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): November 1, 2016
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 November 1, 2016, NMI Holdings, Inc. issued a news release announcing its financial results for the quarter ended September 30, 2016, a copy of which 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) Exhibit.
99.1* NMI Holdings, Inc. News Release dated November 1, 2016
_____________________
* Furnished herewith.
1
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: November 1, 2016 | By: | /s/ Nicole C. Sanchez |
Nicole C. Sanchez | ||
VP, Assistant General Counsel | ||
2
EXHIBIT INDEX
Exhibit No. | Description |
99.1* | NMI Holdings, Inc. News Release dated November 1, 2016 |
* Furnished herewith
i
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
NMI Holdings, Inc. Reports Record Third Quarter Net Income of $6.2 Million
EMERYVILLE, CALIF., Nov 1, 2016 -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $6.2 million, or $0.10 per share, for the third quarter ended Sep. 30, 2016. This compares with net income of $2.0 million, or $0.03 per share, in the prior quarter and a net loss of ($4.8) million, or ($0.08) per share, in the third quarter of 2015. Total revenue for the quarter was $35.5 million, up 20% from $29.5 million in the prior quarter and up 141% from $14.7 million in the third quarter of 2015.
Bradley Shuster, chairman and CEO of National MI, said, “We continued our positive momentum in the third quarter, delivering record net income and returns, trends that we expect will continue for the foreseeable future. We grew our high-quality insurance-in-force by 19% over the prior quarter and 166% over the third quarter last year. We also continued to shift our mix to high-return monthly product, which grew to 71% of total new insurance written in the quarter. Cessions commenced under our reinsurance agreement and we expect to continue to take advantage of the low cost of capital provided by reinsurance to support our future growth.”
• | As of Sep. 30, 2016, the company had primary insurance-in-force of $28.2 billion, up 19% from $23.6 billion at the prior quarter end and up 166% over $10.6 billion as of Sep. 30, 2015. |
• | Premiums earned for the quarter were $31.8 million, up 22% from $26.0 million in the prior quarter and up 148% over $12.8 million in the same quarter a year ago. |
• | Monthly premium NIW was $4.16 billion, an increase of 12% over $3.70 billion in the prior quarter and an increase of 163% over the third quarter of 2015. Single premium NIW of $1.70 billion was down 21% from the prior quarter and down 17% compared with the same quarter a year ago. |
• | Total NIW in the third quarter was $5.86 billion, which compares with $5.84 billion in the prior quarter and $3.63 billion in the third quarter of 2015. |
• | Total underwriting and operating expenses in the third quarter were $24.0 million, including share-based compensation expense of $1.8 million. This compares with total underwriting and operating expenses of $23.2 million, including $1.8 million of share-based compensation, in the prior quarter, and $19.7 million, including $1.8 million of share-based compensation, in the same quarter a year ago. |
• | Loss expense for the quarter was $0.7 million, resulting in a loss ratio of 2.1%. |
• | As of the end of the third quarter, the company had approved master policies in place with 1,100 customers, up from 1,061 as of the end of the prior quarter, and up from 906 as of the end of the third quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 525, which compares with 518 in the prior quarter and 391 in the same quarter a year ago. |
• | At quarter-end, cash and investments were $686 million, including $77 million at the holding company, and book equity was $430 million, equal to $7.28 per share. This book value excludes any benefit attributable to the company’s deferred tax asset of approximately $66 million as of Dec. 31, 2015. |
• | In the first nine months of 2016, the company generated $52.2 million of cash from operations, which compares with $16.2 million for the same period in 2015. |
• | At quarter-end, the company had total PMIERs available assets of $489 million, which compares with risk-based required assets under PMIERs of $321 million. |
1
EXHIBIT 99.1
Quarter Ended 9/30/2016 | Quarter Ended 6/30/2016 | Quarter Ended 9/30/2015 | Growth Q/Q | Growth Y/Y | |||||
Primary Insurance-in-Force ($billions) | 28.22 | 23.62 | 10.60 | 19% | 166% | ||||
New Insurance Written - NIW ($billions) | |||||||||
Monthly premium | 4.16 | 3.70 | 1.58 | 12 | % | 163% | |||
Single premium | 1.70 | 2.14 | 2.05 | -21 | % | -17% | |||
Total | 5.86 | 5.84 | 3.63 | — | 61% | ||||
Premiums Earned ($millions) | 31.81 | 26.04 | 12.83 | 22% | 148% | ||||
Underwriting & Operating Expense ($millions) | 24.04 | 23.23 | 19.65 | 3% | 22% | ||||
Loss Expense ($millions) | 0.66 | 0.47 | 0.18 | 40% | 267 | % | |||
Loss Ratio | 2.1% | 1.8% | 1.4 | % | |||||
Cash & Investments ($millions) | 686 | 654 | 447 | 5% | 53% | ||||
Book Equity ($millions) | 430 | 422 | 408 | 2% | 5% | ||||
Book Value per Share | $ 7.28 | $ 7.14 | $6.95 | 2% | 5% | ||||
Approved Master Policies | 1100 | 1061 | 906 | 4% | 21% | ||||
Customers Generating NIW | 525 | 518 | 391 | 1% | 34% | ||||
Conference Call and Webcast Details
The company will hold a conference call and live webcast today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The call also can be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 for international callers using Conference ID: 93562675, or by referencing NMI Holdings, Inc.
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 (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 ongoing ability to comply with the financial requirements of the PMIERs; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; our ability to successfully execute and implement our capital plans, including our ability to access the reinsurance market and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; 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; 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; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; our ability to utilize our net operating loss carryforwards, which could be limited or eliminated in various ways, including if we experience an ownership change as defined in Section 382 of the
2
EXHIBIT 99.1
Internal Revenue Code; 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, 2015, 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
Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com
3
EXHIBIT 99.1
Consolidated statements of operations and comprehensive income | For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | (In Thousands, except for share data) | ||||||||||||||
Net premiums earned | $ | 31,808 | $ | 12,834 | $ | 77,656 | $ | 28,626 | |||||||
Net investment income | 3,544 | 1,884 | 10,117 | 5,168 | |||||||||||
Net realized investment gains (losses) | 66 | (15 | ) | (758 | ) | 952 | |||||||||
Other revenues | 102 | — | 172 | — | |||||||||||
Total revenues | 35,520 | 14,703 | 87,187 | 34,746 | |||||||||||
Expenses | |||||||||||||||
Insurance claims and claims expenses | 664 | 181 | 1,592 | 279 | |||||||||||
Underwriting and operating expenses | 24,037 | 19,653 | 69,943 | 58,912 | |||||||||||
Total expenses | 24,701 | 19,834 | 71,535 | 59,191 | |||||||||||
Other (expense) income | |||||||||||||||
(Loss) gain from change in fair value of warrant liability | (797 | ) | 332 | (187 | ) | 1,473 | |||||||||
Interest expense | (3,733 | ) | — | (11,072 | ) | — | |||||||||
Total other (expense) income | (4,530 | ) | 332 | (11,259 | ) | 1,473 | |||||||||
Income (loss) before income taxes | 6,289 | (4,799 | ) | 4,393 | (22,972 | ) | |||||||||
Income tax expense | 114 | — | 114 | — | |||||||||||
Net income (loss) | $ | 6,175 | $ | (4,799 | ) | $ | 4,279 | $ | (22,972 | ) | |||||
Earnings (loss) per share | |||||||||||||||
Basic | $ | 0.10 | $ | (0.08 | ) | $ | 0.07 | $ | (0.39 | ) | |||||
Diluted | $ | 0.10 | $ | (0.08 | ) | $ | 0.07 | $ | (0.39 | ) | |||||
Weighted average common shares outstanding | |||||||||||||||
Basic | 59,130,401 | 58,741,328 | 59,047,758 | 58,650,043 | |||||||||||
Diluted | 60,284,746 | 58,741,328 | 59,861,916 | 58,650,043 | |||||||||||
Loss Ratio(1) | 2 | % | 1 | % | 2 | % | 1 | % | |||||||
Expense Ratio(2) | 76 | 153 | 90 | 206 | |||||||||||
Combined ratio | 78 | % | 155 | % | 92 | % | 207 | % | |||||||
Net income (loss) | $ | 6,175 | $ | (4,799 | ) | $ | 4,279 | $ | (22,972 | ) | |||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Net unrealized gains (losses) in accumulated other comprehensive gain (loss), net of tax (benefit) expense of $0 for all periods presented | (82 | ) | (483 | ) | 17,690 | (15 | ) | ||||||||
Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented | (66 | ) | 15 | 758 | (952 | ) | |||||||||
Other comprehensive income (loss), net of tax | (148 | ) | (468 | ) | 18,448 | (967 | ) | ||||||||
Comprehensive income (loss) | $ | 6,027 | $ | (5,267 | ) | $ | 22,727 | $ | (23,939 | ) | |||||
(1) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
4
EXHIBIT 99.1
Consolidated balance sheets | September 30, 2016 | December 31, 2015 | |||||
Assets | (In Thousands, except for share data) | ||||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $628,209 and $564,319 as of September 30, 2016 and December 31, 2015, respectively) | $ | 641,572 | $ | 559,235 | |||
Cash and cash equivalents | 44,522 | 57,317 | |||||
Premiums receivable | 11,378 | 5,143 | |||||
Accrued investment income | 3,615 | 2,873 | |||||
Prepaid expenses | 2,313 | 1,428 | |||||
Deferred policy acquisition costs, net | 28,911 | 17,530 | |||||
Software and equipment, net | 19,924 | 15,201 | |||||
Intangible assets and goodwill | 3,634 | 3,634 | |||||
Prepaid reinsurance premiums | 36,091 | — | |||||
Other assets | 206 | 90 | |||||
Total assets | $ | 792,166 | $ | 662,451 | |||
Liabilities | |||||||
Term loan | $ | 144,230 | $ | 143,939 | |||
Unearned premiums | 145,401 | 90,773 | |||||
Accounts payable and accrued expenses | 32,568 | 22,725 | |||||
Reserve for insurance claims and claim expenses | 2,133 | 679 | |||||
Reinsurance funds withheld | 28,963 | — | |||||
Deferred ceding commission | 6,697 | — | |||||
Warrant liability, at fair value | 1,654 | 1,467 | |||||
Current tax payable | 114 | — | |||||
Deferred tax | 137 | 137 | |||||
Total liabilities | 361,897 | 259,720 | |||||
Commitments and contingencies | |||||||
Shareholders' equity | |||||||
Common stock - class A shares, $0.01 par value; 59,138,663 and 58,807,825 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively (250,000,000 shares authorized) | 591 | 588 | |||||
Additional paid-in capital | 575,148 | 570,340 | |||||
Accumulated other comprehensive income (loss), net of tax | 10,974 | (7,474 | ) | ||||
Accumulated deficit | (156,444 | ) | (160,723 | ) | |||
Total shareholders' equity | 430,269 | 402,731 | |||||
Total liabilities and shareholders' equity | $ | 792,166 | $ | 662,451 | |||
5
EXHIBIT 99.1
Historical Quarterly Data | 2016 | 2015 | |||||||||||||||||||||
September 30 | June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||||||||||
Revenues | (In Thousands, except for share data) | ||||||||||||||||||||||
Net premiums earned | $ | 31,808 | $ | 26,041 | $ | 19,807 | $ | 16,880 | $ | 12,834 | $ | 8,856 | |||||||||||
Net investment income | 3,544 | 3,342 | 3,231 | 2,078 | 1,884 | 1,688 | |||||||||||||||||
Net realized investment gains (losses) | 66 | 61 | (885 | ) | (121 | ) | (15 | ) | 354 | ||||||||||||||
Other revenues | 102 | 37 | 32 | 25 | — | — | |||||||||||||||||
Total revenues | 35,520 | 29,481 | 22,185 | 18,862 | 14,703 | 10,898 | |||||||||||||||||
Expenses | |||||||||||||||||||||||
Insurance claims and claims expenses | 664 | 470 | 458 | 371 | 181 | (6 | ) | ||||||||||||||||
Underwriting and operating expenses | 24,037 | 23,234 | 22,672 | 21,686 | 19,653 | 20,910 | |||||||||||||||||
Total expenses | 24,701 | 23,704 | 23,130 | 22,057 | 19,834 | 20,903 | |||||||||||||||||
Other (expense) income (1) | (4,530 | ) | (3,766 | ) | (2,962 | ) | (1,626 | ) | 332 | (106 | ) | ||||||||||||
Income (loss) before income taxes | 6,289 | 2,011 | (3,907 | ) | (4,821 | ) | (4,799 | ) | (10,112 | ) | |||||||||||||
Income tax expense (benefit) | 114 | — | — | — | — | 241 | |||||||||||||||||
Net income (loss) | $ | 6,175 | $ | 2,011 | $ | (3,907 | ) | $ | (4,821 | ) | $ | (4,799 | ) | $ | (10,353 | ) | |||||||
Earnings (loss) per share | |||||||||||||||||||||||
Basic | $ | 0.10 | $ | 0.03 | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.18 | ) | |||||||
Diluted | $ | 0.10 | 0.03 | (0.07 | ) | (0.08 | ) | (0.08 | ) | (0.18 | ) | ||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Basic | 59,130,401 | 59,105,613 | 58,936,694 | 58,781,566 | 58,741,328 | 58,720,095 | |||||||||||||||||
Diluted | 60,284,746 | 59,830,899 | 58,936,694 | 58,781,566 | 58,741,328 | 58,720,095 | |||||||||||||||||
Other data | |||||||||||||||||||||||
Loss Ratio (2) | 2 | % | 2 | % | 2 | % | 2 | % | 1 | % | — | % | |||||||||||
Expense Ratio (3) | 76 | % | 89 | % | 114 | % | 128 | % | 153 | % | 236 | % | |||||||||||
Combined ratio | 78 | % | 91 | % | 117 | % | 131 | % | 155 | % | 236 | % | |||||||||||
(1) Other (expense) income includes the gain from change in fair value of warrant liability, gain from settlement of warrants, and interest expense.
(2) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(3) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
6
EXHIBIT 99.1
New Insurance Written (NIW), Insurance in Force (IIF) and Premiums
The tables below show primary and pool NIW and IIF, by quarter, for the last six quarters.
Primary NIW | Three months ended | ||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | ||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
Monthly | $ | 4,162 | $ | 3,700 | $ | 2,492 | $ | 2,029 | $ | 1,582 | $ | 1,460 | |||||||||||
Single | 1,695 | 2,138 | 1,762 | 2,518 | 2,051 | 1,089 | |||||||||||||||||
Primary | $ | 5,857 | $ | 5,838 | $ | 4,254 | $ | 4,547 | $ | 3,633 | $ | 2,549 | |||||||||||
Primary and pool IIF | As of | ||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | ||||||||||||||||||
(In Millions) | |||||||||||||||||||||||
Monthly | $ | 16,038 | $ | 12,529 | $ | 9,210 | $ | 6,958 | $ | 5,087 | $ | 3,617 | |||||||||||
Single | 12,190 | 11,095 | 9,354 | 7,866 | 5,514 | 3,573 | |||||||||||||||||
Primary | 28,228 | 23,624 | 18,564 | 14,824 | 10,601 | 7,190 | |||||||||||||||||
Pool | 3,826 | 3,999 | 4,136 | 4,238 | 4,340 | 4,476 | |||||||||||||||||
Total | $ | 32,054 | $ | 27,623 | $ | 22,700 | $ | 19,062 | $ | 14,941 | $ | 11,666 | |||||||||||
Portfolio Statistics
The table below shows primary portfolio trends, by quarter, for the last six quarters.
Primary portfolio trends | As of and for the quarter ended | ||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | ||||||||||||||||||
($ Values In Millions) | |||||||||||||||||||||||
New insurance written | $ | 5,857 | $ | 5,838 | $ | 4,254 | $ | 4,547 | $ | 3,633 | $ | 2,549 | |||||||||||
New risk written | 1,415 | 1,411 | 1,016 | 1,105 | 887 | 615 | |||||||||||||||||
Insurance in force (1) | 28,228 | 23,624 | 18,564 | 14,824 | 10,601 | 7,190 | |||||||||||||||||
Risk in force (1) | 6,847 | 5,721 | 4,487 | 3,586 | 2,553 | 1,715 | |||||||||||||||||
Policies in force (count) (1) | 119,002 | 100,547 | 79,700 | 63,948 | 46,175 | 31,682 | |||||||||||||||||
Weighted-average coverage (2) | 24.3 | % | 24.2 | % | 24.2 | % | 24.2 | % | 24.1 | % | 23.9 | % | |||||||||||
Loans in default (count) | 115 | 79 | 55 | 36 | 20 | 9 | |||||||||||||||||
Percentage of loans in default | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | — | % | — | % | |||||||||||
Risk in force on defaulted loans | $ | 6 | $ | 4 | $ | 3 | $ | 2 | $ | 1 | $ | 1 | |||||||||||
Average premium yield (3) | 0.48 | % | 0.47 | % | 0.45 | % | 0.49 | % | 0.52 | % | 0.51 | % | |||||||||||
Annual persistency (4) | 81.8 | % | 83.3% | 82.7 | % | 79.6 | % | 71.6 | % | 65.5 | % | ||||||||||||
(1) | Reported as of the end of the period. |
(2) | End of period risk in force (RIF) divided by IIF. |
(3) | Average premium yield is calculated by dividing primary net premiums earned, net of reinsurance, by average gross IIF for the period, annualized. |
(4) | Defined as the percentage of IIF that remains on our books after any 12-month period. |
7
EXHIBIT 99.1
The tables below reflect our total primary NIW by FICO, loan-to-value (LTV), and purchase/refinance mix.
Primary NIW by FICO | Three months ended | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
>= 760 | $ | 2,975 | $ | 3,160 | $ | 1,755 | |||||
740-759 | 934 | 961 | 583 | ||||||||
720-739 | 725 | 672 | 505 | ||||||||
700-719 | 588 | 541 | 376 | ||||||||
680-699 | 387 | 308 | 271 | ||||||||
<=679 | 248 | 196 | 143 | ||||||||
Total | $ | 5,857 | $ | 5,838 | $ | 3,633 | |||||
Primary NIW by LTV | Three months ended | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
95.01% and above | $ | 347 | $ | 362 | $ | 162 | |||||
90.01% to 95.00% | 2,557 | 2,633 | 1,656 | ||||||||
85.01% to 90.00% | 1,844 | 1,732 | 1,208 | ||||||||
85.00% and below | 1,109 | 1,111 | 607 | ||||||||
Total | $ | 5,857 | $ | 5,838 | $ | 3,633 | |||||
Primary NIW by purchase/refinance mix | Three months ended | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
Purchase | $ | 4,400 | $ | 4,199 | $ | 2,604 | |||||
Refinance | 1,457 | 1,639 | 1,029 | ||||||||
Total | $ | 5,857 | $ | 5,838 | $ | 3,633 | |||||
The tables below show the primary weighted average FICO and the weighted average LTV, by policy type, for NIW in the quarters presented.
Weighted Average FICO | ||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||
Monthly | 748 | 752 | 742 | |||||
Single | 763 | 762 | 758 | |||||
Weighted Average LTV | ||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||
Monthly | 91 | % | 92 | % | 92 | % | ||
Single | 90 | 91 | 91 | |||||
8
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, 2016 | ||||||
IIF | RIF | ||||||
(In Millions) | |||||||
September 30, 2016 | $ | 15,433 | $ | 3,719 | |||
2015 | 10,679 | 2,610 | |||||
2014 | 2,062 | 505 | |||||
2013 | 54 | 13 | |||||
Total | $ | 28,228 | $ | 6,847 | |||
The tables below reflect our total primary IIF and RIF by FICO, average loan size, LTV, and loan type.
Primary IIF by FICO | As of | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
>= 760 | $ | 14,258 | $ | 11,929 | $ | 4,969 | |||||
740-759 | 4,612 | 3,876 | 1,703 | ||||||||
720-739 | 3,648 | 3,082 | 1,582 | ||||||||
700-719 | 2,813 | 2,341 | 1,063 | ||||||||
680-699 | 1,863 | 1,561 | 848 | ||||||||
<=679 | 1,034 | 835 | 436 | ||||||||
Total | $ | 28,228 | $ | 23,624 | $ | 10,601 | |||||
Primary RIF by FICO | As of | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
>= 760 | $ | 3,470 | $ | 2,895 | $ | 1,174 | |||||
740-759 | 1,130 | 951 | 413 | ||||||||
720-739 | 887 | 750 | 391 | ||||||||
700-719 | 680 | 566 | 260 | ||||||||
680-699 | 443 | 369 | 209 | ||||||||
<=679 | 237 | 190 | 106 | ||||||||
Total | $ | 6,847 | $ | 5,721 | $ | 2,553 | |||||
Primary Average Loan Size by FICO | As of | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Thousands) | |||||||||||
>= 760 | $ | 250 | $ | 249 | $ | 244 | |||||
740-759 | 240 | 239 | 234 | ||||||||
720-739 | 235 | 234 | 227 | ||||||||
700-719 | 233 | 232 | 225 | ||||||||
680-699 | 224 | 223 | 218 | ||||||||
<=679 | 209 | 209 | 207 | ||||||||
9
EXHIBIT 99.1
Primary IIF by LTV | As of | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
95.01% and above | $ | 1,363 | $ | 1,049 | $ | 282 | |||||
90.01% to 95.00% | 12,644 | 10,574 | 4,710 | ||||||||
85.01% to 90.00% | 9,157 | 7,754 | 3,658 | ||||||||
85.00% and below | 5,064 | 4,247 | 1,951 | ||||||||
Total | $ | 28,228 | $ | 23,624 | $ | 10,601 | |||||
Primary RIF by LTV | As of | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
95.01% and above | $ | 380 | $ | 293 | $ | 80 | |||||
90.01% to 95.00% | 3,725 | 3,116 | 1,392 | ||||||||
85.01% to 90.00% | 2,174 | 1,838 | 866 | ||||||||
85.00% and below | 568 | 474 | 215 | ||||||||
Total | $ | 6,847 | $ | 5,721 | $ | 2,553 | |||||
Primary RIF by Loan Type | As of | |||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||
Fixed | 98 | % | 98 | % | 97 | % | ||
Adjustable rate mortgages: | ||||||||
Less than five years | — | — | — | |||||
Five years and longer | 2 | 2 | 3 | |||||
Total | 100 | % | 100 | % | 100 | % | ||
As of September 30, 2016 and September 30, 2015, 100% of each of our pool IIF and RIF was comprised of insurance on fixed rate mortgages.
The table below reflects a summary of the change in total primary IIF for the following periods.
Primary IIF | Three months ended | ||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||
(In Millions) | |||||||||||
IIF, beginning of period | $ | 23,624 | $ | 18,564 | $ | 7,190 | |||||
NIW | 5,857 | 5,838 | 3,633 | ||||||||
Cancellations and other reductions | (1,253 | ) | (778 | ) | (222 | ) | |||||
IIF, end of period | $ | 28,228 | $ | 23,624 | $ | 10,601 | |||||
10
EXHIBIT 99.1
Geographic Dispersion
The following table shows the distribution by state of our primary RIF.
Top 10 primary RIF by state | As of | |||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||
California | 13.2 | % | 13.0 | % | 13.2 | % | ||
Texas | 6.8 | 6.8 | 7.1 | |||||
Virginia | 6.6 | 6.4 | 3.9 | |||||
Florida | 4.7 | 5.0 | 5.4 | |||||
Colorado | 4.0 | 4.1 | 4.3 | |||||
Michigan | 3.9 | 4.1 | 4.6 | |||||
Arizona | 3.8 | 3.8 | 3.6 | |||||
Maryland | 3.6 | 3.4 | 3.5 | |||||
Pennsylvania | 3.6 | 2.3 | 3.9 | |||||
Utah | 3.6 | 3.3 | 2.6 | |||||
Total | 53.8 | % | 52.2 | % | 52.1 | % | ||
11
EXHIBIT 99.1
The following table shows portfolio data by origination year.
As of September 30, 2016 | ||||||||||||||||||||||||||||
Origination year | Original Insurance Written | Remaining Insurance in Force | % Remaining of Original Insurance | Policies Ever in Force | Number of Policies in Force | Number of Loans in Default | # of Claims Paid | Incurred Loss Ratio (Inception to Date) (1) | Cumulative default rate (2) | |||||||||||||||||||
($ Values in Millions) | ||||||||||||||||||||||||||||
2013 | $ | 162 | $ | 54 | 33 | % | 655 | 264 | — | 1 | — | % | 0.2 | % | ||||||||||||||
2014 | 3,451 | 2,062 | 60 | % | 14,786 | 9,824 | 46 | 2 | 2.7 | % | 0.3 | % | ||||||||||||||||
2015 | 12,422 | 10,678 | 86 | % | 52,550 | 46,902 | 61 | 5 | 1.7 | % | 0.1 | % | ||||||||||||||||
2016 (through September 30) | 15,949 | 15,434 | 97 | % | 63,519 | 62,012 | 8 | — | 0.3 | % | — | % | ||||||||||||||||
Total | $ | 31,984 | $ | 28,228 | 131,510 | 119,002 | 115 | 8 | ||||||||||||||||||||
(1) | The ratio of total losses incurred (paid and reserved) divided by cumulative premiums earned, without the effects of reinsurance. |
(2) | The sum of claims paid ever to date and notices of default as of the end of the period divided by policies ever in force. |
12
EXHIBIT 99.1
The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses:
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(In Thousands) | |||||||||||||||
Beginning balance | $ | 1,475 | $ | 181 | $ | 679 | $ | 83 | |||||||
Less reinsurance recoverables (1) | — | — | — | — | |||||||||||
Beginning balance, net of reinsurance recoverables | 1,475 | 181 | 679 | 83 | |||||||||||
Add claims incurred: | |||||||||||||||
Claims and claim expenses incurred: | |||||||||||||||
Current year (2) | 690 | 219 | 1,803 | 358 | |||||||||||
Prior years (3) | (29 | ) | (38 | ) | (214 | ) | (79 | ) | |||||||
Total claims and claims expenses incurred | 661 | 181 | 1,589 | 279 | |||||||||||
Less claims paid: | |||||||||||||||
Claims and claim expenses paid: | |||||||||||||||
Current year (2) | — | — | — | — | |||||||||||
Prior years (3) | 93 | 4 | 225 | 4 | |||||||||||
Total claims and claim expenses paid | 93 | 4 | 225 | 4 | |||||||||||
Reserve at end of period, net of reinsurance recoverables | 2,043 | 358 | 2,043 | 358 | |||||||||||
Add reinsurance recoverables (1) | 90 | — | 90 | — | |||||||||||
Balance, September 30 | $ | 2,133 | $ | 358 | $ | 2,133 | $ | 358 | |||||||
(1) Related to ceded losses recoverable on the 2016 QSR Transaction. To date, ceded losses have been immaterial.
(2) Related to defaults occurring in the current year.
(3) Related to defaults occurring in prior years.
The following table provides a reconciliation of the beginning and ending count of loans in default.
Three months ended | Nine months ended | ||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||
Beginning default inventory | 79 | 9 | 36 | 4 | |||||||
Plus: new defaults | 69 | 21 | 158 | 24 | |||||||
Less: cures | (30 | ) | (9 | ) | (73 | ) | (7 | ) | |||
Less: claims paid | (3 | ) | (1 | ) | (6 | ) | (1 | ) | |||
Ending default inventory | 115 | 20 | 115 | 20 | |||||||
13
EXHIBIT 99.1
The following tables provide details of our claims and reserves.
Three months ended | Nine months ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
($ Values In Thousands) | |||||||||||||||
Number of claims paid | 3 | 1 | 6 | 1 | |||||||||||
Total amount paid for claims | $ | 93 | $ | 4 | $ | 225 | $ | 4 | |||||||
Average amount paid per claim | $ | 31 | $ | 4 | $ | 32 | $ | 4 | |||||||
Severity | 53 | % | 5 | % | 62 | % | 5 | % | |||||||
Average reserve per default: | As of September 30, 2016 | As of September 30, 2015 | |||||
(In Thousands) | |||||||
Case | $ | 17 | $ | 17 | |||
IBNR | 1 | 1 | |||||
Total | $ | 18 | $ | 18 | |||
The following table provides a comparison of the PMIERs financial requirements as reported by National MI.
As of | |||||||||||
September 30, 2016 | June 30, 2016 | December 31, 2015 | |||||||||
(In thousands) | |||||||||||
Available Assets | $ | 488,635 | $ | 432,074 | $ | 431,411 | |||||
Net Risk-Based Required Assets | 320,609 | 377,468 | 249,805 | ||||||||
Asset charge % (1) | 6.14 | % | 6.10 | % | 6.17 | % | |||||
(1)Asset charge represents the risk based required asset amount as defined in the PMIERs, divided by the outstanding RIF on performing primary loans.
14