November 1, 2016

NMI Holdings, Inc. Reports Record Third Quarter Net Income of $6.2 Million

EMERYVILLE, CA -- (Marketwired) -- 11/01/16 --

NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $6.2 million, or $0.10 per share, for the third quarter ended Sep. 30, 2016. This compares with net income of $2.0 million, or $0.03 per share, in the prior quarter and a net loss of ($4.8) million, or ($0.08) per share, in the third quarter of 2015. Total revenue for the quarter was $35.5 million, up 20% from $29.5 million in the prior quarter and up 141% from $14.7 million in the third quarter of 2015.

Bradley Shuster, chairman and CEO of National MI, said, "We continued our positive momentum in the third quarter, delivering record net income and returns, trends that we expect will continue for the foreseeable future. We grew our high-quality insurance-in-force by 19% over the prior quarter and 166% over the third quarter last year. We also continued to shift our mix to high-return monthly product, which grew to 71% of total new insurance written in the quarter. Cessions commenced under our reinsurance agreement and we expect to continue to take advantage of the low cost of capital provided by reinsurance to support our future growth."

  • As of Sep. 30, 2016, the company had primary insurance-in-force of $28.2 billion, up 19% from $23.6 billion at the prior quarter end and up 166% over $10.6 billion as of Sep. 30, 2015.
  • Premiums earned for the quarter were $31.8 million, up 22% from $26.0 million in the prior quarter and up 148% over $12.8 million in the same quarter a year ago
  • Monthly premium NIW was $4.16 billion, an increase of 12% over $3.70 billion in the prior quarter and an increase of 163% over the third quarter of 2015. Single premium NIW of $1.70 billion was down 21% from the prior quarter and down 17% compared with the same quarter a year ago.
  • Total NIW in the third quarter was $5.86 billion, which compares with $5.84 billion in the prior quarter and $3.63 billion in the third quarter of 2015.
  • Total underwriting and operating expenses in the third quarter were $24.0 million, including share-based compensation expense of $1.8 million. This compares with total underwriting and operating expenses of $23.2 million, including $1.8 million of share-based compensation, in the prior quarter, and $19.7 million, including $1.8 million of share-based compensation, in the same quarter a year ago.
  • Loss expense for the quarter was $0.7 million, resulting in a loss ratio of 2.1%.
  • As of the end of the third quarter, the company had approved master policies in place with 1,100 customers, up from 1,061 as of the end of the prior quarter, and up from 906 as of the end of the third quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 525, which compares with 518 in the prior quarter and 391 in the same quarter a year ago.
  • At quarter-end, cash and investments were $686 million, including $77 million at the holding company, and book equity was $430 million, equal to $7.28 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.
  • In the first nine months of 2016, the company generated $52.2 million of cash from operations, which compares with $16.2 million for the same period in 2015.
  • At quarter-end, the company had total PMIERs available assets of $489 million, which compares with risk- based required assets under PMIERs of $321 million.
 
    Quarter
Ended
9/30/2016
  Quarter
Ended
6/30/2016
  Quarter
Ended
9/30/2015
  Growth
Q/Q
  Growth
Y/Y
Primary Insurance-in-Force ($billions)     28.22     23.62     10.60   19%   166%
New Insurance Written - NIW ($billions)                          
  Monthly premium     4.16     3.70     1.58   12%   163%
  Single premium     1.70     2.14     2.05   -21%   -17%
  Total     5.86     5.84     3.63   -   61%
                             
Premiums Earned ($millions)     31.81     26.04     12.83   22%   148%
Underwriting & Operating Expense ($millions)     24.04     23.23     19.65   3%   22%
Loss Expense ($millions)     0.66     0.47     0.18   40%   267%
Loss Ratio     2.1%     1.8%     1.4%        
Cash & Investments ($millions)     686     654     447   5%   53%
Book Equity ($millions)     430     422     408   2%   5%
Book Value per Share   $ 7.28   $ 7.14   $ 6.95   2%   5%
Approved Master Policies     1100     1061     906   4%   21%
Customers Generating NIW     525     518     391   1%   34%
                           

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: 93562675, 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 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
September 30,
  For the nine months ended September
30,
    2016   2015   2016   2015
Revenues   (In Thousands, except for share data)
  Net premiums earned   $ 31,808   $ 12,834   $ 77,656   $ 28,626
  Net investment income     3,544     1,884     10,117     5,168
  Net realized investment gains (losses)     66     (15)     (758)     952
  Other revenues     102     -     172     -
Total revenues     35,520     14,703     87,187     34,746
Expenses                        
  Insurance claims and claims expenses     664     181     1,592     279
  Underwriting and operating expenses     24,037     19,653     69,943     58,912
Total expenses     24,701     19,834     71,535     59,191
Other (expense) income                        
  (Loss) gain from change in fair value of warrant liability     (797)     332     (187)     1,473
  Interest expense     (3,733)     -     (11,072)     -
Total other (expense) income     (4,530)     332     (11,259)     1,473
 
Income (loss) before income taxes     6,289     (4,799)     4,393     (22,972)
  Income tax expense     114     -     114     -
Net income (loss)   $ 6,175   $ (4,799)   $ 4,279   $ (22,972)
 
Earnings (loss) per share                        
  Basic   $ 0.10   $ (0.08)   $ 0.07   $ (0.39)
  Diluted   $ 0.10   $ (0.08)   $ 0.07   $ (0.39)
 
Weighted average common shares outstanding                        
Basic     59,130,401     58,741,328     59,047,758     58,650,043
Diluted     60,284,746     58,741,328     59,861,916     58,650,043
                         
Loss Ratio(1)     2%     1%     2%     1%
Expense Ratio(2)     76     153     90     206
Combined ratio     78%     155%     92%     207%
 
Net income (loss)   $ 6,175   $ (4,799)   $ 4,279   $ (22,972)
Other comprehensive income (loss), net of tax:                        
  Net unrealized gains (losses) in accumulated other comprehensive gain (loss), net of tax (benefit) expense of $0 for all periods presented     (82)     (483)     17,690     (15)
  Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented     (66)     15     758     (952)
Other comprehensive income (loss), net of tax     (148)     (468)     18,448     (967)
Comprehensive income (loss)   $ 6,027   $ (5,267)   $ 22,727   $ (23,939)
                         
   
(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   September 30, 2016   December 31, 2015
Assets   (In Thousands, except for share data)
  Fixed maturities, available-for-sale, at fair value (amortized cost of $628,209 and $564,319 as of September 30, 2016 and December 31, 2015, respectively)   $ 641,572   $ 559,235
  Cash and cash equivalents     44,522     57,317
  Premiums receivable     11,378     5,143
  Accrued investment income     3,615     2,873
  Prepaid expenses     2,313     1,428
  Deferred policy acquisition costs, net     28,911     17,530
  Software and equipment, net     19,924     15,201
  Intangible assets and goodwill     3,634     3,634
  Prepaid reinsurance premiums     36,091     -
  Other assets     206     90
Total assets   $ 792,166   $ 662,451
 
Liabilities            
  Term loan   $ 144,230   $ 143,939
  Unearned premiums     145,401     90,773
  Accounts payable and accrued expenses     32,568     22,725
  Reserve for insurance claims and claim expenses     2,133     679
  Reinsurance funds withheld     28,963     -
  Deferred ceding commission
    6,697     -
  Warrant liability, at fair value     1,654     1,467
  Current tax payable     114     -
  Deferred tax     137     137
Total liabilities     361,897     259,720
Commitments and contingencies            
 
Shareholders' equity            
  Common stock - class A shares, $0.01 par value; 59,138,663 and 58,807,825 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively (250,000,000 shares authorized)     591     588
  Additional paid-in capital     575,148     570,340
  Accumulated other comprehensive income (loss), net of tax     10,974     (7,474)
  Accumulated deficit     (156,444)     (160,723)
Total shareholders' equity     430,269     402,731
Total liabilities and shareholders' equity   $ 792,166   $ 662,451
             
   
Historical Quarterly Data   2016     2015  
   
    September 30     June 30     March 31     December 31     September 30     June 30  
Revenues           (In Thousands, except for share data)         
  Net premiums earned   $ 31,808     $ 26,041     $ 19,807     $ 16,880     $ 12,834     $ 8,856  
  Net investment income     3,544       3,342       3,231       2,078       1,884       1,688  
  Net realized investment gains (losses)     66       61       (885 )     (121 )     (15 )     354  
  Other revenues     102       37       32       25       -       -  
Total revenues     35,520       29,481       22,185       18,862       14,703       10,898  
Expenses                                                
  Insurance claims and claims expenses     664       470       458       371       181       (6 )
  Underwriting and operating expenses     24,037       23,234       22,672       21,686       19,653       20,910  
Total expenses     24,701       23,704       23,130       22,057       19,834       20,903  
   
Other (expense) income (1)     (4,530 )     (3,766 )     (2,962 )     (1,626 )     332       (106 )
   
Income (loss) before income taxes     6,289       2,011       (3,907 )     (4,821 )     (4,799 )     (10,112 )
  Income tax expense (benefit)     114       -       -       -       -       241  
Net income (loss)   $ 6,175     $ 2,011     $ (3,907 )   $ (4,821 )   $ (4,799 )   $ (10,353 )
   
Earnings (loss) per share                                                
  Basic   $ 0.10     $ 0.03     $ (0.07 )   $ (0.08 )   $ (0.08 )   $ (0.18 )
  Diluted   $ 0.10       0.03       (0.07 )     (0.08 )     (0.08 )     (0.18 )
   
Weighted average common shares outstanding                                                
Basic     59,130,401       59,105,613       58,936,694       58,781,566       58,741,328       58,720,095  
Diluted     60,284,746       59,830,899       58,936,694       58,781,566       58,741,328       58,720,095  
   
Other data                                                
Loss Ratio (2)     2 %     2 %     2 %     2 %     1 %     - %
Expense Ratio (3)     76 %     89 %     114 %     128 %     153 %     236 %
Combined ratio     78 %     91 %     117 %     131 %     155 %     236 %
                                                 
   
(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
    September
30, 2016
 
June 30, 2016
  March 31,
2016
  December 31,
2015
  September
30, 2015
 
June 30, 2015
                (In Millions)            
Monthly   $ 4,162   $ 3,700   $ 2,492   $ 2,029   $ 1,582   $ 1,460
Single     1,695     2,138     1,762     2,518     2,051     1,089
Primary   $ 5,857   $ 5,838   $ 4,254   $ 4,547   $ 3,633   $ 2,549
 
Primary and pool IIF As of
     September
30, 2016
   
June 30, 2016
   March 31,
2016
   December 31,
2015
   September
30, 2015
   
June 30, 2015
                  (In Millions)            
Monthly   $ 16,038   $ 12,529   $ 9,210   $ 6,958   $ 5,087   $ 3,617
Single     12,190     11,095     9,354     7,866     5,514     3,573
Primary     28,228     23,624     18,564     14,824     10,601     7,190
 
Pool     3,826     3,999     4,136     4,238     4,340     4,476
Total   $ 32,054   $ 27,623   $ 22,700   $ 19,062   $ 14,941   $ 11,666
                                     

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  
    September
30, 2016
    June 30,
2016
    March 31,
2016
    December 31,
2015
    September
30, 2015
   
June 30, 2015
 
    ($ Values In Millions )  
New insurance written   $ 5,857     $ 5,838     $ 4,254     $ 4,547     $ 3,633     $ 2,549  
New risk written     1,415       1,411       1,016       1,105       887       615  
Insurance in force (1)     28,228       23,624       18,564       14,824       10,601       7,190  
Risk in force (1)     6,847       5,721       4,487       3,586       2,553       1,715  
Policies in force (count) (1)     119,002       100,547       79,700       63,948       46,175       31,682  
Weighted-average coverage (2)     24.3 %     24.2 %     24.2 %     24.2 %     24.1 %     23.9 %
Loans in default (count)     115       79       55       36       20       9  
Percentage of loans in default     0.1 %     0.1 %     0.1 %     0.1 %     - %     - %
   
Risk in force on defaulted loans   $ 6     $ 4     $ 3     $ 2     $ 1     $ 1  
Average premium yield (3)     0.48 %     0.47 %     0.45 %     0.49 %     0.52 %     0.51 %
Annual persistency (4)     81.8 %     83.3 %     82.7 %     79.6 %     71.6 %     65.5 %
                                                 
   
(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, 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.
   

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    
    September 30, 2016   June 30, 2016   September 30, 2015
            (In Millions)      
  > = 760   $ 2,975   $ 3,160   $ 1,755
  740-759     934     961     583
  720-739     725     672     505
  700-719     588     541     376
  680-699     387     308     271
  < = 679     248     196     143
Total   $ 5,857   $ 5,838   $ 3,633
 
 
Primary NIW by LTV           Three months ended      
      September 30, 2016     June 30, 2016     September 30, 2015
            (In Millions)      
  95.01% and above   $ 347   $ 362   $ 162
  90.01% to 95.00%     2,557     2,633     1,656
  85.01% to 90.00%     1,844     1,732     1,208
  85.00% and below     1,109     1,111     607
Total   $ 5,857   $ 5,838   $ 3,633
 
 
Primary NIW by purchase/refinance mix           Three months ended      
      September 30, 2016     June 30, 2016     September 30, 2015
            (In Millions)      
  Purchase   $ 4,400   $ 4,199   $ 2,604
  Refinance     1,457     1,639     1,029
Total   $ 5,857   $ 5,838   $ 3,633
                   

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                  
    September 30, 2016     June 30, 2016     September 30, 2015  
Monthly   748     752     742  
Single   763     762     758  
   
   
Weighted Average LTV                  
    September 30, 2016     June 30, 2016     September 30, 2015  
Monthly   91 %   92 %   92 %
Single   90     91     91  
                   

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

 
Primary IIF and RIF     As of September 30, 2016
      IIF     RIF
      (In Millions)
September 30, 2016   $ 15,433   $ 3,719
2015     10,679     2,610
2014     2,062     505
2013     54     13
Total   $ 28,228   $ 6,847
             

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    
    September 30, 2016   June 30, 2016   September 30, 2015
        (In Millions)    
  > = 760   $ 14,258   $ 11,929   $ 4,969
  740-759     4,612     3,876     1,703
  720-739     3,648     3,082     1,582
  700-719     2,813     2,341     1,063
  680-699     1,863     1,561     848
  < =679     1,034     835     436
Total   $ 28,228   $ 23,624   $ 10,601
 
 
Primary RIF by FICO           As of      
     September 30, 2016    June 30, 2016    September 30, 2015
            (In Millions)      
  > = 760   $ 3,470   $ 2,895   $ 1,174
  740-759     1,130     951     413
  720-739     887     750     391
  700-719     680     566     260
  680-699     443     369     209
  < =679     237     190     106
Total   $ 6,847   $ 5,721   $ 2,553
 
 
Primary Average Loan Size by FICO           As of      
     September 30, 2016    June 30, 2016    September 30, 2015
            (In Thousands)      
  > = 760   $ 250   $ 249   $ 244
  740-759     240     239     234
  720-739     235     234     227
  700-719     233     232     225
  680-699     224     223     218
  < =679     209     209     207
                   
   
Primary IIF by LTV         As of        
    September 30, 2016     June 30, 2016     September 30, 2015  
          (In Millions)        
  95.01% and above   $ 1,363     $ 1,049     $ 282  
  90.01% to 95.00%     12,644       10,574       4,710  
  85.01% to 90.00%     9,157       7,754       3,658  
  85.00% and below     5,064       4,247       1,951  
Total   $ 28,228     $ 23,624     $ 10,601  
   
   
Primary RIF by LTV         As of        
    September 30, 2016     June 30, 2016     September 30, 2015  
          (In Millions)        
  95.01% and above   $ 380     $ 293     $ 80  
  90.01% to 95.00%     3,725       3,116       1,392  
  85.01% to 90.00%     2,174       1,838       866  
  85.00% and below     568       474       215  
Total   $ 6,847     $ 5,721     $ 2,553  
   
   
Primary RIF by Loan Type         As of        
    September 30, 2016     June 30, 2016     September 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 September 30, 2016 and September 30, 2015, 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    
    September 30, 2016   June 30, 2016   September 30, 2015
        (In Millions)    
IIF, beginning of period   $ 23,624   $ 18,564   $ 7,190
  NIW     5,857     5,838     3,633
  Cancellations and other reductions     (1,253)     (778)     (222)
IIF, end of period   $ 28,228   $ 23,624   $ 10,601
                   

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

   
Top 10 primary RIF by state         As of        
    September 30, 2016     June 30, 2016     September 30, 2015  
California   13.2 %   13.0 %   13.2 %
Texas   6.8     6.8     7.1  
Virginia   6.6     6.4     3.9  
Florida   4.7     5.0     5.4  
Colorado   4.0     4.1     4.3  
Michigan   3.9     4.1     4.6  
Arizona   3.8     3.8     3.6  
Maryland   3.6     3.4     3.5  
Pennsylvania   3.6     2.3     3.9  
Utah   3.6     3.3     2.6  
Total   53.8 %   52.2 %   52.1 %
                   

The following table shows portfolio data by origination year.

   
   
    As of September 30, 2016  



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   $ 54   33 %   655   264   -   1   - %   0.2 %
2014     3,451     2,062   60 %   14,786   9,824   46   2   2.7 %   0.3 %
2015     12,422     10,678   86 %   52,550   46,902   61   5   1.7 %   0.1 %
   
2016 (through September 30)     15,949     15,434   97 %   63,519   62,012   8   -   0.3 %   - %
Total   $ 31,984   $ 28,228         131,510   119,002   115   8            
                                               
   
(1) The ratio of total losses incurred (paid and reserved) divided by cumulative premiums earned, without the effects 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 September 
30,
  For the nine months ended September 
30,
    2016   2015   2016   2015
    (In Thousands)
Beginning balance   $ 1,475   $ 181   $ 679   $ 83
Less reinsurance recoverables (1)     -     -     -     -
Beginning balance, net of reinsurance recoverables     1,475     181     679     83
 
Add claims incurred:                        
  Claims and claim expenses incurred:                        
    Current year (2)     690     219     1,803     358
    Prior years (3)     (29)     (38)     (214)     (79)
Total claims and claims expenses incurred     661     181     1,589     279
 
Less claims paid:                        
  Claims and claim expenses paid:                        
    Current year (2)     -     -     -     -
    Prior years (3)     93     4     225     4
Total claims and claim expenses paid     93     4     225     4
 
Reserve at end of period, net of reinsurance recoverables     2,043     358     2,043     358
Add reinsurance recoverables (1)     90     -     90     -
Balance, September 30   $ 2,133   $ 358   $ 2,133   $ 358
                         
   
(1) Related to ceded losses recoverable on the 2016 QSR 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.

             
    Three months ended     Nine months ended  
    September 30,     September 30,     September 30,     September 30,  
    2016     2015     2016     2015  
Beginning default inventory   79     9     36     4  
Plus: new defaults   69     21     158     24  
Less: cures   (30 )   (9 )   (73 )   (7 )
Less: claims paid   (3 )   (1 )   (6 )   (1 )
Ending default inventory   115     20     115     20  
                         

The following tables provide details of our claims and reserves.

    Three months ended     Nine months ended  
    September 30,     September 30,     September 30,     September 30,  
    2016     2015     2016     2015  
    ($ Values In Thousands)  
Number of claims paid     3       1       6       1  
Total amount paid for claims   $ 93     $ 4     $ 225     $ 4  
Average amount paid per claim   $ 31     $ 4     $ 32     $ 4  
Severity     53 %     5 %     62 %     5 %
 
Average reserve per default:   As of September 30, 2016   As of September 30, 2015
    (In Thousands)
Case   $ 17   $ 17
IBNR     1     1
Total   $ 18   $ 18
             

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

             
        As of    
    September 30, 2016   June 30, 2016   December 31, 2015
      (In thousands)  
Available Assets   $ 488,635   $ 432,074   $ 431,411
Net Risk-Based Required Assets     320,609     377,468     249,805
 
Asset charge % (1)     6.14%     6.10%     6.17%
                   
(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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