August 2, 2016

NMI Holdings, Inc. Reports Second Quarter Net Income of $2 Million, Enters Into Reinsurance Treaty to Support Growth

EMERYVILLE, CA -- (Marketwired) -- 08/02/16 --

NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $2.0 million, or $0.03 per share, for the second quarter ended June 30, 2016. This compares with a net loss of $3.9 million, or $(0.07) per share, in the prior quarter and a net loss of $10.4 million, or $(0.18) per share, in the second quarter of 2015. Total revenue for the quarter was $29.6 million, up 33% from $22.2 million in the prior quarter and up 171% from $10.9 million in the second quarter of 2015.

The company also announced today that it has entered into a quota share reinsurance agreement with a panel of third-party reinsurance providers. The company expects that Fannie Mae and Freddie Mac will allow full credit under the Private Mortgage Insurer Eligibility Requirements (PMIERs) for risk ceded under the agreement.

Bradley Shuster, chairman and CEO of National MI, said, "In the second quarter we achieved GAAP profitability, a significant milestone for this young company just three years after writing our first mortgage insurance policy. It is a reflection of our dedication to customer service, our disciplined approach to account development, and diligent management of both risk and expenses. We are grateful to our customers for their belief in us, our employees for their hard work and loyalty, and our shareholders and other business partners for their support of National MI since its founding. We are at an exciting inflection point in our development as we now have visibility to rapid earnings growth for many years to come. Looking ahead, we now expect to report pre-tax income of $7 to $10 million for the full year 2016, and are reaffirming our guidance for pre-tax income of at least $60 million in 2017."

  • As of June 30, 2016, the company had primary insurance-in-force of $23.6 billion, up 27% from $18.6 billion at the prior quarter end and up 229% over $7.2 billion as of June 30, 2015.
  • Premiums earned for the quarter were $26.0 million, up 31% from $19.8 million in the prior quarter and up 194% over $8.9 million in the same quarter a year ago.
  • Total NIW of $5.8 billion in the second quarter was up 37% over $4.3 billion in the prior quarter and up 129% over $2.5 billion in the second quarter of 2015.
  • Monthly premium NIW was $3.7 billion, an increase of 49% over $2.5 billion in the prior quarter and an increase of 153% over the second quarter of 2015. Single premium NIW of $2.1 billion was up 21% from the prior quarter and up 96% compared with the same quarter a year ago.
  • Total underwriting and operating expenses in the second quarter were $23.2 million, including share-based compensation expense of $1.8 million. This compares with total underwriting and operating expenses of $22.7 million, including $1.4 million of share-based compensation, in the prior quarter, and $20.9 million, including $2.1 million of share-based compensation, in the same quarter a year ago.
  • Loss expense for the quarter was $0.4 million, resulting in a loss ratio of 1.8%.
  • As of the end of the second quarter, the company had approved master policies in place with 1,061 customers, up from 1,023 as of the end of the prior quarter, and up from 842 as of the end of the second quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 518, which compares with 469 in the prior quarter and 340 in the same quarter a year ago. On an ever-to-date basis, customers delivering NIW grew to 649.
  • At quarter-end, cash and investments were $654 million, including $78 million at the holding company, and book equity was $422 million, equal to $7.14 per share. This book value excludes any benefit attributable to the company's deferred tax asset of approximately $66 million as of Dec. 31, 2015.
  • At quarter-end, the company had total PMIERs available assets of $432 million, which compares with risk- based required assets under PMIERs of $377 million.
   
    Quarter     Quarter     Quarter            
    Ended     Ended     Ended   Growth
    Growth
 
    6/30/2016     3/31/2016     6/30/2015   Q/Q       Y/Y    
Primary Insurance-in-Force ($billions)     23.62       18.56       7.19   27 %   228 %
New Insurance Written - NIW ($billions)                                  
  Monthly premium     3.70       2.49       1.46   49 %   153 %
  Single premium     2.14       1.76       1.09   21 %   96 %
  Total     5.84       4.25       2.55   37 %   129 %
Premiums Earned ($millions)     26.04       19.81       8.86   31 %   194 %
Underwriting & Operating Expense ($millions)     23.23       22.67       20.91   2 %   11 %
Loss Expense ($millions)     0.47       0.46       -   3 %   -  
Loss Ratio     1.8 %     2.3 %     -            
Cash & Investments ($millions)     654       630       434   4 %   51 %
Book Equity ($millions)     422       410       412   3 %   2 %
Book Value per Share   $ 7.14     $ 6.94     $ 7.01   3 %   2 %
Approved Master Policies     1061       1023       842   4 %   26 %
Customers Generating NIW     518       469       340   10 %   52 %
                                   
                                   

Reinsurance Agreement
Effective Sept. 1, 2016, the company's quota share reinsurance agreement covers the following components of its portfolio, subject to certain limitations and conditions:

  • Approximately 23% of existing policies written as of Aug. 31, 2016.
  • Approximately 95% of the company's pool agreement with Fannie Mae.
  • Approximately 23% of policies written from Sept. 1, 2016 through Dec. 31, 2017.

National MI will receive a 20% ceding commission for ceded premiums related to this transaction, as well as a profit commission provided that the loss ratio on the loans covered under the agreement generally remains below 60%. For risk ceded under the agreement, the implied after-tax cost of capital over the term of the transaction is expected to be approximately 3%.

Conference Call and Webcast Details
The company will hold a conference call and live webcast today at 1:30 p.m. Pacific Time / 4:30 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: 40158937, 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 enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us and to the GSEs; 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 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; 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 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; 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, 2015, 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 June 30,     For the six months ended June 30,  
    2016     2015     2016     2015  
Revenues   (In Thousands, except for share data)  
  Net premiums written   $ 48,862     $ 20,347     $ 86,991     $ 33,268  
  Increase in unearned premiums     (22,821 )     (11,491 )     (41,143 )     (17,476 )
  Net premiums earned     26,041       8,856       45,848       15,792  
  Net investment income     3,342       1,688       6,573       3,283  
  Net realized investment gains (losses)     61       354       (824 )     967  
  Other revenues     37       -       69       -  
Total revenues     29,481       10,898       51,666       20,042  
Expenses                                
  Insurance claims and claims expenses     470       (6 )     928       98  
  Underwriting and operating expenses     23,234       20,910       45,906       39,259  
Total expenses     23,704       20,904       46,834       39,357  
Other (expense) income                                
  (Loss) gain from change in fair value of warrant                                
  liability     (59 )     (106 )     611       1,142  
  Interest expense     (3,707 )     -       (7,339 )     -  
Total other (expense) income     (3,766 )     (106 )     (6,728 )     1,142  
                                 
Income (loss) before income taxes     2,011       (10,112 )     (1,896 )     (18,173 )
  Income tax expense     -       241       -       -  
Net income (loss)   $ 2,011     $ (10,353 )   $ (1,896 )   $ (18,173 )
                                 
Earnings (loss) per share                                
  Basic   $ 0.03     $ (0.18 )   $ (0.03 )   $ (0.31 )
  Diluted   $ 0.03     $ (0.18 )   $ (0.03 )   $ (0.31 )
                                 
Weighted average common shares outstanding                                
Basic     59,105,613       58,720,095       59,005,983       58,603,644  
Diluted     59,830,899       58,720,095       59,005,983       58,603,644  
Loss Ratio(1)     2 %     - %     2 %     1 %
Expense Ratio(2)     89       236       100       249  
Combined ratio     91 %     236 %     102 %     249 %
                                 
Net income (loss)   $ 2,011     $ (10,353 )   $ (1,896 )   $ (18,173 )
Other comprehensive income (loss), net of tax:                                
  Net unrealized gains (losses) in accumulated other comprehensive gain (loss), net of tax (benefit) expense of $0 and ($1,431) for the three monthsended June 30, 2016 and 2015, respectively, and $0 for both the six months ended June 30, 2016 and 2015     8,670       (2,205 )     17,771       467  
  Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented     (61 )     (354 )     824       (967 )
Other comprehensive income (loss), net of tax     8,609       (2,559 )     18,595       (500 )
Comprehensive income (loss)   $ 10,620     $ (12,912 )   $ 16,699     $ (18,673 )
     
(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   June 30, 2016     December 31, 2015  
Assets   (In Thousands, except for share data)  
  Fixed maturities, available-for-sale, at fair value (amortized cost of $593,807 and $564,319 as of June 30, 2016 and December 31, 2015, respectively)   $ 607,318     $ 559,235  
  Cash and cash equivalents     46,827       57,317  
  Premiums receivable     8,868       5,143  
  Accrued investment income     3,068       2,873  
  Prepaid expenses     1,810       1,428  
  Deferred policy acquisition costs, net     25,128       17,530  
  Software and equipment, net     19,690       15,201  
  Intangible assets and goodwill     3,634       3,634  
  Other assets     85       90  
Total assets   $ 716,428     $ 662,451  
                 
Liabilities                
  Term loan   $ 144,107     $ 143,939  
  Unearned premiums     131,916       90,773  
  Accounts payable and accrued expenses     15,502       22,725  
  Reserve for insurance claims and claim expenses     1,475       679  
  Warrant liability, at fair value     856       1,467  
  Deferred tax     137       137  
Total liabilities     293,993       259,720  
Commitments and contingencies                
                 
Shareholders' equity                
  Common stock - class A shares, $0.01 par value; 59,128,011 and 58,807,825 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively (250,000,000 shares authorized)     591       588  
  Additional paid-in capital     573,342       570,340  
  Accumulated other comprehensive income (loss), net of tax     11,121       (7,474 )
  Accumulated deficit     (162,619 )     (160,723 )
Total shareholders' equity     422,435       402,731  
Total liabilities and shareholders' equity   $ 716,428     $ 662,451  
                 
   
   
Historical Quarterly Data   2016     2015  
    June 30     March 31     December 31     September 30     June 30     March 31  
Revenues   (In Thousands, except for share data)  
  Net premiums written   $ 48,862     $ 38,129     $ 45,582     $ 35,360     $ 20,347     $ 12,921  
  Increase in unearned premiums     (22,821 )     (18,322 )     (28,702 )     (22,526 )     (11,491 )     (5,985 )
  Net premiums earned     26,041       19,807       16,880       12,834       8,856       6,936  
  Net investment income     3,342       3,231       2,078       1,884       1,688       1,596  
  Net realized investment gains                                                
  (losses)     61       (885 )     (121 )     (15 )     354       613  
  Other revenues     37       32       25       -       -       -  
Total revenues     29,481       22,185       18,862       14,703       10,898       9,145  
Expenses                                                
  Insurance claims and claims expenses     470       458       371       181       (6 )     104  
  Underwriting and operating expenses     23,234       22,672       21,686       19,653       20,910       18,350  
Total expenses     23,704       23,130       22,057       19,834       20,904       18,454  
                                                 
Other (expense) income (1)     (3,766 )     (2,962 )     (1,626 )     332       (106 )     1,248  
                                                 
Income (loss) before income taxes     2,011       (3,907 )     (4,821 )     (4,799 )     (10,112 )     (8,061 )
  Income tax expense (benefit)     -       -       -       -       241       (241 )
Net income (loss)   $ 2,011     $ (3,907 )   $ (4,821 )   $ (4,799 )   $ (10,353 )   $ (7,820 )
                                                 
Earnings (loss) per share                                                
  Basic   $ 0.03     $ (0.07 )   $ (0.08 )   $ (0.08 )   $ (0.18 )   $ (0.13 )
  Diluted     0.03       (0.07 )     (0.08 )     (0.08 )     (0.18 )     (0.13 )
                                                 
Weighted average common shares                                                
outstanding                                                
Basic     59,105,613       58,936,694       58,781,566       58,741,328       58,720,095       58,485,899  
Diluted     59,830,899       58,936,694       58,781,566       58,741,328       58,720,095       58,485,899  
                                                 
Other data                                                
Loss Ratio (2)     2 %     2 %     2 %     1 %     - %     1 %
Expense Ratio (3)     89 %     114 %     128 %     153 %     236 %     265 %
Combined ratio     91 %     117 %     131 %     155 %     236 %     266 %
                                                 
(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.
     
 
 
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
    June 30, 2016   March 31, 2016   December 312015   September 302015   June 30 2015   March 31, 2015
    (In Millions)
Monthly   $ 3,700   $ 2,492   $ 2,029   $ 1,582   $ 1,460   $ 919
Single     2,138     1,762     2,518     2,051     1,089     777
Primary   $ 5,838   $ 4,254   $ 4,547   $ 3,633   $ 2,549   $ 1,696
                                     
Primary and pool IIF   As of
    June 30, 2016   March 31, 2016   December 31, 2015   September 302015   June 30 2015   March 31, 2015
    (In Millions)
Monthly   $ 12,529   $ 9,210   $ 6,958   $ 5,087   $ 3,617   $ 2,259
Single     11,095     9,354     7,866     5,514     3,573     2,576
Primary     23,624     18,564     14,824     10,601     7,190     4,835
                                     
Pool     3,999     4,136     4,238     4,340     4,476     4,621
Total   $ 27,623   $ 22,700   $ 19,062   $ 14,941   $ 11,666   $ 9,457
                                     
   
   
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              
    June 30,
2016
    March 31
2016
    December 31
2015
    September 30
2015
    June 30,
2015
    March 31
2015
 
    ($ Values In Millions)  
New insurance written   $ 5,838     $ 4,254     $ 4,547     $ 3,633     $ 2,549     $ 1,696  
New risk written     1,411       1,016       1,105       887       615       396  
Insurance in force (1)     23,624       18,564       14,824       10,601       7,190       4,835  
Risk in force (1)     5,721       4,487       3,586       2,553       1,715       1,146  
Policies in force (count) (1)     100,547       79,700       63,948       46,175       31,682       21,225  
Weighted-average coverage (2)     24.2 %     24.2 %     24.2 %     24.1 %     23.9 %     23.7 %
Loans in default (count)     79       55       36       20       9       6  
Percentage of loans in default     0.1 %     0.1 %     0.1 %     - %     - %     - %
Risk in force on defaulted                                                
loans   $ 4     $ 3     $ 2     $ 1     $ 1     $ -  
Average premium yield (3)     0.47 %     0.45 %     0.49 %     0.52 %     0.51 %     0.55 %
Annual persistency (4)     83.3 %     82.7 %     79.6 %     71.6 %     65.5 %     59.2 %
                                                 
(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 primary net premiums earned by average IIF for the period, annualized.
(4)   Defined as the percentage of IIF that remains on our books after any 12-month period.
     
   
   
The tables below reflect our total primary NIW by FICO, LTV, and purchase/refinance mix.     
   
   
Primary NIW by FICO   Three months ended  
    June 30, 2016     March 31, 2016     June 30, 2015  
    (In Millions)  
  > = 760   $ 3,160     $ 2,283     $ 1,182  
  740-759     961       712       377  
  720-739     672       473       422  
  700-719     541       411       242  
  680-699     308       245       203  
  < =679     196       130       123  
Total   $ 5,838     $ 4,254     $ 2,549  
   
   
Primary NIW by LTV   Three months ended  
    June 30, 2016     March 31, 2016     June 30, 2015  
    (In Millions)  
  95.01% and above   $ 362     $ 209     $ 84  
  90.01% to 95.00%     2,633       1,816       1,149  
  85.01% to 90.00%     1,732       1,420       842  
  85.00% and below     1,111       809       474  
Total   $ 5,838     $ 4,254     $ 2,549  
   
   
Primary NIW by purchase/refinance mix   Three months ended  
    June 30, 2016     March 31, 2016     June 30, 2015  
    (In Millions)  
  Purchase   $ 4,199     $ 2,919     $ 1,619  
  Refinance     1,639       1,335       930  
Total   $ 5,838     $ 4,254     $ 2,549  
   
   
The tables below show the primary weighted average FICO and the weighted average loan-to-value ratio (LTV), by policy type, for NIW in the quarters presented.  
   
Weighted Average FICO                        
    June 30, 2016     March 31, 2016     June 30, 2015  
Monthly     752       753       742  
Single     762       759       760  
   
   
Weighted Average LTV                        
    June 30, 2016     March 31, 2016     June 30, 2015  
Monthly     92 %     92 %     92 %
Single     91       91       91  
                         
 
 
The table below reflects a summary of our primary IIF and RIF by book year.
 
 
Primary IIF and RIF       As of June 30, 2016
        IIF   RIF
        (In Millions)
June 30, 2016         $ 9,951   $ 2,393
2015           11,348     2,762
2014           2,266     552
2013           59     14
Total         $ 23,624   $ 5,721
 
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
    June 30, 2016   March 31, 2016   June 30, 2015
    (In Millions)
  > = 760   $ 11,929   $ 9,146   $ 3,323
  740-759     3,876     3,045     1,153
  720-739     3,082     2,515     1,109
  700-719     2,341     1,877     706
  680-699     1,561     1,305     595
  < =679     835     676     304
Total   $ 23,624   $ 18,564   $ 7,190
 
 
Primary RIF by FICO   As of
    June 30, 2016   March 31, 2016   June 30, 2015
    (In Millions)
  > = 760   $ 2,895   $ 2,206   $ 772
  740-759     951     747     276
  720-739     750     614     273
  700-719     566     453     173
  680-699     369     312     147
  < =679     190     155     74
Total   $ 5,721   $ 4,487   $ 1,715
 
 
Primary Average Loan Size by FICO   As of
    June 30, 2016   March 31, 2016   June 30, 2015
    (In Millions)
  > = 760   $ 249   $ 247   $ 241
  740-759     239     237     233
  720-739     234     232     227
  700-719     232     229     221
  680-699     223     220     217
  < =679     209     206     205
   
   
   
Primary IIF by LTV         As of        
    June 30, 2016     March 31, 2016     June 30, 2015  
    (In Millions)  
  95.01% and above   $ 1,049     $ 699     $ 122  
  90.01% to 95.00%     10,574       8,220       3,132  
  85.01% to 90.00%     7,754       6,326       2,534  
  85.00% and below     4,247       3,319       1,402  
Total   $ 23,624     $ 18,564     $ 7,190  
   
   
Primary RIF by LTV         As of        
    June 30, 2016     March 31, 2016     June 30, 2015  
    (In Millions)  
  95.01% and above   $ 293     $ 196     $ 36  
  90.01% to 95.00%     3,116       2,423       927  
  85.01% to 90.00%     1,838       1,498       598  
  85.00% and below     474       370       154  
Total   $ 5,721     $ 4,487     $ 1,715  
   
   
Primary RIF by Loan Type         As of        
    June 30, 2016     March 31, 2016     June 30, 2015  
   
  Fixed     98 %     98 %     97 %
  Adjustable rate mortgages:                        
    Less than five years     -       -       -  
    Five years and longer     2       2       3  
Total     100 %     100 %     100 %
                         
   
   
As of June 30, 2016 and June 30, 2015, 100% 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  
    June 30, 2016     March 31, 2016     June 30, 2015  
    (In Millions)  
IIF, beginning of period   $ 18,564     $ 14,824     $ 4,835  
  NIW     5,838       4,254       2,548  
  Cancellations and other reductions     (778 )     (514 )     (193 )
IIF, end of period   $ 23,624     $ 18,564     $ 7,190  
                         
   
                   
Geographic Dispersion  
   
The following table shows the distribution by state of our primary RIF.        
   
Top 10 primary RIF by state   As of  
    June 30, 2016     March 31, 2016     June 30, 2015  
California   13.0 %   13.2 %   13.6 %
Texas   6.8     6.8     7.4  
Virginia   6.4     5.8     5.3  
Florida   5.0     5.3     4.8  
Colorado   4.1     4.3     4.2  
Michigan   4.1     4.1     3.6  
Arizona   3.8     3.8     3.7  
Pennsylvania   3.5     3.5     3.3  
Maryland   3.4     3.6     3.5  
North Carolina   3.4     3.1     2.1  
Total   53.5 %   53.5 %   51.5 %
                   
 
 
The following table shows portfolio data by origination year.
   
Origination year   As of June 30, 2016  
   
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   $ 59   36 %   655   289   -   1   - %   0.2 %
2014     3,451     2,266   66 %   14,786   10,640   30   2   2.0 %   - %
2015     12,422     11,348   91 %   52,550   49,180   47   2   1.9 %   0.4 %
2016 (through June 30)     10,092     9,951   99 %   40,862   40,438   2   -   0.2 %   - %
Total   $ 26,127   $ 23,624         108,853   100,547   79   5            
                                               
(1)   The ratio of total losses incurred (paid and reserved) divided by the total premiums earned.
(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:  
                         
    Three months ended     Six months ended  
    June 30, 2016     June 30, 2015     June 30, 2016     June 30, 2015  
    (In Thousands)  
Beginning balance   $ 1,137     $ 187     $ 679     $ 83  
                                 
Add claims incurred:                                
  Claims and claim expenses incurred:                                
    Current year     560       59       1,113       139  
    Prior years     (90 )     (65 )     (185 )     (41 )
Total claims and claims expenses incurred     470       (6 )     928       98  
                                 
Less claims paid:                                
  Claims and claim expenses paid:                                
    Current year     -       -       -       -  
    Prior years     132       -       132       -  
Total claims and claim expenses paid     132       -       132       -  
                                 
Balance, June 30   $ 1,475     $ 181     $ 1,475     $ 181  
                                 
   
   
The following table provides a reconciliation of the beginning and ending count of loans in default.  
   
    Three months ended     Six months ended  
    June 30, 2016     June 30, 2015     June 30, 2016     June 30, 2015  
Beginning default inventory     55       6       36       4  
Plus: new defaults     50       5       89       10  
Less: cures     (23 )     (2 )     (43 )     (5 )
Less: claims paid     (3 )     -       (3 )     -  
Ending default inventory     79       9       79       9  
   
   
The following tables provide details of our claims and reserves.  
   
    Three months ended     Six months ended  
    June 30, 2016     June 30, 2015     June 30, 2016     June 30, 2015  
    ($ Values In Thousands)  
Number of claims paid     3       -       3       -  
Total amount paid for claims   $ 132     $ -     $ 132     $ -  
Average amount paid per claim   $ 44     $ -     $ 44     $ -  
Severity     71 %     -       71 %     -  
   
Average reserve per default:     As of June 30, 2016   As of June 30, 2015
      (In Thousands)
Case     $ 17   $ 19
IBNR       1     1
Total     $ 18   $ 20
               
   
   
The following table provides a trended comparison of the PMIERs financial requirements as reported by National MI.  
   
    As of  
    June 30, 2016     March 31, 2016     June 30, 2015  
              (In thousands )        
Available Assets   $ 432,074     $ 434,138     $ 431,411  
Risk-Based Required Assets     377,468       302,852       249,805  
                         
Asset charge % (1)     6.10 %     6.12 %     6.17 %
     
(1)   Asset charge represents the risk based required asset amount 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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