Press Release

EMERYVILLE, Calif., July 31, 2019 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported GAAP net income of $39.1 million, or $0.56 per diluted share, and adjusted net income of $41.4 million, or $0.59 per diluted share, for its second quarter ended June 30, 2019.  This compares with GAAP net income of $32.9 million, or $0.48 per diluted share, and adjusted net income of $38.5 million, or $0.56 per diluted share, in the first quarter ended March 31, 2019.  In the second quarter of 2018, the company reported GAAP net income of $25.2 million, or $0.37 per diluted share, and adjusted net income of $27.4 million, or $0.40 per diluted share.  The non-GAAP financial measures adjusted net income, adjusted diluted earnings per share and adjusted return-on-equity are presented in this release to enhance the comparability of financial results between periods. See "Use of Non-GAAP Financial Measures" and our reconciliation of such measures to their most comparable GAAP measures, below.

Claudia Merkle, CEO of National MI, said, "National MI again delivered record performance, including new insurance written of $12.2 billion, net premiums earned of $83.2 million, adjusted net income of $41.4 million and adjusted return-on-equity of 21.2%.  We continued to grow our high-quality insured portfolio at an industry-leading rate and are driving accelerating momentum in our customer franchise.  We also succeeded with our third Insurance-Linked Notes offering, further extending our comprehensive credit risk management framework.  The $327 million offering, which closed earlier this week, provides significant incremental PMIERs capital support and helps to insulate National MI from adverse loss in our insured portfolio."

• As of June 30, 2019, the company had primary insurance-in-force of $81.7 billion, up 12% from $73.2 billion at March 31, 2019 and up 41% compared to $58.1 billion as of June 30, 2018.

• Net premiums earned for the quarter were $83.2 million, up 13% compared to $73.9 million for the first quarter of 2019 and up 35% compared to $61.6 million for the second quarter of 2018.

• Total underwriting and operating expenses in the quarter were $32.5 million, including $0.7 million of fees and expenses related to the recently completed Insurance-Linked Notes transaction.  This compares with total underwriting and operating expenses of $30.8 million in the first quarter of 2019 and $29.0 million in the second quarter of 2018, which included $0.7 million of fees and expenses related to the issuance of Insurance-Linked Notes completed in July 2018.

• At quarter-end, cash and investments were $1.1 billion and shareholders’ equity was $812 million, equal to $11.99 per share.

• Return-on-equity for the quarter was 20.0% and adjusted return-on-equity (a non-GAAP measure) was 21.2%.

• At quarter-end, the company had total PMIERs available assets of $879 million, which compares with risk- based required assets under PMIERs of $782 million.  The PMIERs required assets do not reflect the benefit of the recently completed Insurance-Linked Notes transaction and related excess-of-loss reinsurance coverage, which occurred after the close of the second quarter.

The non-GAAP measures of adjusted net income, adjusted diluted EPS and adjusted return-on-equity for the quarters presented exclude the after-tax impact of periodic capital markets transaction costs, changes in the fair value of our warrant liability and realized gains or losses from our investment portfolio.

		Quarter Ended 6/30/2019					Quarter Ended 3/31/2019					Quarter Ended 6/30/2018
																	Change (1) Q/Q			Change (1) Y/Y
Primary Insurance-in-Force ($billions)		$			81.7		$			73.2		$			58.1		12		%	41		%
New Insurance Written - NIW ($billions)
Monthly premium		11.1					6.2					5.7					78		%	94		%
Single premium		1.1					0.7					0.8					58		%	39		%
Total		12.2					6.9					6.5					76		%	87		%
Premiums Earned ($millions)		83.2					73.9					61.6					13		%	35		%
Underwriting & Operating Expense ($millions)		32.5					30.8					29.0					5		%	12		%
Loss Expense ($millions)		2.9					2.7					0.6					7		%	355		%
Loss Ratio		3.5				%	3.7				%	1.0				%
Expense Ratio		39.1				%	41.8				%	47.1				%
Cash & Investments ($millions)		$			1,053.3		$			980.0		$			854.7		7		%	23		%
Book Equity ($millions)		812.4					751.9					629.6					8		%	29		%
Book Value per Share		$			11.99		$			11.14		$			9.58		8		%	25		%
(1) Percentages may not be replicated based on the rounded figures presented in the table.

Conference Call and Webcast Details

The company will hold a conference call, which will be webcast live today, July 31, 2019, 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 conference call can also be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 internationally, and using Conference ID: 8584908 or by referencing NMI Holdings, Inc.

About NMI Holdings, Inc.

NMI Holdings, Inc. (NASDAQ: NMIH), is the parent company of National Mortgage Insurance Corporation (National MI), 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 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 government mortgage insurers, such as the Federal Housing Administration, U.S. Department of Agriculture's Rural Housing Service and the Veterans Administration, and potential market entry by new competitors or consolidation of existing competitors; developments in the world's financial and capital markets and our access to such markets, including reinsurance; 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, including any action by the Consumer Financial Protection Bureau to address the planned expiration of the "QM Patch" under the Dodd-Frank Act Ability to Repay / Qualified Mortgage Rule; legislative or regulatory changes to the GSEs' role in the secondary mortgage market 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 and investment results 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 capital, credit and reinsurance markets and to enter into, and receive approval of 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 high quality 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 risk management or pricing or investment strategies; emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had 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; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; 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, 2018, 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 the use of the non-GAAP measures of adjusted income before tax, adjusted net income and adjusted diluted earnings per share (EPS) enhance the comparability of our fundamental financial performance between periods, and provides 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 prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance.  These measures have been presented in order to increase transparency and enhance the comparability of our fundamental operating trends across periods.

Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and discrete, non-recurring and non-operating items in the periods in which such items are incurred.

Adjusted net income is defined as GAAP net income, excluding the after-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and discrete, non-recurring and non-operating items in the periods in which such items are incurred. Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.

Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the years that non-vested shares are anti-dilutive under GAAP.

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

Although adjusted income before tax, adjusted net income and adjusted diluted EPS exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.

(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 statement of operations in the period in which the change occurred. The change in fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors that do not impact or reflect our current period operating results. We believe trends in our operating performance can be more clearly identified by excluding fluctuations related to the change in fair value of our warrant liability.
(2)		Capital markets transaction costs. Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles.
(3)		Net realized investment gains and losses.  The recognition of the net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results.
(4)		Infrequent or unusual non-operating items. Items that are the result of unforeseen or uncommon events, which occur separately from operating earnings and are not expected to recur in the future.  Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include the effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are non-recurring in nature, are not part of our primary operating activities and do not reflect our current period operating results.

We believe the disclosure of these items and adjustments provides increased transparency to investors and enhances the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.

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,
		2019																		2018						2019										2018
Revenues		(In Thousands, except for per share data)
Net premiums earned		$	83,249																	$	61,615					$	157,118									$	116,529
Net investment income		7,629																		5,735						15,012										10,309
Net realized investment (losses) gains		(113																)		59						(300								)		59
Other revenues		415																		44						456										108
Total revenues		91,180																		67,453						172,286										127,005
Expenses
Insurance claims and claim expenses		2,923																		643						5,666										2,212
Underwriting and operating expenses		32,543																		29,020						63,392										57,473
Total expenses		35,466																		29,663						69,058										59,685
Other expense
(Loss) gain from change in fair value of warrant liability		(1,685																)		109						(7,164								)		529
Interest expense		(3,071																)		(5,560				)		(6,132								)		(8,979				)
Total other expense		(4,756																)		(5,451				)		(13,296								)		(8,450				)
Income before income taxes		50,958																		32,339						89,932										58,870
Income tax expense		11,858																		7,098						17,933										11,274
Net income		$															39,100			$			25,241			$							71,999			$			47,596
Earnings per share
Basic		$															0.58			$			0.38			$							1.07			$			0.74
Diluted		$															0.56			$			0.37			$							1.04			$			0.70
Weighted average common shares outstanding
Basic		67,590																		65,664						67,143										63,891
Diluted		69,590																		68,616						69,348										67,171
Loss ratio(1)		3.5																%		1.0				%		3.6								%		1.9				%
Expense ratio(2)		39.1																%		47.1				%		40.3								%		49.3				%
Combined ratio(3)		42.6																%		48.1				%		44.0								%		51.2				%
Net income		$															39,100			$			25,241			$							71,999			$			47,596
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) in accumulated other comprehensive income, net of tax expense (benefit) of $3,662 and ($2,879) for the three months ended June 30, 2019 and 2018 and $7,615 and ($3,304) for the six months ended June 30, 2019 and 2018, respectively		13,779																		(1,464				)		28,647										(12,429				)
Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of ($24) and $12 for the three months ended June 30, 2019 and 2018 and ($63) and $10 for the six months ended June 30, 2019 and 2018, respectively		89																		(46				)		237										(37				)
Other comprehensive income (loss), net of tax		13,868																		(1,510				)		28,884										(12,466				)
Comprehensive income		$															52,968			$			23,731			$							100,883			$			35,130
(1) Loss ratio is calculated by dividing the provision for insurance claims and claim expenses by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(3) Combined ratio may not foot due to rounding.

Consolidated balance sheets		June 30, 2019										December 31, 2018
Assets		(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $994,543 and $924,987 as of June 30, 2019 and December 31, 2018, respectively)		$	1,017,607									$	911,490
Cash and cash equivalents (including restricted cash of $1,430 and $1,414 as of June 30, 2019 and December 31, 2018, respectively)		35,735										25,294
Premiums receivable		42,225										36,007
Accrued investment income		6,301										5,694
Prepaid expenses		3,358										3,241
Deferred policy acquisition costs, net		52,607										46,840
Software and equipment, net		25,827										24,765
Intangible assets and goodwill		3,634										3,634
Prepaid reinsurance premiums		20,426										30,370
Other assets		12,679										4,708
Total assets		$							1,220,399			$			1,092,043
Liabilities
Term loan		$							146,253			$			146,757
Unearned premiums		151,358										158,893
Accounts payable and accrued expenses		24,351										31,141
Reserve for insurance claims and claim expenses		18,432										12,811
Reinsurance funds withheld		18,092										27,114
Warrant liability, at fair value		9,679										7,296
Deferred tax liability, net		28,258										2,740
Other liabilities (1)		11,597										3,791
Total liabilities		408,020										390,543
Shareholders' equity
Common stock - class A shares, $0.01 par value; 67,768,466 and 66,318,849 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively (250,000,000 shares authorized)		677										663
Additional paid-in capital		692,163										682,181
Accumulated other comprehensive income (loss), net of tax		14,052										(14,832				)
Retained earnings		105,487										33,488
Total shareholders' equity		812,379										701,500
Total liabilities and shareholders' equity		$							1,220,399			$			1,092,043
(1) Deferred Ceding Commissions have been reclassified to "Other Liabilities" in prior periods

Non-GAAP Financial Measure Reconciliations
												Quarter ended														Quarter ended						Quarter ended
												6/30/2019														3/31/2019						6/30/2018
As Reported												(In Thousands, except for per share data)
Revenues
Net premiums earned												$											83,249			$			73,868			$			61,615
Net investment income												7,629														7,383						5,735
Net realized investment (losses) gains												(113												)		(187				)		59
Other revenues												415														42						44
Total revenues												91,180														81,106						67,453
Expenses
Insurance claims and claim expenses												2,923														2,743						643
Underwriting and operating expenses												32,543														30,849						29,020
Total expenses												35,466														33,592						29,663
Other Expense
(Loss) gain from change in fair value of warrant liability												(1,685												)		(5,479				)		109
Interest expense												(3,071												)		(3,061				)		(5,560				)
Total other expense												(4,756												)		(8,540				)		(5,451				)
Income before income taxes												50,958														38,974						32,339
Income tax expense												11,858														6,075						7,098
Net income												$											39,100			$			32,899			$			25,241
Adjustments:
Net realized investment losses  (gains)												113														187						(59				)
Loss (Gain) from change in fair value of warrant liability												1,685														5.479						(109				)
Capital markets transaction costs												664														—						2,921
Adjusted income before taxes												53,420														44,640						35,092
Income tax expense on adjustments												163														39						578
Adjusted net income												$											41,399			$			38,526			$			27,416
Weighted average diluted shares outstanding												69,590														68,996						68,616
Diluted EPS												$											0.56			$			0.48			$			0.37
Adjusted diluted EPS												$											0.59			$			0.56			$			0.40
Return-on-equity												20.0												%		18.1				%		16.4				%
Adjusted return-on-equity												21.2												%		21.2				%		17.8				%

Historical Quarterly Data		2019												2018
		June 30						March 31						December 31						September 30						June 30						March 31
Revenues		(In Thousands, except for per share data)
Net premiums earned		$			83,249			$			73,868			$			69,261			$			65,407			$			61,615			$			54,914
Net investment income		7,629						7,383						6,952						6,277						5,735						4,574
Net realized investment (losses) gains		(113				)		(187				)		6						(8				)		59						—
Other revenues		415						42						40						85						44						64
Total revenues		91,180						81,106						76,259						71,761						67,453						59,552
Expenses
Insurance claims and claim expenses		2,923						2,743						2,141						1,099						643						1,569
Underwriting and operating expenses		32,543						30,849						29,384						30,379						29,020						28,453
Total expenses		35,466						33,592						31,525						31,478						29,663						30,022
Other (expense) income (1)		(4,756				)		(8,540				)		510						(8,436				)		(5,451				)		(2,999				)
Income before income taxes		50,958						38,974						45,244						31,847						32,339						26,531
Income tax expense		11,858						6,075						9,724						7,036						7,098						4,176
Net income		$			39,100			$			32,899			$			35,520			$			24,811			$			25,241			$			22,355
Earnings per share
Basic		$			0.58			$			0.49			$			0.54			$			0.38			$			0.38			$			0.36
Diluted		$			0.56			$			0.48			$			0.46			$			0.36			$			0.37			$			0.34
Weighted average common shares outstanding
Basic		67,590						66,692						66,308						65,948						65,664						62,099
Diluted		69,590						68,996						69,013						68,844						68,616						65,697
Other data
Loss Ratio  (2)		3.5				%		3.7				%		3.1				%		1.7				%		1.0				%		2.9				%
Expense Ratio (3)		39.1				%		41.8				%		42.4				%		46.4				%		47.1				%		51.8				%
Combined ratio		42.6				%		45.5				%		45.5				%		48.1				%		48.1				%		54.7				%
(1) Other (expense) income includes the gain (loss) from change in fair value of warrant liability and interest expense.
(2) Loss ratio is calculated by dividing the provision for insurance claims and claim 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 present primary NIW and primary and pool IIF, as of the dates and for the periods indicated.

Primary NIW		Three months ended
		June 30, 2019																										March 31, 2019						December 31, 2018						September 30, 2018						June 30, 2018						March 31, 2018
		(In Millions)
Monthly		$	11,067																									$	6,211					$	6,296					$	6,675					$	5,711					$	5,441
Single		1,112																										702						666						686						802						1,019
Primary		$																							12,179			$			6,913			$			6,962			$			7,361			$			6,513			$			6,460

Primary and pool IIF		As of
		June 30, 2019																										March 31, 2019						December 31, 2018						September 30, 2018						June 30, 2018						March 31, 2018
		(In Millions)
Monthly		$	63,922																									$	55,995					$	51,655					$	46,967					$	41,843					$	37,574
Single		17,786																										17,239						16,896						16,560						16,246						15,860
Primary		81,708																										73,234						68,551						63,527						58,089						53,434
Pool		2,758																										2,838						2,901						2,974						3,064						3,153
Total		$																							84,466			$			76,072			$			71,452			$			66,501			$			61,153			$			56,587

The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction and 2018 QSR Transaction, and collectively, the QSR Transactions) for the periods indicated.

		As of and for the three months ended
		June 30, 2019																										March 31, 2019						December 31, 2018						September 30, 2018						June 30, 2018						March 31, 2018
		(In Thousands)
Ceded risk-in-force		$	4,558,862																									$	4,534,353					$	4,292,450					$	3,960,461					$	3,606,928					$	3,304,335
Ceded premiums written		(18,592																								)		(18,845				)		(17,799				)		(16,546				)		(15,318				)		(14,525				)
Ceded premiums earned		(20,919																								)		(21,468				)		(20,487				)		(19,286				)		(18,077				)		(16,218				)
Ceded claims and claim expenses		770																										899						710						337						173						543
Ceding commission written		3,717																										3,771						3,549						3,320						3,064						2,905
Ceding commission earned		4,171																										4,206						4,084						3,814						3,536						3,151
Profit commission		11,884																										12,061						11,666						11,272						10,707						9,201

Portfolio Statistics

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

Primary portfolio trends		As of and for the three months ended
		June 30, 2019																										March 31, 2019						December 31, 2018						September 30, 2018						June 30, 2018						March 31, 2018
		($ Values In Millions)
New insurance written		$	12,179																									$	6,913					$	6,962					$	7,361					$	6,513					$	6,460
New risk written		3,183																										1,799						1,799						1,883						1,647						1,580
Insurance in force (IIF) (1)		81,708																										73,234						68,551						63,527						58,089						53,434
Risk in force (1)		20,661																										18,373						17,091						15,744						14,308						13,085
Policies in force (count) (1)		324,876																										297,232						280,825						262,485						241,993						223,263
Average loan size (1)		$																							0.252			$			0.246			$			0.244			$			0.242			$			0.240			$			0.239
Coverage percentage (2)		25.3																								%		25.1				%		24.9				%		24.8				%		24.6				%		24.5				%
Loans in default (count) (1)		1,028																										940						877						746						768						1,000
Percentage of loans in default (1)		0.3																								%		0.3				%		0.3				%		0.3				%		0.3				%		0.5				%
Risk in force on defaulted loans (1)		$																							58			$			53			$			48			$			42			$			43			$			57
Average premium yield (3)		0.43																								%		0.42				%		0.42				%		0.43				%		0.44				%		0.43				%
Earnings from cancellations		$																							4.5			$			2.3			$			2.1			$			2.6			$			3.1			$			2.8
Annual persistency (4)		86.0																								%		87.2				%		87.1				%		86.1				%		85.5				%		85.7				%
Quarterly run-off (5)		5.1																								%		3.3				%		3.1				%		3.3				%		3.5				%		3.1				%
(1) Reported as of the end of the period.
(2) Calculated as end of period risk in force (RIF) divided by end of period IIF.
(3) Calculated as net premiums earned, divided by average primary IIF for the period, annualized.
(4) Defined as the percentage of IIF that remains on our books after a given 12-month period.
(5) Defined as the percentage of IIF that is no longer on our books after a given three 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 FICO		For the three months ended
		June 30, 2019														March 31, 2019						June 30, 2018
		($ In Millions)
>= 760		$	5,627													$	3,057					$	2,807
740-759		2,165														1,224						1,129
720-739		1,785														1,044						964
700-719		1,337														792						747
680-699		891														553						469
<=679		374														243						397
Total		$											12,179			$			6,913			$			6,513
Weighted average FICO		751														749						747

Primary NIW by LTV		For the three months ended
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Millions)
95.01% and above		$	971													$	569					$	971
90.01% to 95.00%		5,931														3,424						2,932
85.01% to 90.00%		4,085														2,241						1,888
85.00% and below		1,192														679						722
Total		$											12,179			$			6,913			$			6,513
Weighted average LTV		92.0												%		92.2				%		92.7				%

Primary NIW by purchase/refinance mix		For the three months ended
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Millions)
Purchase		$	10,697													$	6,383					$	6,137
Refinance		1,482														530						376
Total		$											12,179			$			6,913			$			6,513

The table below presents a summary of our primary IIF and RIF by book year as of June 30, 2019.

Primary IIF and RIF		As of June 30, 2019
		IIF										RIF
		(In Millions)
June 30, 2019		$	18,745									$	4,892
2018		24,344										6,177
2017		17,512										4,319
2016		13,903										3,454
2015		6,218										1,569
2014 and before		986										250
Total		$							81,708			$			20,661

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 FICO		As of
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Millions)
>= 760		$	37,830													$	33,902					$	27,311
740-759		13,731														12,160						9,460
720-739		11,388														10,096						7,722
700-719		9,028														8,122						6,355
680-699		6,045														5,435						4,174
<=679		3,686														3,519						3,067
Total		$											81,708			$			73,234			$			58,089

Primary RIF by FICO		As of
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Millions)
>= 760		$	9,551													$	8,506					$	6,758
740-759		3,499														3,076						2,344
720-739		2,904														2,550						1,905
700-719		2,286														2,036						1,558
680-699		1,524														1,357						1,016
<=679		897														848						727
Total		$											20,661			$			18,373			$			14,308

Primary IIF by LTV		As of
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Millions)
95.01% and above		$	7,925													$	7,204					$	5,747
90.01% to 95.00%		38,371														34,024						26,119
85.01% to 90.00%		25,099														22,208						17,319
85.00% and below		10,313														9,798						8,904
Total		$											81,708			$			73,234			$			58,089

Primary RIF by LTV		As of
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Millions)
95.01% and above		$	2,145													$	1,928					$	1,522
90.01% to 95.00%		11,206														9,923						7,610
85.01% to 90.00%		6,108														5,384						4,154
85.00% and below		1,202														1,138						1,022
Total		$											20,661			$			18,373			$			14,308

Primary RIF by Loan Type		As of
		June 30, 2019										March 31, 2019				June 30, 2018
Fixed		98								%		98		%		98		%
Adjustable rate mortgages:
Less than five years		—										—				—
Five years and longer		2										2				2
Total		100								%		100		%		100		%

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

Primary IIF		For the three months ended
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Millions)
IIF, beginning of period		$	73,234													$	68,551					$	53,434
NIW		12,179														6,913						6,513
Cancellations and other reductions		(3,705												)		(2,230				)		(1,858				)
IIF, end of period		$											81,708			$			73,234			$			58,089

Geographic Dispersion

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

Top 10 primary RIF by state		As of
		June 30, 2019										March 31, 2019				June 30, 2018
California		12.3								%		12.7		%		13.4		%
Texas		8.2										8.3				8.0
Florida		5.4										5.2				4.7
Virginia		5.2										5.0				5.0
Arizona		4.6										4.8				5.0
Illinois		3.6										3.4				3.3
Pennsylvania		3.6										3.6				3.6
Michigan		3.5										3.6				3.7
Colorado		3.4										3.4				3.5
Maryland		3.3										3.2				3.3
Total		53.1								%		53.2		%		53.5		%

The table below presents selected primary portfolio statistics, by book year, as of June 30, 2019.

		As of June 30, 2019
Book 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)				Current default rate (3)
		($ Values in Millions)
2013		$		162			$		27			16		%		655			145			—			1			0.2		%		0.2		%		—		%
2014		3,451					960					28		%		14,786			5,085			46			35			3.8		%		0.5		%		0.9		%
2015		12,422					6,218					50		%		52,548			29,049			183			69			2.9		%		0.5		%		0.6		%
2016		21,187					13,902					66		%		83,626			58,662			209			67			2.0		%		0.3		%		0.4		%
2017		21,582					17,512					81		%		85,897			72,988			355			17			3.1		%		0.4		%		0.5		%
2018		27,288					24,344					89		%		104,015			95,477			231			3			3.0		%		0.2		%		0.2		%
2019		19,092					18,745					98		%		64,429			63,470			4			—			0.3		%		—		%		—		%
Total		$		105,184			$		81,708							405,956			324,876			1,028			192
(1) The ratio of total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2) The sum of number of claims paid ever to date and number of loans in default divided by policies ever in force.
(3) The ratio of the number of loans in default divided by number of policies in force.

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

		For the three months ended																								For the six months ended
		June 30, 2019																		June 30, 2018						June 30, 2019										June 30, 2018
		(In Thousands)
Beginning balance		$	15,537																	$	10,391					$	12,811									$	8,761
Less reinsurance recoverables (1)		(3,678																)		(2,334				)		(3,001								)		(1,902				)
Beginning balance, net of reinsurance recoverables		11,859																		8,057						9,810										6,859
Add claims incurred:
Claims and claim expenses incurred:
Current year (2)		3,492																		1,212						7,401										3,152
Prior years (3)		(569																)		(569				)		(1,735								)		(940				)
Total claims and claim expenses incurred		2,923																		643						5,666										2,212
Less claims paid:
Claims and claim expenses paid:
Current year (2)		—																		—						—										—
Prior years (3)		674																		481						1,368										852
Reinsurance terminations (4)		(549																)		—						(549								)		—
Total claims and claim expenses paid		125																		481						819										852
Reserve at end of period, net of reinsurance recoverables		14,657																		8,219						14,657										8,219
Add reinsurance recoverables (1)		3,775																		2,382						3,775										2,382
Ending balance		$															18,432			$			10,601			$							18,432			$			10,601
(1) Related to ceded losses recoverable under the QSR Transactions, included in "Other Assets" on the Condensed Consolidated Balance Sheets.
(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. Amounts are presented net of reinsurance.
(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time. Amounts are presented net of reinsurance.
(4) Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016 QSR Transaction on a cut-off basis.

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 six months ended
		June 30, 2019							June 30, 2018				June 30, 2019							June 30, 2018
Beginning default inventory		940							1,000				877							928
Plus: new defaults		546							287				1,120							700
Less: cures		(433					)		(501		)		(907					)		(825		)
Less: claims paid		(25					)		(18		)		(62					)		(35		)
Ending default inventory		1,028							768				1,028							768

The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions, for the periods indicated.

		For the three months ended																								For the six months ended
		June 30, 2019																		June 30, 2018						June 30, 2019										June 30, 2018
		(In Thousands)
Number of claims paid (1)																	25						18										62						35
Total amount paid for claims		$															788			$			607			$							1,714			$			1,089
Average amount paid per claim		$															32			$			34			$							28			$			31
Severity(2)		77																%		78				%		69								%		76				%
(1) Count includes 4 and 7 claims settled without payment for the three and six months ended June 30, 2019, respectively, and 1 and 4 claims settled without payment for the three and six months ended June 30, 2018, respectively.
(2) Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment.

The following table shows our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the periods indicated.

Average reserve per default:		As of June 30, 2019										As of June 30, 2018
		(In Thousands)
Case (1)		$	16									$	13
IBNR (2)		2										1
Total		$	18									$	14
(1) Defined as the gross reserve per insured loan in default.
(2) Amount includes claims adjustment expenses.

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

		As of
		June 30, 2019														March 31, 2019						June 30, 2018
		(In Thousands)
Available Assets		$	878,550													$	817,758					$	653,080
Risk-Based Required Assets		782,460														607,325						587,235

Source: NMI Holdings Inc