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NMIH Holdings' (NMIH) Reliance on Robust Premiums is a Boon

Zacks Equity Research

NMIH Holdings, Inc. NMIH, offering its clients private mortgage insurance in the United States, has been flaunting an excellent premium growth trajectory over a considerable period of time. This improvement is primarily attributable to a sustained performance exhibited by new insurance written (NIW). Given the rising trend of NIW across the company’s product line and its compelling portfolio mix, we expect this momentum to continue going forward.

Also, the company has been successful in achieving NIW growth while being committed toward risk management and remaining disciplined from a risk return standpoint.

Its primary insurance in-force has been showing a noticeable improvement with the insurer maintaining focus on delivering the fastest growth rate of insurance in-force in the industry.

Moreover, solid market conditions and a growing in-force portfolio have allowed the company to retain underwriting profitability and we expect this metric to deliver a favorable performance in the future.  

Further, with the introduction of Rate GPS (Granular Pricing System) that represents an important evolution in pricing approach and risk-selection capabilities, the company aims at making substantial enhancements to the pricing process. We can expect this better pricing process to get reflected in the insurer’s overall results.  

Also, the company has witnessed early success of Rate GPS across management with the expected returns on its Rate GPS production being strong and in line with the long-term goals.

Banking on an improving interest rate environment, the company has been experiencing solid investment results over the past few years. On the back of higher money rates along with heavier yields and increase in the size of total investment portfolio, we anticipate investment results to consistently show progress in the near term.

Riding on healthier investment results and sturdy premiums, the company’s top line is estimated to grow in the near term. In fact, the Zacks Consensus Estimate for 2019 revenues is pegged at $364.8 million, reflecting a 32.1% year-over-year surge.

The company has been able to keep a strong liquidity position intact, which in turn, has helped it fund strategic initiatives and see through the execution, thereby boosting its product pricing, risk management and technology capabilities in the process.

Shares of this Zacks Rank #2 (Buy) insurer have gained 0.3% in a year’s time against the industry’s decline of 6.7%. We believe, the aforementioned upsides will push the stock up in the near term.



For the P&C insurer, the Zacks Consensus Estimate for 2019 earnings stands at $2.26, indicating year-over-year growth of 39.5%.

With respect to its earnings history, the company delivered positive surprises in all the trailing four reported quarters, the average being 22.19%.

Other Stocks to Consider

Investors interested in some other top-ranked stocks from the same space can also consider Markel Corporation MKL, Mercury General Corporation MCY and Berkshire Hathaway Inc. BRK.B, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Markel markets and underwrites specialty insurance products in the United States, the United Kingdom, Canada and internationally. The company delivered positive surprises in three of the trailing four reported quarters, the average beat being 104.54%.

Mercury General engages in writing personal automobile insurance in the United States. The company pulled off earnings surprises in two of the previous four reported quarters, the average beat being 1.26%.

Berkshire Hathaway engages in insurance, freight rail transportation and utility businesses. The company surpassed estimates in three of the preceding four reported quarters, the average beat being 4.31%.

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