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) February 19, 2015
NMI Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 001-36174 | 45-4914248 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2100 Powell Street, 12th Floor, Emeryville, CA. |
(Address of Principal Executive Offices) |
94608 |
(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):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On February 19, 2015, NMI Holdings, Inc. issued a news release announcing its financial results for the fourth quarter and year ended December 31, 2014. A copy of this news release is furnished as Exhibit 99.1 to this report.
The information included in, or furnished with, this report has been "furnished" and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference in any filing or other document under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing or document.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1* NMI Holdings, Inc. News Release dated February 19, 2015.
_____________________
* Furnished herewith.
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: February 19, 2015
By: | /s/ Nicole C. Sanchez |
Nicole C. Sanchez | |
VP, Assistant General Counsel | |
EXHIBIT INDEX
Exhibit No. Description
99.1* NMI Holdings, Inc. News Release dated February 19, 2015.
* Furnished herewith
EXHIBIT 99.1
NMI Holdings, Inc. Reports Fourth Quarter 2014 Financial Results,
Flow NIW Grows 68% Sequentially
EMERYVILLE, Calif., Feb 19, 2015 - - NMI Holdings, Inc. (Nasdaq: NMIH) today reported results for the fourth quarter and year ended December 31, 2014. The company reported a net loss for the fourth quarter of $10.0 million or $0.17 per share, which compares with a loss of $11.0 million, or $0.19 per share, in the prior quarter, and $13.1 million, or $0.23 per share, in the fourth quarter of 2013.
• | For the fourth quarter, primary new insurance written (NIW) was $1.7 billion, compared with $975 million in the prior quarter and $158 million in the same quarter a year ago. |
• | Excluding aggregated single, the company’s "flow" NIW for the fourth quarter was $936 million, up 68% from $557 million in the prior quarter. Aggregated single for the fourth quarter was $757 million, compared with $418 million in the prior quarter. |
• | As of the end of the quarter, the company had approved master policies in place with 735 customers, up from 664 as of the prior quarter end, and up from 305 as of the end of 2013. |
• | As of December 31, 2014, the company had primary risk-in-force of $802 million, which compares with $436 million as of September 30, 2014. Pool risk-in-force was unchanged as of December 31, 2014, remaining at $93 million. |
• | As of December 31, 2014, cash and investments were $440 million, and book equity was $427 million, equal to $7.31 per share. This book value excludes any benefit attributable to the company’s deferred tax asset. |
Bradley Shuster, chairman and CEO of National MI, said, "In the fourth quarter, we delivered strong sequential growth in flow NIW, driven by the continued penetration and ramp of new lenders. Fully 26% of our flow volume in the quarter was generated from customers who had not previously contributed flow NIW. Our ability to rapidly gain share in a competitive marketplace reflects the strength of our team and our differentiated value proposition. We are off to a strong start in 2015 and look forward to another year of solid growth in new master policies, active customers, and NIW."
Conference Call and Webcast Details
NMI Holdings, Inc. will hold a conference call today, February 19, 2015 at 2:00 p.m. Pacific / 5:00 p.m. Eastern to discuss results for the quarter. The conference call will be broadcast live on the company’s website, on the "Events and Presentations" page of the "Investors" section at http://ir.nationalmi.com. The call may also be accessed by dialing (888) 734-0328 inside the U.S., or (678) 894-3054 for international callers, using conference ID: 67081098 or by referencing NMI Holdings, Inc. Investors and analysts are asked to dial-in ten minutes before the conference call begins.
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.
1
EXHIBIT 99.1
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 ("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," "plans," "projects," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: our ability to implement our business strategy, including our ability to attract and retain a diverse customer base and to achieve a diversified mix of business across the spectrum of our product offerings; changes in the business practices of the GSEs, including the timing of and final requirements in their proposed new mortgage insurer eligibility requirements ("PMIERs"), which remains uncertain, or any of their decisions that may impact the use of private mortgage insurance; our ability to comply with the financial requirements of the PMIERs, once adopted; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; heightened competition for our mortgage insurance business from other private mortgage insurers and the FHA; changes to laws and regulations that impact the role of the GSEs in the secondary market or the use of private mortgage insurance; and general economic downturns and volatility. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2013 and 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
(510) 788-8417
john.swenson@nationalmi.com
Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com
2
EXHIBIT 99.1
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
For the Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | (In Thousands, except for share data) | ||||||||||||||
Premiums written | |||||||||||||||
Direct | $ | 14,139 | $ | 3,058 | $ | 34,029 | $ | 3,541 | |||||||
Net premiums written | 14,139 | 3,058 | 34,029 | 3,541 | |||||||||||
Increase in unearned premiums | (8,629 | ) | (1,446 | ) | (20,622 | ) | (1,446 | ) | |||||||
Net premiums earned | 5,510 | 1,612 | 13,407 | 2,095 | |||||||||||
Net investment income | 1,319 | 1,472 | 5,618 | 4,808 | |||||||||||
Net realized investment gains | 63 | 14 | 197 | 186 | |||||||||||
Gain (loss) from change in fair value of warrant liability | (60 | ) | (918 | ) | 2,949 | (1,529 | ) | ||||||||
Gain from settlement of warrants | — | — | 37 | — | |||||||||||
Total revenues | 6,832 | 2,180 | 22,208 | 5,560 | |||||||||||
Expenses | |||||||||||||||
Insurance claims and claims expenses | 81 | — | 83 | — | |||||||||||
Amortization of deferred policy acquisition costs | 265 | 1 | 373 | 1 | |||||||||||
Underwriting and operating expenses | 17,318 | 15,263 | 73,044 | 60,743 | |||||||||||
Total expenses | 17,664 | 15,264 | 73,500 | 60,744 | |||||||||||
Loss before income taxes | (10,832 | ) | (13,084 | ) | (51,292 | ) | (55,184 | ) | |||||||
Income tax benefit | (812 | ) | — | (2,386 | ) | — | |||||||||
Net loss | $ | (10,020 | ) | $ | (13,084 | ) | $ | (48,906 | ) | $ | (55,184 | ) | |||
Loss per share | |||||||||||||||
Basic and diluted loss per share | $ | (0.17 | ) | $ | (0.23 | ) | $ | (0.84 | ) | $ | (0.99 | ) | |||
Weighted average common shares outstanding | 58,406,574 | 57,238,730 | 58,281,425 | 56,005,326 | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
December 31, 2014 | December 31, 2013 | ||||||
(In Thousands) | |||||||
Total investment portfolio | $ | 336,501 | $ | 409,088 | |||
Cash and cash equivalents | 103,021 | 55,929 | |||||
Deferred policy acquisition costs, net | 2,985 | 90 | |||||
Software and equipment, net | 11,806 | 8,876 | |||||
Other assets | 8,952 | 7,236 | |||||
Total assets | $ | 463,265 | $ | 481,219 | |||
Reserve for insurance claims and claims expenses | $ | 83 | $ | — | |||
Accounts payable and accrued expenses | 10,646 | 10,052 | |||||
Unearned premiums | 22,069 | 1,446 | |||||
Warrant liability | 3,372 | 6,371 | |||||
Deferred tax liability | 137 | 133 | |||||
Total liabilities | 36,307 | 18,002 | |||||
Total shareholders' equity | 426,958 | 463,217 | |||||
Total liabilities and shareholders' equity | $ | 463,265 | $ | 481,219 | |||
3
EXHIBIT 99.1
New Insurance Written ("NIW"), Insurance in Force ("IIF") and Risk in Force ("RIF")
The table below shows NIW, IIF, RIF, policies in force, the weighted-average coverage and loans in default, by quarter, for the last five quarters, for the company's primary book.
Primary | Three Months Ended | ||||||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | |||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||
New insurance written | $ | 1,692,187 | $ | 974,910 | $ | 429,944 | $ | 354,313 | $ | 157,568 | |||||||||
Insurance in force (1) | $ | 3,369,664 | $ | 1,812,956 | $ | 939,753 | $ | 514,796 | $ | 161,731 | |||||||||
Risk in force (1) | $ | 801,561 | $ | 435,722 | $ | 220,949 | $ | 115,467 | $ | 36,516 | |||||||||
Policies in force (1) | 14,603 | 7,628 | 3,865 | 2,072 | 653 | ||||||||||||||
Weighted-average coverage (2) | 23.8 | % | 24.0 | % | 23.5 | % | 22.4 | % | 22.6 | % | |||||||||
Loans in default (count) | 4 | — | 1 | — | — | ||||||||||||||
Risk in force on defaulted loans | $ | 208 | $ | — | $ | 100 | $ | — | $ | — | |||||||||
(1) | Reported as of the end of the period. |
(2) | End of period RIF divided by IIF. |
The table below shows primary and pool IIF, NIW and premiums written and earned.
Primary and Pool | |||||||||||||||||||||||||
As of and for the Year Ended December 31, 2014 | As of and for the Year Ended December 31, 2013 | ||||||||||||||||||||||||
IIF | NIW | Premiums Written | Premiums Earned | IIF | NIW | Premiums Written | Premiums Earned | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Primary | $ | 3,369,664 | $ | 3,451,354 | $ | 28,611 | $ | 7,989 | $ | 161,731 | $ | 162,172 | $ | 1,651 | $ | 205 | |||||||||
Pool | 4,721,674 | — | 5,418 | 5,418 | 5,089,517 | 5,171,664 | 1,890 | 1,890 | |||||||||||||||||
Total | $ | 8,091,338 | $ | 3,451,354 | $ | 34,029 | $ | 13,407 | $ | 5,251,248 | $ | 5,333,836 | $ | 3,541 | $ | 2,095 | |||||||||
The tables below show the weighted average FICO and the weighted average LTV, by policy type, for the quarter in which the policy was originated.
Weighted Average FICO | ||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | ||||||||||
Monthly | 740 | 746 | 747 | 749 | 747 | |||||||||
Single | 753 | 756 | 754 | 759 | 757 | |||||||||
Annual | 725 | — | — | — | — | |||||||||
Weighted Average LTV | ||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | ||||||||||
Monthly | 91 | % | 92 | % | 93 | % | 92 | % | 93 | % | ||||
Single | 90 | 90 | 90 | 89 | 89 | |||||||||
Annual | 90 | — | — | — | — | |||||||||
4
EXHIBIT 99.1
The table below reflects our total NIW, IIF and RIF by FICO as of December 31, 2014.
Total Portfolio | IIF | RIF | |||||||||
(Dollars in Thousands) | |||||||||||
As of December 31, 2014 | |||||||||||
>= 740 | $ | 5,947,805 | 73.5 | % | $ | 571,549 | 63.9 | % | |||
680 - 739 | 1,892,596 | 23.4 | 292,048 | 32.6 | |||||||
620 - 679 | 250,937 | 3.1 | 31,054 | 3.5 | |||||||
<= 619 | — | — | — | — | |||||||
Total | $ | 8,091,338 | 100.0 | % | $ | 894,651 | 100.0 | % | |||
The table below reflects the company's primary NIW, IIF and RIF by FICO for the 2014 and 2013 books as of December 31, 2014.
Primary - 2014 Book | NIW | IIF | RIF | ||||||||||||||
(Dollars in Thousands) | |||||||||||||||||
As of December 31, 2014 | |||||||||||||||||
>= 740 | $ | 2,178,995 | 63.1 | % | $ | 2,040,422 | 62.7 | % | $ | 479,076 | 61.8 | % | |||||
680 - 739 | 1,156,785 | 33.6 | 1,102,579 | 33.8 | 268,429 | 34.6 | |||||||||||
620 - 679 | 115,574 | 3.3 | 113,752 | 3.5 | 28,070 | 3.6 | |||||||||||
<= 619 | — | — | — | — | — | — | |||||||||||
Total | $ | 3,451,354 | 100.0 | % | $ | 3,256,753 | 100.0 | % | $ | 775,575 | 100.0 | % | |||||
Primary - 2013 Book | NIW * | IIF | RIF | ||||||||||||||
(Dollars in Thousands) | |||||||||||||||||
As of December 31, 2014 | |||||||||||||||||
>= 740 | $ | 113,907 | 70.2 | % | $ | 75,646 | 67.0 | % | $ | 17,096 | 65.8 | % | |||||
680 - 739 | 47,102 | 29.0 | 36,264 | 32.1 | 8,618 | 33.2 | |||||||||||
620 - 679 | 1,163 | 0.8 | 1,001 | 0.9 | 272 | 1.0 | |||||||||||
<= 619 | — | — | — | — | — | — | |||||||||||
Total | $ | 162,172 | 100.0 | % | $ | 112,911 | 100.0 | % | $ | 25,986 | 100.0 | % | |||||
The table below reflects the company's pool NIW, IIF and RIF by FICO for the 2013 book as of December 31, 2014.
Pool - 2013 Book | NIW * | IIF | RIF | ||||||||||||||
(Dollars in Thousands) | |||||||||||||||||
As of December 31, 2014 | |||||||||||||||||
>= 740 | $ | 4,186,844 | 81.0 | % | $ | 3,831,737 | 81.2 | % | $ | 75,377 | 81.0 | % | |||||
680 - 739 | 832,755 | 16.1 | 753,753 | 16.0 | 15,001 | 16.1 | |||||||||||
620 - 679 | 152,065 | 2.9 | 136,184 | 2.8 | 2,712 | 2.9 | |||||||||||
<= 619 | — | — | — | — | — | — | |||||||||||
Total | $ | 5,171,664 | 100.0 | % | $ | 4,721,674 | 100.0 | % | $ | 93,090 | 100.0 | % | |||||
* | Represents total NIW for the year ended December 31, 2013. |
5
EXHIBIT 99.1
The tables below reflect the company's average primary loan size by FICO and the percentage of our RIF by loan type.
December 31, 2014 | December 31, 2013 | ||||||
Average Primary Loan Size by FICO | (In Thousands) | ||||||
>= 740 | $ | 236 | $ | 253 | |||
680 - 739 | 225 | 237 | |||||
620 - 679 | 205 | 194 | |||||
<= 619 | — | — | |||||
Percentage of RIF by Loan Type | Primary | Pool | |||
As of December 31, 2014 | |||||
Fixed | 95.5 | % | 100.0 | % | |
Adjustable rate mortgages: | |||||
Less than five years | 0.1 | — | |||
Five years and longer | 4.4 | — | |||
Total | 100.0 | % | 100.0 | % | |
The following table reflects the company's RIF by LTV ratio. The company calculates the LTV ratio of a loan as a percentage of the original loan amount to the original value of the property securing the loan.
Total RIF by LTV | Primary | Pool | |||||||||||||||||
RIF | % of Total LTV | Policy Count | RIF | % of Total LTV | Policy Count | ||||||||||||||
As of December 31, 2014 | (Dollars in Thousands) | ||||||||||||||||||
95.01% and above | $ | 3,695 | 0.5 | % | 76 | $ | — | — | % | — | |||||||||
90.01% to 95.00% | 435,950 | 54.4 | 6,832 | — | — | — | |||||||||||||
85.01% to 90.00% | 291,711 | 36.4 | 4,929 | — | — | — | |||||||||||||
80.01% to 85.00% | 70,191 | 8.7 | 2,765 | — | — | — | |||||||||||||
80.00% and below | 14 | — | 1 | 93,090 | 100.0 | 20,573 | |||||||||||||
Total RIF | $ | 801,561 | 100.0 | % | 14,603 | $ | 93,090 | 100.0 | % | 20,573 | |||||||||
The following tables show the distribution by state of the company's IIF and RIF for primary and pool insurance. The distribution of risk across the states as of December 31, 2014 is not necessarily representative of the geographic distribution the company expects in the future.
Top 10 Primary IIF and RIF by State | IIF | RIF | ||||
As of December 31, 2014 | ||||||
1. | California | 16.6 | % | 16.3 | % | |
2. | Texas | 6.2 | 6.6 | |||
3. | Michigan | 4.8 | 4.7 | |||
4. | Florida | 4.7 | 4.6 | |||
5. | Arizona | 3.8 | 3.9 | |||
6. | Pennsylvania | 3.7 | 3.7 | |||
7. | Ohio | 3.6 | 3.8 | |||
8. | Virginia | 3.6 | 3.5 | |||
9. | Colorado | 3.5 | 3.5 | |||
10. | North Carolina | 3.5 | 3.6 | |||
Total | 54.0 | % | 54.2 | % | ||
6
EXHIBIT 99.1
Top 10 Pool IIF and RIF by State | IIF | RIF | ||||
As of December 31, 2014 | ||||||
1. | California | 28.6 | % | 28.0 | % | |
2. | Texas | 5.4 | 5.4 | |||
3. | Colorado | 3.9 | 3.9 | |||
4. | Washington | 3.9 | 3.8 | |||
5. | Massachusetts | 3.7 | 3.6 | |||
6. | Virginia | 3.7 | 3.7 | |||
7. | Illinois | 3.7 | 3.7 | |||
8. | New York | 2.8 | 2.8 | |||
9. | Florida | 2.8 | 2.8 | |||
10. | New Jersey | 2.8 | 2.8 | |||
Total | 61.3 | % | 60.5 | % | ||
7