February 15, 2018

NMI Holdings, Inc. Reports Record Fourth Quarter 2017 Financial Results

EMERYVILLE, Calif., Feb. 15, 2018 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq:NMIH) today reported a GAAP net loss of $1.8 million, or $(0.03) per diluted share, and adjusted net income of $14.0 million, or $0.22 per diluted share for its fourth quarter ended December 31, 2017. Net income (loss) and net income (loss) per share were adjusted to reflect a one-time non-cash expense of $13.6 million primarily related to the re-measurement of the company's net deferred tax asset as a result of tax reform, and a pre-tax non-cash expense of $3.4 million related to the change in fair value of the company's warrant liability as a result of the increase in its stock price. This compares with net income of $12.3 million, or $0.20 per diluted share, and adjusted net income of $12.6 million, or $0.20 per diluted share, after adjusting for the change in fair value of the warrant liability, in the prior quarter. In the fourth quarter of 2016, the company reported net income of $59.7 million, or $0.98 per diluted share, and adjusted net income of $2.3 million, or $0.04 per diluted share, after adjusting for the change in fair value of the warrant liability and release of the valuation allowance on the company's net deferred tax asset. We present the non-GAAP financial measures adjusted net income and adjusted net income per share to increase the comparability of our financial results between periods.  See "Use of Non-GAAP Financial Measures" below.

Bradley Shuster, Chairman and CEO of National MI, said, "In the fourth quarter, National MI delivered record financial results, including record new insurance written of $6.9 billion, record net premiums earned of $50.1 million, record adjusted net income of $14.0 million, and record adjusted return-on-equity of 11.0%. National MI continued to build its portfolio of high-quality insurance in force at a rate that leads our industry. We also continued to make significant strides in customer development, activating 29 new customers in the fourth quarter and continuing to increase our volume with existing customers."

  • As of December 31, 2017, the company had primary insurance-in-force of $48.5 billion, up 12% from $43.3 billion at the prior quarter end and up 51% over $32.2 billion as of December 31, 2016.
  • Premiums earned for the quarter were $50.1 million, including $4.2 million attributable to cancellation of single premium policies, which compares with $44.5 million, including $4.3 million related to cancellations, in the prior quarter.  Premiums earned in the fourth quarter of 2017 were up 53% over premium revenue of $32.8 million in the same quarter a year ago, which included $5.1 million related to cancellations.
  • NIW mix was 83% monthly premium product, which compares with 79% in the prior quarter and 75% in the fourth quarter of 2016.
  • At quarter-end, cash and investments were $735 million, including $51 million at the holding company, and book equity was $509 million, equal to $8.41 per share.
  • At quarter-end, the company had total PMIERs available assets of $528 million, which compares with risk-based required assets under PMIERs of $446 million.
       
  Quarter
Ended
Quarter
Ended
Quarter
Ended
ChangeChange
  12/31/2017 9/30/201712/31/2016 (1)Q/QY/Y
Primary Insurance-in-Force ($billions)48.47 43.26 32.17 12%51%
New Insurance Written - NIW ($billions)     
 Monthly premium5.74 4.83 3.90 19%47%
 Single premium1.14 1.28 1.34 -11%-15%
 Total6.88 6.11 5.24 13%31%
      
Premiums Earned ($millions)  50.08   44.52   32.83 12%53%
Underwriting & Operating Expense ($millions)  28.30   24.65   23.28 15%22%
Loss Expense ($millions)  2.37   0.96   0.80 148%197%
Loss Ratio4.7%2.1%2.4%  
Cash & Investments ($millions)  735   713   677 3%9%
Book Equity ($millions)509 511 476 0%7%
Book Value per Share8.41
   8.53   8.04 -1%5%

(1) The 2016 prior period balance sheet has been revised. Please refer to our Form 10-K for the year ended December 31, 2017 for further details.

Conference Call and Webcast Details
The company will hold a conference call and live webcast 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: 1986684, 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: changes in the business practices of Fannie Mae and Freddie Mac (collectively, the GSEs), including decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement; our ability to remain an eligible mortgage insurer under the current or future versions of their private mortgage insurer eligibility requirements (PMIERs) and other requirements imposed by the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia (D.C.) and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including other private mortgage insurers and governmental mortgage insurers like the Federal Housing Administration (FHA) and the Veterans Administration (VA) (collectively, public MIs), and potential market entry by new competitors or consolidation of existing competitors; developments in the world's financial capital and reinsurance markets and our access to such markets; adoption of new or changes to existing laws and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators; changes to the GSEs' role in the secondary mortgage market driven by Congressional or regulatory action or other changes that could affect the residential mortgage industry generally or mortgage insurance industry in particular; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; changes in general economic, market and political conditions and policies, interest rates, inflation or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance; 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 for reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; our ability to implement our business strategy, including our ability to write mortgage insurance on low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry; our ability to attract and retain a diverse customer base, including the largest mortgage originators; failure of our pricing, risk management or investment strategies; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; potential adverse impacts arising from recent natural disasters, including, with respect to the affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages;  the inability of our counter-parties, including third party reinsurers, to meet their obligations to us; our ability to utilize our net operating loss carryforwards, 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; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform as expected; and, our ability to recruit, train and retain key personnel.   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, 2017, 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.

Use of Non-GAAP Financial Measures

We believe that use of the non-GAAP measures of adjusted pre-tax income, adjusted net income, adjusted net income per share and adjusted return-on-equity facilitate the evaluation of our fundamental financial performance, thereby providing relevant information to investors. These non-GAAP financial measures align with the way the Company's business performance is evaluated by management. These measures are not recognized in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance.  These measures have been established in order to increase transparency for the purposes of evaluating our fundamental operating trends and enabling more meaningful comparisons with our peers.

Adjusted pre-tax income is defined as GAAP income before tax, excluding the effects of the non-cash loss or gain related to the change in fair value of our warrant liability.

Adjusted net income is defined as GAAP net income (loss) excluding the after-tax impact of the aforementioned change in the fair value of our warrant liability and other discrete tax (benefits) expense which are infrequent and unusual non-operating items, such as the one-time non-cash charge due to a re-measurement of our net deferred tax assets in connection with the enactment of the Tax Cuts and Jobs Act (the "Tax Act") in 2017 and the release of the valuation allowance held against certain of our net deferred tax assets in 2016. The amounts of adjustments to components of pre-tax income are tax effected using a federal statutory tax rate of 35%.

Adjusted net income per diluted share is calculated in a manner consistent with the accounting standard regarding earnings per share by dividing (i) adjusted net income by (ii) diluted weighted average common shares outstanding, which reflects share dilution from non-vested restricted stock units and from warrants when dilutive.

Adjusted return-on-equity is calculated by dividing the adjusted income on an annualized basis by the average shareholders' equity for the period.

Although adjusted pre-tax net income and adjusted net income exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items represent items that are: (1) not viewed as part of the operating performance of our primary activities; or (2) impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, along with the reasons for their treatment, are described below. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these adjustments. Other companies may calculate these measures differently. Therefore, their measures may not be comparable to those used by us.

(1)  Change in fair value of warrant liability.  Outstanding warrants at the end of each reporting period are revalued, and any change in fair value is reported in the statements of operations in the period in which the change occurred.  The change in the fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors which may not impact or reflect our current period operating results. Trends in our operating performance can be more clearly identified without the fluctuations of the change in fair value of our warrant liability.

(2) Infrequent or unusual non-operating items.  Our income tax expense for 2017 reflects a one-time non-cash charge due to a re-measurement of our net deferred tax assets in connection with the enactment of the Tax Act in the fourth quarter of 2017. Our income tax benefit in 2016 reflects a one-time non-cash benefit related to the release of the valuation allowance held against certain of our net deferred tax assets.

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 incomeFor the three months ended
December 31,
 For the year ended
December 31,
 2017 2016 (3) 2017 2016(3)
Revenues(In Thousands, except for per share data)
Net premiums earned$50,079  $32,825  $165,740  $110,481 
Net investment income4,388  3,634  16,273  13,751 
Net realized investment gains (losses)9  65  208  (693)
Other revenues62  105  522  276 
Total revenues54,538  36,629  182,743   123,815 
Expenses       
Insurance claims and claims expenses2,374  800  5,339  2,392 
Underwriting and operating expenses28,297  23,281  106,979  93,223 
Total expenses30,671   24,081  112,318  95,615 
Other expense       
(Loss) gain from change in fair value of warrant liability(3,426) (1,714) (4,105) (1,900)
Interest expense3,382  3,776  (13,528) (14,848)
Total other expense(6,808) (5,490) (17,633) (16,748)
        
Income (loss) before income taxes17,059  7,058  52,792  11,452 
Income tax expense (benefit)18,825  (52,664) 30,742  (52,549)
Net income (loss)$(1,766) $59,722  $22,050  $64,001 
        
Earnings (loss) per share       
Basic$(0.03) $1.01  $0.37  $1.08 
Diluted$(0.03) $0.98  $0.35  $1.05 
        
Weighted average common shares outstanding       
Basic60,219  59,140  59,816  59,071 
Diluted60,219  61,229  62,186  60,829 
        
Loss Ratio(1) 4.7% 2.4% 3.2% 2.2%
Expense Ratio(2)56.5% 70.9% 64.5% 84.4%
Combined ratio61.2% 73.3% 67.7% 86.6%
         
Net income (loss)$(1,766) $59,722  $ 22,050  $64,001 
Other comprehensive income, net of tax:       
Net unrealized gains (losses) in accumulated other comprehensive income, net of tax expense of $1,234 and
$1,178 for the years ended December 31, 2017 and 2016, respectively, and $(1,273) and $1,178 for the quarters ended
December 2017 and 2016, respectively
(2,094) (16,196) 2,559  1,429 
Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $73, and $0
for the years ended December 31, 2017 and 2016, respectively and $73 and $0 for the quarters ended
December 31, 2017 and 2016, respectively
(135) (65) (131) 758 
Other comprehensive income, net of tax(2,229) (16,261 ) 2,428  2,187 
Comprehensive income (loss)$(3,995) $43,461  $24,478  $66,188 
                

(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.
(3) The 2016 prior period consolidated results of operations have been revised. Please refer to our Form 10-K for the year ended December 31, 2017 for further details.

    
Consolidated balance sheetsDecember 31, 2017 December 31, 2016 (1)
Assets(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $713,859
and $630,688 as of December 31, 2017 and December 31, 2016, respectively)
$715,875  $628,969 
Cash and cash equivalents19,196  47,746 
Premiums receivable25,179  13,728 
Accrued investment income4,212  3,421 
Prepaid expenses2,151  1,991 
Deferred policy acquisition costs, net37,925  30,109 
Software and equipment, net22,802  20,402 
Intangible assets and goodwill3,634  3,634 
Prepaid reinsurance premiums40,250  37,921 
Deferred tax asset, net19,929  51,434 
Other assets3,695  542 
Total assets$894,848   $839,897 
    
Liabilities   
Term loan$143,882  $144,353 
Unearned premiums163,166  152,906 
Accounts payable and accrued expenses23,364  25,297 
Reserve for insurance claims and claim expenses8,761  3,001 
Reinsurance funds withheld34,102  30,633 
Deferred ceding commission5,024  4,831 
Warrant liability, at fair value7,472  3,367 
Total liabilities385,771  364,388 
Commitments and contingencies   
    
Shareholders' equity   
Common stock - class A shares, $0.01 par value;
60,517,512 and 59,145,161 shares issued and outstanding as of December 31, 2017
and December 31, 2016, respectively (250,000,000 shares authorized)
605  591 
Additional paid-in capital585,488  576,927 
Accumulated other comprehensive loss, net of tax(2,859) (5,287)
Accumulated deficit(74,157) (96,722)
Total shareholders' equity509,077  475,509 
Total liabilities and shareholders' equity$894,848   $839,897 
        

(1)  The 2016 prior period consolidated results of operations has been revised. Please refer to our Form 10-K for the year ended December 31, 2017 for further details.

 
Non-GAAP Financial Measure Reconciliations
  Quarter
Ended
  Quarter
Ended
  Quarter
Ended
(In Thousands, except for per share data)12/31/2017 9/30/2017 12/31/2016
 As Reported     
Revenues     
Net premiums earned$50,079  $44,519  $32,825 
Net investment income4,388  4,170  3,634 
Net realized investment gains (losses)9  69  65 
Other revenues62  195  105 
Total revenues54,538  48,953  36,629 
Expenses     
Insurance claims and claims expenses2,374  957  800 
Underwriting and operating expenses28,297  24,645  23,281 
Total expenses30,671  25,602  24,081 
Other Expense     
Gain (loss) from change in fair value of warrant liability(3,426) (502) (1,713)
Interest expense3,382  3,352  3,777 
Total other expense(6,808 ) (3,854) (5,490)
      
Income before income taxes17,059  19,497  7,059 
Income tax expense (benefit)18,825  7,185  (52,663)
Net income$(1,766) $12,312  $59,722 
Adjustments:     
(Gain) loss from change in fair value of warrant liability3,426  502  1,713 
Adjusted Income before income taxes20,485  19,999  8,771 
      
After-tax warrant adjustment2,227  326  1,113 
Deferred tax asset adjustments13,554    (58,535)
Adjusted Net income$14,015  $12,638  $2,300 
      
Weighted average diluted shares outstanding - Reported60,219  63,089  61,229 
Dilutive effect of non-vested shares and warrants3,449     
Weighted average diluted shares outstanding - Adjusted63,668  63,089  61,229 
      
Diluted EPS - Reported$(0.03) $0.20  $0.98 
Diluted EPS - Adjusted$0.22   $0.20  $0.04 
      
Return on Equity - Reported(1.4)% 9.8% 52.7%
Return on Equity - Adjusted11.0% 10.0% 2.0%
          


      
Historical Quarterly Data 2017 2016 
 December 31September 30 June 30 March 31 December 31 (4) September 30 
Revenues (In Thousands, except for per share data)
Net premiums earned$50,079 $44,519  $37,917  $33,225  $32,825  $31,808  
Net investment income4,388 4,170  3,908  3,807  3,634  3,544  
Net realized investment gains (losses)9 69  188  (58) 65  66  
Other revenues62 195  185  80  105  102  
Total revenues54,538 48,953  42,198  37,054  36,629  35,520  
Expenses           
Insurance claims and claims expenses2,374 957  1,373  635  800  664  
Underwriting and operating expenses28,297 24,645  28,048  25,989  23,281  24,037  
Total expenses30,671 25,602  29,421  26,624  24,081  24,701  
            
Other expense (1)(6,808)(3,854) (3,281) (3,690) (5,490) (4,530) 
            
Income (loss) before income taxes17,059 19,497  9,496  6,740  7,058  6,289  
Income tax expense (benefit)18,825 7,185  3,484  1,248  (52,664) 114  
Net income (loss)$(1,766)$12,312  $6,012  $5,492  $59,722  $6,175  
            
Earnings (loss) per share           
Basic$(0.03)$0.21  $0.10  $0.09  $1.01  $0.10  
Diluted$(0.03)$0.20  $0.10  $0.09  $0.98   $0.10  
            
Weighted average common shares outstanding           
Basic60,219 59,884  59,823  59,184  59,140  59,130  
Diluted60,219 63,089  63,010  62,339  61,229  60,285  
            
Other data           
Loss Ratio (2)4.7%2.1% 3.6% 1.9% 2.4% 2.1% 
Expense Ratio (3)56.555.4% 74.0% 78.2% 70.9% 75.6% 
Combined ratio61.2%57.5% 77.6% 80.1% 73.3% 77.7% 
                  

(1) Other expense includes the gain from change in fair value of warrant liability 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 2016 prior period consolidated results of operations have been revised. Please refer to our Form 10-K for the year ended December 31, 2017 for further details.

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

                The tables below present primary and pool NIW and IIF, as of the dates and for the periods indicated.

  
Primary NIWThree months ended
 December 31,
2017
 September 30,
2017
June 30,
2017
 March 31,
2017
 December 31,
2016
 September 30,
2016
 (In Millions)
Monthly$5,736   $4,833 $4,099  $2,892  $3,904   $4,162 
Single1,140  1,282 938  667  1,336  1,695 
Primary$ 6,876  $6,115 $5,037  $3,559  $5,240  $5,857 
                        


Primary and pool IIFAs of
 December 31,
2017
 September 30,
2017
June 30,
2017
 March 31,
2017
 December 31,
2016
 September 30,
2016
 
 (In Millions)
Monthly$33,268  $28,707 $ 24,865  $21,511  $19,205  $16,038  
Single15,197  14,552 13,764  13,268  12,963  12,190  
Primary48,465  43,259 38,629  34,779  32,168  28,228  
            
Pool3,233  3,330 3,447  3,545  3,650  3,826  
Total$51,698  $46,589 $42,076  $38,324  $35,818  $32,054  
                         

                The following table presents the amounts related to the 2016 QSR transaction for the periods indicated.

   
 December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
  (In Thousands)
Ceded risk-in-force$2,983,353 $2,682,982 $2,403,027 $2,167,745  $2,008,385 $1,778,235 
Ceded premiums written(15,233)(14,389)(12,034)(10,292)(11,576)(38,977)
Ceded premiums earned(14,898)(13,393)(11,463)(9,865)(9,746)(2,885)
Ceded claims and claims expenses800 277 342 268 206 90 
Ceding commission written3,047 2,878 2,407 2,058 2,316 7,795 
Ceding commission earned2,885 2,581 2,275 2,065 1,752 551 
Profit commission8,139 7,758 6,536 5,651 5,642 1,641 
             

Portfolio Statistics

The table below highlights trends in our primary portfolio as of the date and for the periods indicated.

  
Primary portfolio trendsAs of and for the three months ended
 December 31,
2017
 September 30,
2017
June 30,
2017
March 31,
2017
 December 31,
2016
 September 30,
2016
 
 ($ Values In Millions)
New insurance written$6,876  $6,115 $5,037 $3,559  $5,240  $5,857  
New risk written1,665  1,496 1,242 868  1,244  1,415  
Insurance in force (IIF) (1)48,465  43,259 38,629 34,779  32,168  28,228  
Risk in force (1)11,843  10,572 9,417 8,444  7,790  6,847  
Policies in force (count) (1)202,351  180,089  161,195 145,632  134,662  119,002  
Average loan size (1)$0.240  $0.240 $0.240 $0.239  $0.239  $0.237  
Average coverage (2)24.4% 24.4%24.4%24.3% 24.2% 24.3% 
Loans in default (count)928  350 249  207   179  115  
Percentage of loans in default0.5% 0.2%0.2%0.1% 0.1% 0.1% 
Risk in force on defaulted loans$53  $19 $14 $12  $10   $6  
Average premium yield (3)0.44% 0.43%0.41%0.40% 0.43% 0.49% 
Earnings from cancellations$4.2  $4.3 $3.8 $2.5  $5.1  $5.8  
Annual persistency (4)86.1% 85.1%83.1%81.3% 80.7% 81.8% 
Quarterly run-off (5)3.9% 3.8%3.4%2.9% 4.6% 5.3% 
                  

(1)              Reported as of the end of the period.
(2)              Calculated as end of period risk in force (RIF) divided by IIF.
(3)              Calculated as net primary and pool premiums earned, net of reinsurance, divided 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 are no longer on our books after any 3-month period

                The tables below present our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated.

  
Primary NIW by FICOFor the three months ended
 December 31, 2017 September 30, 2017 December 31, 2016
 ($ In Millions)
> = 760$2,847  $2,806  $2,566 
740-7591,055  934  846 
720-739943  807  647 
700-719877  697  560 
680-699611  456  375 
< =679543  415  246 
Total$6,876  $6,115  $5,240 
Weighted average FICO743  747  764 
         


  
Primary NIW by LTVFor the three months ended
 December 31, 2017 September 30, 2017 December 31, 2016
  (In Millions)
95.01% and above$988  $722  $355 
90.01% to 95.00%2,889  2,714  2,224 
85.01% to 90.00%1,870  1,765  1,580 
85.00% and below1,129  914  1,081 
Total$6,876  $6,115  $5,240 
Weighted average LTV92.3% 92.3% 91.6%
         


  
Primary NIW by purchase/refinance mixFor the three months ended
 December 31, 2017 September 30, 2017 December 31, 2016
 (In Millions)
Purchase$5,738  $5,387   $3,776 
Refinance1,137  728  1,464 
Total$6,876  $6,115  $5,240 
            

                 The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.

  
Primary IIF and RIFAs of December 31, 2017
 IIF  RIF
 (In Millions)
December 31, 2017$20,739  $5,059 
201618,066  4,383 
20158,256  2,051 
20141,368   341 
201336  9 
Total$48,465  $11,843 
        

                The tables below present our total primary IIF and RIF by FICO and LTV and total primary RIF by loan type as of the dates indicated.

  
Primary IIF by FICOAs of
 December 31, 2017 September 30, 2017 December 31, 2016
 (In Millions)
> = 760$23,438  $21,329  $16,166 
740-7597,781   6,983  5,248 
720-7396,259  5,547  4,130 
700-7195,179  4,505  3,245 
680-6993,408  2,942  2,151 
< =6792,400  1,953  1,228 
Total$48,465  $43,259  $32,168 
            


  
Primary RIF by FICOAs of
 December 31, 2017 September 30, 2017 December 31, 2016
 (In Millions)
> = 760$5,764  $5,251  $3,934 
740-7591,909  1,713  1,281 
720-7391,527  1,349  1,000 
700-7191,256  1,092  782 
680-699821  707  511 
< =679566  460  282 
Total$11,843  $10,572  $7,790 
            


  
Primary IIF by LTVAs of
 December 31, 2017 September 30, 2017 December 31, 2016
 (In Millions)
95.01% and above$3,946  $3,038  $1,686 
90.01% to 95.00%21,763  19,562  14,358 
85.01% to 90.00%14,766  13,437  10,282 
85.00% and below7,990  7,222  5,842 
Total$48,465  $43,259  $32,168 
            


  
Primary RIF by LTVAs of
 December 31, 2017 September 30, 2017 December 31, 2016
 (In Millions)
95.01% and above$1,054  $822  $467 
90.01% to 95.00%6,354  5,722  4,226 
85.01% to 90.00%3,523  3,205  2,439 
85.00% and below912  823  658 
Total$11,843  $10,572  $7,790 
            


  
Primary RIF by Loan TypeAs of
 December 31, 2017 September 30, 2017 December 31, 2016
      
Fixed98%  98% 99%
Adjustable rate mortgages:     
Less than five years      
Five years and longer2  2  1 
Total100% 100% 100%
         

                The table below presents a summary of the change in total primary IIF during the periods indicated.

  
Primary IIFFor the three months ended
 December 31, 2017   September 30, 2017   December 31, 2016
 (In Millions)
IIF, beginning of period$43,259  $38,629  $28,228 
NIW6,876  6,115  5,240 
Cancellations and other reductions(1,670) (1,485) (1,300)
IIF, end of period$48,465  $43,259  $32,168 
            

Geographic Dispersion

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

  
Top 10 primary RIF by stateAs of
 December 31, 2017 September 30, 2017 December 31, 2016
California13.5% 13.6% 13.6%
Texas7.8  7.6  7.0 
Virginia5.3  5.6  6.5 
Arizona4.6  4.4  3.9 
Florida4.5  4.3  4.5 
Michigan3.7  3.7  3.7 
Pennsylvania3.6  3.6  3.6 
Colorado3.6  3.8  3.9 
Maryland3.5  3.6  3.7 
Utah3.5  3.6  3.7 
Total53.6% 53.8% 54.1%
         


                The following table shows portfolio data by book year, as of December 31, 2017.

  
 As of December 31, 2017
Book yearOriginal
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  $36  22% 655  187  1  1  0.2% 0.3%
20143,451  1,368  40% 14,786  6,970  80  14  4.0% 0.6%
201512,422  8,256  66% 52,548  37,771  316  17  2.8% 0.6%
201621,187  18,066   85% 83,626  73,986  363  6  2.3% 0.4%
201721,587  20,739  96% 85,912  83,437  168    2.4% 0.2%
Total$58,809  $48,465    237,527  202,351  928  38     
                          

(1)              The ratio of claims 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 For the year ended
 December 31,
2017
 December 31,
2016
 December 31,
2017
 December 31,
2016
         
 (In Thousands)
Beginning balance$6,123  $2,133   $3,001  $679 
Less reinsurance recoverables (1)(1,174) (90) (297)  
Beginning balance, net of reinsurance recoverables4,949  2,043  2,704  679 
        
Add claims incurred:       
Claims and claim expenses incurred:       
Current year (2)2,594  654  6,140  2,457 
Prior years (3)(220) 149  (801) (65 )
Total claims and claims expenses incurred2,374  803  5,339  2,392 
        
Less claims paid:       
Claims and claim expenses paid:       
Current year (2)27  171  27  171 
Prior years (3)437  (29) 1,157  196 
Total claims and claim expenses paid464   142  1,184  367 
        
Reserve at end of period, net of reinsurance recoverables6,859  2,704  6,859  2,704 
Add reinsurance recoverables (1)1,902  297  1,902  297 
Ending balance$8,761  $3,001  $8,761  $3,001 
                 

(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheet.
(2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year.
(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.

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

    
 For the three months ended For the year ended
 December 31,
2017
 December 31 ,
2016
 December 31,
2017
 December 31,
2016
Beginning default inventory350  115  179  36 
Plus: new defaults783  126  1,262  284 
Less: cures(194) (59) (486) (132)
Less: claims paid (11) (3) (27) (9)
Ending default inventory928  179  928  179 
            

                The following tables provide details of our claims and reserves for the periods indicated, before claims paid covered under the 2016 QSR Transaction.

    
 For the three months ended For the year ended
 December 31,
2017
 December 31,
2016
 December 31,
2017
  December 31,
2016
 ($ Values In Thousands)
Number of claims paid11  3  27  9 
Total amount paid for claims$535  $136  $1,266  $367 
Average amount paid per claim$49  $45  $47  $41 
Severity(1)90% 65% 86% 64%
            

(1) Severity represents the total amount of claims paid divided by the related RIF on the loan at the time the claim is perfected.

    
Average reserve per default:As of December 31, 2017 As of December 31, 2016
 (In Thousands)
Case (1)$8  $15 
IBNR1  2 
Total$9  $17 
        

(1) Defined as the gross reserve per insured loan in default.

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

  
 As of
 December 31, 2017 September 30, 3017 December 31, 2016
 (In thousands)
Available assets$527,897  $495,182   $453,523 
Risk-based required assets446,226  356,207  366,584 
      

Source: NMI Holdings Inc

News Provided by Acquire Media


Close window | Back to top

Copyright 2018 NMI Holdings, Inc.