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): October 27, 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 October 27, 2015, NMI Holdings, Inc. issued a news release announcing its financial results for the quarter and year to date periods ended September 30, 2015. 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 October 27, 2015.
_____________________
* Furnished herewith.
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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: October 27, 2015 | By: | /s/ Nicole C. Sanchez |
Nicole C. Sanchez | ||
VP, Assistant General Counsel | ||
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EXHIBIT INDEX
Exhibit No. Description
99.1* NMI Holdings, Inc. News Release dated October 27, 2015.
* Furnished herewith
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EXHIBIT 99.1
NMI Holdings, Inc. Reports Third Quarter 2015 Financial Results,
New Insurance Written Grows 43% Sequentially
NMI Holdings, Inc. (Nasdaq: NMIH) today reported results for the third quarter ended Sep. 30, 2015. The company reported a net loss for the third quarter of $4.8 million, or $0.08 per share, which compares with a net loss of $10.4 million, or $0.18 per share, in the prior quarter, and a net loss of $11.0 million, or $0.19 per share, in the third quarter of 2014.
Bradley Shuster, chairman and CEO of National MI, said, “In the third quarter, we continued to execute on our growth plan, as our 43% sequential increase in new insurance written significantly exceeded estimated market growth for the quarter. Strength in our flow business drove the majority of the gains. For the quarter, we grew cash and investments by approximately $13 million, signed up 64 new customers to master policies, and achieved record premiums earned. We expect to end the year in a solid competitive position, and look forward to continued growth and becoming profitable in 2016.”
• | Total new insurance written (NIW) for the third quarter was $3.6 billion, up 43% from $2.5 billion in the prior quarter. |
• | Premiums earned for the quarter were $12.8 million, up from $8.9 million in the prior quarter. Investment income in the third quarter was $1.9 million, up from $1.7 million in the prior quarter. Total revenues were $14.7 million, up from $10.9 million in the prior quarter. |
• | Total underwriting and operating expenses in the third quarter were $19.7 million, including share-based compensation expense of $1.8 million. This compares with total underwriting and operating expenses of $20.9 million, including $2.1 million of share-based compensation, in the prior quarter. |
• | As of the end of the third quarter, the company had approved master policies in place with 906 customers, up from 842 as of the end of the prior quarter, and up from 664 as of the end of the third quarter of 2014. Customers delivering NIW in the quarter grew to 391, which compares with 340 in the prior quarter and 180 in the same quarter a year ago. |
• | As of Sep. 30, 2015, the company had primary insurance-in-force of $10.6 billion, which compares with $7.2 billion at the prior quarter end and $1.8 billion as of Sep. 30, 2014. Pool insurance-in-force as of the end of the third quarter was $4.3 billion, which compares with $4.5 billion at the prior quarter-end and $4.8 billion as of Sep. 30, 2014. |
• | As of Sep. 30, 2015, cash and investments were $447 million, including $161 million at the holding company, and book equity was $408 million, equal to $6.95 per share. This book value excludes any benefit attributable to the company’s deferred tax asset of approximately $54 million as of Dec. 31, 2014. |
• | As of Sep. 30, 2015, the company’s risk-to-available assets ratio in its primary insurance company was 11.6:1. |
Conference Call and Webcast Details
NMI Holdings, Inc. will hold a conference call today, Oct. 27, 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 (914) 495-8578 for international callers using Conference ID: 60950406, 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.
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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 (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: our ability to implement our business strategy, including our ability to attract and retain a diverse customer base and to achieve a diversified mix of business across the spectrum of our product offerings; changes in the business practices of the GSEs that may impact the use of private mortgage insurance; our ability to comply with the financial requirements of the PMIERs, once effective; 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; adoption of new or changes to existing laws and regulations or their enforcement and implementation by regulators, including changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular and potential future lawsuits, investigations or inquiries or resolution of current inquiries, including a June 2015 letter from the Wisconsin Office of the Commissioner of Insurance requesting that each MI company, including us, respond to a number of inquiries related to whether the company has offered customized terms or rates; 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, 2014 as updated in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and 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
(510) 788-8417
john.swenson@nationalmi.com
Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com
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EXHIBIT 99.1
Consolidated statements of operations (unaudited) | For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | (In Thousands) | ||||||||||||||
Net premiums written | $ | 35,360 | $ | 9,661 | $ | 68,629 | $ | 19,890 | |||||||
Increase in unearned premiums | (22,526 | ) | (5,761 | ) | (40,003 | ) | (11,993 | ) | |||||||
Net premiums earned | 12,834 | 3,900 | 28,626 | 7,897 | |||||||||||
Net investment income | 1,884 | 1,342 | 5,168 | 4,299 | |||||||||||
Net realized investment (losses) gains | (15 | ) | 134 | 952 | 134 | ||||||||||
Total revenues | 14,703 | 5,376 | 34,746 | 12,330 | |||||||||||
Expenses | |||||||||||||||
Insurance claims and claims expenses | 181 | (26 | ) | 279 | 2 | ||||||||||
Underwriting and operating expenses | 19,653 | 17,895 | 58,912 | 55,833 | |||||||||||
Total expenses | 19,834 | 17,869 | 59,191 | 55,835 | |||||||||||
Other income | |||||||||||||||
Gain from change in fair value of warrant liability | 332 | 1,240 | 1,473 | 3,009 | |||||||||||
Gain from settlement of warrants | — | — | — | 37 | |||||||||||
Loss before income taxes | (4,799 | ) | (11,253 | ) | (22,972 | ) | (40,459 | ) | |||||||
Income tax benefit | — | (277 | ) | — | (1,574 | ) | |||||||||
Net loss | $ | (4,799 | ) | $ | (10,976 | ) | $ | (22,972 | ) | $ | (38,885 | ) | |||
Condensed consolidated balance sheets (unaudited) | September 30, 2015 | December 31, 2014 | |||||
(In Thousands) | |||||||
Total investment portfolio | $ | 314,455 | $ | 336,501 | |||
Cash and cash equivalents | 132,791 | 103,021 | |||||
Deferred policy acquisition costs, net | 12,181 | 2,985 | |||||
Software and equipment, net | 13,902 | 11,806 | |||||
Other assets | 13,568 | 8,952 | |||||
Total assets | $ | 486,897 | $ | 463,265 | |||
Unearned premiums | 62,072 | 22,069 | |||||
Reserve for insurance claims and claims expenses | $ | 358 | $ | 83 | |||
Accounts payable and accrued expenses | 14,230 | 10,646 | |||||
Warrant liability | 1,899 | 3,372 | |||||
Deferred tax liability | 137 | 137 | |||||
Total liabilities | 78,696 | 36,307 | |||||
Total shareholders' equity | 408,201 | 426,958 | |||||
Total liabilities and shareholders' equity | $ | 486,897 | $ | 463,265 | |||
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EXHIBIT 99.1
New Insurance Written, Insurance in Force and Premiums
The table below shows primary and pool IIF, NIW and premiums written and earned.
Primary and pool IIF and NIW | As of and for the quarter ended | For the nine months ended | |||||||||||||||||
September 30, 2015 | June 30, 2015 | September 30, 2015 | |||||||||||||||||
IIF | NIW | IIF | NIW | NIW | |||||||||||||||
(In Thousands) | |||||||||||||||||||
Monthly | $ | 5,087,431 | $ | 1,581,617 | $ | 3,616,951 | $ | 1,460,166 | $ | 3,960,480 | |||||||||
Single | 5,514,061 | 2,051,123 | 3,573,463 | 1,088,349 | 3,916,917 | ||||||||||||||
Primary | 10,601,492 | 3,632,740 | 7,190,414 | 2,548,515 | 7,877,397 | ||||||||||||||
Pool | 4,339,508 | — | 4,475,653 | — | — | ||||||||||||||
Total | $ | 14,941,000 | $ | 3,632,740 | $ | 11,666,067 | $ | 2,548,515 | $ | 7,877,397 | |||||||||
Primary and pool premiums written and earned | For the quarter ended | ||||||
September 30, 2015 | June 30, 2015 | ||||||
(In Thousands) | |||||||
Net premiums written | $ | 35,360 | $ | 20,347 | |||
Net premiums earned | 12,834 | 8,856 | |||||
Portfolio Statistics
The table below shows primary NIW, IIF, RIF, policies in force, the weighted average coverage and loans in default, by quarter, for the last five quarters.
Primary portfolio trends | As of and for the quarter ended | ||||||||||||||||||
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | |||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||
New insurance written | $ | 3,632,740 | $ | 2,548,515 | $ | 1,696,142 | $ | 1,692,187 | $ | 974,910 | |||||||||
Insurance in force (1) | $ | 10,601,492 | $ | 7,190,414 | $ | 4,835,248 | $ | 3,369,664 | $ | 1,812,956 | |||||||||
Risk in force (1) | $ | 2,553,347 | $ | 1,715,442 | $ | 1,145,602 | $ | 801,561 | $ | 435,722 | |||||||||
Policies in force (1) | 46,175 | 31,682 | 21,225 | 14,603 | 7,628 | ||||||||||||||
Weighted average coverage (2) | 24.1 | % | 23.9 | % | 23.7 | % | 23.8 | % | 24.0 | % | |||||||||
Loans in default (count) | 20 | 9 | 6 | 4 | — | ||||||||||||||
Risk in force on defaulted loans | $ | 962 | $ | 528 | $ | 350 | $ | 208 | $ | — | |||||||||
(1) | Reported as of the end of the period. |
(2) | End of period RIF divided by IIF. |
The table below reflects a summary of the change in total primary IIF for the three and nine months ended September 30, 2015 and 2014.
Primary IIF | For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In Thousands) | |||||||||||||||
IIF, beginning of period | $ | 7,190,414 | $ | 939,753 | $ | 3,369,664 | $ | 161,731 | |||||||
NIW | 3,632,740 | 974,910 | 7,877,397 | 1,759,167 | |||||||||||
Cancellations and other reductions | (221,662 | ) | (101,707 | ) | (645,569 | ) | (107,942 | ) | |||||||
IIF, end of period | $ | 10,601,492 | $ | 1,812,956 | $ | 10,601,492 | $ | 1,812,956 | |||||||
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EXHIBIT 99.1
The table below reflects a summary of our primary IIF and RIF by book year.
Primary IIF and RIF | As of September 30, 2015 | ||||||
IIF | RIF | ||||||
(In Thousands) | |||||||
2015, through September 30, 2015 | $ | 7,725,632 | $ | 1,862,737 | |||
2014 | 2,800,015 | 672,745 | |||||
2013 | 75,845 | 17,865 | |||||
Total | $ | 10,601,492 | $ | 2,553,347 | |||
The table below reflects our total primary IIF, RIF and average loan size, by FICO.
As of September 30, 2015 | |||||||||||||||
Primary | IIF | RIF | Average primary loan size | ||||||||||||
(Dollars in Thousands) | |||||||||||||||
>= 740 | $ | 6,673,029 | 63.0 | % | $ | 1,587,567 | 62.2 | % | $ | 237 | |||||
680 - 739 | 3,492,541 | 32.9 | 859,823 | 33.7 | 221 | ||||||||||
620 - 679 | 435,922 | 4.1 | 105,957 | 4.1 | 205 | ||||||||||
<= 619 | — | — | — | — | — | ||||||||||
Total | $ | 10,601,492 | 100.0 | % | $ | 2,553,347 | 100.0 | % | |||||||
The table below reflects the percentage of our primary RIF by loan type.
Percentage of Primary RIF by loan type | As of September 30, 2015 | |
Fixed | 97.5 | % |
Adjustable rate mortgages: | ||
Less than five years | — | |
Five years and longer | 2.5 | |
Total | 100.0 | % |
As of September 30, 2015, 100% of our pool risk-in-force was comprised of insurance on fixed rate mortgages.
The following table reflects the percentage and policy count of our RIF by LTV.
Total RIF by LTV | As of September 30, 2015 | ||||
% of Total RIF | Policy Count | ||||
Primary | |||||
95.01% and above | 3.1 | % | 1,520 | ||
90.01% to 95.00% | 54.5 | 21,808 | |||
85.01% to 90.00% | 34.0 | 14,803 | |||
80.01% to 85.00% | 8.4 | 8,043 | |||
80.00% and below | — | 1 | |||
Total primary | 100.0 | % | 46,175 | ||
Pool | |||||
80.00% and below | 100.0 | % | 19,296 | ||
Total pool | 100.0 | % | 19,296 | ||
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EXHIBIT 99.1
Geographic Dispersion
The following tables show the distribution by state of our IIF and RIF, for both primary and pool insurance.
Top 10 primary IIF and RIF by state | IIF | RIF | ||||
As of September 30, 2015 | ||||||
1. | California | 14.0 | % | 13.2 | % | |
2. | Texas | 6.9 | 7.1 | |||
3. | Florida | 5.2 | 5.4 | |||
4. | Michigan | 4.5 | 4.6 | |||
5. | Colorado | 4.3 | 4.3 | |||
6. | Virginia | 4.0 | 3.9 | |||
7. | Pennsylvania | 3.8 | 3.9 | |||
8. | New Jersey | 3.7 | 3.4 | |||
9. | Ohio | 3.6 | 3.8 | |||
10. | Arizona | 3.5 | 3.6 | |||
Total | 53.5 | % | 53.2 | % | ||
Top 10 pool IIF and RIF by state | IIF | RIF | ||||
As of September 30, 2015 | ||||||
1. | California | 28.4 | % | 27.8 | % | |
2. | Texas | 5.3 | 5.4 | |||
3. | Washington | 3.8 | 3.8 | |||
4. | Colorado | 3.8 | 3.8 | |||
5. | Massachusetts | 3.7 | 3.6 | |||
6. | Illinois | 3.7 | 3.7 | |||
7. | Virginia | 3.6 | 3.6 | |||
8. | New York | 2.9 | 2.9 | |||
9. | New Jersey | 2.8 | 2.8 | |||
10. | Florida | 2.8 | 2.8 | |||
Total | 60.8 | % | 60.2 | % | ||
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