May 5, 2015

NMI Holdings, Inc. Reports First Quarter 2015 Financial Results, Flow NIW Grows 23% Sequentially

EMERYVILLE, Calif., May 5, 2015 /PRNewswire/ -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported results for the first quarter ended Mar. 31, 2015.  The company reported a net loss for the first quarter of $7.8 million or $0.13 per share, which compares with a loss of $10.0 million, or $0.17 per share, in the prior quarter, and $15.1 million, or $0.26 per share, in the first quarter of 2014.

Founded in 2012, National Mortgage Insurance Corporation (National MI) is headquartered in Emeryville, California, in the San Francisco Bay Area. NMI Holdings, Inc., National MI's parent company, raised over $500 million of capital in a private placement of its securities in April 2012 and 
is led by an experienced management team. National MI is approved to provide mortgage insurance nationwide. To learn more about National MI, visit www.nationalmi.com ( http://www.nationalmi.com ).

Bradley Shuster, chairman and CEO of National MI, said, "In the first quarter, National MI delivered solid growth in primary flow new insurance written, and we are off to a great start for the year.  We also were pleased to see release of the final PMIERs last month, which we believe will help to restore confidence in the private mortgage insurance market.  With significant available assets, National MI has the capacity to write approximately $20 billion of new insurance, positioning us to take on an increasing role in providing credit enhancement to the housing finance industry."

  • "Flow" new insurance written (NIW) for the first quarter was $1,154 million, up 23% from $936 million in the prior quarter and up significantly from $77 million in the same quarter a year ago.
  • Aggregated single-premium NIW for the first quarter was $542 million, compared with $757 million in the prior quarter and $278 million in the first quarter of 2014.
  • Total NIW for the first quarter, which typically is weak seasonally compared with the fourth quarter, was $1,696 million, up slightly from $1,692 million in the prior quarter and up substantially from $354 million in the same quarter a year ago.
  • Premiums earned for the quarter were $6.9 million, up from $5.5 million in the prior quarter. Investment income in the first quarter was $1.6 million, up from $1.3 million in the prior quarter.
  • Total expenses in the first quarter were $18.5 million, including stock-based compensation expense of approximately $2 million. This is up approximately 5% from $17.7 million in the prior quarter, reflecting modest increases in both fixed and variable expenses.
  • As of the end of the first quarter, the company had approved master policies in place with 777 customers, up from 735 as of the end of the prior quarter, and up from 436 as of the end of the first quarter of 2014. Customers delivering NIW in the quarter grew to 291, which compares with 251 in the prior quarter and 35 in the same quarter a year ago.
  • As of Mar. 31, 2015, the company had primary insurance-in-force of $4,835 million, up from $3,370 million at the prior quarter end and up 839% from $515 million as of Mar. 31, 2014. Pool insurance-in-force as of the end of the first quarter was $4,621 million, compared with $4,722 million at the prior quarter-end and $5,029 million as of Mar. 31, 2014.
  • As of Mar. 31, 2015, cash and investments were $434 million, including $158 million at the holding company, and book equity was $423 million, equal to $7.23 per share. This book value excludes any benefit attributable to the company's net deferred tax asset of approximately $54 million as of Dec. 31, 2014.
  • As of Mar. 31, 2015, the company's risk-to-available assets ratio in its insurance companies was 5:1, which compares with the maximum risk-to-available assets ratio under the final PMIERs of 18:1.

Conference Call and Webcast Details

NMI Holdings, Inc. will hold a conference call today, May 5, 2015, at 2:00 p.m. Pacific / 5:00 p.m. Eastern to discuss results for the quarter.  The conference call will be broadcast live on the company's website, on the "Events and Presentations" page of the "Investors" section at http://ir.nationalmi.com.  The call may also be accessed by dialing (888) 734-0328 inside the U.S., or (678) 894-3054 for international callers using Conference ID: 29793567, or by referencing NMI Holdings, Inc.  Investors and analysts are asked to dial-in ten minutes before the conference call begins.

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 ability to comply with the financial requirements of the PMIERs, once effective; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; heightened competition for our mortgage insurance business from other private mortgage insurers and the FHA; changes to laws and regulations that impact the role of the GSEs in the secondary market or the use of private mortgage insurance; 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, 2014 and 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
(510) 788-8417
john.swenson@nationalmi.com

Press Contact

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


CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



For the three months ended March 31,



2015


2014

Revenues

(In Thousands, except for share data)

Net premiums written


$

12,921



$

5,178


Increase in unearned premiums


(5,985)



(3,274)


Net premiums earned


6,936



1,904


Net investment income


1,596



1,489


Net realized investment gains


613




Gain from change in fair value of warrant liability


1,248



817


Gain from settlement of warrants




37


Total revenues


10,393



4,247


Expenses





Insurance claims and claims expenses


104




Underwriting and operating expenses


18,350



19,302


Total expenses


18,454



19,302


Loss before income taxes


(8,061)



(15,055)


Income tax benefit


(241)




Net loss


$

(7,820)



$

(15,055)







Loss per share





Basic and diluted loss per share


$

(0.13)



$

(0.26)


Weighted average common shares outstanding


58,485,899



58,061,299


 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


March 31, 2015


December 31, 2014


(In Thousands)

Total investment portfolio

$

367,947



$

336,501


Cash and cash equivalents

66,420



103,021


Deferred policy acquisition costs, net

5,283



2,985


Software and equipment, net

12,913



11,806


Other assets

9,176



8,952


Total assets

$

461,739



$

463,265


Reserve for insurance claims and claims expenses

$

187



$

83


Accounts payable and accrued expenses

6,845



10,646


Unearned premiums

28,054



22,069


Warrant liability

2,124



3,372


Current tax payable

1,190




Deferred tax liability

137



137


Total liabilities

38,537



36,307


Total shareholders' equity

423,202



426,958


Total liabilities and shareholders' equity

$

461,739



$

463,265


 

New Insurance Written (NIW), Insurance in Force (IIF) and Risk in Force (RIF)

The table below shows primary NIW, IIF, RIF, policies in force, the weighted average coverage and loans in default, by quarter, for the last five quarters.

Primary portfolio trends

As of and for the Quarter Ended


March 31, 2015


December 31, 2014


September 30, 2014


June 30, 2014


March 31, 2014


(Dollars in Thousands)

New insurance written

$

1,696,142



$

1,692,187



$

974,910



$

429,944



$

354,313


Insurance in force (1)

$

4,835,248



$

3,369,664



$

1,812,956



$

939,753



$

514,796


Risk in force (1)

$

1,145,602



$

801,561



$

435,722



$

220,949



$

115,467


Policies in force (1)

21,225



14,603



7,628



3,865



2,072


Weighted average coverage (2)

23.7

%


23.8

%


24.0

%


23.5

%


22.4

%

Loans in default (count)

6



4





1




Risk in force on defaulted loans

$

350



$

208



$



$

100



$






















(1) Reported as of the end of the period.











(2) End of period RIF divided by IIF.










 

The table below shows primary and pool IIF, NIW and premiums written and earned.

Primary and pool IIF and NIW

As of and for the quarter ended


March 31, 2015


December 31, 2014


IIF


NIW


IIF


NIW


(In Thousands)

Monthly

$

2,258,776



$

918,697



$

1,400,893



$

735,559


Single

680,880



235,517



454,691



200,108


Aggregated single

1,895,592



541,928



1,514,080



756,520


Total primary

$

4,835,248



$

1,696,142



$

3,369,664



$

1,692,187










Pool

4,621,346





4,721,674




Total

$

9,456,594



$

1,696,142



$

8,091,338



$

1,692,187


 

Primary and pool premiums written and earned

For the quarter ended


March 31, 2015


December 31, 2014


(In Thousands)

Net premiums written

$

12,921



$

14,139


Net premiums earned

6,936



5,510


 

The tables below show the weighted average FICO and the weighted average LTV, by policy type, for the quarter in which the policy was originated.

Weighted Average FICO



March 31, 2015


December 31, 2014


March 31, 2014

Monthly

740



740



749


Single

767



753



759


 

Weighted Average LTV



March 31, 2015


December 31, 2014


March 31, 2014

Monthly

91

%


91

%


92

%

Single

89



90



89


 

The table below reflects our total primary and pool IIF and RIF by FICO.


As of March 31, 2015

Total Portfolio

IIF


RIF


(Dollars in Thousands)

> = 740

$

6,802,681


71.9

%


$

787,381


63.6

%

680 - 739

2,333,269


24.7



403,299


32.6


620 - 679

320,644


3.4



48,012


3.8


< = 619






Total

$

9,456,594


100.0

%


$

1,238,692


100.0

%

 

The table below reflects our primary NIW, IIF and RIF by FICO by book year.


Year to date March 31, 2015


As of March 31, 2015

Primary - 2015 Book

NIW


IIF


RIF


(Dollars in Thousands)

> = 740

$

1,099,281


64.8

%


$

1,091,628


64.7

%


$

251,081


63.8

%

680 - 739

520,069


30.7



518,500


30.7



124,849


31.7


620 - 679

76,792


4.5



76,549


4.6



17,805


4.5


< = 619









Total

$

1,696,142


100.0

%


$

1,686,677


100.0

%


$

393,735


100.0

%

 


Year ended December 31, 2014


As of March 31, 2015

Primary - 2014 Book

NIW


IIF


RIF


(Dollars in Thousands)

> = 740

$

2,178,995


63.1

%


$

1,896,783


62.1

%


$

446,935


61.2

%

680 - 739

1,156,785


33.5



1,049,082


34.3



256,309


35.1


620 - 679

115,574


3.4



110,474


3.6



27,239


3.7


< = 619









Total

$

3,451,354


100.0

%


$

3,056,339


100.0

%


$

730,483


100.0

%

 


Year ended December 31, 2013


As of March 31, 2015

Primary - 2013 Book

NIW


IIF


RIF


(Dollars in Thousands)

> = 740

$

113,907


70.2

%


$

61,109


66.3

%


$

13,931


65.1

%

680 - 739

47,102


29.0



30,127


32.7



7,183


33.6


620 - 679

1,163


0.8



996


1.0



270


1.3


< = 619









Total

$

162,172


100.0

%


$

92,232


100.0

%


$

21,384


100.0

%

 

The table below reflects our pool NIW, IIF and RIF by FICO.


Year ended December 31, 2013


As of March 31, 2015

Pool - 2013 Book

NIW


IIF


RIF


(Dollars in Thousands)

> = 740

$

4,186,844


81.0

%


$

3,753,161


81.2

%


$

75,434


81.0

%

680 - 739

832,755


16.1



735,560


15.9



14,958


16.1


620 - 679

152,065


2.9



132,625


2.9



2,698


2.9


< = 619









Total

$

5,171,664


100.0

%


$

4,621,346


100.0

%


$

93,090


100.0

%

 

The tables below reflect our average primary loan size by FICO and the percentage of our RIF by loan type.


March 31, 2015


December 31, 2014

Average primary loan size by FICO           

(In Thousands)

> = 740

$

234



$

236


680 - 739

221



225


620 - 679

200



205


< = 619




 

Percentage of RIF by loan type               

Primary


Pool

As of March 31, 2015




Fixed

96.4

%


100.0

%

Adjustable rate mortgages:




Less than five years




Five years and longer

3.6




Total

100.0

%


100.0

%

 

The following table reflects our RIF by LTV ratio.

Total RIF by LTV

Primary


Pool


RIF


% of Total

LTV


Policy Count


RIF


% of Total

LTV


Policy Count

As of March 31, 2015

(Dollars in Thousands)

95.01% and above

$

11,459



1.0

%


226



$



%



90.01% to 95.00%

608,361



53.1



9,681








85.01% to 90.00%

418,850



36.6



7,175








80.01% to 85.00%

106,918



9.3



4,142








80.00% and below

14





1



93,090



100.0



20,257


Total RIF

$

1,145,602



100.0

%


21,225



$

93,090



100.0

%


20,257


 

Geographic Dispersion

The following tables show the distribution by state of our IIF and RIF, for both primary and pool insurance.

Top 10 primary IIF and RIF by state 

IIF


RIF

As of March 31, 2015


1.

California

15.1

%


14.7

%

2.

Texas

6.5



6.9


3.

Florida

4.9



5.0


4.

Michigan

4.7



4.7


5.

Colorado

3.9



3.8


6.

Arizona

3.7



3.9


7.

Pennsylvania

3.7



3.7


8.

Virginia

3.7



3.5


9.

Ohio

3.6



3.8


10.

North Carolina

3.5



3.6



Total

53.3

%


53.6

%

 

Top 10 pool IIF and RIF by state   

IIF


RIF

As of March 31, 2015


1.

California

28.6

%


28.0

%

2.

Texas

5.3



5.4


3.

Colorado

3.9



3.9


4.

Washington

3.8



3.8


5.

Massachusetts

3.7



3.7


6.

Illinois

3.7



3.7


7.

Virginia

3.7



3.7


8.

New York

2.8



2.9


9.

New Jersey

2.8



2.8


10.

Florida

2.7



2.8



Total

61.0

%


60.7

%

 

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