Breaking News Bar

Business News and Information

NMI Holdings, Inc. Reports Second Quarter 2020 Financial Results

EMERYVILLE, Calif., Aug. 05, 2020 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported GAAP net income of $26.8 million, or $0.36 per diluted share, for the second quarter ended June 30, 2020, which compares to $58.3 million, or $0.74 per diluted share, in the first quarter ended March 31, 2020 and $39.1 million, or $0.56 per diluted share, in the second quarter ended June 30, 2019. Adjusted net income for the quarter was $29.7 million or $0.40 per diluted share, which compares to $52.7 million or $0.75 per diluted share in the first quarter ended March 31, 2020 and $41.4 million or $0.59 per diluted share in the second quarter ended June 30, 2019. Results for the second quarter ended June 30, 2020, reflect the impact of additional claims and claim expenses incurred on higher default experience in connection with the COVID-19 pandemic. 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, "From the start of this crisis, we have taken steps to protect the health and safety of our employees and ensure our continued ability to seamlessly support our lenders and their borrowers. While still early, we have been encouraged by the resiliency we’ve seen in the housing market. Demand has been robust, house prices have continued to rise and record low interest rates have giving more Americans a chance to access homeownership at a time when it’s most critical.” Merkle continued, “This is the time when our customers need us most, and our broadly conservative stance heading into this crisis, and the recent success we have achieved in the capital and reinsurance markets positions us well to continue supporting them and the overall housing market during the COVID-19 pandemic.”

Selected highlights from the second quarter 2020 include:

  • Primary insurance-in-force at quarter end was $98.9 billion, up 21% compared to the second quarter of 2019

  • New insurance written was $13.1 billion, up 8% compared to $12.2 billion in the second quarter of 2019

  • Net premiums earned were $98.9 million, up 19% compared to $83.2 million in the second quarter of 2019

  • Underwriting and operating expenses were $30.4 million, including $0.2 million of capital market transaction costs, compared to $32.2 million in the second quarter of 2019, including $0.7 million of capital market transaction costs

  • Insurance claims and claim expenses were $34.3 million, compared to $2.9 million in the second quarter of 2019, reflecting higher default experience attributable to the COVID-19 pandemic
     
  • At quarter-end, cash and investments were $1.9 billion and shareholders’ equity was $1.3 billion, equal to $14.82 per share

  • Annualized return-on-equity for the quarter was 9.6% and annualized adjusted return-on-equity was 10.7%

  • At quarter-end, the company reported total PMIERs available assets of $1.7 billion and net risk- based required assets of $1.0 billion

Concurrent with the release of second quarter earnings, the company has filed a Form 8-K that includes its current assessment of the impact the COVID-19 outbreak will have on the U.S. economy and housing market, and its perspective on the implications for the U.S. mortgage insurance market, and its business performance and financial position. The Form 8-K also includes selected operating statistics for the month ended July 31, 2020. Investors may access the Form 8-K on the company’s website, www.nationalmi.com, in the “Investor Relations” section.

 Quarter EndedQuarter EndedQuarter EndedChange (1)Change (1)
 6/30/20203/31/20206/30/2019Q/QY/Y
INSURANCE METRICS ($billions)
Primary Insurance-in-Force $98.9 $98.5 $81.7 —  %21  %
New Insurance Written - NIW      
Monthly premium11.9 10.5 11.1 14  % %
Single premium1.2 0.8 1.1 48  %11  %
Total (2)13.1 11.3 12.2 16  % %
      
FINANCIAL HIGHLIGHTS ($millions, except per share amounts)
Net Premiums Earned98.9 98.7 83.2 —  %19  %
Insurance Claims and Claim Expenses34.3 5.7 2.9 503  %1075  %
Underwriting and Operating Expenses (3)30.4 32.3 32.2 (6)%(6)%
Net Income 26.8 58.3 39.1 (54)%(31)%
Adjusted Net Income 29.7 52.7 41.4 (44)%(28)%
Cash and Investments $1,855 $1,180 $1,053 57  %76  %
Shareholders' Equity 1,257 975 812 29  %55  %
Book Value per Share$14.82 $14.15 $11.99  %24  %
Loss Ratio34.7%5.8%3.5%  
Expense Ratio (3)30.7%32.7%38.7%  

(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, August 5, 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: 3189949 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 coronavirus ("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 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 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, 2019 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 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 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  For the three months ended
June 30,
 For the six months ended
June 30,
  2020 2019 2020 2019
Revenues (In Thousands, except for per share data)
Net premiums earned $98,944   $83,249   $197,661   $157,118  
Net investment income 7,070   7,629   15,174   15,012  
Net realized investment gains (losses) 711   (113)  639   (300) 
Other revenues 1,223   415   2,123   456  
Total revenues 107,948   91,180   215,597   172,286  
Expenses        
Insurance claims and claim expenses 34,334   2,923   40,031   5,666  
Underwriting and operating expenses(1) 30,370   32,190   62,647   62,990  
Service expenses(1) 1,090   353   1,824   402  
Interest expense 5,941   3,071   8,685   6,132  
Loss (gain) from change in fair value of warrant liability 1,236   1,685   (4,723)  7,164  
Total expenses 72,971   40,222   108,464   82,354  
         
Income before income taxes 34,977   50,958   107,133   89,932  
Income tax expense 8,129   11,858   22,014   17,933  
Net income $26,848   $39,100   $85,119   $71,999  
         
Earnings per share        
Basic $0.36   $0.58   $1.20   $1.07  
Diluted $0.36   $0.56   $1.11   $1.04  
         
Weighted average common shares outstanding        
Basic 73,617   67,590   71,090   67,143  
Diluted 74,174   69,590   72,407   69,348  
         
Loss ratio(2) 34.7 % 3.5 % 20.3 % 3.6 %
Expense ratio(3) 30.7 % 38.7 % 31.7 % 40.1 %
Combined ratio (4) 65.4 % 42.2 % 51.9 % 43.7 %
         
Net income $26,848   $39,100   $85,119   $71,999  
Other comprehensive income, net of tax:        
Unrealized gains in accumulated other comprehensive income, net of tax expense of $8,978 and $3,662 for the three months ended June 30, 2020 and 2019, and $5,162 and $7,615 for the six months ended June 30, 2020 and 2019, respectively 33,773   13,779   19,418   28,647  
Reclassification adjustment for realized (gains) losses included in net income, net of tax expense (benefit) of $149 and ($24) for the three months ended June 30, 2020 and 2019, and ($258) and ($63) for the six months ended June 30, 2020 and 2019, respectively (562)  89   969   237  
Other comprehensive income, net of tax 33,211   13,868   20,387   28,884  
Comprehensive income $60,059   $52,968   $105,506   $100,883  

(1)  Certain "Underwriting and operating expenses" have been reclassified as "Service expenses" in prior periods.
(2)  Loss ratio is calculated by dividing 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 sheets June 30, 2020 December 31, 2019
Assets (In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,286,803 and $1,113,779 as of June 30, 2020 and December 31, 2019, respectively) $1,339,771  $1,140,940 
Cash and cash equivalents (including restricted cash of $2,068 and $2,662 as of June 30, 2020 and December 31, 2019, respectively) 515,450  41,089 
Premiums receivable 46,408  46,085 
Accrued investment income 7,909  6,831 
Prepaid expenses 3,416  3,512 
Deferred policy acquisition costs, net 63,619  59,972 
Software and equipment, net 26,105  26,096 
Intangible assets and goodwill 3,634  3,634 
Prepaid reinsurance premiums 10,263  15,488 
Reinsurance recoverable (1) 14,307  4,939 
Other assets (1) 16,049  16,232 
Total assets $2,046,931  $1,364,818 
     
Liabilities    
Debt $392,773  $145,764 
Unearned premiums 115,236  136,642 
Accounts payable and accrued expenses 104,777  39,904 
Reserve for insurance claims and claim expenses 69,903  23,752 
Reinsurance funds withheld 12,205  14,310 
Warrant liability, at fair value 2,698  7,641 
Deferred tax liability, net 83,785  56,360 
Other liabilities 8,517  10,025 
Total liabilities 789,894  434,398 
     
Shareholders' equity    
Common stock - class A shares, $0.01 par value; 84,804,766 and 68,358,074 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively (250,000,000 shares authorized) 848  684 
Additional paid-in capital 927,950  707,003 
Accumulated other comprehensive income, net of tax 37,675  17,288 
Retained earnings 290,564  205,445 
Total shareholders' equity 1,257,037  930,420 
Total liabilities and shareholders' equity $2,046,931  $1,364,818 

(1)  Reinsurance recoverable has been reclassified from "Other assets" in the prior period.



 
Non-GAAP Financial Measure Reconciliations
 Quarter ended Quarter ended Quarter ended
 6/30/2020 3/31/2020 6/30/2019
 As Reported(In Thousands, except for per share data)
Revenues     
Net premiums earned$98,944   $98,717   $83,249  
Net investment income7,070   8,104   7,629  
Net realized investment gains (losses)711   (72)  (113) 
Other revenues1,223   900   415  
Total revenues107,948   107,649   91,180  
Expenses     
Insurance claims and claim expenses34,334   5,697   2,923  
Underwriting and operating expenses(1)30,370   32,277   32,190  
Service expenses(1)1,090   734   353  
Interest expense5,941   2,744   3,071  
Loss (gain) from change in fair value of warrant liability1,236   (5,959)  1,685  
Total expenses72,971   35,493   40,222  
      
Income before income taxes34,977   72,156   50,958  
Income tax expense8,129   13,885   11,858  
Net income $26,848   $58,271   $39,100  
      
Adjustments:     
Net realized investment (gains) losses(711)  72   113  
Loss (gain) from change in fair value of warrant liability1,236   (5,959)  1,685  
Capital markets transaction costs2,790   474   664  
Adjusted income before taxes38,292   66,743   53,420  
      
Income tax expense on adjustments437   115   163  
Adjusted net income$29,726   $52,743   $41,399  
      
Weighted average diluted shares outstanding74,174   70,401   69,590  
      
Diluted EPS$0.36   $0.74  (2)$0.56  
Adjusted diluted EPS $0.40   $0.75   $0.59  
      
Return-on-equity 9.6 % 24.5 % 20.0 %
Adjusted return-on-equity10.7 % 22.1 % 21.2 %
      
      
Expense ratio (3)30.7 % 32.7 % 38.7 %
Adjusted expense ratio (4)30.5 % 32.2 % 37.9 %
      
Combined ratio (5)65.4 % 38.5 % 42.2 %
Adjusted combined ratio (6)65.2 % 38.0 % 41.4 %

(1)  Certain "Underwriting and operating expenses" have been reclassified as "Service expenses" in prior periods.
(2)  Diluted net income for the quarter ended March 31, 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.
(3)  Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
(4)  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.
(5)  Combined ratio is calculated by dividing the total of underwriting and operating expenses and insurance claims and claims expense by net premiums earned.
(6)  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 Data2020 2019
 June 30 March 31 December 31 September 30 June 30 March 31
Revenues(In Thousands, except for per share data)
Net premiums earned$98,944  $98,717   $95,517  $92,381   $83,249   $73,868  
Net investment income7,070  8,104   7,962  7,882   7,629   7,383  
Net realized investment gains (losses)711  (72)  264  81   (113)  (187) 
Other revenues1,223  900   1,154  1,244   415   42  
Total revenues107,948  107,649   104,897  101,588   91,180   81,106  
Expenses           
Insurance claims and claim expenses34,334  5,697   4,269  2,572   2,923   2,743  
Underwriting and operating expenses(1)30,370  32,277   31,296  32,335   32,190   30,800  
Service expenses(1)1,090  734   937  909   353   49  
Interest expense5,941  2,744   2,974  2,979   3,071   3,061  
Loss (gain) from change in fair value of warrant liability1,236  (5,959)  2,632  (1,139)  1,685   5,479  
Total expenses72,971  35,493   42,108  37,656   40,222   42,132  
            
Income before income taxes34,977  72,156   62,789  63,932   50,958   38,974  
Income tax expense8,129  13,885   12,594  14,169   11,858   6,075  
Net income$26,848  $58,271   $50,195  $49,763   $39,100   $32,899  
            
Earnings per share           
Basic$0.36  $0.85   $0.74  $0.73   $0.58   $0.49  
Diluted$0.36  $0.74   $0.71  $0.69   $0.56   $0.48  
            
Weighted average common shares outstanding           
Basic73,617  68,563   68,140  67,849   67,590   66,692  
Diluted74,174  70,401   70,276  70,137   69,590   68,996  
            
Other data           
Loss Ratio(2)34.7% 5.8 % 4.5% 2.8 % 3.5 % 3.7 %
Expense Ratio(3)30.7% 32.7 % 32.8% 35.0 % 38.7 % 41.7 %
Combined ratio (4)65.4% 38.5 % 37.2% 37.8 % 42.2 % 45.4 %

(1)  Certain "Underwriting and operating expenses" have been reclassified as "Service expenses" in prior periods.
(2)  Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
(3)  Expense ratio is calculated by dividing 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
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 (In Millions)
Monthly$11,885  $10,461  $11,085  $12,994  $11,067  $6,211 
Single1,239  836  864  1,106  1,112  702 
Primary$13,124  $11,297  $11,949  $14,100  $12,179  $6,913 


Primary and pool IIFAs of
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 (In Millions)
Monthly$82,848  $81,347  $77,097  $71,814  $63,922  $55,995 
Single16,057  17,147  17,657  17,899  17,786  17,239 
Primary98,905  98,494  94,754  89,713  81,708  73,234 
            
Pool2,340  2,487  2,570  2,668  2,758  2,838 
Total$101,245  $100,981  $97,324  $92,381  $84,466  $76,072 


The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction, 2018 QSR Transaction and 2020 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
  June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
   
The QSR Transactions            
Ceded risk-in-force $4,563,676  $4,843,715  $5,137,249  $4,901,809  $4,558,862  $4,534,353 
Ceded premiums earned (23,210) (23,011) (23,673) (23,151) (20,919) (21,468)
Ceded claims and claim expenses 8,669  1,532  1,030  766  770  899 
Ceding commission earned 4,428  4,513  4,691  4,584  4,171  4,206 
Profit commission 5,271  12,413  13,314  13,254  11,884  12,061 
             
The ILN Transactions            
Ceded premiums $(3,267) $(3,872) $(4,263) $(4,409) $(2,895) $(3,023)


Portfolio Statistics

The table below highlights trends in our primary portfolio as of the date and for the periods indicated.

Primary portfolio trends As of and for the three months ended
  June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
  ($ Values In Millions, except as noted below)
New insurance written $13,124  $11,297  $11,949  $14,100  $12,179  $6,913 
New risk written 3,260  2,897  3,082  3,651  3,183  1,799 
Insurance in force (IIF) (1) 98,905  98,494  94,754  89,713  81,708  73,234 
Risk in force (1) 25,238  25,192  24,173  22,810  20,661  18,373 
Policies in force (count) (1) 372,934  376,852  366,039  350,395  324,876  297,232 
Average loan size ($ value in thousands) (1) $265  $261  $259  $256  $252  $246 
Coverage percentage (2) 25.5% 25.6% 25.5% 25.4% 25.3% 25.1%
Loans in default (count) (1) 10,816  1,449  1,448  1,230  1,028  940 
Percentage of loans in default (1) 2.90% 0.38% 0.40% 0.35% 0.32% 0.32%
Risk in force on defaulted loans (1) $799  $84  $84  $70  $58  $53 
Average premium yield (3) 0.40% 0.41% 0.41% 0.43% 0.43% 0.42%
Earnings from cancellations $15.5  $8.6  $8.0  $7.4  $4.5  $2.3 
Annual persistency (4) 64.1% 71.7% 76.8% 82.4% 86.0% 87.2%
Quarterly run-off (5) 12.9% 8.0% 7.7% 7.5% 5.1% 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
 June 30, 2020 March 31, 2020 June 30, 2019
 ($ In Millions)
>= 760$8,052  $6,290  $5,627 
740-7591,866  1,615  2,165 
720-7391,607  1,579  1,785 
700-719959  1,038  1,337 
680-699514  565  891 
<=679126  210  374 
Total$13,124  $11,297  $12,179 
Weighted average FICO762  757  751 


Primary NIW by LTVFor the three months ended
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Millions)
95.01% and above$547  $721  $971 
90.01% to 95.00%5,385  5,009  5,931 
85.01% to 90.00%5,067  4,082  4,085 
85.00% and below2,125  1,485  1,192 
Total$13,124  $11,297  $12,179 
Weighted average LTV90.7% 91.3% 92.0%


Primary NIW by purchase/refinance mixFor the three months ended
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Millions)
Purchase$7,776  $7,991  $10,697 
Refinance5,348  3,306  1,482 
Total$13,124  $11,297  $12,179 


The table below presents a summary of our primary IIF and RIF by book year as of June 30, 2020.

Primary IIF and RIFAs of June 30, 2020
 IIF RIF
 (In Millions)
June 30, 2020$23,949  $6,039 
201934,658  9,017 
201814,322  3,643 
201711,548  2,877 
20169,595  2,428 
2015 and before4,833  1,234 
Total$98,905  $25,238 


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
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Millions)
>= 760$48,898  $47,340  $37,830 
740-75915,764  16,060  13,731 
720-73913,882  14,002  11,388 
700-71910,228  10,518  9,028 
680-6996,657  6,879  6,045 
<=6793,476  3,695  3,686 
Total$98,905  $98,494  $81,708 


Primary RIF by FICOAs of
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Millions)
>= 760$12,433  $12,076  $9,551 
740-7594,031  4,121  3,499 
720-7393,585  3,626  2,904 
700-7192,625  2,696  2,286 
680-6991,706  1,760  1,524 
<=679858  913  897 
Total$25,238  $25,192  $20,661 


Primary IIF by LTVAs of
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Millions)
95.01% and above$8,453  $8,838  $7,925 
90.01% to 95.00%45,862  46,318  38,371 
85.01% to 90.00%32,603  31,729  25,099 
85.00% and below11,987  11,609  10,313 
Total$98,905  $98,494  $81,708 


Primary RIF by LTVAs of
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Millions)
95.01% and above$2,387  $2,478  $2,145 
90.01% to 95.00%13,463  13,587  11,206 
85.01% to 90.00%7,985  7,767  6,108 
85.00% and below1,403  1,360  1,202 
Total$25,238  $25,192  $20,661 


Primary RIF by Loan TypeAs of
 June 30, 2020 March 31, 2020 June 30, 2019
      
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
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Millions)
IIF, beginning of period$98,494  $94,754  $73,234 
NIW13,124  11,297  12,179 
Cancellations, principal repayments and other reductions(12,713) (7,557) (3,705)
IIF, end of period$98,905  $98,494  $81,708 


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
 June 30, 2020 March 31, 2020 June 30, 2019
California11.3% 11.5% 12.3%
Texas8.1  8.2  8.2 
Florida6.2  5.9  5.4 
Virginia5.4  5.3  5.2 
Illinois4.0  3.8  3.6 
Colorado3.8  3.6  3.4 
Pennsylvania3.6  3.7  3.6 
Maryland3.5  3.4  3.3 
Washington3.4  3.3  3.0 
Massachusetts3.4  3.3  2.8 
Total52.7% 52.0% 50.8%


The table below presents selected primary portfolio statistics, by book year, as of June 30, 2020.

 As of June 30, 2020
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 $17 10% 655 98 1 1 0.3% 0.3% 1.0%
20143,451 649 19% 14,786 3,633 117 46 4.2% 1.1% 3.2%
201512,422 4,167 34% 52,548 20,466 559 106 3.4% 1.3% 2.7%
201621,187 9,595 45% 83,626 42,628 1,385 107 3.1% 1.8% 3.2%
201721,582 11,548 54% 85,897 51,702 2,132 65 5.2% 2.6% 4.1%
201827,295 14,322 52% 104,043 62,237 2,732 37 8.4% 2.7% 4.4%
201945,141 34,658 77% 148,423 119,696 3,357 3 12.5% 2.3% 2.8%
202024,421 23,949 98% 73,653 72,474 533  8.5% 0.7% 0.7%
Total$155,661 $98,905   563,631 372,934 10,816 365      

(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 six months ended
  June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
  (In Thousands)
Beginning balance $29,479  $15,537  $23,752  $12,811 
Less reinsurance recoverables (1) (6,193) (3,678) (4,939) (3,001)
Beginning balance, net of reinsurance recoverables 23,286  11,859  18,813  9,810 
         
Add claims incurred:        
Claims and claim expenses incurred:        
Current year (2) 34,958  3,492  42,516  7,401 
Prior years (3) (624) (569) (2,485) (1,735)
Total claims and claim expenses incurred 34,334  2,923  40,031  5,666 
         
Less claims paid:        
Claims and claim expenses paid:        
Current year (2) 39    39   
Prior years (3) 1,985  674  3,209  1,368 
Reinsurance terminations (4)   (549)   (549)
Total claims and claim expenses paid 2,024  125  3,248  819 
         
Reserve at end of period, net of reinsurance recoverables 55,596  14,657  55,596  14,657 
Add reinsurance recoverables (1) 14,307  3,775  14,307  3,775 
Ending balance $69,903  $18,432  $69,903  $18,432 

(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.
(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 six months ended
 June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Beginning default inventory1,449  940  1,448  877 
Plus: new defaults9,770  546  10,282  1,120 
Less: cures(353) (433) (828) (907)
Less: claims paid(49) (25) (83) (62)
Less: claims denied(1)   (3)  
Ending default inventory10,816  1,028  10,816  1,028 


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 six months ended
 June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
 (In Thousands)
Number of claims paid (1)49  25  83  62 
Total amount paid for claims$2,578  $788  $4,081  $1,714 
Average amount paid per claim$53  $32  $49  $28 
Severity(2)89% 77% 87% 69%

(1)  Count includes one and two claims settled without payment for the three and six months ended June 30, 2020, respectively, and four and seven claims settled without payment for the three and six months ended June 30, 2019, 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 June 30, 2020 As of June 30, 2019
 (In Thousands)
Case (1)$5.6  $16.4 
IBNR (1)(2)0.9  1.5 
Total$6.5  $17.9 

(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
 June 30, 2020 March 31, 2020 June 30, 2019
 (In Thousands)
Available Assets$1,656,426  $1,069,695  $878,550 
Risk-Based Required Assets1,047,619  912,321  782,460 

 

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
bottom clear