NMI Holdings (NMIH) Q1 Earnings Top on Higher Premiums Earned
NMI Holdings, Inc. NMIH reported first-quarter 2023 operating net income per share of 88 cents, beating the Zacks Consensus Estimate by 2.3% and our estimate of operating net income of 85 cents. The bottom line increased 14.3% year over year.
NMI Holdings’ total operating revenues of $136.8 million increased 7.3% year over year on higher net premiums earned (up 4.5%) and net investment income (up 46%). The top line beat the Zacks Consensus Estimate by 0.8% and our estimate of $135.2 million.
The quarterly results reflected increased strength in operating performance and increasing persistency, which drove growth in the company’s high-quality insured portfolio. Improving net premiums earned and expense discipline led to record profitability and strong returns on equity.
NMI Holdings Inc Price, Consensus and EPS Surprise
NMI Holdings Inc price-consensus-eps-surprise-chart | NMI Holdings Inc Quote
Operational Update
Primary insurance in force increased 18% to $186.7 billion. Annual persistency was 85.1%, up 1360 basis points (bps) year over year.
New insurance written was $8.7 billion, down 38.3% year over year, reflecting a decline in refinancing origination volume year over year.
Underwriting and operating expenses totaled $25.8 million, down 22% year over year. Insurance claims and claim expenses were $6.7 million against a benefit of $0.6 million in the year-ago quarter.
The loss ratio was 5.5 versus (0.5) in the year-ago quarter, reflecting higher insurance claims and expenses.
The adjusted expense ratioof 21.2 improved 680 bps year over year due to lower underwriting and operating expenses than the year-ago quarter. The adjusted combined ratio of 26.7 improved 80 bps year over year.
Financial Update
Book value per share, a measure of net worth, was up about 14.9% year over year to $20.49 as of Mar 31, 2023.
NMI Holdings had $83.1 million in cash and cash equivalents, down from $44.4 million at 2022-end. The debt balance of $396.4 million increased from $396.1 million at 2022-end.
Annualized return on equity for the quarter was 17.9%, up 40 bps.
Total PMIERs available assets were $2.5 billion and net risk-based required assets totaled $1.2 billion at the first-quarter end.
Zacks Rank
NMI Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Property and Casualty Insurers
The Travelers Companies, Inc. TRV reported first-quarter 2023 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of core income of $3.41.
However, the bottom line decreased 2.6% year over year. The year-over-year decline reflects higher catastrophe losses and lower net favorable prior-year reserve developments. However, a higher underlying underwriting gain and higher net investment income partially offset the same.
The Progressive Corporation’s PGR first-quarter 2023 earnings per share (EPS) of 65 cents missed the Zacks Consensus Estimate of $1.44 and our estimate of EPS of $1.50. The bottom line declined 20.7% year over year.
Net premiums written were $16.1 billion in the quarter, rising 22% from $13.2 billion a year ago and beating our estimate of net premiums of $14.6 billion.Net premiums earned grew 15% to $13.5 billion, beating our estimate of $12.6 billion.
W.R. Berkley Corporation’s WRB first-quarter 2023 operating income of $1 per share missed the Zacks Consensus Estimate by about 16%. The bottom line declined 9.1% year over year and missed our estimate of operating income of $1.19.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth fueling continued strong underwriting performance, and a surge in investment income.
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