NMI Holdings, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

NMI Holdings, Inc.

EMERYVILLE, Calif., Feb. 14, 2023 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $72.9 million, or $0.86 per diluted share, for the fourth quarter ended December 31, 2022, which compares to $76.8 million, or $0.90 per diluted share, in the third quarter ended September 30, 2022 and $60.5 million, or $0.69 per diluted share, in the fourth quarter ended December 31, 2021. Adjusted net income for the quarter was $72.9 million, or $0.86 per diluted share, which compares to $76.8 million, or $0.90 per diluted share, in the third quarter ended September 30, 2022 and $63.5 million, or $0.73 per diluted share, in the fourth quarter ended December 31, 2021.

Net income for the full year ended December 31, 2022 was $292.9 million or $3.39 per diluted share, which compares to $231.1 million, or $2.65 per diluted share, for the year ended December 31, 2021. Adjusted net income for the year was $291.6 million or $3.39 per diluted share, which compares to $236.8 million, or $2.73 per diluted share, for the year ended December 31, 2021. The non-GAAP financial measures adjusted net income, adjusted diluted earnings per share and adjusted return on equity are presented in this release to enhance the comparability of financial results between periods. See "Use of Non-GAAP Financial Measures" and our reconciliation of such measures to their most comparable GAAP measures, below.

Adam Pollitzer, President and Chief Executive Officer of National MI, said, “The fourth quarter capped another year of standout success for National MI. In 2022, we delivered strong operating performance, generated significant NIW volume and growth in our high-quality insured portfolio, and achieved record profitability and an 18.4% return on equity. We continued to manage with discipline and a focus on through-the-cycle performance, and looking forward, we’re well-positioned to continue to serve our customers and their borrowers, support our talented team, and deliver sustained performance and long-term value for our shareholders.”

Selected fourth quarter 2022 highlights include:

• Primary insurance-in-force at quarter end was $184.0 billion, compared to $179.2 billion at the end of the third quarter and $152.3 billion at the end of the fourth quarter of 2021
  
  

• Net premiums earned were $119.6 million, compared to $118.3 million in the third quarter and $113.9 million in the fourth quarter of 2021
  
  

• Underwriting and operating expenses were $26.7 million, compared to $27.1 million in the third quarter and $38.8 million in the fourth quarter of 2021
  
  

• Insurance claims and claim expenses were $3.4 million, compared to a benefit of $3.4 million in the third quarter and a benefit of $0.5 million in the fourth quarter of 2021
  
  

• Shareholders’ equity was $1.6 billion at quarter end and book value per share was $19.31. Book value per share excluding the impact of net unrealized gains and losses in the investment portfolio was $21.76, up 4% compared to $20.85 in the third quarter and 19% compared to $18.23 in the fourth quarter of 2021
  
  

• Annualized return on equity for the quarter was 18.6%, compared to 20.1% in the third quarter and 15.7% in the fourth quarter of 2021
  
  

• At quarter-end, total PMIERs available assets were $2.4 billion and net risk-based required assets were $1.2 billion
  
  

		Quarter Ended			Quarter Ended			Quarter Ended			Change (1)		Change (1)
		12/31/2022			9/30/2022			12/31/2021			Q/Q		Y/Y
INSURANCE METRICS ($billions)
Primary Insurance-in-Force		$	184.0		$	179.2		$	152.3		3	%	21	%
New Insurance Written - NIW
	Monthly premium		10.5			16.7			17.0		(37	)%	(38	)%
	Single premium		0.3			0.6			1.4		(52	)%	(80	)%
	Total (2)		10.7			17.2			18.3		(38	)%	(42	)%
FINANCIAL HIGHLIGHTS (Unaudited, $millions, except per share amounts)
Net Premiums Earned			119.6			118.3			113.9		1	%	5	%
Insurance Claims and Claim (Benefits) Expenses			3.4			(3.4	)		(0.5	)	(202	)%	(790	)%
Underwriting and Operating Expenses			26.7			27.1			38.8		(2	)%	(31	)%
Net Income			72.9			76.8			60.5		(5	)%	21	%
Book Value per Share (excluding net unrealized gains and losses) (3)			21.76			20.85			18.23		4	%	19	%
Loss Ratio			2.9	%		(2.9)	%		(0.4	)%
Expense Ratio			22.3	%		22.9	%		34.1	%

⁽¹⁾ Percentages may not be replicated based on the rounded figures presented in the table.
⁽²⁾ Total may not foot due to rounding.
⁽³⁾ Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.

Conference Call and Webcast Details

The company will hold a conference call, which will be webcast live today, February 14, 2023, 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 conference call can also be accessed by dialing (844) 481-2708 in the U.S., or (412) 317-0664 internationally, by referencing NMI Holdings, Inc.

About NMI Holdings, Inc.

NMI Holdings, Inc. (NASDAQ: NMIH), is the parent company of National Mortgage Insurance Corporation (National MI), a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the U.S. Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "perceive," "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 general economic, market and political conditions and policies (including rising interest rates and inflation) and investment results or other conditions that affect the U.S. housing market or the U.S. markets for home mortgages, mortgage insurance, reinsurance and credit risk transfer markets, including the risk related to geopolitical instability, inflation, an economic downturn (including any decline in home prices) or recession, and their impacts on our business, operations and personnel; changes in the charters, business practices, policy, pricing or priorities of Fannie Mae and Freddie Mac (collectively, the GSEs), which may include decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement generally, or with first time homebuyers or on very high loan-to-value mortgages; or changes in the direction of housing policy objectives of the Federal Housing Finance Agency (“FHFA”), such as the FHFA's priority to increase the accessibility to and affordability of homeownership for low-and-moderate income borrowers and underrepresented communities; our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (“PMIERs”) and other requirements imposed by the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia (“D.C.”) and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including other private mortgage insurers and government mortgage insurers such as the Federal Housing Administration, the U.S. Department of Agriculture's Rural Housing Service and the U.S. Department of Veterans Affairs, and potential market entry by new competitors or consolidation of existing competitors; adoption of new or changes to existing laws, rules and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including the implementation of the final rules defining and/or concerning "Qualified Mortgage" and "Qualified Residential Mortgage"; U.S. federal tax reform and other potential changes in tax law and their impact on us and our operations; legislative or regulatory changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance industry in particular; potential legal and regulatory claims, investigations, actions, audits or inquiries that could result in adverse judgements, settlements, fines or other reliefs that could require significant expenditures or have other negative effects on our business; uncertainty relating to the coronavirus (COVID-19) virus and its variants or the measures taken by governmental authorities and other third-parties to contain the spread of COVID-19, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and our business, operations and personnel; our ability to successfully execute and implement our capital plans, including our ability to access the equity, credit and reinsurance markets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; lenders, the GSEs, or other market participants seeking alternatives to private mortgage insurance; 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; decrease in the length of time our insurance policies are in force; emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience; potential adverse impacts arising from natural disasters including, with respect to affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; climate risk and efforts to manage or regulate climate risk by government agencies could affect our business and operations; potential adverse impacts arising from the occurrence of any man-made disasters or public health emergencies, including pandemics; the inability of our counter-parties, including third party reinsurers, to meet their obligations to us; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; effectiveness and security of our information technology systems and digital products and services, including the risks these systems, products or services may fail to operate as expected or planned, or expose us to cybersecurity or third-party risks (including the exposure of our confidential customer and other confidential information); and 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, 2021, 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.

Use of Non-GAAP Financial Measures

We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) and enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors. These non-GAAP financial measures align with the way the company's business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.

Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.

Adjusted net income is defined as GAAP net income, excluding the after-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred. Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.

Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the periods that non-vested shares are anti-dilutive under GAAP.

Adjusted return on equity is calculated by dividing adjusted net income on an annualized basis by the average shareholders' equity for the period.

Adjusted expense ratio is defined as GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions, divided by net premiums earned.

Adjusted combined ratio is defined as the total of GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions and insurance claims and claims expenses, divided by net premiums earned.

Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on investments, divided by shares outstanding.

Although adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.

(1) Change in fair value of warrant liability. Outstanding warrants at the end of each reporting period are revalued, and any change in fair value is reported in the statement of operations in the period in which the change occurred. The change in fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors that do not impact or reflect our current period operating results. Furthermore, all unexercised warrants expired in April 2022 and, as such, no change in fair value will be recognized in future reporting periods. We believe trends in our operating performance can be more clearly identified by excluding fluctuations related to the change in fair value of our warrant liability.

(2) Capital markets transaction costs. Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles.

(3) Net realized investment gains and losses. The recognition of the net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results.

(4) Other infrequent, unusual or non-operating items. Items that are the result of unforeseen or uncommon events, and are not expected to recur with frequency in the future. Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include infrequent, unusual or non-operating adjustments related to severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced in September 2021 and the effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are infrequent or non-recurring in nature, and are not indicative of the performance of, or ongoing trends in, our primary operating activities or business.

(5) Net unrealized gains and losses on investments. The recognition of the net unrealized gains or losses on investment can vary significantly across periods and is influenced by factors such as interest rate movement, overall market and economic conditions, and tax and capital profiles. These valuation adjustments may not necessarily result in economic gains or losses and not reflective of ongoing operations. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these unrealized gains or losses.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Consolidated statements of operations and comprehensive income (unaudited)	For the three months ended December 31,								For the year ended December 31,
		2022				2021				2022				2021
	(In Thousands, except for per share data)
Revenues
Net premiums earned	$	119,584			$	113,933			$	475,266			$	444,294
Net investment income		13,341				10,045				46,406				38,072
Net realized investment gains		6				714				481				729
Other revenues		176				380				1,192				1,977
Total revenues		133,107				125,072				523,345				485,072
Expenses
Insurance claims and claim expenses (benefits)		3,450				(500	)			(3,594	)			12,305
Underwriting and operating expenses		26,711				38,843				117,490				142,303
Service expenses		131				650				1,094				2,509
Interest expense		8,035				8,029				32,163				31,796
Gain from change in fair value of warrant liability		—				(112	)			(1,113	)			(566	)
Total expenses		38,327				46,910				146,040				188,347
Income before income taxes		94,780				78,162				377,305				296,725
Income tax expense		21,840				17,639				84,403				65,595
Net income	$	72,940			$	60,523			$	292,902			$	231,130
Earnings per share
Basic	$	0.87			$	0.71			$	3.45			$	2.70
Diluted	$	0.86			$	0.69			$	3.39			$	2.65
Weighted average common shares outstanding
Basic		83,592				85,757				84,921				85,620
Diluted		84,809				87,117				85,999				86,885
Loss ratio(1)		2.9	%			(0.4	)%			(0.8	)%			2.8	%
Expense ratio(2)		22.3	%			34.1	%			24.7	%			32.0	%
Combined ratio (3)		25.2	%			33.7	%			24.0	%			34.8	%
Net income	$	72,940			$	60,523			$	292,902			$	231,130
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) in accumulated other comprehensive income, net of tax expense (benefit) of $4,505 and $(4,601) for the three months ended December 31, 2022 and 2021, respectively, and $(54,608) and $(13,768) for the years ended December 31, 2022, and 2021, respectively		16,948				(17,307	)			(205,428	)			(51,795	)
Reclassification adjustment for realized gains included in net income, net of tax expense of $1 and $150 for the three months ended December 31, 2022 and 2021, respectively, and $101 and $153 for the years ended December 31, 2022, and 2021, respectively		(5	)			(564	)			(380	)			(576	)
Other comprehensive income (loss), net of tax		16,943				(17,871	)			(205,808	)			(52,371	)
Comprehensive income	$	89,883			$	42,652			$	87,094			$	178,759

⁽¹⁾ Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) by net premiums earned.
⁽²⁾ Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
⁽³⁾ Combined ratio may not foot due to rounding.

Consolidated balance sheets (unaudited)	December 31, 2022				December 31, 2021
Assets	(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $2,352,747 and $2,078,773 as of December 31, 2022 and December 31, 2021, respectively)	$	2,099,389			$	2,085,931
Cash and cash equivalents (including restricted cash of $2,176 and $3,165 as of December 31, 2022 and December 31, 2021, respectively)		44,426				76,646
Premiums receivable		69,680				60,358
Accrued investment income		14,144				11,900
Deferred policy acquisition costs, net		58,564				59,584
Software and equipment, net		31,930				32,047
Intangible assets and goodwill		3,634				3,634
Reinsurance recoverable		21,587				20,320
Prepaid federal income taxes (1)		154,409				89,244
Other assets (1) (2)		18,267				10,917
Total assets	$	2,516,030			$	2,450,581
Liabilities
Debt	$	396,051			$	394,623
Unearned premiums		123,035				139,237
Accounts payable and accrued expenses		74,576				72,000
Reserve for insurance claims and claim expenses		99,836				103,551
Reinsurance funds withheld		2,674				5,601
Warrant liability, at fair value		—				2,363
Deferred tax liability, net		193,859				164,175
Other liabilities		12,272				3,245
Total liabilities		902,303				884,795
Shareholders' equity
Common stock - class A shares, $0.01 par value; 86,472,742 shares issued and 83,549,879 shares outstanding as of December 31, 2022 and 85,792,849 shares issued and outstanding as of December 31, 2021, respectively (250,000,000 shares authorized)		865				858
Additional paid-in capital		972,717				955,302
Treasury stock, at cost: 2,922,863 and 0 common shares as of December 31, 2022 and December 31, 2021, respectively		(56,575	)			—
Accumulated other comprehensive (loss) income, net of tax		(204,323	)			1,485
Retained earnings		901,043				608,141
Total shareholders' equity		1,613,727				1,565,786
Total liabilities and shareholders' equity	$	2,516,030			$	2,450,581

⁽¹⁾ "Prepaid federal income taxes" have been reclassified from "Other assets" in the prior period.
⁽²⁾ "Prepaid expenses" and "Prepaid reinsurance premiums" have been reclassified as "Other assets" in the prior period.

Non-GAAP Financial Measure Reconciliations (unaudited)
	For the three months ended												For the year ended
	12/31/2022				9/30/2022				12/31/2021				12/31/2022				12/31/2021
As Reported	(In Thousands, except for per share data)
Revenues
Net premiums earned	$	119,584			$	118,317			$	113,933			$	475,266			$	444,294
Net investment income		13,341				11,945				10,045				46,406				38,072
Net realized investment gains		6				14				714				481				729
Other revenues		176				301				380				1,192				1,977
Total revenues		133,107				130,577				125,072				523,345				485,072
Expenses
Insurance claims and claim expenses (benefits)		3,450				(3,389	)			(500	)			(3,594	)			12,305
Underwriting and operating expenses		26,711				27,144				38,843				117,490				142,303
Service expenses		131				197				650				1,094				2,509
Interest expense		8,035				8,036				8,029				32,163				31,796
Gain from change in fair value of warrant liability		—				—				(112	)			(1,113	)			(566	)
Total expenses		38,327				31,988				46,910				146,040				188,347
Income before income taxes		94,780				98,589				78,162				377,305				296,725
Income tax expense		21,840				21,751				17,639				84,403				65,595
Net income	$	72,940			$	76,838			$	60,523			$	292,902			$	231,130
Adjustments:
Net realized investment gains		(6	)			(14	)			(714	)			(481	)			(729	)
Gain from change in fair value of warrant liability		—				—				(112	)			(1,113	)			(566	)
Capital markets transaction costs		—				—				1,505				205				3,979
Other infrequent, unusual or non-operating items		—				—				2,540				—				3,829
Adjusted income before taxes		94,774				98,575				81,381				375,916				303,238
Income tax (benefit) expense on adjustments (1)		(1	)			(3	)			251				(58	)			806
Adjusted net income	$	72,935			$	76,827			$	63,491			$	291,571			$	236,837
Weighted average diluted shares outstanding		84,809				85,485				87,117				85,999				86,885
Diluted EPS	$	0.86			$	0.90			$	0.69			$	3.39			$	2.65
Adjusted diluted EPS	$	0.86			$	0.90			$	0.73			$	3.39			$	2.73
Return-on-equity		18.6	%			20.1	%			15.7	%			18.4	%			15.7	%
Adjusted return-on-equity		18.6	%			20.1	%			16.5	%			18.3	%			16.1	%
Expense ratio (2)		22.3	%			22.9	%			34.1	%			24.7	%			32.0	%
Adjusted expense ratio (3)		22.3	%			22.9	%			30.5	%			24.7	%			30.3	%
Combined ratio (4)		25.2	%			20.1	%			33.7	%			24.0	%			34.8	%
Adjusted combined ratio (5)		25.2	%			20.1	%			30.1	%			23.9	%			33.0	%
Book value per share (6)	$	19.31			$	18.21			$	18.25
Book value per share (excluding net unrealized gains and losses) (7)	$	21.76			$	20.85			$	18.23

⁽¹⁾ Marginal tax impact of non-GAAP adjustments is calculated based on our statutory U.S. federal corporate income tax rate of 21%, except for those items that are not eligible for an income tax deduction. Such non-deductible items include gains or losses from the change in the fair value of our warrant liability and certain costs incurred in connection with the CEO transition, which are limited under Section 162(m) of the Internal Revenue Code.
⁽²⁾ Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
⁽³⁾ Adjusted expense ratio is calculated by dividing adjusted underwriting and operating expense (underwriting and operating expenses excluding costs related to capital markets reinsurance transactions) by net premiums earned.
⁽⁴⁾ Combined ratio is calculated by dividing the total of underwriting and operating expenses and insurance claims and claims expense by net premiums earned.
⁽⁵⁾ Adjusted combined ratio is calculated by dividing the total of adjusted underwriting and operating expenses (underwriting and operating expenses excluding costs related to capital market reinsurance transaction) and insurance claims and claims expense by net premiums earned.
⁽⁶⁾ Book value per share is calculated by dividing total shareholder's equity by shares outstanding.
⁽⁷⁾ Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.

Historical Quarterly Data		2022																2021
	December 31				September 30				June 30				March 31				December 31				September 30
	(In Thousands, except for per share data)
Revenues
Net premiums earned	$	119,584			$	118,317			$	120,870			$	116,495			$	113,933			$	113,594
Net investment income		13,341				11,945				10,921				10,199				10,045				9,831
Net realized investment gains		6				14				53				408				714				3
Other revenues		176				301				376				339				380				613
Total revenues		133,107				130,577				132,220				127,441				125,072				124,041
Expenses
Insurance claims and claim expenses (benefits)		3,450				(3,389	)			(3,036	)			(619	)			(500	)			3,204
Underwriting and operating expenses		26,711				27,144				30,700				32,935				38,843				34,669
Service expenses		131				197				336				430				650				787
Interest expense		8,035				8,036				8,051				8,041				8,029				7,930
Gain from change in fair value of warrant liability		—				—				(1,020	)			(93	)			(112	)			—
Total expenses		38,327				31,988				35,031				40,694				46,910				46,590
Income before income taxes		94,780				98,589				97,189				86,747				78,162				77,451
Income tax expense		21,840				21,751				21,745				19,067				17,639				17,258
Net income	$	72,940			$	76,838			$	75,444			$	67,680			$	60,523			$	60,193
Earnings per share
Basic	$	0.87			$	0.91			$	0.88			$	0.79			$	0.71			$	0.70
Diluted	$	0.86			$	0.90			$	0.86			$	0.77			$	0.69			$	0.69
Weighted average common shares outstanding
Basic		83,592				84,444				85,734				85,953				85,757				85,721
Diluted		84,809				85,485				86,577				87,310				87,117				86,880
Other data
Loss Ratio (1)		2.9	%			(2.9	)%			(2.5	)%			(0.5	)%			(0.4	)%			2.8	%
Expense Ratio (2)		22.3	%			22.9	%			25.4	%			28.3	%			34.1	%			30.5	%
Combined ratio (3)		25.2	%			20.1	%			22.9	%			27.7	%			33.7	%			33.3	%

⁽¹⁾ Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) by net premiums earned.
⁽²⁾ Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
⁽³⁾ Combined ratio may not foot due to rounding.

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

December 31, 2022

September 30, 2022

June 30, 2022