May 4, 2017

NMI Holdings, Inc. Reports First Quarter 2017 Financial Results

EMERYVILLE, CA -- (Marketwired) -- 05/04/17 --

NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $5.5 million, or $0.09 per share, for the first quarter ended Mar. 31, 2017. Results for the quarter include fees and expenses of approximately $1.6 million related to repricing and extension of the company's Term Loan and the previously announced issuance of Insurance-Linked Notes. The company reported a net loss of $3.9 million, or $0.07 per share, in the first quarter of 2016.

Bradley Shuster, chairman and CEO of National MI, said, "We had another great quarter at National MI, achieving new records in the important metrics of insurance in force, premiums earned, master policies and customers generating NIW. Also, subsequent to the end of the quarter, we executed an Insurance-Linked Notes transaction that enhances National MI's financial strength by providing a layer of protection against adverse losses, while at the same time providing expected additional writing capacity under PMIERs of approximately $200 million. Our estimated after-tax cost of this coverage and capital relief is approximately three percent."

  • As of March 31, 2017, the company had primary insurance-in-force of $34.8 billion, up 8% from $32.2 billion at the prior quarter end and up 87% over $18.6 billion as of March 31, 2016.
  • Premiums earned for the quarter were $33.2 million, including $2.5 million attributable to cancellation of single premium policies, which compares with $32.8 million, including $5.1 million related to cancellations, in the prior quarter. Premiums earned in the first quarter of 2017 were up 68% over premium revenue of $19.8 million in the same quarter a year ago, which included $2.3 million related to cancellations.
  • NIW mix was 81% monthly premium product, which compares with 75% in the prior quarter and 59% in the first quarter of 2016.
  • Total underwriting and operating expenses in the first quarter were $26.0 million, including share-based compensation expense of $1.9 million. Expense in the quarter includes fees and expenses of approximately $1.6 million related to repricing and extension of the company's Term Loan and the previously announced issuance of Insurance-Linked Notes. This compares with total underwriting and operating expenses of $23.3 million, including $1.9 million of share-based compensation, in the prior quarter, and $22.7 million, including $1.4 million of share-based compensation, in the same quarter a year ago.
  • Loss expense for the quarter was $0.6 million, resulting in a loss ratio of 2%.
  • At quarter-end, cash and investments were $671 million, including $59 million at the holding company, and book equity was $484 million, equal to $8.09 per share.
  • At quarter-end, the company had total PMIERs available assets of $467 million, which compares with risk- based required assets under PMIERs of $399 million.
   
  Quarter   Quarter   Quarter   Growth   Growth  
  Ended   Ended   Ended   Q/Q   Y/Y  
  3/31/2017   12/31/2016 (1)   3/31/2016          
Primary Insurance-in-Force ($billions) 34.78   32.17   18.56   8 % 87 %
New Insurance Written - NIW ($billions)                    
  Monthly premium 2.89   3.9   2.49   -26 % 16 %
  Single premium 0.67   1.34   1.76   -50 % -62 %
  Total 3.56   5.24   4.25   -32 % -16 %
Premiums Earned ($millions) 33.23   32.83   19.81   1 % 68 %
Underwriting & Operating Expense ($millions) 25.99   23.28   22.67   12 % 15 %
Loss Expense ($millions) 0.64   0.80   0.46   -20 % 39 %
Loss Ratio 2 % 2 % 2 %        
Cash & Investments ($millions) 671   677   630   -1 % 7 %
Book Equity ($millions) 484   476   410   2 % 18 %
Book Value per Share 8.09   8.04   6.94   1 % 17 %
Approved Master Policies 1,174   1,131   1,023   4 % 15 %
Customers Generating NIW 537   532   469   1 % 14 %
(1) The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended March 31, 2017 for further details.
 

Conference Call and Webcast Details
The company will hold a conference call and live webcast today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The call also can be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 for international callers using Conference ID: 3499361, or by referencing NMI Holdings, Inc.

About National MI
National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc. (NASDAQ: NMIH), is a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: our ability to implement our business strategy, including our ability to attract and retain a diverse customer base and to achieve a diversified mix of business across the spectrum of our product offerings; changes in the business practices of the GSEs that may impact the use of private mortgage insurance; our ongoing ability to comply with the financial requirements of the PMIERs; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; our ability to successfully execute and implement our capital plans, including our ability to access the reinsurance market and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; heightened competition for our mortgage insurance business from other private mortgage insurers and the FHA; adoption of new or changes to existing laws and regulations that impact the mortgage insurance industry or their enforcement and implementation by regulators; changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular; our implementation of complex infrastructure, systems, procedures and internal controls to support our business and regulatory and reporting requirements; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; our ability to utilize our net operating loss carry forwards, which could be limited or eliminated in various ways, including if we experience an ownership change as defined in Section 382 of the Internal Revenue Code; and general economic downturns and volatility. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2016, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com

   
Consolidated statements of operations and comprehensive income   For the three months ended March 31,  
    2017     2016  
Revenues   (In Thousands, except for share data)  
  Net premiums earned   $ 33,225     $ 19,807  
  Net investment income     3,807       3,231  
  Net realized investment gains (losses)     (58 )     (885 )
  Other revenues     80       32  
Total revenues     37,054       22,185  
Expenses                
  Insurance claims and claims expenses     635       458  
  Underwriting and operating expenses     25,989       22,672  
Total expenses     26,624       23,130  
Other (expense) income                
                 
  (Loss) gain from change in fair value of warrant liability     (196 )     670  
  Interest expense     (3,494 )     (3,632 )
Total other (expense)     (3,690 )     (2,962 )
                 
Income (loss) before income taxes     6,740       (3,907 )
  Income tax expense     1,248       -  
Net income (loss)   $ 5,492     $ (3,907 )
                 
Earnings (loss) per share                
  Basic   $ 0.09     $ (0.07 )
  Diluted   $ 0.09     $ (0.07 )
                 
Weighted average common shares outstanding                
Basic     59,183,973       58,936,694  
Diluted     62,338,856       58,936,694  
Loss Ratio(1)     2 %     2 %
Expense Ratio(2)     78       114  
Combined ratio     80 %     117 %
                 
Net income (loss)   $ 5,492     $ (3,907 )
Other comprehensive (loss) income, net of tax:                
  Net unrealized gains in accumulated other comprehensive income, net of tax expense of $664 and $0 for the quarters ended March 31, 2017 and March 31, 2016, respectively    
1,175
     
9,101
 
                 
  Reclassification adjustment for losses included in net loss (gain), net of tax expense of $0 for the quarters ended March 31, 2017 and 2016    
58
     
885
 
Other comprehensive (loss) income, net of tax     1,233       9,986  
Comprehensive income   $ 6,725     $ 6,079  
(1) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
 
   
Consolidated balance sheets   March 31, 2017     December 31, 2016 (1)  
Assets   (In Thousands, except for share data)  
  Fixed maturities, available-for-sale, at fair value (amortized cost of $658,463 and                
  $630,688 as of March 31, 2017 and December 31, 2016, respectively)   $ 658,640     $ 628,969  
  Cash and cash equivalents     12,543       47,746  
  Premiums receivable     15,566       13,728  
  Accrued investment income     3,900       3,421  
  Prepaid expenses     2,935       1,991  
  Deferred policy acquisition costs, net     32,165       30,109  
  Software and equipment, net     21,168       20,402  
  Intangible assets and goodwill     3,634       3,634  
  Prepaid reinsurance premiums     38,348       37,921  
  Deferred tax asset, net     50,529       51,434  
  Other assets     734       542  
Total assets   $ 840,162     $ 839,897  
                 
Liabilities                
  Term loan   $ 144,010     $ 144,353  
  Unearned premiums     154,711       152,906  
  Accounts payable and accrued expenses     14,175       25,297  
  Reserve for insurance claims and claim expenses     3,761       3,001  
  Reinsurance funds withheld     31,243       30,633  
  Deferred ceding commission     4,790       4,831  
  Warrant liability, at fair value     3,563       3,367  
  Deferred tax liability, net     -       -  
Total liabilities     356,253       364,388  
Commitments and contingencies                
                 
Shareholders' equity                
  Common stock - class A shares, $0.01 par value; 59,783,358 and 59,145,161 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively (250,000,000 shares authorized)    

598
     

591
 
  Additional paid-in capital     578,081       576,927  
  Accumulated other comprehensive loss, net of tax     (4,054 )     (5,287 )
  Accumulated deficit     (90,716 )     (96,722 )
Total shareholders' equity     483,909       475,509  
Total liabilities and shareholders' equity   $ 840,162     $ 839,897  
(1) The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended March 31, 2017 for further details.
 
   
Historical Quarterly Data   2017     2016     2015  
   
March 31
    December
31, (4)
    September
30
   
June 30
   
March 31
    December
31
 
Revenues   (In Thousands, except for share data)  
  Net premiums earned   $ 33,225     $ 32,825     $ 31,808     $ 26,041     $ 19,807     $ 16,880  
  Net investment income     3,807       3,634       3,544       3,342       3,231       2,078  
                                                 
  Net realized investment (losses) gains     (58 )     65       66       61       (885 )     (121 )
  Other revenues     80       105       102       37       32       25  
Total revenues     37,054       36,629       35,520       29,481       22,185       18,862  
Expenses                                                
  Insurance claims and claims expenses     635       800       664       470       458       371  
  Underwriting and operating expenses     25,989       23,281       24,037       23,234       22,672       21,686  
Total expenses     26,624       24,081       24,701       23,704       23,130       22,057  
                                                 
Other (expense) income (1)     (3,690 )     (5,490 )     (4,530 )     (3,766 )     (2,962 )     (1,626 )
                                                 
Income (loss) before income taxes     6,740       7,058       6,289       2,011       (3,907 )     (4,821 )
  Income tax expense (benefit)     1,248       (52,664 )     114       -       -       -  
Net income (loss)   $ 5,492     $ 59,722     $ 6,175     $ 2,011     $ (3,907 )   $ (4,821 )
                                                 
Earnings (loss) per share                                                
  Basic   $ 0.09     $ 1.01     $ 0.10     $ 0.03     $ (0.07 )   $ (0.08 )
  Diluted   $ 0.09     $ 0.98     $ 0.10       0.03       (0.07 )     (0.08 )
                                                 
Weighted average common shares                                                
outstanding                                                
Basic     59,183,973       59,140,011       59,130,401       59,105,613       58,936,694       58,781,566  
Diluted     62,338,856       61,229,338       60,284,746       59,830,899       58,936,694       58,781,566  
                                                 
Other data                                                
Loss Ratio (2)     2 %     2 %     2 %     2 %     2 %     2 %
Expense Ratio (3)     78 %     71 %     76 %     89 %     114 %     128 %
Combined ratio     80 %     73 %     78 %     91 %     117 %     131 %
(1) Other (expense) income includes the gain from change in fair value of warrant liability, gain from settlement of warrants, and interest expense.
(2) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(3) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(4) The Q4 2016 quarterly data has been revised. Please refer to our Form 10-Q for the quarter ended March 31, 2017 for further details.
 

New Insurance Written (NIW), Insurance in Force (IIF) and Premiums

The tables below show primary and pool NIW and IIF, by quarter, for the last six quarters.

 
Primary NIW   Three months ended
    March 31,   December 31,   September 30,   June 30,   March 31,   December 31,
    2017   2016   2016   2016   2016   2015
            (In Millions)        
Monthly   $ 2,892   $ 3,904   $ 4,162   $ 3,700   $ 2,492   $ 2,029
Single     667     1,336     1,695     2,138     1,762     2,518
Primary   $ 3,559   $ 5,240   $ 5,857   $ 5,838   $ 4,254   $ 4,547
                                     
     
Primary and pool IIF   As of
    March 31,   December 31,   September 30,   June 30,   March 31,   December 31,
    2017   2016   2016   2016   2016   2015
            (In Millions)        
Monthly   $ 21,511   $ 19,205   $ 16,038   $ 12,529   $ 9,210   $ 6,958
Single     13,268     12,963     12,190     11,095     9,354     7,866
Primary     34,779     32,168     28,228     23,624     18,564     14,824
                                     
Pool     3,545     3,650     3,826     3,999     4,136     4,238
Total   $ 38,324   $ 35,818   $ 32,054   $ 27,623   $ 22,700   $ 19,062
                                     

Portfolio Statistics

The table below shows primary portfolio trends, by quarter, for the last six quarters.

   
Primary portfolio trends   As of and for the quarter ended  
    March 31,     December 31,     September 30,     June 30,     March 31,     December 31,  
    2017     2016     2016     2016     2016     2015  
    ($ Values In Millions)  
New insurance written   $ 3,559     $ 5,240     $ 5,857     $ 5,838     $ 4,254     $ 4,547  
New risk written     868       1,244       1,415       1,411       1,016       1,105  
Insurance in force (1)     34,779       32,168       28,228       23,624       18,564       14,824  
Risk in force (1)     8,444       7,790       6,847       5,721       4,487       3,586  
Policies in force (count) (1)     145,632       134,662       119,002       100,547       79,700       63,948  
Weighted-average coverage (2)     24.3 %     24.2 %     24.3 %     24.2 %     24.2 %     24.2 %
Loans in default (count)     207       179       115       79       55       36  
Percentage of loans in default     0.1 %     0.1 %     0.1 %     0.1 %     0.1 %     0.1 %
                                                 
Risk in force on defaulted loans   $ 12     $ 10     $ 6     $ 4     $ 3     $ 2  
Average premium yield (3)     0.40 %     0.44 %     0.48 %     0.47 %     0.45 %     0.49 %
Earnings from cancellations   $ 2.5     $ 5.1     $ 5.8     $ 3.5     $ 2.3     $ 1.4  
Annual persistency (4)     81.3 %     80.7 %     81.8 %     83.3 %     82.7 %     79.6 %
Quarterly persistency (5)     88.2 %     81.6 %     78.8 %     83.2 %     86.1 %     87.8 %
(1) Reported as of the end of the period.
(2) End of period risk in force (RIF) divided by IIF.
(3) Average premium yield is calculated by dividing net primary and pool premiums earned, net of reinsurance, by average gross IIF for the period, annualized.
(4) Defined as the percentage of IIF that remains on our books after any 12-month period.
(5) Defined as the percentage of IIF that remains on our books after any 3-month period, annualized.
 

The tables below reflect our total primary NIW by FICO, loan-to-value (LTV), and purchase/refinance mix.

     
Primary NIW by FICO   Three months ended
    March 31, 2017   December 31, 2016   March 31, 2016
        (In Millions)    
  > = 760   $ 1,683   $ 2,566   $ 2,283
  740-759     551     846     712
  720-739     456     647     473
  700-719     396     560     411
  680-699     264     375     245
  < =679     209     246     130
Total   $ 3,559   $ 5,240   $ 4,254
                   
                   
Primary NIW by LTV   Three months ended
    March 31, 2017   December 31, 2016   March 31, 2016
            (In Millions)      
  95.01% and above   $ 274   $ 355   $ 209
  90.01% to 95.00%     1,612     2,224     1,816
  85.01% to 90.00%     1,101     1,580     1,420
  85.00% and below     572     1,081     809
Total   $ 3,559   $ 5,240   $ 4,254
                   
                   
Primary NIW by purchase/refinance mix   Three months ended
    March 31, 2017   December 31, 2016   March 31, 2016
            (In Millions)      
  Purchase   $ 2,984   $ 3,776   $ 2,919
  Refinance     575     1,464     1,335
Total   $ 3,559   $ 5,240   $ 4,254
                   

The tables below show the primary weighted average FICO and the weighted average LTV, by policy type, for NIW in the quarters presented.

                   
Weighted Average FICO                  
    March 31, 2017     December 31, 2016     March 31, 2016  
Monthly   745     746     753  
Single   764     764     759  
                   
                   
Weighted Average LTV                  
    March 31, 2017     December 31, 2016     March 31, 2016  
Monthly   92 %   92 %   92 %
Single   91     90     91  
                   

The table below reflects a summary of our primary IIF and RIF by book year.

 
Primary IIF and RIF   As of March 31, 2017
    IIF   RIF
    (In Millions)
March 31, 2017   $ 3,544   $ 865
2016     19,774     4,756
2015     9,681     2,384
2014     1,735     428
2013     45     11
Total   $ 34,779   $ 8,444
             

The tables below reflect our total primary IIF and RIF by FICO, average loan size, LTV, and loan type.

Primary IIF by FICO       As of    
    March 31, 2017   December 31, 2016   March 31, 2016
      (In Millions)  
  > = 760   $ 17,408   $ 16,166   $ 9,146
  740-759     5,658     5,248     3,045
  720-739     4,460     4,130     2,515
  700-719     3,533     3,245     1,877
  680-699     2,336     2,151     1,305
  < =679     1,384     1,228     676
Total   $ 34,779   $ 32,168   $ 18,564
                   
                   
Primary RIF by FICO           As of      
      March 31, 2017     December 31, 2016     March 31, 2016
        (In Millions)   
  > = 760   $ 4,253   $ 3,934   $ 2,206
  740-759     1,383     1,281     747
  720-739     1,081     1,000     614
  700-719     851     782     453
  680-699     556     511     312
  < =679     320     282     155
Total   $ 8,444   $ 7,790   $ 4,487
                   
                   
Primary Average Loan Size by FICO           As of      
      March 31, 2017     December 31, 2016     March 31, 2016
        (In Thousands)   
  > = 760   $ 250   $ 250   $ 247
  740-759     241     241     237
  720-739     235     235     232
  700-719     233     233     229
  680-699     224     224     220
  < =679     210     210     206
 
Primary IIF by LTV       As of    
    March 31, 2017   December 31, 2016   March 31, 2016
    (In Millions)
  95.01% and above   $ 1,931   $ 1,686   $ 699
  90.01% to 95.00%     15,601     14,358     8,220
  85.01% to 90.00%     11,058     10,282     6,326
  85.00% and below     6,189     5,842     3,319
Total   $ 34,779   $ 32,168   $ 18,564
                   
                   
Primary RIF by LTV       As of    
    March 31, 2017   December 31, 2016   March 31, 2016
    (In Millions)
  95.01% and above   $ 533   $ 467   $ 196
  90.01% to 95.00%     4,585     4,226     2,423
  85.01% to 90.00%     2,626     2,439     1,498
  85.00% and below     700     658     370
Total   $ 8,444   $ 7,790   $ 4,487
                   
                   
Primary RIF by Loan Type       As of    
    March 31, 2017   December 31, 2016   March 31, 2016
             
Fixed     99%     99%     98%
Adjustable rate mortgages:                  
  Less than five years     -     -     -
  Five years and longer     1     1     2
Total     100%     100%     100%
                   

As of March 31, 2017 and March 31, 2016, 100% of each of our pool IIF and RIF was comprised of insurance on fixed rate mortgages.

The table below reflects a summary of the change in total primary IIF for the following periods.

                   
Primary IIF         Three months ended        
    March 31, 2017     December 31, 2016     March 31, 2016  
    (In Millions)  
IIF, beginning of period   $ 32,168     $ 28,228     $ 14,824  
  NIW     3,559       5,240       4,254  
  Cancellations and other reductions     (948 )     (1,300 )     (514 )
IIF, end of period   $ 34,779     $ 32,168     $ 18,564  
                         

Geographic Dispersion

The following table shows the distribution by state of our primary RIF.

   
Top 10 primary RIF by state         As of        
    March 31, 2017     December 31, 2016     March 31, 2016  
California   13.8 %   13.6 %   13.2 %
Texas   7.2     7.0     6.8  
Virginia   6.3     6.5     5.8  
Florida   4.4     4.5     5.3  
Arizona   4.1     3.9     3.8  
Colorado   3.9     3.9     4.1  
Maryland   3.7     3.7     3.1  
Michigan   3.7     3.7     4.3  
Utah   3.6     3.7     3.6  
Pennsylvania   3.6     3.6     3.6  
Total   54.3 %   54.1 %   53.6 %
                   

The following table shows portfolio data by origination year.

   
    As of March 31, 2017  



Origination year
 
Original
Insurance
Written
 
Remaining
Insurance in
Force
  %
Remaining
of Original
Insurance
   
Policies
Ever in
Force
 
Number of
Policies in
Force
 
Number
of Loans
in Default
 
# of
Claims
Paid
  Incurred
Loss Ratio
(Inception to
Date) (1)
   

Cumulative
default rate (2)
 
                      ($ Values in Millions)                
2013   $ 162   $ 45   28 %   655   224   -   1   0.2 %   0.2 %
2014     3,451     1,735   50 %   14,786   8,527   47   5   2.7 %   0.4 %
2015     12,422     9,681   78 %   52,548   43,414   114   9   2.5 %   0.2 %
2016     21,188     19,774   93 %   83,628   79,595   46   -   0.9 %   0.1 %
2017   $ 3,559   $ 3,544   100 %   13,926   13,872   -   -   - %   - %
Total   $ 40,782   $ 34,779         165,543   145,632   207   15            
(1) The ratio of losses incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2) The sum of claims paid ever to date and notices of default as of the end of the period divided by policies ever in force.
 

The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses:

       
    For the three months ended
    March 31, 2017     March 31, 2016  
    (In Thousands)
Beginning balance   $ 3,001     $ 679  
Less reinsurance recoverables (1)     (297 )     -  
Beginning balance, net of reinsurance recoverables     2,704       679  
                 
Add claims incurred:                
  Claims and claim expenses incurred:                
    Current year (2)     955       553  
    Prior years (3)     (320 )     (95 )
Total claims and claims expenses incurred     635       458  
                 
Less claims paid:                
  Claims and claim expenses paid:                
    Current year (2)     -       -  
    Prior years (3)     142       -  
Total claims and claim expenses paid     142       -  
                 
Reserve at end of period, net of reinsurance recoverables     3,197       1,137  
Add reinsurance recoverables (1)     564       -  
Balance, March 31   $ 3,761     $ 1,137  
(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction. To date, ceded losses have been immaterial.
(2) Related to defaults occurring in the current year.
(3) Related to defaults occurring in prior years.
 

The following table provides a reconciliation of the beginning and ending count of loans in default.

       
    For the three months ended  
    March 31, 2017     March 31, 2016  
Beginning default inventory   179     36  
Plus: new defaults   124     39  
Less: cures   (92 )   (20 )
Less: claims paid   (4 )   -  
Ending default inventory   207     55  
             

The following tables provide details of our claims and reserves.

       
    For the three months ended  
             
    March 31, 2017     March 31, 2016  
    ($ Values In Thousands)     
Number of claims paid     4       -  
Total amount paid for claims   $ 42     $ -  
Average amount paid per claim   $ 35     $ -  
Severity     88 %     -
%
                 
 
Average reserve per default:   As of March 31, 2017   As of March 31, 2016
    (In Thousands)
Case   $ 16   $ 19
IBNR     2     2
Total   $ 18   $ 21
             

The following table provides a comparison of the PMIERs financial requirements as reported by National MI.

                   
          As of        
    March 31, 2017     December 31, 2016     March 31, 2016  
    (In thousands)  
Available Assets   $ 466,982     $ 453,523     $ 434,138  
Net Risk-Based Required Assets     398,859       366,584       302,852  
                         
Asset charge % (1)     6.14 %     6.15 %     6.12 %
(1) Asset charge represents the risk based required asset amount as defined in the PMIERs, divided by the outstanding RIF on performing primary loans.
 

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com

Source: NMI Holdings, Inc.

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