NMIH
$12.84
Nmi Holdings
$.54
4.39%
Earnings Details
Quarter December 2019
Tuesday, February 11, 2020 4:01:00 PM
Tweet Share Watch
Summary

Nmi Holdings Beats

Nmi Holdings (NMIH) reported Quarter December 2019 earnings of $0.75 per share on revenue of $104.9 million. The consensus earnings estimate was $0.70 per share on revenue of $104.1 million. The Earnings Whisper number was $0.73 per share. Revenue grew 37.6% on a year-over-year basis.

NMI Holdings Inc through its subsidiaries provides private mortgage guaranty insurance. The Company offers two types of mortgage insurance; Primary mortgage insurance and Pool insurance.

Results
Reported Earnings
$0.75
Earnings Whisper
$0.73
Consensus Estimate
$0.70
Reported Revenue
$104.9 Mil
Revenue Estimate
$104.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

NMI Holdings, Inc. Reports Record Fourth Quarter 2019 Financial Results

EMERYVILLE, Calif., Feb. 11, 2020 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported GAAP net income of $50.2 million, or $0.71 per diluted share, and adjusted net income of $52.6 million, or $0.75 per diluted share, for its fourth quarter ended December 31, 2019. This compares with GAAP net income of $49.8 million, or $0.69 per diluted share, and adjusted net income of $49.9 million, or $0.71 per diluted share, in the third quarter ended September 30, 2019. In the fourth quarter of 2018, the company reported GAAP net income of $35.5 million, or $0.46 per diluted share, and adjusted net income of $32.1 million, or $0.46 per diluted share. The non-GAAP financial measures adjusted net income, adjusted diluted earnings per share (EPS) 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, "In the fourth quarter, National MI delivered record results, capping a year of standout success. In 2019, we delivered exceptionally strong financial performance, broad success in customer development, and best in-class growth in NIW and insurance in-force. We continued to innovate in the reinsurance and capital markets, and remain focused on driving disciplined growth and sustained performance across all market cycles."

  • As of December 31, 2019, the company had primary insurance-in-force of $94.8 billion, up 6% compared to $89.7 billion at September 30, 2019 and 38% compared to $68.6 billion as of December 31, 2018.

  • Net premiums earned for the quarter were $95.5 million, up 3% compared to $92.4 million for the third quarter of 2019 and 38% compared to $69.3 million for the fourth quarter of 2018.

  • Total underwriting and operating expenses in the quarter were $31.3 million, compared to $32.3 million in the third quarter of 2019 and $29.3 million in the fourth quarter of 2018. Expense ratio in the quarter was 32.8%, compared to 35.0% in the third quarter of 2019 and 42.4% in the fourth quarter of 2018.

  • At quarter-end, cash and investments were $1.2 billion and shareholders' equity was $930 million. Book value per share was $13.61.

  • Return-on-equity for the quarter was 22.3% and adjusted return-on-equity was 23.3%.

  • At quarter-end, the company had total PMIERs available assets of $1,016 million, which compares with risk- based required assets under PMIERs of $773 million.

The non-GAAP measures of adjusted net income, adjusted diluted EPS and adjusted return-on-equity for the quarters presented exclude the after-tax impact of periodic capital markets transaction costs, changes in the fair value of our warrant liability and realized gains or losses from our investment portfolio.

  Quarter EndedQuarter EndedQuarter EndedChange (1)Change (1)
  12/31/20199/30/201912/31/2018Q/QY/Y
INSURANCE METRICS ($billions)
Primary Insurance-in-Force$94.8 $89.7 $68.6 6 %38%
New Insurance Written - NIW     
 Monthly premium11.1 13.0 6.3 (15)%76%
 Single premium0.9 1.1 0.7 (22)%30%
 Total (2)11.9 14.1 7.0 (15)%72%
      
FINANCIAL HIGHLIGHTS ($millions, except per share amounts)
Net Premiums Earned95.5 92.4 69.3 3 %38%
Insurance Claims and Claim Expenses4.3 2.6 2.1 66 %99%
Underwriting and Operating Expenses (3)31.3 32.3 29.3 (3)%7%
Net Income50.2 49.8 35.5 1 %41%
Adjusted Net Income52.6 49.9 32.1 5 %64%
Cash and Investments$1,182.0 $1,119.1 $936.8 6 %26%
Shareholders' Equity930.4 873.5 701.5 7 %33%
Book Value per Share$13.61 $12.86 $10.58 6 %29%
Loss Ratio4.5%2.8%3.1%  
Expense Ratio (3)32.8%35.0%42.4%  

(1)       Percentages may not be replicated based on the rounded figures presented in the table.
(2)       Total may not foot due to rounding.
(3)       Certain "Underwriting and operating expenses" have been reclassified as "Service expenses" in prior periods.

Conference Call and Webcast Details

The company will hold a conference call, which will be webcast live today, February 11, 2020, 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: 1875336 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 (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (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: 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, the U.S. Department of Agriculture's Rural Housing Service and the Veterans Administration, 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 any action by the Consumer Financial Protection Bureau to address the planned 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 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; 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, 2018, 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 and adjusted return-on-equity 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 years 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.

Although adjusted income before tax, adjusted net income, adjusted diluted EPS and adjusted return-on-equity 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 Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com


Consolidated statements of operations and comprehensive income (loss)For the three months ended December 31, For the year ended December 31,
 2019 2018 2019 2018
        
Revenues(In Thousands, except for per share data)
Net premiums earned$95,517  $69,261  $345,015  $251,197 
Net investment income7,962  6,952  30,856  23,538 
Net realized investment gains264  6  45  57 
Other revenues1,154  40  2,855  233 
Total revenues104,897  76,259  378,771  275,025 
Expenses       
Insurance claims and claim expenses4,269  2,141  12,507  5,452 
Underwriting and operating expenses(1)31,296  29,339  126,621  116,966 
Service expenses(1)937  45  2,248  270 
Interest expense2,974  3,028  12,085  14,979 
Loss (gain) from change in fair value of warrant liability2,632  (3,538) 8,657  1,397 
Total expenses42,108  31,015  162,118  139,064 
        
Income before income taxes62,789  45,244  216,653  135,961 
Income tax expense12,594  9,724  44,696  28,034 
Net income$50,195  $35,520  $171,957  $107,927 
        
Earnings per share       
Basic$0.74  $0.54  $2.54  $1.66 
Diluted$0.71  $0.46  $2.47  $1.60 
        
Weighted average common shares outstanding       
Basic68,140  66,308  67,573  65,019 
Diluted70,276  69,013  69,721  67,652 
        
Loss ratio(2)4.5% 3.1% 3.6% 2.2%
Expense ratio(3)32.8% 42.4% 36.7% 46.6%
Combined ratio (4)37.2% 45.5% 40.3% 48.8%
        
Net income$50,195  $35,520  $171,957  $107,927 
Other comprehensive income (loss), net of tax:       
Unrealized (losses) gains in accumulated other comprehensive income, net of tax (benefit) expense of ($444) and $392 for the three months ended December 31, 2019 and 2018, respectively, and $8,548 and ($3,285) for the years ended December 31, 2019, and 2018 respectively(1,668) 1,476  32,155  (12,357)
Reclassification adjustment for realized (gains) losses included in net income, net of tax expense (benefit) of $55 and $1 for the three months ended December 31, 2019 and 2018, respectively, and $9 and ($27) for the years ended December 31, 2019, and 2018 respectively(208) (4) (35) 102 
Other comprehensive (loss) income, net of tax(1,876) 1,472  32,120  (12,255)
Comprehensive income$48,319  $36,992  $204,077  $95,672 

(1)        Certain "Underwriting and operating expenses" have been reclassified as "Service expenses" in prior periods.
(2)        Loss ratio is calculated by dividing the provision for insurance claims and claim expenses by net premiums earned.
(3)        Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(4)        Combined ratio may not foot due to rounding.

Consolidated balance sheetsDecember 31, 2019 December 31, 2018
    
Assets(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,113,779 and $924,987 as of December 31, 2019 and December 31, 2018, respectively)$1,140,940  $911,490 
Cash and cash equivalents (including restricted cash of $2,662 and $1,414 as of December 31, 2019 and December 31, 2018, respectively)41,089  25,294 
Premiums receivable46,085  36,007 
Accrued investment income6,831  5,694 
Prepaid expenses3,512  3,241 
Deferred policy acquisition costs, net59,972  46,840 
Software and equipment, net26,096  24,765 
Intangible assets and goodwill3,634  3,634 
Prepaid reinsurance premiums15,488  30,370 
Other assets21,171  4,708 
Total assets$1,364,818  $1,092,043 
    
Liabilities   
Term loan$145,764  $146,757 
Unearned premiums136,642  158,893 
Accounts payable and accrued expenses39,904  31,141 
Reserve for insurance claims and claim expenses23,752  12,811 
Reinsurance funds withheld14,310  27,114 
Warrant liability, at fair value7,641  7,296 
Deferred tax liability, net56,360  2,740 
Other liabilities (1)10,025  3,791 
Total liabilities434,398  390,543 
    
Shareholders' equity   
Common stock - class A shares, $0.01 par value; 68,358,074 and 66,318,849 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively (250,000,000 shares authorized)684  663 
Additional paid-in capital707,003  682,181 
Accumulated other comprehensive income (loss), net of tax17,288  (14,832)
Retained earnings205,445  33,488 
Total shareholders' equity930,420  701,500 
Total liabilities and shareholders' equity$1,364,818  $1,092,043 

(1)     "Deferred Ceding Commissions have" been reclassified to "Other liabilities" in prior periods.

Non-GAAP Financial Measure Reconciliations
 Quarter ended Quarter ended Quarter ended
 12/31/2019 9/30/2019 12/31/2018
 As Reported(In Thousands, except for per share data)
Revenues     
Net premiums earned$95,517  $92,381  $69,261 
Net investment income7,962  7,882  6,952 
Net realized investment gains264  81  6 
Other revenues1,154  1,244  40 
Total revenues104,897  101,588  76,259 
Expenses     
Insurance claims and claim expenses4,269  2,572  2,141 
Underwriting and operating expenses(1)31,296  32,335  29,339 
Service expenses(1)937  909  45 
Interest expense2,974  2,979  3,028 
Loss (gain) from change in fair value of warrant liability2,632  (1,139) (3,538)
Total expenses42,108  37,656  31,015 
      
Income before income taxes62,789  63,932  45,244 
Income tax expense12,594  14,169  9,724 
Net income$50,195  $49,763  $35,520 
      
Adjustments:     
Net realized investment gains(264) (81) (6)
Loss (gain) from change in fair value of warrant liability2,632  (1,139) (3,538)
Capital markets transaction costs  1,689  102 
Adjusted income before taxes65,157  64,401  41,802 
      
Income tax expense on adjustments(55) 338  20 
Adjusted net income$52,618  $49,894  $32,058 
      
Weighted average diluted shares outstanding70,276  70,137  69,013 
      
Diluted EPS$0.71  $0.69  $0.46 
Adjusted diluted EPS$0.75  $0.71  $0.46 
      
Return-on-equity22.3% 23.6% 20.9%
Adjusted return-on-equity23.3% 23.7% 18.8%

(1)        Certain "Underwriting and operating expenses" have been reclassified as "Service expenses" in prior periods.


Historical Quarterly Data2019 2018
 December 31 September 30June 30 March 31 December 31 September 30
           
Revenues(In Thousands, except for per share data)
Net premiums earned$95,517  $92,381 $83,249  $73,868  $69,261  $65,407 
Net investment income7,962  7,882 7,629  7,383  6,952  6,277 
Net realized investment gains (losses)264  81 (113) (187) 6  (8)
Other revenues1,154  1,244 415  42  40  85 
Total revenues104,897  101,588 91,180  81,106  76,259  71,761 
Expenses          
Insurance claims and claim expenses4,269  2,572 2,923  2,743  2,141  1,099 
Underwriting and operating expenses(1)31,296  32,335 32,190  30,800  29,339  30,323 
Service expenses(1)937  909 353  49  45  56 
Interest expense2,974  2,979 3,071  3,061  3,028  2,972 
Loss (gain) from change in fair value of warrant liability2,632  (1,139)1,685  5,479  (3,538) 5,464 
Total expenses42,108  37,656 40,222  42,132  31,015  39,914 
           
Income before income taxes62,789  63,932 50,958  38,974  45,244  31,847 
Income tax expense12,594  14,169 11,858  6,075  9,724  7,036 
Net income$50,195  $49,763 $39,100  $32,899  $35,520  $24,811 
           
Earnings per share          
Basic$0.74  $0.73 $0.58  $0.49  $0.54  $0.38 
Diluted$0.71  $0.69 $0.56  $0.48  $0.46  $0.36 
           
Weighted average common shares outstanding          
Basic68,140  67,849 67,590  66,692  66,308  65,948 
Diluted70,276  70,137 69,590  68,996  69,013  68,844 
           
Other data          
Loss Ratio(2)4.5% 2.8%3.5% 3.7% 3.1% 1.7%
Expense Ratio(3)32.8% 35.0%38.7% 41.7% 42.4% 46.4%
Combined ratio (4)37.2% 37.8%42.2% 45.4% 45.5% 48.0%

(1)        Certain "Underwriting and operating expenses" have been reclassified as "Service expenses" in prior periods.
(2)        Loss ratio is calculated by dividing the provision for insurance claims and claim expenses by net premiums earned.
(3)        Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(4)       Combined ratio may not foot due to rounding.


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
 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018
 (In Millions)
Monthly$11,085  $12,994  $11,067  $6,211  $6,296  $6,675 
Single864  1,106  1,112  702  666  686 
Primary$11,949  $14,100  $12,179  $6,913  $6,962  $7,361 


Primary and pool IIFAs of
 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018
 (In Millions)
Monthly$77,097  $71,814  $63,922  $55,995  $51,655  $46,967 
Single17,657  17,899  17,786  17,239  16,896  16,560 
Primary94,754  89,713  81,708  73,234  68,551  63,527 
            
Pool2,570  2,668  2,758  2,838  2,901  2,974 
Total$97,324  $92,381  $84,466  $76,072  $71,452  $66,501 

The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction and 2018 QSR Transaction, and collectively, the QSR Transactions), and Insurance-Linked Note transactions (the 2017 ILN Transaction, 2018 ILN Transaction and 2019 ILN Transaction, and collectively, the ILN Transactions) for the periods indicated.

 For the three months ended
 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018September 30, 2018
  
The QSR Transactions          
Ceded risk-in-force$5,137,249  $4,901,809  $4,558,862  $4,534,353  $4,292,450 $3,960,461 
Ceded premiums earned(23,673) (23,151) (20,919) (21,468) (20,487)(19,286)
Ceded claims and claim expenses1,030  766  770  899  710 337 
Ceding commission earned4,691  4,584  4,171  4,206  4,084 3,814 
Profit commission13,314  13,254  11,884  12,061  11,666 11,272 
           
The ILN Transactions          
Ceded premiums$(4,263) $(4,409) $(2,895) $(3,023) $(3,257)$(3,093)

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
 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018
 ($ Values In Millions)
New insurance written$11,949  $14,100  $12,179  $6,913  $6,962  $7,361 
New risk written3,082  3,651  3,183  1,799  1,799  1,883 
Insurance in force (IIF) (1)94,754  89,713  81,708  73,234  68,551  63,527 
Risk in force (1)24,173  22,810  20,661  18,373  17,091  15,744 
Policies in force (count) (1)366,039  350,395  324,876  297,232  280,825  262,485 
Average loan size (1)$0.259  $0.256  $0.252  $0.246  $0.244  $0.242 
Coverage percentage (2)25.5% 25.4% 25.3% 25.1% 24.9% 24.8%
Loans in default (count) (1)1,448  1,230  1,028  940  877  746 
Percentage of loans in default (1)0.40% 0.35% 0.32% 0.32% 0.31% 0.28%
Risk in force on defaulted loans (1)$84  $70  $58  $53  $48  $42 
Average premium yield (3)0.41% 0.43% 0.43% 0.42% 0.42% 0.43%
Earnings from cancellations$8.0  $7.4  $4.5  $2.3  $2.1  $2.6 
Annual persistency (4)76.8% 82.4% 86.0% 87.2% 87.1% 86.1%
Quarterly run-off (5)7.7% 7.5% 5.1% 3.3% 3.1% 3.3%

(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 12-month period.
(5)        Defined as the percentage of IIF that is no longer on our books after a given three month period.

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
 December 31, 2019 September 30, 2019 December 31, 2018
      
 ($ In Millions)
>= 760$6,253 $6,994 $3,125
740-7591,864 2,288 1,198
720-7391,712 2,102 1,033
700-7191,204 1,450 797
680-699662 915 559
<=679254 351 250
Total$11,949 $14,100 $6,962
Weighted average FICO756 754 750


Primary NIW by LTVFor the three months ended
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Millions)
95.01% and above$663  $989  $582 
90.01% to 95.00%5,528  6,592  3,409 
85.01% to 90.00%4,296  4,933  2,224 
85.00% and below1,462  1,586  747 
Total$11,949  $14,100  $6,962 
Weighted average LTV91.4% 91.7% 92.1%


Primary NIW by purchase/refinance mixFor the three months ended
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Millions)
Purchase$9,041 $11,284 $6,627
Refinance2,908 2,816 335
Total$11,949 $14,100 $6,962

The table below presents a summary of our primary IIF and RIF by book year as of December 31, 2019.

Primary IIF and RIFAs of December 31, 2019
 IIF RIF
    
 (In Millions)
December 31, 2019$42,060 $10,916
201819,579 4,977
201714,961 3,710
201611,944 2,995
20155,370 1,361
2014 and before840 214
Total$94,754 $24,173

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
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Millions)
>= 760$44,793 $41,855 $31,870
740-75915,728 15,028 11,294
720-73913,417 12,666 9,338
700-71910,284 9,822 7,574
680-6996,774 6,559 5,062
<=6793,758 3,783 3,413
Total$94,754 $89,713 $68,551


Primary RIF by FICOAs of
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Millions)
>= 760$11,388 $10,611 $7,955
740-7594,034 3,847 2,836
720-7393,465 3,257 2,341
700-7192,632 2,501 1,886
680-6991,728 1,665 1,256
<=679926 929 817
Total$24,173 $22,810 $17,091


Primary IIF by LTVAs of
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Millions)
95.01% and above$8,640 $8,500 $6,774
90.01% to 95.00%44,668 42,255 31,507
85.01% to 90.00%30,163 28,083 20,668
85.00% and below11,283 10,875 9,602
Total$94,754 $89,713 $68,551


Primary RIF by LTVAs of
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Millions)
95.01% and above$2,390 $2,326 $1,801
90.01% to 95.00%13,086 12,358 9,185
85.01% to 90.00%7,376 6,854 4,994
85.00% and below1,321 1,272 1,111
Total$24,173 $22,810 $17,091


Primary RIF by Loan TypeAs of
 December 31, 2019 September 30, 2019 December 31, 2018
      
Fixed98% 98% 98%
Adjustable rate mortgages:     
Less than five years     
Five years and longer2  2  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
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Millions)
IIF, beginning of period$89,713  $81,708  $63,527 
NIW11,949  14,100  6,962 
Cancellations, principal repayments and other reductions(6,908) (6,095) (1,938)
IIF, end of period$94,754  $89,713  $68,551 

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
 December 31, 2019 September 30, 2019 December 31, 2018
California11.8% 11.9% 13.0%
Texas8.2  8.1  8.2 
Florida5.7  5.6  5.0 
Virginia5.3  5.3  4.9 
Arizona3.9  4.2  4.9 
Illinois3.8  3.8  3.4 
Pennsylvania3.6  3.6  3.6 
Michigan3.5  3.5  3.6 
Colorado3.4  3.4  3.5 
Maryland3.4  3.3  3.2 
Total52.6% 52.7% 53.3%


The table below presents selected primary portfolio statistics, by book year, as of December 31, 2019.

 As of December 31, 2019
Book yearOriginal Insurance Written Remaining Insurance in Force % Remaining of Original Insurance Policies Ever in Force Number of Policies in Force Number of Loans in Default # of Claims Paid Incurred Loss Ratio (Inception to Date) (1) Cumulative Default Rate (2) Current default rate  (3)
 ($ Values in Millions)  
2013$162 $22 14% 655 123 1 1 0.3% 0.3% 0.8%
20143,451 818 24% 14,786 4,406 43 40 4.2% 0.6% 1.0%
201512,422 5,370 43% 52,548 25,459 179 94 2.8% 0.5% 0.7%
201621,187 11,944 56% 83,626 51,347 293 87 2.2% 0.5% 0.6%
201721,582 14,961 69% 85,897 64,041 464 41 3.2% 0.6% 0.7%
201827,295 19,579 72% 104,043 80,456 399 19 4.0% 0.4% 0.5%
201945,141 42,060 93% 148,423 140,207 69  1.4% % %
Total$131,240 $94,754   489,978 366,039 1,448 282      

(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 For the year ended
 December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
        
 (In Thousands)
Beginning balance$20,505  $10,908  $12,811  $8,761 
Less reinsurance recoverables (1)(4,309) (2,517) (3,001) (1,902)
Beginning balance, net of reinsurance recoverables16,196  8,391  9,810  6,859 
        
Add claims incurred:       
Claims and claim expenses incurred:       
Current year (2)3,789  2,770  14,737  7,860 
Prior years (3)480  (629) (2,230) (2,408)
Total claims and claim expenses incurred4,269  2,141  12,507  5,452 
        
Less claims paid:       
Claims and claim expenses paid:       
Current year (2)204  93  204  130 
Prior years (3)1,448  629  3,849  2,371 
Reinsurance terminations (4)    (549)  
Total claims and claim expenses paid1,652  722  3,504  2,501 
        
Reserve at end of period, net of reinsurance recoverables18,813  9,810  18,813  9,810 
Add reinsurance recoverables (1)4,939  3,001  4,939  3,001 
Ending balance$23,752  $12,811  $23,752  $12,811 


(1)Related to ceded losses recoverable under the QSR Transactions, included in "Other assets" on the consolidated balance sheets.
(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.
(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.
(4)Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016 QSR Transaction on a cut-off basis.

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 For the year ended
 December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Beginning default inventory1,230  746  877  928 
Plus: new defaults591  479  2,429  1,559 
Less: cures(319) (318) (1,702) (1,521)
Less: claims paid(54) (30) (152) (89)
Less: claims denied    (4)  
Ending default inventory1,448  877  1,448  877 

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 For the year ended
 December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
        
 (In Thousands)
Number of claims paid (1)54  30  152  89 
Total amount paid for claims$2,051  $947  $5,030  $3,164 
Average amount paid per claim$38  $32  $33  $36 
Severity(2)80% 64% 74% 72%


(1)Count includes 5 and 19 claims settled without payment for the three months and year ended December 31, 2019, respectively, and 3 and 8 claims settled without payment for the three months and year ended December 31, 2018, respectively.
(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 December 31, 2019 As of December 31, 2018
    
 (In Thousands)
Case (1)$15 $14
IBNR (2)1 1
Total$16 $15

(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
 December 31, 2019 September 30, 2019 December 31, 2018
      
 (In Thousands)
Available Assets$1,016,387 $955,554 $733,762
Risk-Based Required Assets773,474 637,914 511,268

 

National MI Logo 9in.png

Source: NMI Holdings Inc