Document


 
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, 2017

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))

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer x
Non-accelerated filer o
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
 
Emerging growth company x
 
 
 
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. x
 





Item 2.02.     Results of Operations and Financial Condition

On November 1, 2017, NMI Holdings, Inc. issued a news release announcing its financial results for the quarter ended September 30, 2017. A copy of the 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 November 1, 2017.

_____________________

*  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, 2017
By:
/s/ Nicole C. Sanchez
 
 
Nicole C. Sanchez
 
 
VP, Associate General Counsel




2




EXHIBIT INDEX


Exhibit No.    Description

99.1*         NMI Holdings, Inc. News Release dated November 1, 2017.

*  Furnished herewith


i
Exhibit
EXHIBIT 99.1

FOR IMMEDIATE RELEASE
NMI Holdings, Inc. Reports Record Third Quarter 2017 Financial Results
EMERYVILLE, CALIF., November 1, 2017 -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $12.3 million, or $0.21 per share, for the third quarter ended September 30, 2017. This compares with net income of $6.0 million, or $0.10 per share, in the prior quarter, and net income of $6.2 million, or $0.10 per share, in the third quarter of 2016.
Bradley Shuster, Chairman and CEO of National MI, said, "In the third quarter, National MI delivered record financial results, including record new insurance written of $6.1 billion, record net premiums earned of $44.5 million, and record pre-tax income of $19.5 million. We were also pleased to deliver annualized return-on-average equity of 9.8%. National MI continued to build its portfolio of high-quality insurance in force at a rate that leads our industry, and we continued to make significant strides in customer development, activating 25 new customers in the third quarter and 98 new customers for the year-to-date.”
As of September 30, 2017, the company had primary insurance-in-force of $43.3 billion, up 12% from $38.6 billion at the prior quarter end and up 53% over $28.2 billion as of September 30, 2016.

Premiums earned for the quarter were $44.5 million, including $4.3 million attributable to cancellation of single premium policies, which compares with $37.9 million, including $3.8 million related to cancellations, in the prior quarter. Premiums earned in the third quarter of 2017 were up 40% over premium revenue of $31.8 million in the same quarter a year ago, which included $5.8 million related to cancellations.

NIW mix was 79% monthly premium product, which compares with 81% in the prior quarter and 71% in the third quarter of 2016.

Total underwriting and operating expenses in the third quarter were $24.6 million. This compares with total underwriting and operating expenses of $28.0 million, including approximately $3.1 million of fees and expenses associated with the issuance of Insurance-Linked Notes in the prior quarter and $24.0 million in the same quarter a year ago.

Claims expense for the quarter was $1.0 million, resulting in a loss ratio of 2.1%.

At quarter-end, cash and investments were $713 million, including $62 million at the holding company, and book equity was $511 million, equal to $8.53 per share.

At quarter-end, the company had total PMIERs available assets of $495 million, which compares with risk-based required assets under PMIERs of $356 million.











1

EXHIBIT 99.1



 
 
Quarter Ended
Quarter Ended
Quarter Ended
Change
Change
 
 
9/30/2017
6/30/2017
9/30/2016
Q/Q
Y/Y
Primary Insurance-in-Force ($billions)
43.26

38.63

28.22

12%
53%
New Insurance Written - NIW ($billions)
 

 

 
 
 
 
Monthly premium
4.83

4.10

4.16

18%
16%
 
Single premium
1.28

0.94

1.70

36%
-25%
 
Total
6.11

5.04

5.86

21%
4%
 
 

 

 

 
 
Premiums Earned ($millions)
       44.52

       37.92

       31.81

17%
40%
Underwriting & Operating Expense ($millions)
       24.65

       28.05

       24.04

-12%
3%
Loss Expense ($millions)
0.96

1.37

         0.66

-30%
45%
Loss Ratio
2.1%

3.6%

2.1%

 
 
Cash & Investments ($millions)
          713

          694

          686

3%
4%
Book Equity ($millions)
511

495

430

3%
19%
Book Value per Share
8.53

8.27

7.28

3%
17%


Conference Call and Webcast Details
The company will hold a conference call and live webcast at 2:00 p.m. Pacific Time / 5:00 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: 1906690, 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: changes in the business practices of the GSEs that may impact the use of private mortgage insurance as credit enhancement; our ability to remain an eligible mortgage insurer under the PMIERs, including the financial requirements, and other requirements of 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 competitors, including governmental agencies like

2

EXHIBIT 99.1

the Federal Housing Administration (FHA) and the Veterans Administration (VA), 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; 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; 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 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; 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 claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; potential adverse impacts arising from recent natural disasters, including, with respect to the 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 counter-parties, including third party reinsurers, to meet their obligations to us; 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 Internal Revenue Code; 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, 2016, 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,
 
2017
 
2016
 
2017
 
2016
Revenues
(In Thousands, except for share data)
Net premiums earned
$
44,519

 
$
31,808

 
$
115,661

 
$
77,656

Net investment income
4,170

 
3,544

 
11,885

 
10,117

Net realized investment gains (losses)
69

 
66

 
198

 
(758
)
Other revenues
195

 
102

 
461

 
172

Total revenues
48,953

 
35,520

 
128,205

 
87,187

Expenses
 
 
 
 
 
 
 
Insurance claims and claims expenses
957

 
664

 
2,965

 
1,592

Underwriting and operating expenses
24,645

 
24,037

 
78,682

 
69,943

Total expenses
25,602

 
24,701

 
81,647

 
71,535

Other expense
 
 
 
 
 
 
 
Loss from change in fair value of warrant liability
(502
)
 
(797
)
 
(679
)
 
(187
)
Interest expense
(3,352
)
 
(3,733
)
 
(10,146
)
 
(11,072
)
Total other expense
(3,854
)
 
(4,530
)
 
(10,825
)
 
(11,259
)
 
 
 
 
 
 
 
 
Income before income taxes
19,497

 
6,289

 
35,733

 
4,393

Income tax expense
7,185

 
114

 
11,917

 
114

Net income
$
12,312


$
6,175

 
$
23,816

 
$
4,279


 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
Basic
$
0.21

 
$
0.10

 
$
0.40

 
$
0.07

Diluted
$
0.20

 
$
0.10

 
$
0.38

 
$
0.07


 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
Basic
59,883,629

 
59,130,401

 
59,680,166

 
59,047,758

Diluted
63,088,958

 
60,284,746

 
62,773,333

 
59,861,916

 
 
 
 
 
 
 
 
Loss Ratio(1)
2.1
%
 
2.1
%
 
2.6
%
 
2.1
%
Expense Ratio(2)
55.4

 
75.6

 
68.0

 
90.1

Combined ratio
57.5
%
 
77.7
%
 
70.6
%
 
92.2
%

 
 
 
 
 
 
 
Net income
$
12,312

 
$
6,175

 
$
23,816

 
$
4,279

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
Net unrealized gain (loss) in accumulated other comprehensive income, net of tax expense of $366 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $2,439 and $0 for the nine months ended September 30, 2017 and 2016
768

 
(82
)
 
4,786

 
17,690

Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $24 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $69 and $0 for the nine months ended September 30, 2017 and 2016
(45
)
 
(66
)
 
(129
)
 
758

Other comprehensive income, net of tax
723

 
(148
)
 
4,657

 
18,448

Comprehensive income
$
13,035

 
$
6,027

 
$
28,473

 
$
22,727

(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, 2017
 
December 31, 2016 (1)
Assets
(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $687,284 and $630,688 as of September 30, 2017 and December 31, 2016, respectively)
$
692,729

 
$
628,969

Cash and cash equivalents
20,698

 
47,746

Premiums receivable
21,056

 
13,728

Accrued investment income
4,598

 
3,421

Prepaid expenses
2,651

 
1,991

Deferred policy acquisition costs, net
36,101

 
30,109

Software and equipment, net
21,767

 
20,402

Intangible assets and goodwill
3,634

 
3,634

Prepaid reinsurance premiums
39,915

 
37,921

Deferred tax asset, net
38,490

 
51,434

Other assets
4,973

 
542

Total assets
$
886,612

 
$
839,897

 
 
 
 
Liabilities
 
 
 
Term loan
$
143,969

 
$
144,353

Unearned premiums
161,345

 
152,906

Accounts payable and accrued expenses
22,028

 
25,297

Reserve for insurance claims and claim expenses
6,123

 
3,001

Reinsurance funds withheld
33,105

 
30,633

Deferred ceding commission
4,971

 
4,831

Warrant liability, at fair value
4,046

 
3,367

Total liabilities
375,587

 
364,388

Commitments and contingencies
 
 
 
 
 
 
 
Shareholders' equity
 
 
 
Common stock - class A shares, $0.01 par value;
59,928,092 and 59,145,161 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively (250,000,000 shares authorized)
599

 
591

Additional paid-in capital
583,447

 
576,927

Accumulated other comprehensive loss, net of tax
(630
)
 
(5,287
)
Accumulated deficit
(72,391
)
 
(96,722
)
Total shareholders' equity
511,025

 
475,509

Total liabilities and shareholders' equity
$
886,612

 
$
839,897

(1)The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended September 30, 2017 for further details.



5

EXHIBIT 99.1

Historical Quarterly Data
2017
 
2016
 
 
September 30
 
June 30
 
March 31
 
December 31 (4)
 
September 30
 
June 30
 
Revenues
(In Thousands, except for share data)
Net premiums earned
$
44,519

 
$
37,917

 
$
33,225

 
$
32,825

 
$
31,808

 
$
26,041

 
Net investment income
4,170

 
3,908

 
3,807

 
3,634

 
3,544

 
3,342

 
Net realized investment gains (losses)
69

 
188

 
(58
)
 
65

 
66

 
61

 
Other revenues
195

 
185

 
80

 
105

 
102

 
37

 
Total revenues
48,953

 
42,198

 
37,054

 
36,629

 
35,520

 
29,481

 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Insurance claims and claims expenses
957

 
1,373

 
635

 
800

 
664

 
470

 
Underwriting and operating expenses
24,645

 
28,048

 
25,989

 
23,281

 
24,037

 
23,234

 
Total expenses
25,602

 
29,421

 
26,624

 
24,081

 
24,701

 
23,704

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense (1)
(3,854
)
 
(3,281
)
 
(3,690
)
 
(5,490
)
 
(4,530
)
 
(3,766
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
19,497

 
9,496

 
6,740

 
7,058

 
6,289

 
2,011

 
Income tax expense (benefit)
7,185

 
3,484

 
1,248

 
(52,664
)
 
114

 

 
Net income
$
12,312

 
$
6,012

 
$
5,492

 
$
59,722

 
$
6,175

 
$
2,011

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.21

 
$
0.10

 
$
0.09

 
$
1.01

 
$
0.10

 
$
0.03

 
Diluted
$
0.20

 
$
0.10

 
$
0.09

 
$
0.98

 
$
0.10

 
$
0.03

 
 
 
 
 
 
 
 

 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
Basic
59,883,629

 
59,823,396

 
59,183,973

 
59,140,011

 
59,130,401

 
59,105,613

 
Diluted
63,088,958

 
63,010,362

 
62,338,856

 
61,229,338

 
60,284,746

 
59,830,899

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other data
 
 
 
 
 
 
 
 
 
 
 
 
Loss Ratio (2)
2.1
%
 
3.6
%
 
1.9
%
 
2.4
%
 
2.1
%
 
1.8
%

Expense Ratio (3)
55.4
%
 
74.0
%
 
78.2
%
 
70.9
%
 
75.6
%
 
89.2
%

Combined ratio
57.5
%
 
77.6
%
 
80.1
%
 
73.3
%
 
77.7
%
 
91.0
%

(1) Other expense 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.
(4) The Q4 2016 quarterly data has been revised. Please refer to our Form 10-Q for the quarter ended September 30, 2017 for further details.


6

EXHIBIT 99.1

New Insurance Written (NIW), Insurance in Force (IIF) and Premiums
The tables below present primary and pool NIW and IIF, as of the dates and for the periods indicated.
Primary NIW
Three months ended
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
 
June 30, 2016
 
 
(In Millions)
Monthly
$
4,833

 
$
4,099

 
$
2,892

 
$
3,904

 
$
4,162

 
$
3,700

 
Single
1,282

 
938

 
667

 
1,336

 
1,695

 
2,138

 
Primary
$
6,115

 
$
5,037

 
$
3,559

 
$
5,240

 
$
5,857

 
$
5,838

 
Primary and pool IIF
As of
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
 
June 30, 2016
 
 
(In Millions)
Monthly
$
28,707

 
$
24,865

 
$
21,511

 
$
19,205

 
$
16,038

 
$
12,529

 
Single
14,552

 
13,764

 
13,268

 
12,963

 
12,190

 
11,095

 
Primary
43,259

 
38,629

 
34,779

 
32,168

 
28,228

 
23,624

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pool
3,330

 
3,447

 
3,545

 
3,650

 
3,826

 
3,999

 
Total
$
46,589

 
$
42,076

 
$
38,324

 
$
35,818

 
$
32,054

 
$
27,623

 

The following table presents the amounts related to the 2016 QSR transaction, for the last five quarters.
 
 
 
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
 
(In Thousands)
Ceded risk-in-force
$
2,682,982

$
2,403,027

$
2,167,745

$
2,008,385

$
1,778,235

Ceded premiums written
(14,389
)
(12,034
)
(10,292
)
(11,576
)
(38,977
)
Ceded premiums earned
(13,393
)
(11,463
)
(9,865
)
(9,746
)
(2,885
)
Ceded claims and claims expenses
277

342

268

206

90

Ceding commission written
2,878

2,407

2,058

2,316

7,795

Ceding commission earned
2,581

2,275

2,065

1,752

551

Profit commission
7,758

6,536

5,651

5,642

1,641


7

EXHIBIT 99.1


Portfolio Statistics
The table below highlights trends in our primary portfolio as of the date and for the periods indicated.
Primary portfolio trends
As of and for the three months ended
 
September 30, 2017
 
June 30, 2017
March 31, 2017
 
December 31, 2016
 
September 30, 2016
 
June 30, 2016
 
 
($ Values In Millions)
New insurance written
$
6,115

 
$
5,037

$
3,559

 
$
5,240

 
$
5,857

 
$
5,838

 
New risk written
1,496

 
1,242

868

 
1,244

 
1,415

 
1,411

 
Insurance in force (1)
43,259

 
38,629

34,779

 
32,168

 
28,228

 
23,624

 
Risk in force (1)
10,572

 
9,417

8,444

 
7,790

 
6,847

 
5,721

 
Policies in force (count) (1)
180,089

 
161,195

145,632

 
134,662

 
119,002

 
100,547

 
Average loan size (1)
$
0.240

 
0.240

0.239

 
0.239

 
0.237

 
0.235

 
Weighted-average coverage (2)
24.4
%
 
24.4
%
24.3
%
 
24.2
%
 
24.3
%
 
24.2
%
 
Loans in default (count)
350

 
249

207

 
179

 
115

 
79

 
Percentage of loans in default
0.2
%
 
0.2
%
0.1
%
 
0.1
%
 
0.1
%
 
0.1
%
 
Risk in force on defaulted loans
$
19

 
$
14

$
12

 
$
10

 
$
6

 
$
4

 
Average premium yield (3)
0.43
%
 
0.41
%
0.40
%
 
0.44
%
 
0.48
%
 
0.47
%
 
Earnings from cancellations
$
4.3

 
$
3.8

$
2.5

 
$
5.1

 
$
5.8

 
$
3.5

 
Annual persistency (4)
85.1
%
 
83.1
%
81.3
%
 
80.7
%
 
81.8
%
 
83.3
%
 
Quarterly run-off (5)
3.8
%

3.4
%
2.9
%

4.6
%

5.3
%

4.2
%


(1) 
Reported as of the end of the period.
(2) 
Calculated as end of period risk in force (RIF) divided by IIF.
(3) 
Calculated as net primary and pool premiums earned, net of reinsurance, divided 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.
(5) 
Defined as the percentage of IIF that are no longer on our books after any 3-month period
The tables below present our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated.
Primary NIW by FICO
For the three months ended
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
($ In Millions)
>= 760
$
2,806

 
$
2,376

 
$
2,975

740-759
934

 
793

 
934

720-739
807

 
626

 
725

700-719
697

 
568

 
588

680-699
456

 
368

 
387

<=679
415

 
306

 
248

Total
$
6,115

 
$
5,037

 
$
5,857

Weighted average FICO
747

 
749

 
753


8

EXHIBIT 99.1

Primary NIW by LTV
For the three months ended
 
September 30, 2017
 
June 20, 2017
 
September 30, 2016
 
(In Millions)
95.01% and above
$
722

 
$
474

 
$
347

90.01% to 95.00%
2,714

 
2,297

 
2,557

85.01% to 90.00%
1,765

 
1,506

 
1,844

85.00% and below
914

 
760

 
1,109

Total
$
6,115

 
$
5,037

 
$
5,857

Weighted average LTV
92.3
%
 
92.2
%
 
91.7
%
Primary NIW by purchase/refinance mix
For the three months ended
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
(In Millions)
Purchase
$
5,387

 
$
4,518

 
$
4,400

Refinance
728

 
519

 
1,457

Total
$
6,115

 
$
5,037

 
$
5,857

The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.
Primary IIF and RIF
As of September 30, 2017
 
IIF
 
RIF
 
(In Millions)
September 30, 2017
$
14,315

 
$
3,508

2016
18,684

 
4,520

2015
8,742

 
2,167

2014
1,479

 
368

2013
39

 
9

Total
$
43,259

 
$
10,572

The tables below present our total primary IIF and RIF by FICO and LTV and total primary RIF by loan type as of the dates indicated.
Primary IIF by FICO
As of
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
(In Millions)
>= 760
$
21,329

 
$
19,224

 
$
14,258

740-759
6,983

 
6,269

 
4,612

720-739
5,547

 
4,927

 
3,648

700-719
4,505

 
3,973

 
2,813

680-699
2,942

 
2,615

 
1,863

<=679
1,953

 
1,621

 
1,034

Total
$
43,259

 
$
38,629

 
$
28,228


9

EXHIBIT 99.1

Primary RIF by FICO
As of
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
(In Millions)
>= 760
$
5,251

 
$
4,720

 
3,470

740-759
1,713

 
1,535

 
1,130

720-739
1,349

 
1,198

 
887

700-719
1,092

 
960

 
680

680-699
707

 
627

 
443

<=679
460

 
377

 
237

Total
$
10,572

 
$
9,417

 
$
6,847

Primary IIF by LTV
As of
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
(In Millions)
95.01% and above
$
3,038

 
$
2,367

 
$
1,363

90.01% to 95.00%
19,562

 
17,441

 
12,644

85.01% to 90.00%
13,437

 
12,157

 
9,157

85.00% and below
7,222

 
6,664

 
5,064

Total
$
43,259

 
$
38,629

 
$
28,228

Primary RIF by LTV
As of
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
(In Millions)
95.01% and above
$
822

 
$
648

 
$
380

90.01% to 95.00%
5,722

 
5,120

 
3,725

85.01% to 90.00%
3,205

 
2,893

 
2,174

85.00% and below
823

 
756

 
568

Total
$
10,572

 
$
9,417

 
$
6,847

Primary RIF by Loan Type
As of
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
 
 
 
 
 
Fixed
98
%
 
98
%
 
98
%
Adjustable rate mortgages:
 
 
 
 
 
Five years and longer
2

 
2

 
2

Total
100
%
 
100
%
 
100
%
The table below presents a summary of the change in total primary IIF during the periods indicated.
Primary IIF
For the three months ended
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
(In Millions)
IIF, beginning of period
$
38,629

 
$
34,779

 
$
23,624

NIW
6,115

 
5,037

 
5,857

Cancellations and other reductions
(1,485
)
 
(1,187
)
 
(1,253
)
IIF, end of period
$
43,259

 
$
38,629

 
$
28,228




10

EXHIBIT 99.1

Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the periods indicated.
Top 10 primary RIF by state
As of
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
California
13.6
%
 
13.8
%
 
13.2
%
Texas
7.6

 
7.5

 
6.8

Virginia
5.6

 
6.0

 
6.6

Arizona
4.4

 
4.2

 
3.8

Florida
4.3

 
4.4

 
4.7

Colorado
3.8

 
3.9

 
4.0

Michigan
3.7

 
3.6

 
3.9

Pennsylvania
3.6

 
3.6

 
3.6

Utah
3.6

 
3.7

 
3.6

Maryland
3.6

 
3.7

 
3.6

Total
53.8
%
 
54.4
%
 
53.8
%
The following table shows portfolio data by book year, as of September 30, 2017.

 
As of September 30, 2017
Book 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

 
$
39

 
24
%
 
655

 
201

 

 
1

 
0.2
%
 
0.2
%
2014
3,451

 
1,479

 
43
%
 
14,786

 
7,451

 
54

 
9

 
3.8
%
 
0.4
%
2015
12,422

 
8,742

 
70
%
 
52,548

 
39,727

 
164

 
14

 
2.9
%
 
0.3
%
2016
21,187

 
18,684

 
88
%
 
83,626

 
76,095

 
119

 
3

 
1.6
%
 
0.1
%
2017
$
14,711

 
$
14,315

 
97
%
 
57,800

 
56,615

 
13

 

 
0.5
%
 

Total
$
51,933

 
$
43,259

 
 
 
209,415

 
180,089

 
350

 
27

 
 
 
 

(1) 
The ratio of claims incurred (paid and reserved) divided by cumulative premiums earned, net 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.

11

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
 
For the nine months ended
 
September 30, 2017
 
September 30, 2016
 
September 30, 2017
 
September 30, 2016
 
 
 
 
 
 
 
 
 
(In Thousands)
Beginning balance
$
5,048

 
$
1,475

 
$
3,001

 
$
679

Less reinsurance recoverables (1)
(899
)
 

 
(297
)
 

Beginning balance, net of reinsurance recoverables
4,149

 
1,475

 
2,704

 
679

 
 
 
 
 
 
 
 
Add claims incurred:
 
 
 
 
 
 
 
Claims and claim expenses incurred:
 
 
 
 
 
 
 
Current year (2)
1,215

 
690

 
3,546

 
1,803

Prior years (3)
(258
)
 
(29
)
 
(581
)
 
(214
)
Total claims and claims expenses incurred
957

 
661

 
2,965

 
1,589

 
 
 
 
 
 
 
 
Less claims paid:
 
 
 
 
 
 
 
Claims and claim expenses paid:
 
 
 
 
 
 
 
Current year (2)

 

 

 

Prior years (3)
157

 
93

 
720

 
225

Total claims and claim expenses paid
157

 
93

 
720

 
225

 
 
 
 
 
 
 
 
Reserve at end of period, net of reinsurance recoverables
4,949

 
2,043

 
4,949

 
2,043

Add reinsurance recoverables (1)
1,174

 
90

 
1,174

 
90

Ending balance
$
6,123

 
$
2,133

 
$
6,123

 
$
2,133

(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheet.
(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.
(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.
The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.
 
For the three months ended
 
For the nine months ended
 
September 30, 2017
 
September 30, 2016
 
September 30, 2017
 
September 30, 2016
Beginning default inventory
249

 
79

 
179

 
36

Plus: new defaults
208

 
69

 
479

 
158

Less: cures
(103
)
 
(30
)
 
(292
)
 
(73
)
Less: claims paid
(4
)
 
(3
)
 
(16
)
 
(6
)
Ending default inventory
350

 
115

 
350

 
115



12

EXHIBIT 99.1

The following tables provide details of our claims and reserves for the periods indicated, before claims paid covered under the 2016 QSR Transaction.
 
For the three months ended
 
For the nine months ended
 
September 30, 2017
 
September 30, 2016
 
September 30, 2017
 
September 30, 2016
 
($ Values In Thousands)
Number of claims paid
4

 
3

 
16

 
6

Total amount paid for claims
$
160

 
$
93

 
$
731

 
$
225

Average amount paid per claim
$
40

 
$
31

 
$
46

 
$
32

Severity(1)
73
%
 
53
%
 
83
%
 
62
%
(1) Severity represents the total amount of claims paid divided by the related RIF on the loan at the time the claim is perfected.
Average reserve per default:
As of September 30, 2017
 
As of September 30, 2016
 
(In Thousands)
Case (1)
$
16

 
$
17

IBNR
1

 
1

Total
$
17

 
$
18


(1)Defined as the gross reserve per insured loan in default.
The following table provides a comparison of the PMIERs financial requirements as reported by National MI as of the dates indicated.
 
As of
 
September 30, 2017
 
June 30, 2017
 
September 30, 2016
 
(In thousands)
Available assets
$
495,182

 
$
485,019

 
$
488,635

Risk-based required assets
356,207

 
298,091

 
320,609

 
 
 
 
 
 



13