View Filing Data

Change in unrealized investment gains/losses, net of tax

2,805

(10,956)

Ending balance at Mar. 31, 2018

22,355

601,944

$ 656

666,905

(13,533)

(52,084)

Ending balance (in shares) at Mar. 31, 2018

65,569,000

Beginning balance at Dec. 31, 2017

$ 509,077

$ 605

585,488

(2,859)

(74,157)

Beginning balance (in shares) at Dec. 31, 2017

60,518,000

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Common stock: class A shares issued related to warrants (in shares)

29,000

Ending balance at Jun. 30, 2018

$ 47,596

629,642

$ 658

670,870

(15,043)

(26,843)

Ending balance (in shares) at Jun. 30, 2018

65,754,000

Beginning balance at Mar. 31, 2018

601,944

$ 656

666,905

(13,533)

(52,084)

Beginning balance (in shares) at Mar. 31, 2018

65,569,000

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Common stock: class A shares issued related to warrants

^[1]

$ 63

Common stock: class A shares issued related to warrants (in shares)

3,751

3,000

^[1]

Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes

$ 887

$ 2

885

Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares)

182,000

Change in unrealized investment gains/losses, net of tax

3,017

(1,510)

Ending balance at Jun. 30, 2018

25,241

629,642

$ 658

670,870

(15,043)

(26,843)

Ending balance (in shares) at Jun. 30, 2018

65,754,000

Beginning balance at Dec. 31, 2018

701,500

$ 663

682,181

(14,832)

33,488

Beginning balance (in shares) at Dec. 31, 2018

66,319,000

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Common stock: class A shares issued related to warrants

^[2]

$ 944

944

Common stock: class A shares issued related to warrants (in shares)

39,195

39,000

^[2]

Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes

$ (1,459)

$ 12

(1,471)

Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares)

1,144,000

Change in unrealized investment gains/losses, net of tax

2,981

15,016

Ending balance at Mar. 31, 2019

32,899

751,881

$ 675

684,635

184

66,387

Ending balance (in shares) at Mar. 31, 2019

67,502,000

Beginning balance at Dec. 31, 2018

$ 701,500

$ 663

682,181

(14,832)

33,488

Beginning balance (in shares) at Dec. 31, 2018

66,319,000

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Common stock: class A shares issued related to warrants (in shares)

168,000

Ending balance at Jun. 30, 2019

$ 71,999

812,379

$ 677

692,163

14,052

105,487

Ending balance (in shares) at Jun. 30, 2019

67,768,000

Beginning balance at Mar. 31, 2019

751,881

$ 675

684,635

184

66,387

Beginning balance (in shares) at Mar. 31, 2019

67,502,000

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Common stock: class A shares issued related to warrants

3,836

$ 1

3,835

Common stock: class A shares issued related to warrants (in shares)

128,000

Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes

219

$ 1

218

Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes (in shares)

138,000

Change in unrealized investment gains/losses, net of tax

3,475

13,868

Ending balance at Jun. 30, 2019

39,100

$ 812,379

$ 677

$ 692,163

$ 14,052

$ 105,487

Ending balance (in shares) at Jun. 30, 2019

67,768,000

[1]	During the three months ended March 31, 2018 and June 30, 2018, we issued 25,686 and 3,751 common shares, respectively, with a par value of $0.01 related to the exercise of warrants, which is not identifiable in this schedule due to rounding.
[2]	During the three months ended March 31, 2019, we issued 39,195 common shares with a par value of $0.01 related to the exercise of warrants, which is not identifiable in this schedule due to rounding.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
Statement of Stockholders' Equity [Abstract]
Change in unrealized investment gains/losses, tax expense (benefit)	$ (3,686)	$ 3,992	$ (2,891)	$ (423)
Stock issued upon exercise of warrants (in shares)		39,195	3,751	25,686
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01	$ 0.01

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income	$ 71,999	$ 47,596
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net realized investment losses (gains)	300	(59)
Loss (gain) from change in fair value of warrant liability	7,164	(529)
Depreciation and amortization	4,339	3,810
Net amortization of premium on investment securities	622	810
Amortization of debt discount and debt issuance costs	499	2,851
Share-based compensation expense	6,456	5,822
Deferred income taxes	17,840	10,864
Changes in operating assets and liabilities:
Premiums receivable	(6,218)	(6,073)
Accrued investment income	(607)	(577)
Prepaid expenses	(312)	(756)
Deferred policy acquisition costs, net	(5,767)	(4,438)
Other assets	(260)	68
Unearned premiums	(7,535)	2,492
Reserve for insurance claims and claim expenses	5,621	1,840
Reinsurance balances, net	(438)	365
Accounts payable and accrued expenses	(6,379)	(2,733)
Net cash provided by operating activities	87,324	61,353
Cash flows from investing activities
Purchase of short-term investments	(113,276)	(83,874)
Purchase of fixed-maturity investments, available-for-sale	(126,179)	(219,093)
Proceeds from maturity of short-term investments	119,748	52,562
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale	49,229	111,485
Additions to software and equipment	(4,491)	(3,273)
Net cash used in investing activities	(74,969)	(142,193)
Cash flows from financing activities
Proceeds from issuance of common stock related to public offering, net of issuance costs	0	79,165
Proceeds from issuance of common stock related to employee equity plans	12,374	6,173
Taxes paid related to net share settlement of equity awards	(13,538)	(6,480)
Proceeds from senior note, net	0	149,250
Repayments of term loan	(750)	(146,625)
Payments of debt issuance/modification costs	0	(3,385)
Net cash (used in) provided by financing activities	(1,914)	78,098
Net increase (decrease) in cash, cash equivalents and restricted cash	10,441	(2,742)
Cash, cash equivalents and restricted cash, beginning of period	25,294	19,196
Cash, cash equivalents and restricted cash, end of period	35,735	16,454
Supplemental disclosures of cash flow information
Interest paid	5,365	6,425
Income tax (refunded) paid, net	$ (134)
Income tax (refunded) paid, net		$ 447

Organization, Basis of Presentation and Summary of Accounting Principles	6 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization, Basis of Presentation and Summary of Accounting Principles	Organization, Basis of Presentation and Summary of Accounting Principles NMI Holdings, Inc. (NMIH) is a Delaware corporation, incorporated in May 2011, to provide private mortgage guaranty insurance (which we refer to as mortgage insurance or MI) through its wholly owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One). Our common stock is listed on the NASDAQ exchange under the ticker symbol "NMIH." In April 2013, NMIC, our primary insurance subsidiary, issued its first mortgage insurance policy. NMIC is licensed to write mortgage insurance in all 50 states and D.C. In August 2015, NMIH capitalized a wholly owned subsidiary, NMI Services, Inc. (NMIS), through which we offer outsourced loan review services to mortgage loan originators. Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2018, included in our 2018 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to our previously reported financial information have been made to conform to current period presentation. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2019. Significant Accounting Principles There have been no changes to our significant accounting principles as described in Item 8, "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Summary of Accounting Principles" of our 2018 10-K, other than as noted in "Recent Accounting Pronouncements - Adopted" below. Recent Accounting Pronouncements - Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). This update requires that businesses recognize rights and obligations associated with certain leases as assets and liabilities on the balance sheet. The standard also requires additional disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. We adopted this ASU on January 1, 2019 using the modified-retrospective method and applied it prospectively as of the effective date, without adjusting comparative periods presented as permitted by ASU 2018-11, Leases (Topic 842), Targeted Improvements. Adoption of this new standard increased our assets and liabilities by $7.6 million in connection with the recognition of right-of-use assets and lease liabilities, primarily related to the operating lease on our corporate headquarters. Adoption of this standard did not impact our consolidated statements of operations or cash flows. See Note 10, "Leases" for additional information related to our leases. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815). This update is intended to simplify the accounting for certain equity-linked financial instruments. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This update expands the scope of Topic 718 to include share-based payments made to non-employees in connection with the acquisition of goods and services. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our financial results at this time as we have not made any share-based grants to non-employees as defined in ASC 718-10-20. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and in April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which includes codification improvements to Topic 326. These updates will require companies to measure and establish reserves for lifetime expected credit losses on many financial assets held at a given reporting date. Under the guidance, the methodology for measuring lifetime credit losses will generally shift from an incurred loss model, whereby losses are only recognized once probable and estimable, to a current expected credit loss (CECL) model, whereby losses are recognized upfront based on a future economic forecast. Credit losses relating to available-for-sale fixed maturity securities will be recorded through an allowance for credit losses, rather than a write-down of the asset as is currently required, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. The length of time an available-for sale fixed maturity security has been held in an unrealized loss position will no longer impact its credit loss determination. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. While we are still finalizing our analysis of this guidance, we do not expect it to have a material impact on our consolidated financial statements. This standard will not impact our accounting for insurance claims and claim expenses as these items are not in the scope of this ASU. In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts. This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This update modifies the fair value measurement disclosure requirements of ASC 820. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Adoption of this ASU will not have an impact on our Consolidated Balance Sheet, Statements of Operations and Comprehensive Income, Changes in Shareholders Equity or Cash Flows. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This update applies to cloud computing arrangements hosted by a vendor and provides companies with guidance on the criteria for capitalizing implementation, set-up and other up-front costs incurred in association with these arrangements. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements.

Investments

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Investments

We have designated our investment portfolio as available-for-sale and report it at fair value. The related unrealized gains and losses are, after considering the related tax expense or benefit, recognized through comprehensive income and loss, and on an accumulated basis in shareholders' equity. Net realized investment gains and losses are reported in earnings based on specific identification of securities sold or other-than-temporarily impaired.

Fair Values and Gross Unrealized Gains and Losses on Investments



	Amortized Cost		Gross Unrealized					Fair Value
	Amortized Cost		Gains		Losses			Fair Value
As of June 30, 2019	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,193	$	688	$	(116	)	$	48,765
Municipal debt securities	91,650		1,497		(73		)	93,074
Corporate debt securities	634,188		18,569		(785		)	651,972
Asset-backed securities	168,251		3,216		(36		)	171,431
Total bonds	942,282		23,970		(1,010		)	965,242
Short-term investments	52,261		104		—			52,365
Total investments	$	994,543	$	24,074	$	(1,010	)	$	1,017,607



	Amortized Cost		Gross Unrealized					Fair Value
	Amortized Cost		Gains		Losses			Fair Value
As of December 31, 2018	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,171	$	35	$	(1,376	)	$	46,830
Municipal debt securities	92,014		206		(963		)	91,257
Corporate debt securities	554,079		847		(11,688		)	543,238
Asset-backed securities	171,990		792		(1,457		)	171,325
Total bonds	866,254		1,880		(15,484		)	852,650
Short-term investments	58,733		107		—			58,840
Total investments	$	924,987	$	1,987	$	(15,484	)	$	911,490

We did not own any mortgage-backed securities in our asset-backed securities portfolio at June 30, 2019 or December 31, 2018.

The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of June 30, 2019 and December 31, 2018:



	June 30, 2019		December 31, 2018
Financial	38	%	38	%
Consumer	27		27
Communications	10		12
Utilities	9		7
Industrial	8		7
Technology	6		6
Energy	1		2
Other	1		1
Total	100	%	100	%

As of June 30, 2019 and December 31, 2018, approximately $5.5 million and $5.3 million, respectively, of our cash and investments were held in the form of U.S. Treasury securities on deposit with various state insurance departments to satisfy regulatory requirements.

Scheduled Maturities

The amortized cost and fair values of available-for-sale securities as of June 30, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category.



As of June 30, 2019	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	99,314	$	99,375
Due after one through five years	412,820		420,131
Due after five through ten years	300,990		312,792
Due after ten years	13,168		13,878
Asset-backed securities	168,251		171,431
Total investments	$	994,543	$	1,017,607



As of December 31, 2018	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	76,087	$	76,104
Due after one through five years	352,282		347,701
Due after five through ten years	318,728		310,633
Due after ten years	5,900		5,727
Asset-backed securities	171,990		171,325
Total investments	$	924,987	$	911,490

Aging of Unrealized Losses

As of June 30, 2019, the investment portfolio had gross unrealized losses of $1.0 million, of which $0.8 million had been in an unrealized loss position for a period of 12 months or greater. We did not consider these securities to be other-than-temporarily impaired as of June 30, 2019. We based our conclusion that these investments were not other-than-temporarily impaired as of June 30, 2019 on the following facts: (i) the unrealized losses were primarily caused by interest rate movements and market fluctuations in credit spreads since the purchase date; (ii) we do not intend to sell these investments; and (iii) we do not believe that it is more likely than not that we will be required to sell these investments before recovery of our amortized cost basis, which may not occur until maturity. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:



	Less Than 12 Months						12 Months or Greater						Total
	# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses
As of June 30, 2019		(Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	—	$	—	$	—		5	$	13,750	$	(116	)	5	$	13,750	$	(116	)
Municipal debt securities⁽¹⁾	1	2,000		—			10	15,025		(73		)	11	17,025		(73		)
Corporate debt securities	13	24,737		(199		)	33	51,099		(586		)	46	75,836		(785		)
Asset-backed securities	2	8,786		(33		)	6	1,953		(3		)	8	10,739		(36		)
Total	16	$	35,523	$	(232	)	54	$	81,827	$	(778	)	70	$	117,350	$	(1,010	)


⁽¹⁾	Includes securities with unrealized losses of less than 12 months which are not identifiable in the schedule due to rounding.



	Less Than 12 Months						12 Months or Greater						Total
	# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses
As of December 31, 2018		(Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	—	$	—	$	—		19	$	41,817	$	(1,376	)	19	$	41,817	$	(1,376	)
Municipal debt securities	4	7,409		(11		)	31	58,658		(952		)	35	66,067		(963		)
Corporate debt securities	118	226,477		(3,952		)	126	221,675		(7,736		)	244	448,152		(11,688		)
Asset-backed securities	25	36,017		(1,136		)	22	33,988		(321		)	47	70,005		(1,457		)
Total	147	$	269,903	$	(5,099	)	198	$	356,138	$	(10,385	)	345	$	626,041	$	(15,484	)

Net Investment Income

The following table presents the components of net investment income:



	For the three months ended June 30,						For the six months ended June 30,
	2019			2018			2019			2018
	(In Thousands)
Investment income	$	7,741		$	5,937		$	15,237		$	10,719
Investment expenses	(112		)	(202		)	(225		)	(410		)
Net investment income	$	7,629		$	5,735		$	15,012		$	10,309

The following table presents the components of net realized investment losses:



	For the three months ended June 30,					For the six months ended June 30,
	2019			2018		2019			2018
	(In Thousands)
Gross realized investment gains	$	22		$	59	$	217		$	59
Gross realized investment losses	(135		)	—		(517		)	—
Net realized investment losses	$	(113	)	$	59	$	(300	)	$	59

Investment Securities - Other-than-Temporary Impairment (OTTI)

As of June 30, 2019, we held no other-than-temporarily impaired securities. During the six months ended June 30, 2019, we recognized a $0.4 million OTTI loss in earnings related to the planned sale of a security in a loss position that was disposed of in April 2019. We did not recognize any OTTI losses for the three months ended June 30, 2019 or the three and six months ended June 30, 2018. There were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss) for the three or six months ended June 30, 2019.

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

The following describes the valuation techniques used by us to determine the fair value of our financial instruments:

We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this standard are described below:

Level 1 - Fair value measurements based on quoted prices in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments.

Level 2 - Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 - Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions, which require significant management judgment or estimation about the inputs a hypothetical market participant would use to value that asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Assets classified as Level 1 and Level 2

To determine the fair value of securities available-for-sale in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including data published in market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. This model combines all inputs to arrive at a value assigned to each security. We have not made any adjustments to the prices obtained from the independent pricing sources.

Liabilities classified as Level 3

We calculate the fair value of outstanding warrants utilizing Level 3 inputs, including a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. Variables in the model include the risk-free rate of return, dividend yield, expected life and expected volatility of our stock price.

The following tables present the level within the fair value hierarchy at which our financial instruments were measured:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
As of June 30, 2019	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,765	$	—	$	—	$	48,765
Municipal debt securities	—		93,074		—		93,074
Corporate debt securities	—		651,972		—		651,972
Asset-backed securities	—		171,431		—		171,431
Cash, cash equivalents and short-term investments	88,100		—		—		88,100
Total assets	$	136,865	$	916,477	$	—	$	1,053,342
Warrant liability	—		—		9,679		9,679
Total liabilities	$	—	$	—	$	9,679	$	9,679



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
As of December 31, 2018	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	46,830	$	—	$	—	$	46,830
Municipal debt securities	—		91,257		—		91,257
Corporate debt securities	—		543,238		—		543,238
Asset-backed securities	—		171,325		—		171,325
Cash, cash equivalents and short-term investments	84,134		—		—		84,134
Total assets	$	130,964	$	805,820	$	—	$	936,784
Warrant liability	—		—		7,296		7,296
Total liabilities	$	—	$	—	$	7,296	$	7,296

There were no transfers between Level 1 and Level 2, nor any transfers in or out of Level 3, of the fair value hierarchy during the six months ended June 30, 2019 and the year ended December 31, 2018.

The following is a roll-forward of Level 3 liabilities measured at fair value:



	For the six months ended June 30,
Warrant Liability	2019			2018
	(In Thousands)
Balance, January 1	$	7,296		$	7,472
Change in fair value of warrant liability included in earnings	7,164			(529		)
Issuance of common stock on warrant exercise	(4,781		)	(552		)
Balance, June 30	$	9,679		$	6,391

The following table outlines the key inputs and assumptions used to calculate the fair value of the warrant liability in the Black-Scholes option-pricing model as of the dates indicated.



	As of June 30,
	2019			2018
Common stock price	$	28.39		$	16.30
Risk free interest rate	1.72 - 1.95%			2.60		%
Expected life	0.92 - 2.81 years			2.49 years
Expected volatility	33.8 - 40.0%			32.7		%
Dividend yield	0		%	0		%

The changes in fair value of the warrant liability for the six months ended June 30, 2019 and 2018 are primarily attributable to changes in the price of our common stock during the respective periods, with additional impact related to changes in the Black-Scholes model inputs and exercises of outstanding warrants.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

On May 24, 2018, we entered into a credit agreement (2018 Credit Agreement), which provides for (i) a $150 million 5-year senior secured term loan facility (2018 Term Loan) that matures on May 24, 2023; and (ii) a $85 million three-year secured revolving credit facility (2018 Revolving Credit Facility) that matures on May 24, 2021. Proceeds from the 2018 Term Loan were used to repay in full the outstanding amount due under our $150 million amended term loan (2015 Term Loan) due on November 10, 2019, and to pay fees and expenses incurred in connection with the 2018 Credit Agreement.

2018 Term Loan

The 2018 Term Loan bears interest at the Eurodollar Rate, as defined in the 2018 Credit Agreement and subject to a 1.00% floor, plus an annual margin rate of 4.75%, representing an all-in rate of 6.95% as of June 30, 2019, payable monthly based on our current interest period election. Quarterly principal payments of $375 thousand are also required. As of June 30, 2019, the outstanding principal balance of the 2018 Term Loan was $148.5 million.

Interest expense for the 2018 Term Loan includes interest and the amortization of issuance costs, an original issue discount and capitalized modification costs related to the 2015 Term Loan. For the three and six months ended June 30, 2019, interest expense was $2.8 million and $5.7 million, respectively. Remaining unamortized issuance costs were $2.2 million as of June 30, 2019 and are being amortized to interest expense using the effective interest method over the contractual life of the 2018 Term Loan.

We are subject to certain covenants under the 2018 Term Loan (as defined in the 2018 Credit Agreement), including (but not limited to) a maximum debt-to-total capitalization ratio (as defined in the 2018 Credit Agreement) of 35% under the 2018 Term Loan. We were in compliance with all covenants as of June 30, 2019.

Future principal payments due under the 2018 Term Loan as of June 30, 2019 are as follows:



As of June 30, 2019	Principal
	(In thousands)
2019	$	750
2020	1,500
2021	1,500
2022	1,500
2023	143,250
Total	$	148,500

2018 Revolving Credit Facility

Borrowings under the 2018 Revolving Credit Facility may be used for general corporate purposes and will accrue interest at a variable rate equal to, at our discretion, (i) a base rate (as defined in the 2018 Credit Agreement, subject to a floor of 1.00% per annum) plus a margin of 1.00% to 2.50% per annum, based on the applicable corporate credit rating at the time, or (ii) the Eurodollar Rate (subject to a floor of 0.00% per annum) plus a margin of 2.00% to 3.50% per annum, based on the applicable corporate credit rating at the time. As of June 30, 2019, no borrowings had been made under the 2018 Revolving Credit Facility.

We are required to pay a quarterly commitment fee on the average daily undrawn amount of the 2018 Revolving Credit Facility, which ranges from 0.30% to 0.60%, based on the applicable corporate credit rating at the time. As of June 30, 2019, the applicable commitment fee was 0.40%. For the three and six months ended June 30, 2019, we recorded $0.1 million and $0.2 million of commitment fees in interest expense, respectively.

We incurred issuance costs of $1.5 million in connection with the establishment of the 2018 Revolving Credit Facility, which were deferred and recorded within Other Assets. These costs are being amortized through interest expense over the three-year life of the 2018 Revolving Credit Facility on a straight line basis. For the three and six months ended June 30, 2019, we recognized $0.1 million and $0.3 million, respectively, of interest expense from the amortization of deferred issuance costs. At June 30, 2019, remaining deferred issuance costs were $1.0 million, net of accumulated amortization.

We are subject to certain covenants under the 2018 Revolving Credit Facility, including (but not limited to) the following: a maximum debt-to-total capitalization ratio of 35%, a minimum liquidity requirement, compliance with the PMIERs financial requirements (subject to any GSE-approved waivers), and minimum consolidated net worth and statutory capital requirements (respectively, as defined therein). We were in compliance with all covenants as of June 30, 2019.

Reinsurance

6 Months Ended

Jun. 30, 2019

Reinsurance Disclosures [Abstract]

Reinsurance

We enter into third-party reinsurance transactions to actively manage our risk, ensure PMIERs compliance and support the growth of our business. The GSEs and the Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) have approved all such transactions (subject to certain conditions and ongoing review, including levels of approved capital credit).

The effect of our reinsurance agreements on premiums written and earned is as follows:



	For the three months ended						For the six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
	(In Thousands)
Net premiums written
Direct	$	92,213		$	70,677		$	173,943		$	136,704
Ceded ⁽¹⁾	(9,604		)	(6,234		)	(19,411		)	(13,231		)
Net premiums written	$	82,609		$	64,443		$	154,532		$	123,473

Net premiums earned
Direct	$	95,180		$	70,609		$	181,478		$	134,212
Ceded ⁽¹⁾	(11,931		)	(8,994		)	(24,360		)	(17,683		)
Net premiums earned	$	83,249		$	61,615		$	157,118		$	116,529


⁽¹⁾	Net of profit commission.

Excess-of-loss reinsurance

2017 ILN Transaction

In May 2017, NMIC entered into a reinsurance agreement with Oaktown Re Ltd. (Oaktown Re), which provides for up to $211.3 million of aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existing portfolio of mortgage insurance policies written from 2013 through December 31, 2016. For the reinsurance coverage period, NMIC retains the first layer of $126.8 million of aggregate losses, of which $124.4 million remained at June 30, 2019, and Oaktown Re then provides second layer coverage up to the outstanding reinsurance coverage amount. NMIC then retains losses in excess of the outstanding reinsurance coverage amount. The outstanding reinsurance coverage amount decreases from $211.3 million at inception over a ten-year period as the underlying covered mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled and was $91.5 million as of June 30, 2019. The outstanding reinsurance coverage amount will stop amortizing if certain credit enhancement or delinquency thresholds are triggered.

Oaktown Re financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $211.3 million to unaffiliated investors (the 2017 Notes). The 2017 Notes mature on April 26, 2027. All of the proceeds paid to Oaktown Re from the sale of the 2017 Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re to NMIC under the reinsurance agreement. Funds in the reinsurance trust account are required to be invested in high credit quality money market funds at all times. We refer collectively to NMIC's reinsurance agreement with Oaktown Re and the issuance of the 2017 Notes by Oaktown Re as the 2017 ILN Transaction. Under the terms of the 2017 ILN Transaction, NMIC makes risk premium payments for the applicable outstanding reinsurance coverage amount and pays Oaktown Re for anticipated operating expenses (capped at $300 thousand per year). NMIC ceded risk premiums to Oaktown Re of $1.3 million and $2.6 million during the three and six months ended June 30, 2019, respectively, and $1.6 million and $3.3 million during the three and six months ended June 30, 2018, respectively. NMIC did not cede any losses to Oaktown Re during the three and six months ended June 30, 2019 and 2018.

2018 ILN Transaction

In July 2018, NMIC entered into a reinsurance agreement with Oaktown Re II Ltd. (Oaktown Re II), which provides for up to $264.5 million of aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existing portfolio of mortgage insurance policies written between January 1, 2017 and May 31, 2018. For the reinsurance coverage period, NMIC retains the first layer of $125.3 million of aggregate losses, of which $125.2 million remained at June 30, 2019, and Oaktown Re II then provides second layer coverage up to the outstanding reinsurance coverage amount. NMIC then retains losses in excess of the outstanding reinsurance coverage amount. The outstanding reinsurance coverage amount decreases from $264.5 million at inception over a ten-year period as the underlying covered mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled, and was $258.2 million as of June 30, 2019. The outstanding reinsurance coverage amount will stop amortizing if certain credit enhancement or delinquency thresholds are triggered.

Oaktown Re II financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $264.5 million to unaffiliated investors (the 2018 Notes). The 2018 Notes mature on July 25, 2028. All of the proceeds paid to Oaktown Re II from the sale of the 2018 Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re II to NMIC

under the reinsurance agreement. Funds in the reinsurance trust account are required to be invested in high credit quality money market funds at all times. We refer collectively to NMIC's reinsurance agreement with Oaktown Re II and the issuance of the 2018 Notes by Oaktown Re II as the 2018 ILN Transaction. Under the terms of the 2018 ILN Transaction, NMIC makes risk premium payments for the applicable outstanding reinsurance coverage amount and pays Oaktown Re II for anticipated operating expenses (capped at $250 thousand per year). For the three and six months ended June 30, 2019, NMIC ceded risk premiums of $1.6 million and $3.3 million, respectively, to Oaktown Re II. NMIC did not cede any losses to Oaktown Re II during the three and six months ended June 30, 2019.

Under the terms of the 2018 ILN Transaction, we are required to maintain a certain level of restricted funds in a premium deposit account with Bank of New York Mellon until the 2018 Notes have been redeemed in full. "Cash and cash equivalents" on our balance sheet includes restricted cash of $1.4 million as of June 30, 2019. We are not required to deposit additional funds into the premium deposit account and the restricted balance will decrease over time as the principal balance of the 2018 Notes declines.

We refer collectively to the 2017 ILN Transaction and 2018 ILN Transaction as the ILN Transactions. NMIC holds optional termination rights under each ILN Transaction in the event of certain occurrences, including, among others, a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment afforded to NMIC under a given agreement. In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC's failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others.

At inception of each ILN Transaction, we determined that Oaktown Re and Oaktown Re II were variable interest entities (VIEs). However, we concluded that we are not the primary beneficiary of either Oaktown Re or Oaktown Re II because NMIC does not have significant economic exposure to either Oaktown Re or Oaktown Re II, and, as such, we do not consolidate the VIEs in our consolidated financial statements.

The amount of reinsurance premium ceded under the ILN Transactions fluctuates based on changes in one-month LIBOR and changes in the earned rate on the money market funds in which the assets of the reinsurance trusts are invested. As the reinsurance premiums will vary based on changes in these rates, we have concluded that the ILN Transactions contain embedded derivatives that must be accounted for separately as freestanding derivatives. The total fair value of such derivatives at June 30, 2019 and December 31, 2018, and the change in fair value of the derivatives during the three and six months ended June 30, 2019 and 2018, were not material to our consolidated financial statements.

Quota share reinsurance

2016 QSR Transaction

Effective September 1, 2016, NMIC entered into a quota-share reinsurance (QSR) transaction (the 2016 QSR Transaction) with a panel of third-party reinsurers. Each of the third-party reinsurers has an insurer financial strength rating of A- or better by Standard and Poor’s Rating Services (S&P), A.M. Best or both.

Under the 2016 QSR Transaction, NMIC ceded premiums written related to:


•	25% of existing risk written on eligible policies as of August 31, 2016;


•	100% of existing risk under our pool agreement with Fannie Mae; and


•	25% of risk on eligible policies written from September 1, 2016 through December 31, 2017.

The 2016 QSR Transaction is scheduled to terminate on December 31, 2027, except with respect to the ceded pool risk, which is scheduled to terminate on August 31, 2023. However, NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2020, or at the end of any calendar quarter thereafter, which would result in NMIC reassuming the related risk.

2018 QSR Transaction

Effective January 1, 2018, NMIC entered into a second quota share reinsurance treaty with a panel of third-party reinsurers (the 2018 QSR Transaction, together with the 2016 QSR Transaction, the QSR Transactions). Each of the third-party reinsurers has an insurer financial strength rating of A- or better by S&P, AM Best or both. Under the 2018 QSR Transaction, NMIC cedes premiums earned related to 25% of risk on eligible policies written in 2018 and 20% of risk on eligible policies written in 2019. The 2018 QSR Transaction is scheduled to terminate on December 31, 2029. However, NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2022, or at the end of any calendar quarter thereafter, which

would result in NMIC reassuming the related risk.

NMIC may terminate either or both of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the risk-in-force (RIF) ceded under the respective agreements. Additionally, under the terms of the QSR Transactions, NMIC may elect to selectively terminate its engagement with individual reinsurers on a run-off basis (i.e., reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis (i.e., the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement.

Effective April 1, 2019, NMIC elected to terminate its engagement with one reinsurer under the 2016 QSR Transaction on a cut-off basis. In connection with the termination, NMIC recaptured approximately $500 million of previously ceded primary RIF and stopped ceding new premiums earned or written with respect to the recaptured risk. With this termination, ceded premiums written under the 2016 QSR Transaction decreased from 25% to 20.5% on eligible policies. The termination has no effect on the cession of pool risk under the 2016 QSR Transaction.

The following table shows the amounts related to the QSR Transactions:



	For the three months ended						For the six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
	(In Thousands)
Ceded risk-in-force	$	4,558,862		$	3,606,928		$	4,558,862		$	3,606,928
Ceded premiums written	(18,592		)	(15,318		)	(37,437		)	(29,843		)
Ceded premiums earned	(20,919		)	(18,077		)	(42,387		)	(34,295		)
Ceded claims and claim expenses	770			173			1,669			716
Ceding commission written	3,717			3,064			7,488			5,969
Ceding commission earned	4,171			3,536			8,377			6,687
Profit commission	11,884			10,707			23,945			19,908

Ceded premiums written under the 2016 QSR Transaction are recorded on the balance sheet as prepaid reinsurance premiums and amortized to ceded premiums earned in a manner consistent with the recognition of revenue on direct premiums. Under the 2018 QSR Transaction, premiums are ceded on an earned basis as defined in the agreement. NMIC receives a 20% ceding commission for premiums ceded under the QSR Transactions. NMIC also receives a profit commission, provided that the loss ratio on the loans covered under the 2016 QSR Transaction and 2018 QSR Transaction generally remains below 60% and 61%, respectively, as measured annually. Ceded claims and claim expenses under the QSR Transactions reduce NMIC's profit commission on a dollar-for-dollar basis.

In accordance with the terms of the 2016 QSR Transaction, rather than making a cash payment or transferring investments for ceded premiums written, NMIC established a funds withheld liability, which also includes amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC will be realized from this account until exhausted. NMIC's reinsurance recoverable balance is further supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The reinsurance recoverable on loss reserves related to our 2016 QSR Transaction was $2.7 million as of June 30, 2019.

In accordance with the terms of the 2018 QSR Transaction, cash payments for ceded premiums earned are settled on a quarterly basis, offset by amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC are also settled quarterly. NMIC's reinsurance recoverable balance is supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The reinsurance recoverable on loss reserves related to our 2018 QSR Transaction was $1.1 million as of June 30, 2019.

Reserves for Insurance Claims and Claim Expenses

6 Months Ended

Jun. 30, 2019

Reserves for Insurance Claims and Claim Expenses

We establish reserves to recognize the estimated liability for insurance claims and claim expenses related to defaults on insured mortgage loans. Consistent with industry practice, we establish reserves for loans that have been reported to us by servicers as having been in default for at least 60 days, referred to as case reserves, and additional loans that we estimate (based on actuarial review) have been in default for at least 60 days that have not yet been reported to us by servicers, referred to as incurred but not

reported (IBNR) reserves. We also establish claim expense reserves, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claims settlement process. As of June 30, 2019, we had reserves for insurance claims and claim expenses of $18.4 million for 1,028 primary loans in default. During the six months ended June 30, 2019, we paid 62 claims totaling $1.7 million, including 58 claims covered under the QSR Transactions representing $0.3 million of ceded claims and claim expenses.

In 2013, we entered into a pool insurance transaction with Fannie Mae. The pool transaction includes a deductible, which represents the amount of claims to be absorbed by Fannie Mae before we are obligated to pay any claims. We only establish reserves for pool risk if we expect claims to exceed this deductible. At June 30, 2019, 54 loans in the pool were past due by 60 days or more. These 54 loans represented approximately $3.4 million of RIF. Due to the size of the remaining deductible, the low level of notices of default (NODs) reported on loans in the pool through June 30, 2019 and the expected severity (all loans in the pool have loan-to-value ratios (LTV) ratios under 80%), we did not establish any case or IBNR reserves for pool risk at June 30, 2019. In connection with the settlement of pool claims, we applied $0.7 million to the pool deductible through June 30, 2019. At June 30, 2019, the remaining pool deductible was $9.6 million. We have not paid any pool claims to date. 100% of our pool RIF is reinsured under the 2016 QSR Transaction.

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



	For the six months ended June 30,
	2019			2018
	(In Thousands)
Beginning balance	$	12,811		$	8,761
Less reinsurance recoverables ⁽¹⁾	(3,001		)	(1,902		)
Beginning balance, net of reinsurance recoverables	9,810			6,859

Add claims incurred:
Claims and claim expenses incurred:
Current year ⁽²⁾	7,401			3,152
Prior years⁽³⁾	(1,735		)	(940		)
Total claims and claim expenses incurred	5,666			2,212

Less claims paid:
Claims and claim expenses paid:
Current year ⁽²⁾	—			—
Prior years ⁽³⁾	1,368			852
Reinsurance terminations ⁽⁴⁾	(549		)	—
Total claims and claim expenses paid	819			852

Reserve at end of period, net of reinsurance recoverables	14,657			8,219
Add reinsurance recoverables ⁽¹⁾	3,775			2,382
Ending balance	$	18,432		$	10,601


⁽¹⁾	Related to ceded losses recoverable on the QSR Transactions, included in "Other Assets" on the Condensed Consolidated Balance Sheets. See Note 5, "Reinsurance" for additional information.


⁽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. See Note 5, "Reinsurance" for additional information.

The "claims incurred" section of the table above shows claims and claim expenses incurred on NODs for current and prior years, including IBNR reserves and is presented net of reinsurance. The amount of claims incurred relating to current year NODs represents the estimated amount of claims and claim expenses to be ultimately paid on such loans in default. We recognized $1.7 million and $0.9 million of favorable prior year development during the six months ended June 30, 2019 and 2018, respectively, due to NOD cures and ongoing analysis of recent loss development trends. We may increase or decrease our original estimates as we

learn additional information about individual defaults and claims and continue to observe and analyze loss development trends in our portfolio. Gross reserves of $8.9 million related to prior year defaults remained as of June 30, 2019.

Earnings per Share (EPS)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings per Share (EPS)

Basic earnings per share is based on the weighted average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the vesting of service based and performance and service based restricted stock units (RSUs), and the exercise of vested and unvested stock options and outstanding warrants. The number of shares issuable for RSUs subject to performance and service based vesting requirements are only included in diluted shares if the relevant performance measurement period has commenced and results during such period meet the necessary performance criteria. The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings per share of common stock.



	For the three months ended June 30,					For the six months ended June 30,
	2019		2018			2019		2018
	(In Thousands, except for per share data)
Net income	$	39,100	$	25,241		$	71,999	$	47,596
Basic weighted average shares outstanding	67,590		65,664			67,143		63,891
Basic earnings per share	$	0.58	$	0.38		$	1.07	$	0.74

Net income	$	39,100	$	25,241		$	71,999	$	47,596
Warrant gain, net of tax	—		(86		)	—		(418		)
Diluted net income	$	39,100	$	25,155		$	71,999	$	47,178

Basic weighted average shares outstanding	67,590		65,664			67,143		63,891
Dilutive effect of issuable shares	2,000		2,952			2,205		3,280
Diluted weighted average shares outstanding	69,590		68,616			69,348		67,171

Diluted earnings per share	$	0.56	$	0.37		$	1.04	$	0.70

Anti-dilutive shares	705		308			748		231

Warrants	6 Months Ended
Warrants	Jun. 30, 2019
Debt Disclosure [Abstract]
Warrants	Warrants We issued 992 thousand warrants in connection with a private placement of our common stock in April 2012. Each warrant gives the holder thereof the right to purchase one share of common stock at an exercise price equal to $10.00. The warrants were issued with an aggregate fair value of $5.1 million. During the six months ended June 30, 2019, 260 thousand warrants were exercised resulting in the issuance of 168 thousand common shares. Upon exercise, we reclassified approximately $4.8 million of warrant fair value from warrant liability to additional paid-in capital, of which $2.3 million related to changes in fair value during the six months ended June 30, 2019. During the six months ended June 30, 2018, 63 thousand warrants were exercised resulting in the issuance of 29 thousand common shares. Upon exercise, we reclassified approximately $0.6 million of warrant fair value from warrant liability to additional paid-in capital, of which $42 thousand related to changes in fair value during the six months ended June 30, 2018. We account for these warrants to purchase our common shares in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 21%. NMIH files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries. Our effective tax rate on our pre-tax income was 23.3% and 19.9% for the three and six months ended June 30, 2019, respectively, compared to 21.9% and 19.2% for the three and six months ended June 30, 2018, respectively. Our provision for income taxes for interim reporting periods is established based on our estimated annual effective tax rate for a given year. Our effective tax rate may fluctuate between interim periods due to the impact of discrete items not included in our estimated annual effective tax rate, including the tax effects associated with the vesting of RSUs and exercise of options, and the change in fair value of our warrant liability. Such items are treated on a discrete basis in the reporting period in which they occur. As a mortgage guaranty insurance company, we are eligible to claim a tax deduction for our statutory contingency reserve balance, subject to certain limitations outlined under IRC Section 832(e), and only to the extent we acquire tax and loss bonds in an amount equal to the tax benefit derived from the claimed deduction, which is our intent. As a result, our interim provision for income taxes for the three and six months ended June 30, 2019 represents a change in our net deferred tax liability.

Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

We have two operating lease agreements related to our corporate headquarters and a data center facility for which we recognized operating right-of-use (ROU) assets and lease liabilities of $7.3 million and $8.4 million, respectively, as of June 30, 2019. As of June 30, 2019, we did not have any finance leases.

We recognize ROU assets and lease liabilities in connection with the adoption of ASU 2016-02, Leases (Topic 842). ROU assets and lease liabilities are established based on the estimated present value of lease payments over the relevant lease term. We estimate a discount rate for each lease based on our estimated incremental borrowing rate at the commencement date of the relevant lease.

Right-of-use assets obtained in exchange for new operating lease liabilities for the six months ended June 30, 2019 were $8.1 million. The following table provides a summary of our ROU asset and lease liability assumptions as of June 30, 2019:



Weighted-average remaining lease term	3.7 years
Weighted-average discount rate	6.21	%

Cash paid on our operating lease liabilities for the three and six months ended June 30, 2019 was $0.6 million and $1.2 million, respectively. Lease expenses recognized on our operating lease liabilities for the three and six months ended June 30, 2019 were $0.6 million and $1.1 million, respectively. Future payments due under our existing operating leases as of June 30, 2019 are as follows:



As of June 30, 2019	(In Thousands)
2019	$	1,239
2020	2,537
2021	2,609
2022	2,574
2023	462
Total undiscounted lease payments	9,421
Less effects of discounting	(1,028		)
Present value of lease payments	$	8,393

Lease expense is recorded in underwriting and operating expenses on the consolidated statements of operations. Our existing operating leases have terms that range from three to five years. The lease for our corporate headquarters includes an option to renew for an additional five years at prevailing market rates at time of renewal. We have not included this renewal option in our calculation of minimum lease payments as it is not reasonably certain to be exercised.

As of December 31, 2018, the future minimum lease payments as accounted for prior to our adoption of ASU 2016-02, Leases (Topic 842) are as follows:



Year ending December 31, 2018
	(In Thousands)
2019	$	2,346
2020	2,417
2021	2,489
2022	2,564
2023	463
Totals	$	10,279

Regulatory Information

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Regulatory Information

Statutory Requirements

Our insurance subsidiaries, NMIC and Re One, file financial statements in conformity with statutory accounting principles (SAP) prescribed or permitted by the Wisconsin OCI, NMIC's principal regulator. Prescribed SAP includes state laws, regulations and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners. The Wisconsin OCI recognizes only statutory accounting practices prescribed or permitted by the state of Wisconsin for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under Wisconsin insurance laws.

NMIC and Re One's combined statutory net income (loss) was as follows:



	For the three months ended June 30,				For the six months ended June 30,
	2019		2018		2019		2018
	(In Thousands)
Statutory net income (loss)	$	6,466	$	2,066	$	5,539	(4,748	)

NMIC and Re One's combined statutory surplus, contingency reserve and risk-to-capital (RTC) ratios were as follows:



	June 30, 2019		December 31, 2018
	(Dollars In Thousands)
Statutory surplus	$	438,397	$	430,785
Contingency reserve	423,413		332,702
RTC Ratio	15.8:1		13.1:1

NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware corporate law provides that dividends are only payable out of a corporation's capital surplus or, subject to certain limitations, recent net profits. NMIC and Re One's ability to pay dividends to NMIH is subject to Wisconsin OCI notice or approval. Certain other states in which NMIC is licensed also have statutes or regulations that restrict its ability to pay dividends. Since inception, NMIC and Re One have not paid any dividends to NMIH.

Subsequent Event	6 Months Ended
Subsequent Event	Jun. 30, 2019
Subsequent Events [Abstract]
Subsequent Events	Subsequent Event On July 30, 2019, NMIC entered into a reinsurance agreement with Oaktown Re III Ltd. (Oaktown Re III), a Bermuda domiciled special purpose reinsurer, that provides for up to $326.9 million of aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existing portfolio of mortgage insurance policies written between June 1, 2018 and June 30, 2019. For the reinsurance coverage period, NMIC will retain the first layer of $123.4 million of aggregate losses and Oaktown Re III will then provide second layer coverage up to the outstanding reinsurance coverage amount. NMIC will then retain losses in excess of the outstanding reinsurance coverage amount. Oaktown Re III financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $326.9 million to unaffiliated investors (the 2019 Notes). The 2019 Notes mature on July 25, 2029. All of the proceeds paid to Oaktown Re III from the sale of the 2019 Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re III to NMIC under the reinsurance agreement. Funds in the reinsurance trust account are required to be invested in high credit quality money market funds at all times. We refer collectively to NMIC's reinsurance agreement with Oaktown Re III and the issuance of the 2019 Notes by Oaktown Re III as the 2019 ILN Transaction. Under the terms of the 2019 ILN Transaction, NMIC makes risk premium payments for the applicable outstanding reinsurance coverage amount and pays Oaktown Re III for anticipated operating expenses (capped at $250,000 per year).

Organization, Basis of Presentation and Summary of Accounting Principles (Policies)	6 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2018, included in our 2018 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to our previously reported financial information have been made to conform to current period presentation. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2019.
Recent Accounting Pronouncements	Recent Accounting Pronouncements - Adopted In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). This update requires that businesses recognize rights and obligations associated with certain leases as assets and liabilities on the balance sheet. The standard also requires additional disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. We adopted this ASU on January 1, 2019 using the modified-retrospective method and applied it prospectively as of the effective date, without adjusting comparative periods presented as permitted by ASU 2018-11, Leases (Topic 842), Targeted Improvements. Adoption of this new standard increased our assets and liabilities by $7.6 million in connection with the recognition of right-of-use assets and lease liabilities, primarily related to the operating lease on our corporate headquarters. Adoption of this standard did not impact our consolidated statements of operations or cash flows. See Note 10, "Leases" for additional information related to our leases. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815). This update is intended to simplify the accounting for certain equity-linked financial instruments. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This update expands the scope of Topic 718 to include share-based payments made to non-employees in connection with the acquisition of goods and services. We adopted this ASU on January 1, 2019. Adoption of this standard had no impact on our financial results at this time as we have not made any share-based grants to non-employees as defined in ASC 718-10-20. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and in April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which includes codification improvements to Topic 326. These updates will require companies to measure and establish reserves for lifetime expected credit losses on many financial assets held at a given reporting date. Under the guidance, the methodology for measuring lifetime credit losses will generally shift from an incurred loss model, whereby losses are only recognized once probable and estimable, to a current expected credit loss (CECL) model, whereby losses are recognized upfront based on a future economic forecast. Credit losses relating to available-for-sale fixed maturity securities will be recorded through an allowance for credit losses, rather than a write-down of the asset as is currently required, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. The length of time an available-for sale fixed maturity security has been held in an unrealized loss position will no longer impact its credit loss determination. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. While we are still finalizing our analysis of this guidance, we do not expect it to have a material impact on our consolidated financial statements. This standard will not impact our accounting for insurance claims and claim expenses as these items are not in the scope of this ASU. In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts. This update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This update modifies the fair value measurement disclosure requirements of ASC 820. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Adoption of this ASU will not have an impact on our Consolidated Balance Sheet, Statements of Operations and Comprehensive Income, Changes in Shareholders Equity or Cash Flows. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This update applies to cloud computing arrangements hosted by a vendor and provides companies with guidance on the criteria for capitalizing implementation, set-up and other up-front costs incurred in association with these arrangements. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements.
Earnings Per Share	Basic earnings per share is based on the weighted average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the vesting of service based and performance and service based restricted stock units (RSUs), and the exercise of vested and unvested stock options and outstanding warrants. The number of shares issuable for RSUs subject to performance and service based vesting requirements are only included in diluted shares if the relevant performance measurement period has commenced and results during such period meet the necessary performance criteria.

Investments (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Fair Values and Gross Unrealized Gains and Losses

Fair Values and Gross Unrealized Gains and Losses on Investments



	Amortized Cost		Gross Unrealized					Fair Value
	Amortized Cost		Gains		Losses			Fair Value
As of June 30, 2019	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,193	$	688	$	(116	)	$	48,765
Municipal debt securities	91,650		1,497		(73		)	93,074
Corporate debt securities	634,188		18,569		(785		)	651,972
Asset-backed securities	168,251		3,216		(36		)	171,431
Total bonds	942,282		23,970		(1,010		)	965,242
Short-term investments	52,261		104		—			52,365
Total investments	$	994,543	$	24,074	$	(1,010	)	$	1,017,607



	Amortized Cost		Gross Unrealized					Fair Value
	Amortized Cost		Gains		Losses			Fair Value
As of December 31, 2018	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,171	$	35	$	(1,376	)	$	46,830
Municipal debt securities	92,014		206		(963		)	91,257
Corporate debt securities	554,079		847		(11,688		)	543,238
Asset-backed securities	171,990		792		(1,457		)	171,325
Total bonds	866,254		1,880		(15,484		)	852,650
Short-term investments	58,733		107		—			58,840
Total investments	$	924,987	$	1,987	$	(15,484	)	$	911,490

Schedule of Investments by Industry Group

The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of June 30, 2019 and December 31, 2018:



	June 30, 2019		December 31, 2018
Financial	38	%	38	%
Consumer	27		27
Communications	10		12
Utilities	9		7
Industrial	8		7
Technology	6		6
Energy	1		2
Other	1		1
Total	100	%	100	%

Schedule of Investments by Maturity



As of June 30, 2019	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	99,314	$	99,375
Due after one through five years	412,820		420,131
Due after five through ten years	300,990		312,792
Due after ten years	13,168		13,878
Asset-backed securities	168,251		171,431
Total investments	$	994,543	$	1,017,607



As of December 31, 2018	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	76,087	$	76,104
Due after one through five years	352,282		347,701
Due after five through ten years	318,728		310,633
Due after ten years	5,900		5,727
Asset-backed securities	171,990		171,325
Total investments	$	924,987	$	911,490

Schedule of Aging Unrealized Losses

or those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:



	Less Than 12 Months						12 Months or Greater						Total
	# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses
As of June 30, 2019		(Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	—	$	—	$	—		5	$	13,750	$	(116	)	5	$	13,750	$	(116	)
Municipal debt securities⁽¹⁾	1	2,000		—			10	15,025		(73		)	11	17,025		(73		)
Corporate debt securities	13	24,737		(199		)	33	51,099		(586		)	46	75,836		(785		)
Asset-backed securities	2	8,786		(33		)	6	1,953		(3		)	8	10,739		(36		)
Total	16	$	35,523	$	(232	)	54	$	81,827	$	(778	)	70	$	117,350	$	(1,010	)


⁽¹⁾	Includes securities with unrealized losses of less than 12 months which are not identifiable in the schedule due to rounding.



	Less Than 12 Months						12 Months or Greater						Total
	# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses
As of December 31, 2018		(Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	—	$	—	$	—		19	$	41,817	$	(1,376	)	19	$	41,817	$	(1,376	)
Municipal debt securities	4	7,409		(11		)	31	58,658		(952		)	35	66,067		(963		)
Corporate debt securities	118	226,477		(3,952		)	126	221,675		(7,736		)	244	448,152		(11,688		)
Asset-backed securities	25	36,017		(1,136		)	22	33,988		(321		)	47	70,005		(1,457		)
Total	147	$	269,903	$	(5,099	)	198	$	356,138	$	(10,385	)	345	$	626,041	$	(15,484	)

Schedule of Components of Net Investment Income

The following table presents the components of net investment income:



	For the three months ended June 30,						For the six months ended June 30,
	2019			2018			2019			2018
	(In Thousands)
Investment income	$	7,741		$	5,937		$	15,237		$	10,719
Investment expenses	(112		)	(202		)	(225		)	(410		)
Net investment income	$	7,629		$	5,735		$	15,012		$	10,309

Schedule of Net Realized Investment Gains (Losses)

The following table presents the components of net realized investment losses:



	For the three months ended June 30,					For the six months ended June 30,
	2019			2018		2019			2018
	(In Thousands)
Gross realized investment gains	$	22		$	59	$	217		$	59
Gross realized investment losses	(135		)	—		(517		)	—
Net realized investment losses	$	(113	)	$	59	$	(300	)	$	59

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements of Financial Instruments

The following tables present the level within the fair value hierarchy at which our financial instruments were measured:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
As of June 30, 2019	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	48,765	$	—	$	—	$	48,765
Municipal debt securities	—		93,074		—		93,074
Corporate debt securities	—		651,972		—		651,972
Asset-backed securities	—		171,431		—		171,431
Cash, cash equivalents and short-term investments	88,100		—		—		88,100
Total assets	$	136,865	$	916,477	$	—	$	1,053,342
Warrant liability	—		—		9,679		9,679
Total liabilities	$	—	$	—	$	9,679	$	9,679



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
As of December 31, 2018	(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies	$	46,830	$	—	$	—	$	46,830
Municipal debt securities	—		91,257		—		91,257
Corporate debt securities	—		543,238		—		543,238
Asset-backed securities	—		171,325		—		171,325
Cash, cash equivalents and short-term investments	84,134		—		—		84,134
Total assets	$	130,964	$	805,820	$	—	$	936,784
Warrant liability	—		—		7,296		7,296
Total liabilities	$	—	$	—	$	7,296	$	7,296

Roll-Forward of Level 3 Liabilities Measured at Fair Value

The following is a roll-forward of Level 3 liabilities measured at fair value:



	For the six months ended June 30,
Warrant Liability	2019			2018
	(In Thousands)
Balance, January 1	$	7,296		$	7,472
Change in fair value of warrant liability included in earnings	7,164			(529		)
Issuance of common stock on warrant exercise	(4,781		)	(552		)
Balance, June 30	$	9,679		$	6,391

Schedule of Key Inputs and Assumptions in Option-Pricing Model

The following table outlines the key inputs and assumptions used to calculate the fair value of the warrant liability in the Black-Scholes option-pricing model as of the dates indicated.



	As of June 30,
	2019			2018
Common stock price	$	28.39		$	16.30
Risk free interest rate	1.72 - 1.95%			2.60		%
Expected life	0.92 - 2.81 years			2.49 years
Expected volatility	33.8 - 40.0%			32.7		%
Dividend yield	0		%	0		%

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Future Principal Payments

Future principal payments due under the 2018 Term Loan as of June 30, 2019 are as follows:



As of June 30, 2019	Principal
	(In thousands)
2019	$	750
2020	1,500
2021	1,500
2022	1,500
2023	143,250
Total	$	148,500

Reinsurance (Tables)

6 Months Ended

Jun. 30, 2019

Reinsurance Disclosures [Abstract]

Schedule of Effects of Reinsurance

The effect of our reinsurance agreements on premiums written and earned is as follows:



	For the three months ended						For the six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
	(In Thousands)
Net premiums written
Direct	$	92,213		$	70,677		$	173,943		$	136,704
Ceded ⁽¹⁾	(9,604		)	(6,234		)	(19,411		)	(13,231		)
Net premiums written	$	82,609		$	64,443		$	154,532		$	123,473

Net premiums earned
Direct	$	95,180		$	70,609		$	181,478		$	134,212
Ceded ⁽¹⁾	(11,931		)	(8,994		)	(24,360		)	(17,683		)
Net premiums earned	$	83,249		$	61,615		$	157,118		$	116,529

⁽¹⁾

Net of profit commission

The following table shows the amounts related to the QSR Transactions:



	For the three months ended						For the six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
	(In Thousands)
Ceded risk-in-force	$	4,558,862		$	3,606,928		$	4,558,862		$	3,606,928
Ceded premiums written	(18,592		)	(15,318		)	(37,437		)	(29,843		)
Ceded premiums earned	(20,919		)	(18,077		)	(42,387		)	(34,295		)
Ceded claims and claim expenses	770			173			1,669			716
Ceding commission written	3,717			3,064			7,488			5,969
Ceding commission earned	4,171			3,536			8,377			6,687
Profit commission	11,884			10,707			23,945			19,908

Reserves for Insurance Claims and Claim Expenses (Tables)

6 Months Ended

Jun. 30, 2019

Reconciliation of Liability for Insurance Claims and Claim Expenses

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



	For the six months ended June 30,
	2019			2018
	(In Thousands)
Beginning balance	$	12,811		$	8,761
Less reinsurance recoverables ⁽¹⁾	(3,001		)	(1,902		)
Beginning balance, net of reinsurance recoverables	9,810			6,859

Add claims incurred:
Claims and claim expenses incurred:
Current year ⁽²⁾	7,401			3,152
Prior years⁽³⁾	(1,735		)	(940		)
Total claims and claim expenses incurred	5,666			2,212

Less claims paid:
Claims and claim expenses paid:
Current year ⁽²⁾	—			—
Prior years ⁽³⁾	1,368			852
Reinsurance terminations ⁽⁴⁾	(549		)	—
Total claims and claim expenses paid	819			852

Reserve at end of period, net of reinsurance recoverables	14,657			8,219
Add reinsurance recoverables ⁽¹⁾	3,775			2,382
Ending balance	$	18,432		$	10,601


⁽¹⁾	Related to ceded losses recoverable on the QSR Transactions, included in "Other Assets" on the Condensed Consolidated Balance Sheets. See Note 5, "Reinsurance" for additional information.


⁽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. See Note 5, "Reinsurance" for additional information.

Earnings per Share (EPS) (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Earnings per Share, Basic and Diluted

The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings per share of common stock.



	For the three months ended June 30,					For the six months ended June 30,
	2019		2018			2019		2018
	(In Thousands, except for per share data)
Net income	$	39,100	$	25,241		$	71,999	$	47,596
Basic weighted average shares outstanding	67,590		65,664			67,143		63,891
Basic earnings per share	$	0.58	$	0.38		$	1.07	$	0.74

Net income	$	39,100	$	25,241		$	71,999	$	47,596
Warrant gain, net of tax	—		(86		)	—		(418		)
Diluted net income	$	39,100	$	25,155		$	71,999	$	47,178

Basic weighted average shares outstanding	67,590		65,664			67,143		63,891
Dilutive effect of issuable shares	2,000		2,952			2,205		3,280
Diluted weighted average shares outstanding	69,590		68,616			69,348		67,171

Diluted earnings per share	$	0.56	$	0.37		$	1.04	$	0.70

Anti-dilutive shares	705		308			748		231

Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Summary of Right-of-Use Asset and Lease Liability Activity and Assumptions

The following table provides a summary of our ROU asset and lease liability assumptions as of June 30, 2019:



Weighted-average remaining lease term	3.7 years
Weighted-average discount rate	6.21	%

Schedule of Future Payments Due Under Operating Leases

Future payments due under our existing operating leases as of June 30, 2019 are as follows:



As of June 30, 2019	(In Thousands)
2019	$	1,239
2020	2,537
2021	2,609
2022	2,574
2023	462
Total undiscounted lease payments	9,421
Less effects of discounting	(1,028		)
Present value of lease payments	$	8,393

Schedule of Future Minimum Lease Payments as Accounted For Prior to Adoption of ASU 2016-02

As of December 31, 2018, the future minimum lease payments as accounted for prior to our adoption of ASU 2016-02, Leases (Topic 842) are as follows:



Year ending December 31, 2018
	(In Thousands)
2019	$	2,346
2020	2,417
2021	2,489
2022	2,564
2023	463
Totals	$	10,279

Regulatory Information (Tables)

6 Months Ended

Jun. 30, 2019