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NMI Holdings, Inc. (NMIH)

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  • NMI Holdings, Inc. Reports First Quarter 2021 Financial Results
    GlobeNewswire

    NMI Holdings, Inc. Reports First Quarter 2021 Financial Results

    EMERYVILLE, Calif., May 04, 2021 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $52.9 million, or $0.61 per diluted share, for the first quarter ended March 31, 2021, which compares to $48.3 million, or $0.56 per diluted share, in the fourth quarter ended December 31, 2020 and $58.3 million, or $0.74 per diluted share, in the first quarter ended March 31, 2020. Adjusted net income for the quarter was $53.4 million, or $0.62 per diluted share, which compares to $50.8 million, or $0.59 per diluted share, in the fourth quarter ended December 31, 2020 and $52.7 million, or $0.75 per diluted share, in the first quarter ended March 31, 2020. 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. Claudia Merkle, CEO of National MI, said, “We achieved record NIW volume, significant growth in our insured portfolio and strong financial performance in the first quarter. We helped more borrowers than ever before gain access to housing and continued to differentiate with our lender customers. Our credit performance remained favorable and we are increasingly optimistic as the stress of the COVID pandemic has begun to recede, the outlook for the economy has improved sharply and the housing market continues to strengthen.” Selected first quarter 2021 highlights include: New insurance written was $26.4 billion, up 33% compared to $19.8 billion in the fourth quarter and 134% compared to $11.3 billion in the first quarter of 2020Primary insurance-in-force at quarter end was $123.8 billion, up 11% from $111.3 billion at the end of the fourth quarter and 26% compared to the first quarter of 2020Net premiums earned were $105.9 million, up 5% compared to $100.7 million in the fourth quarter and 7% compared to $98.7 million in the first quarter of 2020Underwriting and operating expenses were $34.1 million, including $378 thousand of capital market transaction costs, compared to $35.0 million in the fourth quarter and $32.3 million in the first quarter of 2020Insurance claims and claim expenses were $5.0 million, compared to $3.5 million in the fourth quarter and $5.7 million in the first quarter of 2020At quarter-end, cash and investments were $1.9 billion and shareholders’ equity was $1.4 billion, equal to $16.13 per shareAnnualized return on equity for the quarter was 15.4% and annualized adjusted return on equity was 15.5%At quarter-end, the company reported total PMIERs available assets of $1.8 billion and net risk-based required assets of $1.3 billion Concurrent with the release of first quarter earnings, the company has filed a Form 8-K that includes selected operating statistics for the month ended April 30, 2021. Investors may access the Form 8-K on the company’s website, www.nationalmi.com, in the “Investor Relations” section. QuarterEndedQuarterEndedQuarterEndedChange (1)Change (1) 3/31/202112/31/20203/31/2020Q/QY/YINSURANCE METRICS ($billions)Primary Insurance-in-Force$123.8 $111.3 $98.5 11%26%New Insurance Written - NIW Monthly premium23.8 17.8 10.5 34%127% Single premium2.6 2.0 0.8 32%215% Total26.4 19.8 11.3 33%134% FINANCIAL HIGHLIGHTS ($millions, except per share amounts)Net Premiums Earned$105.9 $100.7 $98.7 5%7%Insurance Claims and Claim Expenses5.0 3.5 5.7 40%(13)%Underwriting and Operating Expenses34.1 35.0 32.3 (3)%6%Net Income52.9 48.3 58.3 10%(9)%Adjusted Net Income53.4 50.8 52.7 5%1%Cash and Investments 1,947 1,931 1,180 1%65%Shareholders' Equity1,380 1,370 975 1%42%Book Value per Share 16.13 16.08 14.15 —%14%Loss Ratio4.7%3.5%5.8% Expense Ratio32.2%34.7%32.7% (1) Percentages may not be replicated based on the rounded figures presented in the table. Conference Call and Webcast Details The company will hold a conference call, which will be webcast live today, May 4, 2021, 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 (888) 734-0328 in the U.S., or (914) 495-8578 internationally, and using Conference ID: 1887668 or 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," "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: uncertainty relating to the COVID-19 pandemic and the measures taken by governmental authorities and other third parties to combat it, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and the Company’s business, operations and personnel, changes in the business practices of Fannie Mae and Freddie Mac (collectively, the "GSEs"), including 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; 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, 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; 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, including the timing and eventual implementation of the final rules concerning "Qualified Mortgage" and “Qualified Residential Mortgage” definitions and the expiration of the “QM Patch” under the Dodd-Frank Act Ability to Repay/Qualified Mortgage rule; 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 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 capital, 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; 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 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; the inability of our counterparties, 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; 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, 2020, 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 and adjusted combined ratio 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 discrete, non-recurring and 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 discrete, non-recurring and 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. Although adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio and adjusted combined ratio 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. 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) Infrequent or unusual non-operating items. Items that are the result of unforeseen or uncommon events, which occur separately from operating earnings and are not expected to recur 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 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 non-recurring in nature, are not part of our primary operating activities and do not reflect our current period operating results. Investor ContactJohn M. SwensonVice President, Investor Relations and Treasuryjohn.swenson@nationalmi.com(510) 788-8417 Press ContactMary McGarityStrategic Vantage Mortgage Public Relations(203) 513-2721MaryMcGarity@StrategicVantage.com Consolidated statements of operations and comprehensive income For the three months ended March 31, 2021 2020 Revenues(In Thousands, except for per share data)Net premiums earned$105,879 $98,717 Net investment income8,814 8,104 Net realized investment losses— (72)Other revenues501 900 Total revenues115,194 107,649 Expenses Insurance claims and claim expenses4,962 5,697 Underwriting and operating expenses34,065 32,277 Service expenses591 734 Interest expense7,915 2,744 Loss (gain) from change in fair value of warrant liability205 (5,959)Total expenses47,738 35,493 Income before income taxes67,456 72,156 Income tax expense14,565 13,885 Net income$52,891 $58,271 Earnings per share Basic$0.62 $0.85 Diluted$0.61 $0.74 Weighted average common shares outstanding Basic85,317 68,563 Diluted86,487 70,401 Loss ratio(1)4.7% 5.8%Expense ratio(2)32.2% 32.7%Combined ratio36.9% 38.5% Net income$52,891 $58,271 Other comprehensive loss, net of tax: Unrealized losses in accumulated other comprehensive loss, net of tax benefit of $11,997 and $3,424 for the quarters ended March 31, 2021 and 2020, respectively(45,133) (12,881)Reclassification adjustment for realized losses included in net income, net of tax benefit of $15 for the quarter ended March 31, 2020— 57 Other comprehensive loss, net of tax(45,133) (12,824)Comprehensive income$7,758 $45,447 (1) Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned. Consolidated balance sheetsMarch 31, 2021 December 31, 2020 Assets(In Thousands, except for share data)Fixed maturities, available-for-sale, at fair value (amortized cost of $1,815,190 and$1,730,835 as of March 31, 2021 and December 31, 2020, respectively)$1,831,511 $1,804,286 Cash and cash equivalents (including restricted cash of $4,868 and $5,555 as ofMarch 31, 2021 and December 31, 2020, respectively)115,517 126,937 Premiums receivable52,206 49,779 Accrued investment income10,495 9,862 Prepaid expenses4,999 3,292 Deferred policy acquisition costs, net62,294 62,225 Software and equipment, net31,298 29,665 Intangible assets and goodwill3,634 3,634 Prepaid reinsurance premiums4,842 6,190 Reinsurance recoverable18,686 17,608 Other assets52,349 53,188 Total assets$2,187,831 $2,166,666 Liabilities Debt$393,622 $393,301 Unearned premiums127,407 118,817 Accounts payable and accrued expenses57,139 61,716 Reserve for insurance claims and claim expenses96,103 90,567 Reinsurance funds withheld7,569 8,653 Warrant liability, at fair value4,239 4,409 Deferred tax liability, net115,150 112,586 Other liabilities6,294 7,026 Total liabilities807,523 797,075 Shareholders' equity Common stock - class A shares, $0.01 par value; 85,599,908 and 85,163,039 sharesissued and outstanding as of March 31, 2021 and December 31, 2020, respectively(250,000,000 shares authorized)856 852 Additional paid-in capital940,827 937,872 Accumulated other comprehensive income, net of tax8,723 53,856 Retained earnings429,902 377,011 Total shareholders' equity1,380,308 1,369,591 Total liabilities and shareholders' equity$2,187,831 $2,166,666 Non-GAAP Financial Measure Reconciliations Quarter ended Quarter ended Quarter ended 3/31/2021 12/31/2020 3/31/2020 As Reported(In Thousands, except for per share data)Revenues Net premiums earned$105,879 $100,709 $98,717 Net investment income8,814 8,386 8,104 Net realized investment gains (losses)— 295 (72)Other revenues501 513 900 Total revenues115,194 109,903 107,649 Expenses Insurance claims and claim expenses4,962 3,549 5,697 Underwriting and operating expenses34,065 34,994 32,277 Service expenses591 459 734 Interest expense7,915 7,906 2,744 Loss (gain) from change in fair value of warrant liability205 1,379 (5,959)Total expenses47,738 48,287 35,493 Income before income taxes67,456 61,616 72,156 Income tax expense14,565 13,348 13,885 Net income $52,891 $48,268 $58,271 Adjustments: Net realized investment (gains) losses— (295) 72 Loss (gain) from change in fair value of warrant liability205 1,379 (5,959)Capital markets transaction costs378 1,719 474 Adjusted income before taxes68,039 64,419 66,743 Income tax expense on adjustments79 299 115 Adjusted net income$53,395 $50,772 $52,743 Weighted average diluted shares outstanding86,487 86,250 70,401 Diluted EPS (1)$0.61 $0.56 $0.74 Adjusted diluted EPS $0.62 $0.59 $0.75 Return-on-equity 15.4% 14.4% 24.5%Adjusted return-on-equity15.5% 15.2% 22.1% Expense ratio (2)32.2% 34.7% 32.7%Adjusted expense ratio (3)31.8% 33.0% 32.2% Combined ratio (4)36.9% 38.3% 38.5%Adjusted combined ratio (5)36.5% 36.6% 38.0% (1) Diluted net income for the quarter ended March 30, 2020, excludes the impact of the warrant fair value change as it was anti-dilutive. For all other periods presented, diluted net income equals reported net income as the impact of the warrant fair value change was dilutive.(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. Historical Quarterly Data2021 2020 2019 March 31 December 31 September 30 June 30 March 31 December 31 Revenues(In Thousands, except for per share data)Net premiums earned$105,879 $100,709 $98,802 $98,944 $98,717 $95,517 Net investment income8,814 8,386 8,337 7,070 8,104 7,962 Net realized investment gains (losses)— 295 (4) 711 (72) 264 Other revenues501 513 648 1,223 900 1,154 Total revenues115,194 109,903 107,783 107,948 107,649 104,897 Expenses Insurance claims and claim expenses4,962 3,549 15,667 34,334 5,697 4,269 Underwriting and operating expenses34,065 34,994 33,969 30,370 32,277 31,296 Service expenses591 459 557 1,090 734 937 Interest expense7,915 7,906 7,796 5,941 2,744 2,974 Loss (gain) from change in fair value of warrant liability205 1,379 437 1,236 (5,959) 2,632 Total expenses47,738 48,287 58,426 72,971 35,493 42,108 Income before income taxes67,456 61,616 49,357 34,977 72,156 62,789 Income tax expense14,565 13,348 11,178 8,129 13,885 12,594 Net income$52,891 $48,268 $38,179 $26,848 $58,271 $50,195 Earnings per share Basic$0.62 $0.57 $0.45 $0.36 $0.85 $0.74 Diluted$0.61 $0.56 $0.45 $0.36 $0.74 $0.71 Weighted average common shares outstanding Basic85,317 84,956 84,805 73,617 68,563 68,140 Diluted86,487 86,250 85,599 74,174 70,401 70,276 Other data Loss Ratio(1)4.7% 3.5% 15.9% 34.7% 5.8% 4.5%Expense Ratio(2)32.2% 34.7% 34.4% 30.7% 32.7% 32.8%Combined ratio (3)36.9% 38.3% 50.2% 65.4% 38.5% 37.2% (1) Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.(2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.(3) Combined ratio may not foot due to rounding. Portfolio Statistics The table below highlights trends in our primary portfolio as of the date and for the periods indicated. Primary portfolio trendsAs of and for the three months ended March 31,2021 December 31,2020 September 30,2020 June 30, 2020 March 31,2020 December 31,2019 ($ Values In Millions, except as noted below)New insurance written$26,397 $19,782 $18,499 $13,124 $11,297 $11,949 New risk written6,531 4,868 4,577 3,260 2,897 3,082 Insurance in force (IIF) (1)123,777 111,252 104,494 98,905 98,494 94,754 Risk in force (1)31,206 28,164 26,568 25,238 25,192 24,173 Policies in force (count) (1)436,652 399,429 381,899 372,934 376,852 366,039 Average loan size ($ value in thousands) (1)$283 $279 $274 $265 $261 $259 Coverage percentage (2)25.2% 25.3% 25.4% 25.5% 25.6% 25.5%Loans in default (count) (1)11,090 12,209 13,765 10,816 1,449 1,448 Default rate (1)2.54% 3.06% 3.60% 2.90% 0.38% 0.40%Risk in force on defaulted loans (1)$785 $874 $1,008 $799 $84 $84 Net premium yield (3)0.36% 0.37% 0.39% 0.40% 0.41% 0.41%Earnings from cancellations$9.9 $11.7 $12.6 $15.5 $8.6 $8.0 Annual persistency (4)51.9% 55.9% 60.0% 64.1% 71.7% 76.8%Quarterly run-off (5)12.5% 12.5% 13.1% 12.9% 8.0% 7.7% (1) Reported as of the end of the period.(2) Calculated as end of period risk-in-force (RIF) divided by end of period IIF.(3) Calculated as net premiums earned, divided by average primary IIF for the period, annualized.(4) Defined as the percentage of IIF that remains on our books after a given twelve-month period.(5) Defined as the percentage of IIF that is no longer on our books after a given three month period. New Insurance Written (NIW), Insurance in Force (IIF) and Premiums The tables below present primary NIW and primary and pool IIF, as of the dates and for the periods indicated. Primary NIWThree months ended March 31, 2021 December 31,2020 September 30,2020 June 30, 2020 March 31, 2020 December 31,2019 (In Millions)Monthly$23,764 $17,789 $16,516 $11,885 $10,461 $11,085 Single2,633 1,993 1,983 1,239 836 864 Primary$26,397 $19,782 $18,499 $13,124 $11,297 $11,949 Primary and pool IIFAs of March 31, 2021 December 31,2020 September 30,2020 June 30, 2020 March 31, 2020 December 31,2019 (In Millions)Monthly$106,920 $95,336 $88,584 $82,848 $81,347 $77,097 Single16,857 15,916 15,910 16,057 17,147 17,657 Primary123,777 111,252 104,494 98,905 98,494 94,754 Pool1,642 1,855 2,115 2,340 2,487 2,570 Total$125,419 $113,107 $106,609 $101,245 $100,981 $97,324 The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction, 2018 QSR Transaction, 2020 QSR Transaction and 2021 QSR Transaction, and collectively, the QSR Transactions), and Insurance-Linked Note transactions (the 2017 ILN Transaction, 2018 ILN Transaction, 2019 ILN Transaction, 2020-1 ILN Transaction and 2020-2 ILN Transaction, and collectively, the ILN Transactions) for the periods indicated. For the three months ended March 31,2021 December 31,2020 September 30,2020 June 30, 2020 March 31,2020 December 31,2019 (In Thousands)The QSR Transactions Ceded risk-in-force$6,330,409 $5,543,969 $5,159,061 $4,563,676 $4,843,715 $5,137,249 Ceded premiums earned(25,747) (24,161) (24,517) (23,210) (23,011) (23,673) Ceded claims and claim expenses1,180 601 3,200 8,669 1,532 1,030 Ceding commission earned5,162 4,787 4,798 4,428 4,513 4,691 Profit commission13,380 13,184 11,034 5,271 12,413 13,314 The ILN Transactions Ceded premiums$(9,397) $(9,422) $(6,268) $(3,267) $(3,872) $(4,263) The tables below present our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated. Primary NIW by FICOFor the three months ended March 31, 2021 December 31, 2020 March 31, 2020 ($ In Millions)>= 760$12,914 $11,495 $6,290 740-7595,312 3,387 1,615 720-7393,963 2,447 1,579 700-7192,358 1,430 1,038 680-6991,360 820 565 <=679490 203 210 Total$26,397 $19,782 $11,297 Weighted average FICO755 761 757 Primary NIW by LTVFor the three months ended March 31, 2021 December 31, 2020 March 31, 2020 (In Millions)95.01% and above$2,451 $1,877 $721 90.01% to 95.00%11,051 7,839 5,009 85.01% to 90.00%7,848 6,239 4,082 85.00% and below5,047 3,827 1,485 Total$26,397 $19,782 $11,297 Weighted average LTV91.0% 90.9% 91.3% Primary NIW by purchase/refinance mixFor the three months ended March 31, 2021 December 31, 2020 March 31, 2020 (In Millions)Purchase$17,909 $13,085 $7,991 Refinance8,488 6,697 3,306 Total$26,397 $19,782 $11,297 The table below presents a summary of our primary IIF and RIF by book year as of March 31, 2021. Primary IIF and RIFAs of March 31, 2021 IIF RIF (In Millions)March 31, 2021$26,296 $6,508 202053,650 13,397 201920,402 5,342 20188,074 2,057 20176,700 1,678 2016 and before8,655 2,224 Total$123,777 $31,206 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 FICOAs of March 31, 2021 December 31, 2020 March 31, 2020 (In Millions)>= 760$63,919 $58,368 $47,340 740-75920,537 17,442 16,060 720-73917,167 15,091 14,002 700-71911,536 10,442 10,518 680-6997,329 6,777 6,879 <=6793,289 3,132 3,695 Total$123,777 $111,252 $98,494 Primary RIF by FICOAs of March 31, 2021 December 31, 2020 March 31, 2020 (In Millions)>= 760$15,920 $14,634 $12,076 740-7595,214 4,449 4,121 720-7394,378 3,868 3,626 700-7192,981 2,692 2,696 680-6991,896 1,748 1,760 <=679817 773 913 Total$31,206 $28,164 $25,192 Primary IIF by LTVAs of March 31, 2021 December 31, 2020 March 31, 2020 (In Millions)95.01% and above$10,616 $9,129 $8,838 90.01% to 95.00%54,832 49,898 46,318 85.01% to 90.00%40,057 36,972 31,729 85.00% and below18,272 15,253 11,609 Total$123,777 $111,252 $98,494 Primary RIF by LTVAs of March 31, 2021 December 31, 2020 March 31, 2020 (In Millions)95.01% and above$3,106 $2,637 $2,478 90.01% to 95.00%16,139 14,673 13,587 85.01% to 90.00%9,818 9,067 7,767 85.00% and below2,143 1,787 1,360 Total$31,206 $28,164 $25,192 Primary RIF by Loan TypeAs of March 31, 2021 December 31, 2020 March 31, 2020 Fixed99% 99% 98%Adjustable rate mortgages Less than five years— — — Five years and longer1 1 2 Total100% 100% 100% The table below presents a summary of the change in total primary IIF during the periods indicated. Primary IIFFor the three months ended March 31, 2021 December 31, 2020 March 31, 2020 (In Millions)IIF, beginning of period$111,252 $104,494 $94,754 NIW26,397 19,782 11,297 Cancellations, principal repayments and other reductions(13,872) (13,024) (7,557) IIF, end of period$123,777 $111,252 $98,494 Geographic Dispersion The following table shows the distribution by state of our primary RIF as of the periods indicated. Top 10 primary RIF by stateAs of March 31, 2021 December 31, 2020 March 31, 2020California10.8% 11.2% 11.5%Texas9.5 8.8 8.2 Florida7.9 7.3 5.9 Virginia5.0 5.1 5.3 Colorado4.1 4.1 3.6 Maryland3.8 3.7 3.4 Illinois3.7 3.8 3.8 Washington3.5 3.5 3.3 Georgia3.3 3.2 2.7 Pennsylvania3.3 3.4 3.7 Total54.9% 54.1% 51.4% The table below presents selected primary portfolio statistics, by book year, as of March 31, 2021. As of March 31, 2021Book yearOriginalInsurance Written RemainingInsurance inForce %Remainingof Original Insurance PoliciesEver inForce Number ofPolicies inForce Numberof Loansin Default # ofClaimsPaid IncurredLoss Ratio(Inceptionto Date) (1) CumulativeDefault Rate (2) Currentdefault rate (3) ($ Values in Millions) 2013$162 $10 6% 655 66 2 1 0.4% 0.5% 3.0%20143,451 414 12% 14,786 2,452 114 48 4.2% 1.1% 4.6%201512,422 2,529 20% 52,548 13,334 541 113 3.2% 1.2% 4.1%201621,187 5,702 27% 83,626 27,332 1,256 122 2.8% 1.6% 4.6%201721,582 6,700 31% 85,897 32,499 1,972 84 4.4% 2.4% 6.1%201827,295 8,074 30% 104,043 38,090 2,679 64 8.5% 2.6% 7.0%201945,141 20,402 45% 148,423 77,278 3,276 9 14.1% 2.2% 4.2%202062,702 53,650 86% 186,174 163,626 1,247 — 8.3% 0.7% 0.8%202126,397 26,296 100% 82,232 81,975 3 — —% —% —%Total$220,339 $123,777 758,384 436,652 11,090 441 (1) Calculated as total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.(2) Calculated as the sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force.(3) Calculated as the number of loans in default divided by number of policies in force. The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim expenses: For the three months ended March 31, 2021 March 31, 2020 (In Thousands)Beginning balance$90,567 $23,752 Less reinsurance recoverables (1)(17,608) (4,939)Beginning balance, net of reinsurance recoverables72,959 18,813 Add claims incurred: Claims and claim expenses incurred: Current year (2)10,557 7,558 Prior years (3)(5,595) (1,861)Total claims and claim expenses incurred4,962 5,697 Less claims paid: Claims and claim expenses paid: Current year (2)12 — Prior years (3)492 1,224 Total claims and claim expenses paid504 1,224 Reserve at end of period, net of reinsurance recoverables77,417 23,286 Add reinsurance recoverables (1)18,686 6,193 Ending balance$96,103 $29,479 (1) Related to ceded losses recoverable under the QSR Transactions.(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, the default would be included in the current year. Amounts are presented net of reinsurance and included $5.3 million attributed to net case reserves and $5.3 million attributed to net IBNR reserves for the three months ended March 31, 2021 and $6.0 million attributed to net case reserves and $1.6 million attributed to net IBNR reserves for the three months ended March 31, 2020.(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance and included $0.6 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for the three months ended March 31, 2021 and $0.6 million attributed to net case reserves and $1.3 million attributed to net IBNR reserves for the three months ended March 31, 2020. 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 March 31, 2021 March 31, 2020Beginning default inventory12,209 1,448 Plus: new defaults1,767 512 Less: cures(2,868) (475)Less: claims paid(16) (34)Less: claims denied(2) (2)Ending default inventory11,090 1,449 The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions, for the periods indicated. For the three months ended March 31, 2021 March 31, 2020 (In Thousands)Number of claims paid (1)16 34 Total amount paid for claims$606 $1,503 Average amount paid per claim$38 $44 Severity(2)61% 83% (1) Count includes one claim settled without payment for the three months ended March 31, 2021 and 2020.(2) Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment. The following table shows our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the periods indicated. Average reserve per default:As of March 31, 2021 As of March 31, 2020 (In Thousands)Case (1)$7.9 $18.6 IBNR (1)(2)0.8 1.7 Total$8.7 $21.3 (1) Defined as the gross reserve per insured loan in default.(2) Amount includes claims adjustment expenses. The following table provides a comparison of the PMIERs financial requirements as reported by NMIC as of the dates indicated. As of March 31, 2021 December 31, 2020 March 31, 2020 (In Thousands)Available Assets$1,809,589 $1,750,668 $1,069,695 Risk-Based Required Assets1,261,015 984,372 912,321

  • ACCESSWIRE

    NMI Holdings, Inc. to Host Earnings Call

    NEW YORK, NY / ACCESSWIRE / May 4, 2021 / NMI Holdings, Inc. (NASDAQ:NMIH) will be discussing their earnings results in their 2021 First Quarter Earnings call to be held on May 4, 2021 at 5:00 PM Eastern Time.

  • NMI Holdings Announces Closing of $367 Million Insurance-Linked Notes Transaction
    GlobeNewswire

    NMI Holdings Announces Closing of $367 Million Insurance-Linked Notes Transaction

    EMERYVILLE, Calif., April 28, 2021 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today announced the closing of a $367 million mortgage insurance-linked notes offering by Oaktown Re VI Ltd. (Oaktown Re VI), a newly formed Bermuda-based special-purpose reinsurance company. The mortgage insurance-linked notes issued by Oaktown Re VI have a 12.5-year legal maturity and consist of the following five classes: $88,491,000 Class M-1A Notes with an initial interest rate of one-month LIBOR plus 1.65%$119,463,000 Class M-1B Notes with an initial interest rate of one-month LIBOR plus 2.05%$70,793,000 Class M-1C Notes with an initial interest rate of one-month LIBOR plus 3.00%$66,368,000 Class M-2 Notes with an initial interest rate of one-month LIBOR plus 3.95%$22,123,000 Class B-1 Notes with an initial interest rate of one-month LIBOR plus 5.50% Oaktown Re VI is not a subsidiary or affiliate of NMIH. In connection with the transaction, NMIH’s wholly owned subsidiary, National Mortgage Insurance Corporation (National MI), will receive $367 million of fully collateralized excess of loss reinsurance protection from Oaktown Re VI, covering an existing portfolio of mortgage insurance policies written primarily from October 1, 2020 through March 31, 2021. The excess of loss reinsurance coverage provides National MI protection for aggregate losses on subject loans beginning at a 1.85% cumulative claim rate threshold and continuing up to an eventual 6.75% aggregate detachment level. National MI expects to receive initial PMIERs credit for the portion of coverage attaching within the current risk-based required asset charge on subject loans and additional benefit in the future if the PMIERs requirement on subject loans increases, all subject to GSE approval. The securities described herein have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the aforementioned securities and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any person to whom, such an offer, solicitation or sale would be unlawful. About National MINational 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 StatementsThis press release may contain statements that are deemed to be 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. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements. Any or all of our forward–looking statements in this press release may turn out to be inaccurate. More information about the risks, uncertainties and assumptions affecting the company can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K for the year ended December 31, 2020 and in other filings we make with the Securities and Exchange Commission. We have based any forward–looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, operating results, business strategy and financial needs. All forward–looking statements are necessarily only estimates and actual events may differ materially from our current expectations. You are, therefore, cautioned not to place undue reliance on such statements. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances. Investor ContactJohn M. SwensonVice President, Investor Relations and Treasuryjohn.swenson@nationalmi.com (510) 788-8417