Why Is NMI Holdings (NMIH) Down 9.6% Since Last Earnings Report?

·3 min read

A month has gone by since the last earnings report for NMI Holdings (NMIH). Shares have lost about 9.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NMI Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

NMI Holdings Q4 Earnings Meet Estimates, Increase Y/Y

NMI Holdings reported fourth-quarter 2022 operating net income per share of 86 cents, which was in line with Zacks Consensus Estimate. The bottom line increased 17.8% year over year.

The quarterly results reflected increased strength in operating performance and increasing persistency, which drove growth in the company’s high-quality insured portfolio. Significant new insurance written volume and expense discipline led to record profitability and strong returns on equity.

Operational Update

NMI Holdings’ total operating revenues of $133.1 million increased 6.4% year over year on higher net premiums earned (up 5%) and net investment income (up 32.8%). The top line missed the Zacks Consensus Estimate by 3.8%.

Primary insurance in force increased 20.8% to $184 billion. Annual persistency was 83.5%, up 1970 basis points (bps) year over year. New insurance written was $10.7 billion, down 42% year over year, reflecting a decline in refinancing origination volume year over year.

Underwriting and operating expenses totaled $26.7 million, down 31.2% year over year. Insurance claims and claim expenses were $3.4 million against a benefit of $0.5 million in the year-ago quarter. The loss ratio was 2.9 versus (0.4) in the year-ago quarter, reflecting higher insurance claims and expenses.

The adjusted expense ratio of 22.3 improved 820 bps year over year due to lower underwriting and operating expenses than the year-ago quarter. The adjusted combined ratio of 25.2 improved 490 bps year over year.

Full-Year Highlights

Total operating revenues for the year 2022 were $523.3 million, compared with $485.1 million at 2021-end. Adjusted earnings for 2022 were $3.39 per share compared with $2.73 per share at 2021-end.

Net premiums earned rose 7% from 2021-end figures. Adjusted combined ratio was 23.9% down 910 bps from 2021-end.

Financial Update

Book value per share, a measure of net worth, was up about 5.8% year over year to $19.31 as of Dec 31, 2022.

NMI Holdings had $44.4 million in cash and cash equivalents, down 42% from 2021-end. The debt balance of $396.1 million increased 0.3% from 2021-end.

Annualized adjusted return on equity in 2022 was 18.6%, up 220 bps. Total PMIERs available assets were $2.4 billion and net risk-based required assets totaled $1.2 billion at the fourth-quarter end.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -6.95% due to these changes.

VGM Scores

At this time, NMI Holdings has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, NMI Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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