NMI Holdings, Inc. Reports First Quarter 2023 Financial Results
Selected first quarter 2023 highlights include:
- Primary insurance-in-force at quarter end was
$186.7 billion , compared to$184.0 billion at the end of the fourth quarter of 2022 and$158.9 billion at the end of the first quarter of 2022
- Net premiums earned were
$121.8 million , compared to$119.6 million in the fourth quarter of 2022 and$116.5 million in the first quarter of 2022
- Total revenue was
$136.8 million , compared to$133.1 million in the fourth quarter of 2022 and$127.4 million in the first quarter of 2022
- Underwriting and operating expenses were
$25.8 million , compared to$26.7 million in the fourth quarter of 2022 and$32.9 million in the first quarter of 2022
- Insurance claims and claim expenses were
$6.7 million , compared to$3.4 million in the fourth quarter of 2022 and a benefit of$0.6 million in the first quarter of 2022
- Shareholders’ equity was
$1.7 billion at quarter end and book value per share was$20.49 . Book value per share excluding the impact of net unrealized gains and losses in the investment portfolio was$22.56 , up 4% compared to$21.76 in the fourth quarter of 2022 and 19% compared to$18.97 in the first quarter of 2022
- Annualized return on equity for the quarter was 17.9%, compared to 18.6% in the fourth quarter of 2022 and 17.5% in the first quarter of 2022
- At quarter-end, total PMIERs available assets were
$2.5 billion and net risk-based required assets were$1.2 billion
Quarter Ended | Quarter Ended | Quarter Ended | Change(1) | Change(1) | ||||||||
Q/Q | Y/Y | |||||||||||
INSURANCE METRICS ($billions) | ||||||||||||
$ | 186.7 | $ | 184.0 | $ | 158.9 | 1% | 18% | |||||
New Insurance Written - NIW | ||||||||||||
Monthly premium | 8.6 | 10.5 | 13.1 | (18)% | (35)% | |||||||
Single premium | 0.2 | 0.3 | 1.1 | (31)% | (83)% | |||||||
Total(2) | 8.7 | 10.7 | 14.2 | (19)% | (38)% | |||||||
FINANCIAL HIGHLIGHTS (Unaudited, $millions, except per share amounts) | ||||||||||||
Net Premiums Earned | 121.8 | 119.6 | 116.5 | 2% | 5% | |||||||
Insurance Claims and Claim Expenses (Benefits) | 6.7 | 3.4 | (0.6 | ) | 94% | N/A | ||||||
Underwriting and Operating Expenses | 25.8 | 26.7 | 32.9 | (3)% | (22)% | |||||||
Net Income | 74.5 | 72.9 | 67.7 | 2% | 10% | |||||||
Book Value per Share (excluding net unrealized gains and losses)(3) | 22.56 | 21.76 | 18.97 | 4% | 19% | |||||||
Loss Ratio | 5.5 | % | 2.9 | % | (0.5 | )% | ||||||
Expense Ratio | 21.2 | % | 22.3 | % | 28.3 | % |
(1) Percentages may not be replicated based on the rounded figures presented in the table.
(2) Total may not foot due to rounding.
(3) Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.
Conference Call and Webcast Details
The company will hold a conference call, which will be webcast live today,
About
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
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, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) 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 other infrequent, unusual or 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 other infrequent, unusual or 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.
Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on investments, divided by shares outstanding.
Although adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) 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. Furthermore, all unexercised warrants expired in
(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) Other infrequent, unusual or non-operating items. Items that are the result of unforeseen or uncommon events, and are not expected to recur with frequency 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 infrequent, unusual or non-operating adjustments related to severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced in
(5) Net unrealized gains and losses on investments. The recognition of the net unrealized gains or losses on investment can vary significantly across periods and is influenced by factors such as interest rate movement, overall market and economic conditions, and tax and capital profiles. These valuation adjustments may not necessarily result in economic gains or losses and not reflective of ongoing operations. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these unrealized gains or losses.
Investor Contact
[email protected]
(510) 788-8417
Consolidated statements of operations and comprehensive income (loss) (unaudited) | For the three months ended |
||||||
2023 | 2022 | ||||||
(In Thousands, except for per share data) | |||||||
Revenues | |||||||
Net premiums earned | $ | 121,754 | $ | 116,495 | |||
Net investment income | 14,894 | 10,199 | |||||
Net realized investment (losses) gains | (33 | ) | 408 | ||||
Other revenues | 164 | 339 | |||||
Total revenues | 136,779 | 127,441 | |||||
Expenses | |||||||
Insurance claims and claim expenses (benefits) | 6,701 | (619 | ) | ||||
Underwriting and operating expenses | 25,786 | 32,935 | |||||
Service expenses | 80 | 430 | |||||
Interest expense | 8,039 | 8,041 | |||||
Gain from change in fair value of warrant liability | — | (93 | ) | ||||
Total expenses | 40,606 | 40,694 | |||||
Income before income taxes | 96,173 | 86,747 | |||||
Income tax expense | 21,715 | 19,067 | |||||
Net income | $ | 74,458 | $ | 67,680 | |||
Earnings per share | |||||||
Basic | $ | 0.89 | $ | 0.79 | |||
Diluted | $ | 0.88 | $ | 0.77 | |||
Weighted average common shares outstanding | |||||||
Basic | 83,600 | 85,953 | |||||
Diluted | 84,840 | 87,310 | |||||
Loss ratio(1) | 5.5 | % | (0.5 | )% | |||
Expense ratio(2) | 21.2 | % | 28.3 | % | |||
Combined ratio(3) | 26.7 | % | 27.7 | % | |||
Net income | $ | 74,458 | $ | 67,680 | |||
Other comprehensive income (loss), net of tax: | |||||||
Unrealized gains (losses) in accumulated other comprehensive income (loss), net of tax expense (benefit) of |
32,476 | (98,471 | ) | ||||
Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of |
26 | (323 | ) | ||||
Other comprehensive income (loss), net of tax | 32,502 | (98,794 | ) | ||||
Comprehensive income (loss) | $ | 106,960 | $ | (31,114 | ) |
(1) Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(3) Combined ratio may not foot due to rounding.
Consolidated balance sheets (unaudited) | |||||||
Assets | (In Thousands, except for share data) | ||||||
Fixed maturities, available-for-sale, at fair value (amortized cost of |
$ | 2,171,766 | $ | 2,099,389 | |||
Cash and cash equivalents (including restricted cash of |
83,104 | 44,426 | |||||
Premiums receivable | 70,198 | 69,680 | |||||
Accrued investment income | 15,702 | 14,144 | |||||
Deferred policy acquisition costs, net | 59,921 | 58,564 | |||||
Software and equipment, net | 31,830 | 31,930 | |||||
Intangible assets and goodwill | 3,634 | 3,634 | |||||
Reinsurance recoverable | 23,479 | 21,587 | |||||
Prepaid federal income taxes | 154,409 | 154,409 | |||||
Other assets | 19,733 | 18,267 | |||||
Total assets | $ | 2,633,776 | $ | 2,516,030 | |||
Liabilities | |||||||
Debt | $ | 396,426 | $ | 396,051 | |||
Unearned premiums | 114,064 | 123,035 | |||||
Accounts payable and accrued expenses | 70,341 | 74,576 | |||||
Reserve for insurance claims and claim expenses | 108,157 | 99,836 | |||||
Reinsurance funds withheld | 2,313 | 2,674 | |||||
Deferred tax liability, net | 223,368 | 193,859 | |||||
Other liabilities | 12,396 | 12,272 | |||||
Total liabilities | 927,065 | 902,303 | |||||
Shareholders' equity | |||||||
Common stock - class A shares, |
869 | 865 | |||||
Additional paid-in capital | 973,599 | 972,717 | |||||
Treasury Stock, at cost: 3,589,283 and 2,922,863 common shares as of |
(71,437 | ) | (56,575 | ) | |||
Accumulated other comprehensive loss, net of tax | (171,821 | ) | (204,323 | ) | |||
Retained earnings | 975,501 | 901,043 | |||||
Total shareholders' equity | 1,706,711 | 1,613,727 | |||||
Total liabilities and shareholders' equity | $ | 2,633,776 | $ | 2,516,030 |
Non-GAAP Financial Measure Reconciliations (unaudited) | |||||||||||
For the three months ended | |||||||||||
As Reported | (In Thousands, except for per share data) | ||||||||||
Revenues | |||||||||||
Net premiums earned | $ | 121,754 | $ | 119,584 | $ | 116,495 | |||||
Net investment income | 14,894 | 13,341 | 10,199 | ||||||||
Net realized investment (losses) gains | (33 | ) | 6 | 408 | |||||||
Other revenues | 164 | 176 | 339 | ||||||||
Total revenues | 136,779 | 133,107 | 127,441 | ||||||||
Expenses | |||||||||||
Insurance claims and claim expenses (benefits) | 6,701 | 3,450 | (619 | ) | |||||||
Underwriting and operating expenses | 25,786 | 26,711 | 32,935 | ||||||||
Service expenses | 80 | 131 | 430 | ||||||||
Interest expense | 8,039 | 8,035 | 8,041 | ||||||||
Gain from change in fair value of warrant liability | — | — | (93 | ) | |||||||
Total expenses | 40,606 | 38,327 | 40,694 | ||||||||
Income before income taxes | 96,173 | 94,780 | 86,747 | ||||||||
Income tax expense | 21,715 | 21,840 | 19,067 | ||||||||
Net income | $ | 74,458 | $ | 72,940 | $ | 67,680 | |||||
Adjustments: | |||||||||||
Net realized investment losses (gains) | 33 | (6 | ) | (408 | ) | ||||||
Gain from change in fair value of warrant liability | — | — | (93 | ) | |||||||
Capital markets transaction costs | — | — | 260 | ||||||||
Adjusted income before taxes | 96,206 | 94,774 | 86,506 | ||||||||
Income tax expense (benefit) on adjustments(1) | 7 | (1 | ) | (31 | ) | ||||||
Adjusted net income | $ | 74,484 | $ | 72,935 | $ | 67,470 | |||||
Weighted average diluted shares outstanding | 84,840 | 84,809 | 87,310 | ||||||||
Diluted EPS | $ | 0.88 | $ | 0.86 | $ | 0.77 | |||||
Adjusted diluted EPS | $ | 0.88 | $ | 0.86 | $ | 0.77 | |||||
Return-on-equity | 17.9 | % | 18.6 | % | 17.5 | % | |||||
Adjusted return-on-equity | 17.9 | % | 18.6 | % | 17.4 | % | |||||
Expense ratio(2) | 21.2 | % | 22.3 | % | 28.3 | % | |||||
Adjusted expense ratio(3) | 21.2 | % | 22.3 | % | 28.0 | % | |||||
Combined ratio(4) | 26.7 | % | 25.2 | % | 27.7 | % | |||||
Adjusted combined ratio(5) | 26.7 | % | 25.2 | % | 27.5 | % | |||||
Book value per share(6) | $ | 20.49 | $ | 19.31 | $ | 17.84 | |||||
Book value per share (excluding net unrealized gains and losses)(7) | $ | 22.56 | $ | 21.76 | $ | 18.97 |
(1) Marginal tax impact of non-GAAP adjustments is calculated based on our statutory
(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.
(6) Book value per share is calculated by dividing total shareholder's equity by shares outstanding.
(7) Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.
Historical Quarterly Data | 2023 | 2022 | 2021 | ||||||||||||||||||||
(In Thousands, except for per share data) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Net premiums earned | $ | 121,754 | $ | 119,584 | $ | 118,317 | $ | 120,870 | $ | 116,495 | $ | 113,933 | |||||||||||
Net investment income | 14,894 | 13,341 | 11,945 | 10,921 | 10,199 | 10,045 | |||||||||||||||||
Net realized investment (losses) gains | (33 | ) | 6 | 14 | 53 | 408 | 714 | ||||||||||||||||
Other revenues | 164 | 176 | 301 | 376 | 339 | 380 | |||||||||||||||||
Total revenues | 136,779 | 133,107 | 130,577 | 132,220 | 127,441 | 125,072 | |||||||||||||||||
Expenses | |||||||||||||||||||||||
Insurance claims and claim expenses (benefits) | 6,701 | 3,450 | (3,389 | ) | (3,036 | ) | (619 | ) | (500 | ) | |||||||||||||
Underwriting and operating expenses | 25,786 | 26,711 | 27,144 | 30,700 | 32,935 | 38,843 | |||||||||||||||||
Service expenses | 80 | 131 | 197 | 336 | 430 | 650 | |||||||||||||||||
Interest expense | 8,039 | 8,035 | 8,036 | 8,051 | 8,041 | 8,029 | |||||||||||||||||
Gain from change in fair value of warrant liability | — | — | — | (1,020 | ) | (93 | ) | (112 | ) | ||||||||||||||
Total expenses | 40,606 | 38,327 | 31,988 | 35,031 | 40,694 | 46,910 | |||||||||||||||||
Income before income taxes | 96,173 | 94,780 | 98,589 | 97,189 | 86,747 | 78,162 | |||||||||||||||||
Income tax expense | 21,715 | 21,840 | 21,751 | 21,745 | 19,067 | 17,639 | |||||||||||||||||
Net income | $ | 74,458 | $ | 72,940 | $ | 76,838 | $ | 75,444 | $ | 67,680 | $ | 60,523 | |||||||||||
Earnings per share | |||||||||||||||||||||||
Basic | $ | 0.89 | $ | 0.87 | $ | 0.91 | $ | 0.88 | $ | 0.79 | $ | 0.71 | |||||||||||
Diluted | $ | 0.88 | $ | 0.86 | $ | 0.90 | $ | 0.86 | $ | 0.77 | $ | 0.69 | |||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Basic | 83,600 | 83,592 | 84,444 | 85,734 | 85,953 | 85,757 | |||||||||||||||||
Diluted | 84,840 | 84,809 | 85,485 | 86,577 | 87,310 | 87,117 | |||||||||||||||||
Other data | |||||||||||||||||||||||
Loss ratio(1) | 5.5 | % | 2.9 | % | (2.9 | )% | (2.5 | )% | (0.5 | )% | (0.4 | )% | |||||||||||
Expense ratio(2) | 21.2 | % | 22.3 | % | 22.9 | % | 25.4 | % | 28.3 | % | 34.1 | % | |||||||||||
Combined ratio(3) | 26.7 | % | 25.2 | % | 20.1 | % | 22.9 | % | 27.7 | % | 33.7 | % |
(1) Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) 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 trends | As of and for the three months ended | ||||||||||||||||||||||
2023 |
2022 |
2022 |
2022 |
2022 |
2021 |
||||||||||||||||||
($ Values In Millions, except as noted below) | |||||||||||||||||||||||
New insurance written (NIW) | $ | 8,734 | $ | 10,719 | $ | 17,239 | $ | 16,611 | $ | 14,165 | $ | 18,342 | |||||||||||
New risk written | 2,258 | 2,797 | 4,616 | 4,386 | 3,721 | 4,786 | |||||||||||||||||
Insurance in force (IIF)(1) | 186,724 | 183,968 | 179,173 | 168,639 | 158,877 | 152,343 | |||||||||||||||||
Risk in force(1) | 48,494 | 47,648 | 46,259 | 43,260 | 40,522 | 38,661 | |||||||||||||||||
Policies in force (count)(1) | 600,294 | 594,142 | 580,525 | 551,543 | 526,976 | 512,316 | |||||||||||||||||
Average loan size($ value in thousands)(1) | $ | 311 | $ | 310 | $ | 309 | $ | 306 | $ | 301 | $ | 297 | |||||||||||
Coverage percentage(2) | 26.0 | % | 25.9 | % | 25.8 | % | 25.7 | % | 25.5 | % | 25.4 | % | |||||||||||
Loans in default (count)(1) | 4,475 | 4,449 | 4,096 | 4,271 | 5,238 | 6,227 | |||||||||||||||||
Default rate(1) | 0.75 | % | 0.75 | % | 0.71 | % | 0.77 | % | 0.99 | % | 1.22 | % | |||||||||||
Risk in force on defaulted loans(1) | $ | 337 | $ | 323 | $ | 284 | $ | 295 | $ | 362 | $ | 435 | |||||||||||
Net premium yield(3) | 0.26 | % | 0.26 | % | 0.27 | % | 0.30 | % | 0.30 | % | 0.31 | % | |||||||||||
Earnings from cancellations | $ | 1.4 | $ | 1.5 | $ | 1.8 | $ | 2.2 | $ | 2.9 | $ | 5.1 | |||||||||||
Annual persistency(4) | 85.1 | % | 83.5 | % | 80.1 | % | 76.0 | % | 71.5 | % | 63.8 | % | |||||||||||
Quarterly run-off(5) | 3.2 | % | 3.3 | % | 4.0 | % | 4.3 | % | 5.0 | % | 6.7 | % |
(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.
NIW, IIF and Premiums
The tables below present primary NIW and primary and pool IIF, as of the dates and for the periods indicated.
Primary NIW | For the three months ended | ||||||||||||||||
2023 |
2022 |
2022 |
2022 |
2022 |
2021 |
||||||||||||
(In Millions) | |||||||||||||||||
Monthly | $ | 8,550 | $ | 10,451 | $ | 16,676 | $ | 15,695 | $ | 13,094 | $ | 16,972 | |||||
Single | 184 | 268 | 563 | 916 | 1,071 | 1,370 | |||||||||||
Primary | $ | 8,734 | $ | 10,719 | $ | 17,239 | $ | 16,611 | $ | 14,165 | $ | 18,342 |
Primary and pool IIF | As of | ||||||||||||||||
2023 |
2022 |
2022 |
2022 |
2022 |
2021 |
||||||||||||
(In Millions) | |||||||||||||||||
Monthly | $ | 166,924 | $ | 163,903 | $ | 158,897 | $ | 148,488 | $ | 139,156 | $ | 133,104 | |||||
Single | 19,800 | 20,065 | 20,276 | 20,151 | 19,721 | 19,239 | |||||||||||
Primary | 186,724 | 183,968 | 179,173 | 168,639 | 158,877 | 152,343 | |||||||||||
Pool | 1,025 | 1,049 | 1,078 | 1,114 | 1,162 | 1,229 | |||||||||||
Total | $ | 187,749 | $ | 185,017 | $ | 180,251 | $ | 169,753 | $ | 160,039 | $ | 153,572 |
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, 2021 QSR Transaction, 2022 QSR Transaction, 2022 Seasoned QSR Transaction, and 2023 QSR Transaction and collectively, the QSR Transactions), insurance-linked note transactions (2018 ILN Transaction, 2019 ILN Transaction, 2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN Transaction and collectively, the ILN Transactions), and traditional reinsurance transactions (2022-1 XOL Transaction, 2022-2 XOL Transaction, 2022-3 XOL Transaction and 2023-1 XOL Transaction and collectively, the XOL Transactions) for the periods indicated.
For the three months ended | |||||||||||||||||||||||
2023 |
2022 |
2022 |
2022 |
2022 |
2021 |
||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
The QSR Transactions | |||||||||||||||||||||||
Ceded risk-in-force | $ | 12,635,442 | $ | 12,617,169 | $ | 12,511,797 | $ | 9,040,944 | $ | 8,504,853 | $ | 8,194,604 | |||||||||||
Ceded premiums earned | (42,096 | ) | (42,246 | ) | (42,265 | ) | (30,231 | ) | (29,005 | ) | (28,490 | ) | |||||||||||
Ceded claims and claim expenses (benefits) | 1,965 | 1,934 | 248 | (403 | ) | (159 | ) | 19 | |||||||||||||||
Ceding commission earned | 9,965 | 10,089 | 10,193 | 6,146 | 5,886 | 6,208 | |||||||||||||||||
Profit commission | 22,279 | 22,314 | 23,899 | 17,778 | 16,723 | 16,142 | |||||||||||||||||
The ILN Transactions(1) | |||||||||||||||||||||||
Ceded premiums | $ | (9,095 | ) | $ | (10,112 | ) | $ | (10,730 | ) | $ | (10,132 | ) | $ | (10,939 | ) | $ | (11,344 | ) | |||||
The XOL Transactions | |||||||||||||||||||||||
Ceded Premiums | $ | (7,237 | ) | $ | (6,199 | ) | $ | (4,808 | ) | $ | (2,907 | ) | $ | — | $ | — |
(1) Effective
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 FICO | For the three months ended | |||||||
(In Millions) | ||||||||
>= 760 | $ | 5,251 | $ | 5,574 | $ | 6,372 | ||
740-759 | 1,514 | 1,902 | 2,388 | |||||
720-739 | 1,107 | 1,564 | 1,937 | |||||
700-719 | 456 | 918 | 1,639 | |||||
680-699 | 342 | 638 | 1,244 | |||||
<=679 | 64 | 123 | 585 | |||||
Total | $ | 8,734 | $ | 10,719 | $ | 14,165 | ||
Weighted average FICO | 762 | 756 | 748 |
Primary NIW by LTV | For the three months ended | ||||||||||
(In Millions) | |||||||||||
95.01% and above | $ | 358 | $ | 646 | $ | 1,366 | |||||
90.01% to 95.00% | 4,085 | 5,325 | 7,055 | ||||||||
85.01% to 90.00% | 3,234 | 3,492 | 3,868 | ||||||||
85.00% and below | 1,057 | 1,256 | 1,876 | ||||||||
Total | $ | 8,734 | $ | 10,719 | $ | 14,165 | |||||
Weighted average LTV | 91.6 | % | 92.0 | % | 92.1 | % |
Primary NIW by purchase/refinance mix | For the three months ended | |||||||
(In Millions) | ||||||||
Purchase | $ | 8,494 | $ | 10,500 | $ | 13,398 | ||
Refinance | 240 | 219 | 767 | |||||
Total | $ | 8,734 | $ | 10,719 | $ | 14,165 |
The table below presents a summary of our primary IIF and RIF by book year as of
Primary IIF and RIF | As of |
||||
IIF | RIF | ||||
(In Millions) | |||||
$ | 8,674 | $ | 2,243 | ||
2022 | 55,664 | 14,730 | |||
2021 | 70,771 | 18,195 | |||
2020 | 32,679 | 8,403 | |||
2019 | 8,798 | 2,324 | |||
2018 and before | 10,138 | 2,599 | |||
Total | $ | 186,724 | $ | 48,494 |
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 FICO | As of | |||||||
(In Millions) | ||||||||
>= 760 | $ | 91,623 | $ | 89,554 | $ | 79,141 | ||
740-759 | 33,156 | 32,691 | 27,406 | |||||
720-739 | 26,233 | 25,910 | 22,176 | |||||
700-719 | 18,203 | 18,245 | 15,236 | |||||
680-699 | 12,502 | 12,480 | 10,347 | |||||
<=679 | 5,007 | 5,088 | 4,571 | |||||
Total | $ | 186,724 | $ | 183,968 | $ | 158,877 |
Primary RIF by FICO | As of | |||||||
(In Millions) | ||||||||
>= 760 | $ | 23,472 | $ | 22,834 | $ | 19,883 | ||
740-759 | 8,692 | 8,556 | 7,054 | |||||
720-739 | 6,903 | 6,807 | 5,735 | |||||
700-719 | 4,847 | 4,859 | 4,010 | |||||
680-699 | 3,311 | 3,305 | 2,706 | |||||
<=679 | 1,269 | 1,287 | 1,134 | |||||
Total | $ | 48,494 | $ | 47,648 | $ | 40,522 |
Primary IIF by LTV | As of | |||||||
(In Millions) | ||||||||
95.01% and above | $ | 17,583 | $ | 17,577 | $ | 14,918 | ||
90.01% to 95.00% | 89,125 | 87,354 | 72,381 | |||||
85.01% to 90.00% | 56,425 | 55,075 | 48,406 | |||||
85.00% and below | 23,591 | 23,962 | 23,172 | |||||
Total | $ | 186,724 | $ | 183,968 | $ | 158,877 |
Primary RIF by LTV | As of | |||||||
(In Millions) | ||||||||
95.01% and above | $ | 5,413 | $ | 5,408 | $ | 4,527 | ||
90.01% to 95.00% | 26,326 | 25,797 | 21,358 | |||||
85.01% to 90.00% | 13,937 | 13,584 | 11,895 | |||||
85.00% and below | 2,818 | 2,859 | 2,742 | |||||
Total | $ | 48,494 | $ | 47,648 | $ | 40,522 |
Primary RIF by Loan Type | As of | |||||||
Fixed | 98 | % | 99 | % | 99 | % | ||
Adjustable rate mortgages: | ||||||||
Less than five years | — | — | — | |||||
Five years and longer | 2 | 1 | 1 | |||||
Total | 100 | % | 100 | % | 100 | % |
The table below presents a summary of the change in total primary IIF during the periods indicated.
Primary IIF | As of and for the three months ended | ||||||||||
(In Millions) | |||||||||||
IIF, beginning of period | $ | 183,968 | $ | 179,173 | $ | 152,343 | |||||
NIW | 8,734 | 10,719 | 14,165 | ||||||||
Cancellations, principal repayments and other reductions | (5,978 | ) | (5,924 | ) | (7,631 | ) | |||||
IIF, end of period | $ | 186,724 | $ | 183,968 | $ | 158,877 |
Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the periods indicated.
Top 10 primary RIF by state | As of | |||||||
10.5 | % | 10.6 | % | 10.8 | % | |||
8.8 | 8.7 | 9.5 | ||||||
8.0 | 8.2 | 8.4 | ||||||
4.1 | 4.1 | 3.9 | ||||||
4.1 | 4.1 | 4.5 | ||||||
4.0 | 3.9 | 3.7 | ||||||
3.9 | 3.9 | 3.8 | ||||||
3.5 | 3.5 | 3.7 | ||||||
3.4 | 3.4 | 3.3 | ||||||
3.3 | 3.4 | 3.6 | ||||||
Total | 53.6 | % | 53.8 | % | 55.2 | % |
The table below presents selected primary portfolio statistics, by book year, as of
As of |
|||||||||||||||||||||||||
Book Year | Original 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) | |||||||||||||||||||||||||
2014 and prior | $ | 3,613 | $ | 198 | 5 | % | 15,441 | 1,248 | 22 | 53 | 3.8 | % | 0.5 | % | 1.8 | % | |||||||||
2015 | 12,422 | 1,158 | 9 | % | 52,548 | 6,488 | 119 | 129 | 2.6 | % | 0.5 | % | 1.8 | % | |||||||||||
2016 | 21,187 | 2,447 | 12 | % | 83,626 | 12,851 | 259 | 148 | 2.0 | % | 0.5 | % | 2.0 | % | |||||||||||
2017 | 21,582 | 2,930 | 14 | % | 85,897 | 15,691 | 422 | 122 | 2.7 | % | 0.6 | % | 2.7 | % | |||||||||||
2018 | 27,295 | 3,405 | 12 | % | 104,043 | 17,572 | 558 | 111 | 4.1 | % | 0.6 | % | 3.2 | % | |||||||||||
2019 | 45,141 | 8,798 | 19 | % | 148,423 | 37,100 | 595 | 35 | 4.1 | % | 0.4 | % | 1.6 | % | |||||||||||
2020 | 62,702 | 32,679 | 52 | % | 186,174 | 107,371 | 589 | 7 | 2.5 | % | 0.3 | % | 0.5 | % | |||||||||||
2021 | 85,574 | 70,771 | 83 | % | 257,972 | 222,036 | 1,339 | 4 | 6.2 | % | 0.5 | % | 0.6 | % | |||||||||||
2022 | 58,734 | 55,664 | 95 | % | 163,281 | 156,817 | 572 | — | 19.3 | % | 0.4 | % | 0.4 | % | |||||||||||
2023 | 8,734 | 8,674 | 99 | % | 23,250 | 23,120 | — | — | — | % | — | % | — | % | |||||||||||
Total | $ | 346,984 | $ | 186,724 | 1,120,655 | 600,294 | 4,475 | 609 |
(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 (benefits).
For the three months ended | |||||||
(In Thousands) | |||||||
Beginning balance | $ | 99,836 | $ | 103,551 | |||
Less reinsurance recoverables(1) | (21,587 | ) | (20,320 | ) | |||
Beginning balance, net of reinsurance recoverables | 78,249 | 83,231 | |||||
Add claims incurred: | |||||||
Claims and claim expenses (benefits) incurred: | |||||||
Current year(2) | 27,608 | 10,080 | |||||
Prior years(3) | (20,907 | ) | (10,699 | ) | |||
Total claims and claim expenses (benefits) incurred | 6,701 | (619 | ) | ||||
Less claims paid: | |||||||
Claims and claim expenses paid: | |||||||
Current year(2) | — | — | |||||
Prior years(3) | 272 | 320 | |||||
Total claims and claim expenses paid | 272 | 320 | |||||
Reserve at end of period, net of reinsurance recoverables | 84,678 | 82,292 | |||||
Add reinsurance recoverables(1) | 23,479 | 20,080 | |||||
Ending balance | $ | 108,157 | $ | 102,372 |
(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 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
(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
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 | |||||
Beginning default inventory | 4,449 | 6,227 | |||
Plus: new defaults | 1,558 | 1,163 | |||
Less: cures | (1,507 | ) | (2,132 | ) | |
Less: claims paid | (21 | ) | (19 | ) | |
Less: rescission and claims denied | (4 | ) | (1 | ) | |
Ending default inventory | 4,475 | 5,238 |
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 | |||||||
($ Values In Thousands) | |||||||
Number of claims paid(1) | 21 | 19 | |||||
Total amount paid for claims | $ | 344 | $ | 402 | |||
Average amount paid per claim | $ | 16 | $ | 21 | |||
Severity(2) | 39 | % | 39 | % |
(1) Count includes seven and six claims settled without payment during the three months ended
(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 dates indicated.
As of | |||||
Average reserve per default: | |||||
(In Thousands) | |||||
Case(1) | $ | 22.4 | $ | 18.0 | |
IBNR(1)(2) | 1.8 | 1.5 | |||
Total | $ | 24.2 | $ | 19.5 |
(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 | ||||||||
(In Thousands) | ||||||||
Available Assets | $ | 2,480,882 | $ | 2,378,627 | $ | 2,127,030 | ||
Risk-Based Required Assets | 1,231,780 | 1,203,708 | 1,341,217 |
Source:
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