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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

10. Income Taxes

Income Tax Provision

The components of our consolidated income tax provision from continuing operations are as follows.

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current provision (benefit)

 

$

4,575

 

 

$

(633

)

 

$

2,920

 

Deferred provision

 

 

162,275

 

 

 

165,001

 

 

 

206,925

 

Total income tax provision

 

$

166,850

 

 

$

164,368

 

 

$

209,845

 

 

The reconciliation of taxes computed at the statutory tax rate of 21% in 2024, 2023 and 2022 to the provision for income taxes is as follows.

 

Reconciliation of provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

(In thousands)

 

$

 

 

% of Pretax Income

 

 

$

 

 

% of Pretax Income

 

 

$

 

 

% of Pretax Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes computed at the statutory tax rate

 

$

161,971

 

 

 

21.0

%

 

$

161,172

 

 

 

21.0

%

 

$

200,084

 

 

 

21.0

%

Change in tax resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State tax provision (benefit), net of federal impact

 

 

537

 

 

 

0.1

 %

 

 

8,988

 

 

 

1.2

 %

 

 

20,869

 

 

 

2.2

 %

Valuation allowance

 

 

3,236

 

 

 

0.4

 %

 

 

(6,283

)

 

 

(0.8

)%

 

 

(13,791

)

 

 

(1.4

)%

Nondeductible compensation expense

 

 

8,668

 

 

 

1.1

 %

 

 

4,659

 

 

 

0.6

 %

 

 

4,413

 

 

 

0.5

 %

Other nontaxable or nondeductible items

 

 

(6,344

)

 

 

(0.8

)%

 

 

(1,679

)

 

 

(0.3

)%

 

 

1,997

 

 

 

0.1

 %

Other, net

 

 

(1,218

)

 

 

(0.2

)%

 

 

(2,489

)

 

 

(0.3

)%

 

 

(3,727

)

 

 

(0.4

)%

Income tax provision

 

$

166,850

 

 

 

21.6

%

 

$

164,368

 

 

 

21.4

%

 

$

209,845

 

 

 

22.0

%

 

As of December 31, 2024 and 2023, our current federal income tax liability primarily relates to applying the standards of accounting for uncertainty in income taxes, and is included as a component of other liabilities in our consolidated balance sheets. See Note 9 for additional detail on the components of our other liabilities.

Deferred Tax Assets and Liabilities

The significant components of our net deferred tax assets and liabilities from continuing operations are summarized as follows.

Deferred tax assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

(In thousands)

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax assets

 

 

 

 

 

 

Net unrealized loss on investments

 

$

93,201

 

 

$

88,065

 

State income taxes

 

 

46,463

 

 

 

46,170

 

Unearned premiums

 

 

24,928

 

 

 

24,948

 

Goodwill and intangibles

 

 

24,393

 

 

 

29,197

 

Capitalized research and development

 

 

16,060

 

 

 

12,450

 

Accrued expenses

 

 

11,983

 

 

 

10,829

 

Other

 

 

42,562

 

 

 

43,227

 

Total gross deferred tax assets

 

 

259,590

 

 

 

254,886

 

Less: Valuation allowance

 

 

66,590

 

 

 

63,354

 

Total deferred tax assets

 

 

193,000

 

 

 

191,532

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

 

 

 

 

Contingency reserve

 

 

925,152

 

 

 

755,481

 

Other

 

 

14,533

 

 

 

25,615

 

Total deferred tax liabilities

 

 

939,685

 

 

 

781,096

 

 

 

 

 

 

 

 

Net deferred tax asset (liability)

 

$

(746,685

)

 

$

(589,564

)

 

As of December 31, 2024, we have generated deferred tax assets related to unrealized capital losses, and we consider it more likely than not that these assets will be realized. We will continue to monitor the level of these losses and our overall ability to realize the related deferred tax assets in future periods.

In addition, certain entities within our consolidated group have generated net deferred tax assets relating primarily to state and local NOL carryforwards which, if unutilized, will expire during various future tax periods. We have determined that certain of these entities may continue to generate taxable losses on a separate company basis in the near term and may not be able to fully utilize certain of their state and local NOLs on their state and local tax returns. Therefore, we have concluded a valuation allowance is required with respect to deferred tax assets relating to these state and local NOLs and other state timing adjustments.

As a mortgage guaranty insurer, we are eligible for a tax deduction, subject to certain limitations, under Internal Revenue Code Section 832(e) 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, in conjunction with quarterly federal tax payment due dates, we purchase non-interest-bearing U.S. Mortgage Guaranty Tax and Loss Bonds issued by the U.S. Department of the Treasury in an amount equal to the tax benefit derived from deducting any portion of our statutory contingency reserves. As of December 31, 2024 and 2023, we held $921 million and $750 million, respectively, of these bonds, which are reported as prepaid federal income taxes in our consolidated balance sheets. The corresponding deduction of our statutory contingency reserves resulted in the recognition of a net deferred tax liability. See Note 16 for additional information about our U.S. Mortgage Guaranty Tax and Loss Bonds.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending gross unrecognized tax benefits, excluding interest and penalties, is as follows.

 

Reconciliation of gross unrecognized tax benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

19,931

 

 

$

20,810

 

 

$

19,888

 

Tax positions related to the current year:

 

 

 

 

 

 

 

 

 

Increases

 

 

698

 

 

 

314

 

 

 

1,791

 

Decreases

 

 

—

 

 

 

(290

)

 

 

—

 

Tax positions related to prior years:

 

 

 

 

 

 

 

 

 

Increases

 

 

18,742

 

 

 

20,387

 

 

 

17,666

 

Decreases

 

 

(106

)

 

 

(667

)

 

 

(17

)

Lapses of applicable statute of limitation

 

 

(18,631

)

 

 

(20,623

)

 

 

(18,518

)

Balance at end of period

 

$

20,634

 

 

$

19,931

 

 

$

20,810

 

 

 

 

 

 

 

 

 

 

 

Net unrecognized tax benefits that, if recognized, would affect the effective tax rate

 

$

4,843

 

 

$

3,519

 

 

$

2,827

 

 

Our gross unrecognized tax benefits increased from December 31, 2023, to December 31, 2024, primarily as a result of the impact of unrecognized tax benefits associated with our recognition of certain premium income, partially offset by reductions related to lapses of the statute of limitations. Although unrecognized tax benefits decreased due to statute expirations, certain amounts for premium income recognition continued to impact subsequent years, resulting in a corresponding increase in unrecognized tax benefits related to premium income recognition.

Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months, based on the information currently available, we do not expect any change to be material to our consolidated financial condition.

The company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2021. Additionally, among the entities within our consolidated group, various tax years remain open to potential examination by state and local taxing authorities.