UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 1, 2020
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of Principal Executive Offices)
(Zip Code)
(855 ) 530-6642
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Exchange Act of 1934 (§ 240.12b-2 of this chapter).
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01 Other Events
On June 1, 2020, the Company issued a press release reporting that its wholly-owned subsidiary, National Mortgage Insurance Corporation, has entered into a new quota share reinsurance arrangement, subject to customary approvals, with a broad panel of highly-rated reinsurers. A copy of the press release is filed herewith as Exhibit 99.1 to this report, which is incorporated herein by reference.
On June 1, 2020, the Company issued a press release reporting selected operating statistics for the month of May 2020. A copy of the press release is filed herewith as Exhibit 99.2 to this report, which is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NMI Holdings, Inc.
(Registrant)
| Date: June 1, 2020 | By: | /s/ Nicole C. Sanchez | ||||||
| Nicole C. Sanchez | ||||||||
| VP, Associate General Counsel | ||||||||
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
NMI Holdings, Inc. Enters Into New Quota Share Reinsurance Arrangement
EMERYVILLE, CA., June 1, 2020 – NMI Holdings, Inc. (Nasdaq: NMIH) today announced that National Mortgage Insurance Corporation (National MI), its wholly-owned insurance subsidiary, has entered into a new quota share reinsurance arrangement, subject to customary approvals, with a broad panel of highly rated reinsurers.
Under the new agreement, National MI will cede, subject to certain limitations, exclusions, and conditions, 10.5% of its primary new insurance written for the period from April 1, 2020 through December 31, 2020. The ceded percentage may be increased with additions to the reinsurance panel. The company will receive a ceding commission equal to 20% of ceded premiums, as well as a profit commission of up to 50% of ceded premiums, reduced by any losses ceded under the agreement.
Adam Pollitzer, Chief Financial Officer of National MI, said, “We are pleased with our ability to secure additional reinsurance capacity at this time. This transaction builds upon the success we have achieved in the risk transfer markets to date and is particularly valuable in light of the COVID-19 outbreak. Our ability to secure coverage in the current environment broadly demonstrates the durability of reinsurance markets as a source of support for mortgage insurance risk and highlights the confidence that our reinsurance partners have in our front-end pricing and credit risk management approach. This treaty provides us with an expanded ability to pursue incremental, high-quality new business production and support our lender customers and their borrowers in the current market.”
About National MI
National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc. (NASDAQ: NMIH), is a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the U.S. Private Securities Litigation Reform Act of 1995 (the "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: uncertainty relating to the coronavirus ("COVID-19") pandemic and the measures taken by governmental authorities and other third parties to combat it, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and the Company’s business, operations and personnel; 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 generally, or with first time homebuyers or on very high loan-to-value mortgages; 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
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EXHIBIT 99.1
competitors, including other private mortgage insurers and government mortgage insurers, such as the Federal Housing Administration, U.S. Department of Agriculture's Rural Housing Service and the U.S. Department of Veterans Affairs, 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 natural disasters, including, with respect to 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 counterparties, 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, 2019 and in Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.
Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417
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EXHIBIT 99.2
FOR IMMEDIATE RELEASE
NMI Holdings, Inc. Releases Monthly Operating Statistics for May 2020
EMERYVILLE, CA, June 1, 2020 – NMI Holdings, Inc. (Nasdaq: NMIH) today reported selected operating statistics for the month of May 2020. In light of the COVID-19 crisis, the company will be releasing operating updates related to the credit performance of its insured portfolio and the risk characteristics of its new insurance written on a monthly basis going forward.
At May 31, 2020, the company reported 2,265 loans in default and a default ratio of 0.61%. A loan is considered to be in default when a borrower has missed two or more consecutive monthly payments. Default ratio is calculated as total loans in default divided by total policies currently in force.
| Default activity as of: | ||||||||||||||
| 3/31/2020 | 4/30/2020 | 5/31/2020 | ||||||||||||
| Number of loans in default | 1,449 | 1,610 | 2,265 | |||||||||||
| Default rate | 0.38% | 0.43% | 0.61% | |||||||||||
| New insurance written during: | ||||||||||||||
| Quarter Ended 3/31/2020 | Month Ended 4/30/2020 | Month Ended 5/31/2020 | ||||||||||||
| Weighted average composition | ||||||||||||||
| FICO | 757 | 762 | 762 | |||||||||||
| Loan-to-value (LTV) | 91.3% | 90.8% | 90.4% | |||||||||||
| Debt-to-income (DTI) | 34.4% | 33.4% | 33.2% | |||||||||||
| In-focus risk segments | ||||||||||||||
| 95.01-97.0% LTV | 6.4% | 6.1% | 3.6% | |||||||||||
| <680 FICO | 1.9% | 1.2% | 0.8% | |||||||||||
| >45% DTI | 10.3% | 8.2% | 6.7% | |||||||||||
| Layered risk (1) | 0.2% | 0.1% | 0.1% | |||||||||||
(1) Layered risk includes loans with more than one in-focus risk factor
About NMI Holdings
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.
Important Disclosures Related to Default Reporting
The information concerning default inventory is compiled from reports received from loan servicers and can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month, and transfers of servicing rights between loan servicers. We expect that we will see a significant increase in our default population going forward as borrowers face challenges related to the COVID-19 outbreak and benefit from the forbearance program for federally backed loans codified under the CARES Act or other programs made available by private lenders.
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EXHIBIT 99.2
Cautionary Note Regarding Forward-Looking Statements
This press release may contain statements that are deemed to be forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act”), and the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements. Any or all of our forward–looking statements in this press release may turn out to be inaccurate. More information about the risks, uncertainties and assumptions affecting the company can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in other filings we make with the Securities and Exchange Commission. We have based any forward–looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, operating results, business strategy and financial needs. All forward–looking statements are necessarily only estimates and actual events may differ materially from our current expectations. You are, therefore, cautioned not to place undue reliance on such statements. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances.
Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417
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