
Third Vesting Period | Time-Based | |
Stock-based compensation | |
Vesting (as a percent) | 33.33% |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 3) - Nonvested shares | 3 Months Ended |
Mar. 31, 2020 | |
Compounded Annual Book Value Per Share Growth 13% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth | 13.00% |
Nonvested Common Shares Earned | 10.00% |
Compounded Annual Book Value Per Share Growth 13% | Maximum | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth | 13.00% |
Nonvested Common Shares Earned | 0.00% |
Compounded Annual Book Value Per Share Growth 14% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth | 14.00% |
Nonvested Common Shares Earned | 35.00% |
Compounded Annual Book Value Per Share Growth 15% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth | 15.00% |
Nonvested Common Shares Earned | 60.00% |
Compounded Annual Book Value Per Share Growth 16% | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth | 16.00% |
Nonvested Common Shares Earned | 85.00% |
Compounded Annual Book Value Per Share Growth 17% | Minimum | |
Stock-based compensation | |
Compounded Annual Book Value Per Share Growth | 17.00% |
Nonvested Common Shares Earned | 100.00% |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details 4) - shares | May 08, 2020 | Feb. 29, 2020 | Jan. 31, 2020 | Mar. 31, 2020 |
Share Units | ||||
Stock-based compensation | ||||
Shares granted (in shares) | 312,000 | |||
Time-Based | Nonvested shares | ||||
Stock-based compensation | ||||
Shares granted (in shares) | 69,000 | |||
Employee | Incentive Program Bonus Award Fiscal Year Performance | Time-Based | Share Units | ||||
Stock-based compensation | ||||
Award vesting period | 3 years | 3 years | ||
Employee | First Vesting Period | Incentive Program Bonus Award Fiscal Year Performance | Time-Based | Share Units | ||||
Stock-based compensation | ||||
Vesting (as a percent) | 33.33% | 33.33% | ||
Employee | Second Vesting Period | Incentive Program Bonus Award Fiscal Year Performance | Time-Based | Share Units | ||||
Stock-based compensation | ||||
Vesting (as a percent) | 33.33% | 33.33% | ||
Employee | Third Vesting Period | Incentive Program Bonus Award Fiscal Year Performance | Time-Based | Share Units | ||||
Stock-based compensation | ||||
Vesting (as a percent) | 33.33% | 33.33% | ||
Subsequent Event | Maximum | Director | Time-Based | Share Units | ||||
Stock-based compensation | ||||
Award vesting period | 1 year | |||
Shares granted (in shares) | 38,128 |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details 5) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock-based compensation | ||
Shares tendered by employees to pay employee withholding taxes (in shares) | 139,853 | |
Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares | ||
Compensation expense | $ 4,780 | $ 4,100 |
Income tax benefit | 918 | 765 |
Nonvested Shares, Share Units Or DEU | ||
Stock-based compensation | ||
Total fair value of shares vested | 17,800 | $ 22,000 |
Nonvested Shares, Share Units | ||
Stock-based compensation | ||
Total unrecognized compensation expense | $ 37,500 | |
Expected weighted average period for recognition of expense | 2 years 4 months 24 days |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Components of income tax expense | ||
Current | $ 10,128 | $ 6,552 |
Deferred | 17,047 | 15,447 |
Total income tax expense | 27,175 | 21,999 |
Effective Income Tax Rate Reconciliation, Amount | ||
Tax provision at weighted average statutory rates | 27,376 | 23,938 |
Non-deductible expenses | 714 | 324 |
Excess tax benefits from stock-based compensation | (620) | (1,956) |
Tax exempt interest, net of proration | (342) | (443) |
Other | 47 | 136 |
Total income tax expense | $ 27,175 | $ 21,999 |
% of pretax income | ||
Tax provision at weighted average statutory rates | 15.50% | 16.00% |
Non-deductible expenses | 0.40% | 0.20% |
Excess tax benefits from stock-based compensation | (0.30%) | (1.30%) |
Tax exempt interest, net of proration | (0.20%) | (0.30%) |
Other | 0.00% | 0.10% |
Total income tax expense | 15.40% | 14.70% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Net deferred tax asset | ||
Deferred tax assets | $ 27,863 | $ 29,392 |
Deferred tax liabilities | (287,551) | (279,012) |
Net deferred tax liability | (259,688) | (249,620) |
Components of the net deferred tax asset | ||
Contingency reserves | (277,496) | (261,855) |
Unearned premium reserve | 15,897 | 16,641 |
Unrealized (gain) loss on investments | (6,235) | (13,214) |
Accrued expenses | 4,065 | 3,391 |
Deferred policy acquisition costs | (3,181) | (3,298) |
Unearned ceding commissions | 3,066 | 3,227 |
Fixed assets | 1,383 | 1,502 |
Start-up expenditures, net | 1,342 | 1,410 |
Change in fair market value of derivatives | 1,252 | 370 |
Loss reserves | 440 | 416 |
Nonvested shares | 410 | 2,426 |
Investments in limited partnerships | (400) | (400) |
Prepaid expenses | (131) | (132) |
Loss reserves - TCJA transition adjustment | (108) | (113) |
Organizational expenditures | 8 | 9 |
Net deferred tax liability | $ (259,688) | $ (249,620) |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Net purchases of T&L Bonds | $ 0 | $ 59,500,000 |
T&L Bonds held as of end of period | $ 261,885,000 | $ 261,885,000 |
Earnings per Share (EPS) (Detai
Earnings per Share (EPS) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net income | $ 149,523 | $ 127,720 |
Basic weighted average shares outstanding (in shares) | 97,949 | 97,595 |
Dilutive effect of nonvested shares (in shares) | 377 | 509 |
Diluted weighted average shares outstanding (in shares) | 98,326 | 98,104 |
Basic earnings per share (in dollars per share) | $ 1.53 | $ 1.31 |
Diluted earnings per share (in dollars per share) | $ 1.52 | $ 1.30 |
Earnings per Share (EPS) (Det_2
Earnings per Share (EPS) (Details 2) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
EPS calculation | ||
Antidilutive nonvested shares (in shares) | 353,230 | 142,642 |
Performance-based share awards | ||
EPS calculation | ||
Percentage of award issuable if current period end were end of contingency period | 100.00% | 100.00% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other comprehensive income (loss): | ||
Other comprehensive income (loss), before tax | $ (17,053) | $ 46,317 |
Other comprehensive income (loss): | ||
Other comprehensive (income) loss, tax effect | 6,979 | (7,951) |
Net of Tax | ||
Stockholders equity, beginning of period | 2,984,845 | |
Other comprehensive income (loss): | ||
Total other comprehensive income (loss) | (10,074) | 38,366 |
Stockholders equity, end of period | 3,107,074 | 2,527,803 |
Accumulated Other Comprehensive Income (Loss) | ||
Before Tax | ||
AOCI before tax, beginning of period | 69,401 | (33,276) |
Other comprehensive income (loss): | ||
AOCI before tax, end of period | 52,348 | 13,041 |
Tax Effect | ||
AOCI tax effect, beginning of period | (13,214) | 4,283 |
Other comprehensive income (loss): | ||
AOCI tax effect, end of period | (6,235) | (3,668) |
Net of Tax | ||
Stockholders equity, beginning of period | 56,187 | (28,993) |
Other comprehensive income (loss): | ||
Total other comprehensive income (loss) | (10,074) | 38,366 |
Stockholders equity, end of period | 46,113 | 9,373 |
Accumulated Net Investment Gains (Losses) On Investments | ||
Other comprehensive income (loss): | ||
Unrealized holding gains (losses) arising during the period, before tax | (13,918) | 46,977 |
Less: Reclassification adjustment for gains included in net income, before tax | (3,135) | (660) |
Other comprehensive income (loss), before tax | (17,053) | 46,317 |
Other comprehensive income (loss): | ||
Unrealized holding (gains) losses arising during the period, tax effect | 6,403 | (8,071) |
Less: Reclassification adjustment for gains included in net income, tax effect | 576 | 120 |
Other comprehensive (income) loss, tax effect | 6,979 | (7,951) |
Other comprehensive income (loss): | ||
Unrealized holding gains (losses) arising during the period, net of tax | (7,515) | 38,906 |
Less: Reclassification adjustment for gains included in net income, net of tax | (2,559) | (540) |
Total other comprehensive income (loss) | $ (10,074) | $ 38,366 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial Assets: | ||
Fair Value | $ 3,705,527 | $ 3,350,747 |
Money market funds | ||
Financial Assets: | ||
Fair Value | 595,165 | 315,362 |
Fair Value, Measurements, Recurring | ||
Financial Assets: | ||
Total assets at fair value | 3,705,527 | 3,350,747 |
Fair Value, Measurements, Recurring | U.S. Treasury securities | ||
Financial Assets: | ||
Fair Value | 235,565 | 242,206 |
Fair Value, Measurements, Recurring | U.S. agency securities | ||
Financial Assets: | ||
Fair Value | 33,892 | 33,605 |
Fair Value, Measurements, Recurring | U.S. agency mortgage-backed securities | ||
Financial Assets: | ||
Fair Value | 876,298 | 848,334 |
Fair Value, Measurements, Recurring | Municipal debt securities | ||
Financial Assets: | ||
Fair Value | 419,688 | 361,638 |
Fair Value, Measurements, Recurring | Non-U.S. government securities: | ||
Financial Assets: | ||
Fair Value | 52,209 | 54,995 |
Fair Value, Measurements, Recurring | Corporate debt securities | ||
Financial Assets: | ||
Fair Value | 879,503 | 880,301 |
Fair Value, Measurements, Recurring | Residential and commercial mortgage securities | ||
Financial Assets: | ||
Fair Value | 275,532 | 288,281 |
Fair Value, Measurements, Recurring | Asset-backed securities | ||
Financial Assets: | ||
Fair Value | 337,675 | 326,025 |
Fair Value, Measurements, Recurring | Money market funds | ||
Financial Assets: | ||
Fair Value | 595,165 | 315,362 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | ||
Financial Assets: | ||
Total assets at fair value | 830,730 | 557,568 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. Treasury securities | ||
Financial Assets: | ||
Fair Value | 235,565 | 242,206 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. agency securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. agency mortgage-backed securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Municipal debt securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Non-U.S. government securities: | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Corporate debt securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Residential and commercial mortgage securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Asset-backed securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Money market funds | ||
Financial Assets: | ||
Fair Value | 595,165 | 315,362 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Financial Assets: | ||
Total assets at fair value | 2,874,797 | 2,793,179 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. Treasury securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. agency securities | ||
Financial Assets: | ||
Fair Value | 33,892 | 33,605 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. agency mortgage-backed securities | ||
Financial Assets: | ||
Fair Value | 876,298 | 848,334 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Municipal debt securities | ||
Financial Assets: | ||
Fair Value | 419,688 | 361,638 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Non-U.S. government securities: | ||
Financial Assets: | ||
Fair Value | 52,209 | 54,995 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Financial Assets: | ||
Fair Value | 879,503 | 880,301 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Residential and commercial mortgage securities | ||
Financial Assets: | ||
Fair Value | 275,532 | 288,281 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Financial Assets: | ||
Fair Value | 337,675 | 326,025 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Money market funds | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Financial Assets: | ||
Total assets at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. Treasury securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. agency securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. agency mortgage-backed securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Municipal debt securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Non-U.S. government securities: | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Corporate debt securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Residential and commercial mortgage securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Asset-backed securities | ||
Financial Assets: | ||
Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Money market funds | ||
Financial Assets: | ||
Fair Value | $ 0 | $ 0 |
Statutory Accounting (Details)
Statutory Accounting (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Essent Guaranty | |||
Dividends Restrictions | |||
Statutory net income | $ 122,644 | $ 101,989 | |
Statutory surplus | 1,074,153 | 905,534 | |
Contingency reserve liability | 1,270,864 | 981,207 | |
Increase in contingency reserve | 73,600 | ||
Essent PA | |||
Dividends Restrictions | |||
Statutory net income | 1,627 | 2,093 | |
Statutory surplus | 53,648 | 50,216 | |
Contingency reserve liability | 53,854 | 49,744 | |
Increase in contingency reserve | 900 | ||
Essent Re | |||
Dividends Restrictions | |||
Statutory net income | 49,500 | $ 39,500 | |
Statutory capital and surplus | $ 1,000,000 | $ 939,200 |