• NMI Holdings, Inc. Reports Fourth Quarter and Full Year 2021 Financial Results; Announces $125 Million Share Repurchase Authorization

    ソース: Nasdaq GlobeNewswire / 15 2 2022 16:01:01   America/New_York

    EMERYVILLE, Calif., Feb. 15, 2022 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $60.5 million, or $0.69 per diluted share, for the fourth quarter ended December 31, 2021, which compares to $60.2 million, or $0.69 per diluted share, in the third quarter ended September 30, 2021 and $48.3 million, or $0.56 per diluted share, in the fourth quarter ended December 31, 2020. Adjusted net income for the quarter was $63.5 million or $0.73 per diluted share, which compares to $61.8 million or $0.71 per diluted share in the third quarter ended September 30, 2021 and $50.8 million or $0.59 per diluted share in the fourth quarter ended December 31, 2020.

    Net income for the full year ended December 31, 2021 was $231.1 million or $2.65 per diluted share, which compares to $171.6 million, or $2.13 per diluted share, for the year ended December 31, 2020. Adjusted net income for the year was $236.8 million or $2.73 per diluted share, which compares to $173.6 million, or $2.19 per diluted share, for the year ended December 31, 2020. The non-GAAP financial measures adjusted net income, adjusted diluted earnings per share and adjusted return on equity are presented in this release to enhance the comparability of financial results between periods. See "Use of Non-GAAP Financial Measures" and our reconciliation of such measures to their most comparable GAAP measures, below.

    The company also announced today that its Board of Directors has authorized a $125 million share repurchase plan effective through December 31, 2023.

    Adam Pollitzer, President and Chief Executive Officer of National MI, said, “The fourth quarter capped a year of standout success for National MI. In 2021, we delivered record NIW volume, grew our high-quality insured portfolio, and achieved record profitability and consistently strong mid-teen returns. We ended the year with a robust funding position and are pleased to announce our $125 million debut share repurchase program. We are excited to progress along our capital roadmap and provide investors with the ability to directly access value as we continue to perform, grow our earnings and compound book value. National MI is leading with impact; helping a record number of borrowers gain access to housing and providing them support as they build long-term value and community. Looking forward, we see a compelling opportunity to continue to support borrowers in need, drive strong growth in our high-quality insurance in-force and deliver strong risk-adjusted returns.”

    Selected fourth quarter 2021 highlights include:

    • New insurance written was $18.3 billion, compared to $18.1 billion in the third quarter and $19.8 billion in the fourth quarter of 2020, primarily reflecting a decline in refinancing origination volume year-on-year

    • Primary insurance-in-force at quarter-end was $152.3 billion, up 6% from $143.6 billion in the third quarter and 37% compared to $111.3 billion in the fourth quarter of 2020

    • Net premiums earned were $113.9 million, compared to $113.6 million in the third quarter and $100.7 million in the fourth quarter of 2020

    • Underwriting and operating expenses were $38.8 million, including $2.5 million of costs incurred in connection with our CEO transition and $1.5 million of capital market transaction costs, compared to $34.7 million in the third quarter and $35.0 million in the fourth quarter of 2020

    • Insurance claims and claim expenses was a benefit of $0.5 million, compared to an expense of $3.2 million in the third quarter and $3.5 million in the fourth quarter of 2020

    • Shareholders' equity was $1.6 billion at quarter end, equal to $18.25 per share, up 3% compared to $17.68 per share in the third quarter and 13% compared to $16.08 per share in the fourth quarter of 2020

    • Annualized return on equity for the quarter was 15.7% and annualized adjusted return on equity was 16.5%

    • At quarter-end, total PMIERs available assets were $2.0 billion and net risk-based required assets of $1.2 billion
      Quarter EndedQuarter EndedQuarter EndedChange (1)Change (1)
      12/31/20219/30/202112/31/2020Q/QY/Y
    INSURANCE METRICS ($billions)
    Primary Insurance-in-Force$152.3 $143.6 $111.3 6%37%
    New Insurance Written - NIW             
     Monthly premium 17.0  16.9  17.8 1%(5)%
     Single premium 1.4  1.2  2.0 12%(31)%
     Total (2) 18.3  18.1  19.8 1%(7)%
          
    FINANCIAL HIGHLIGHTS (Unaudited, $millions, except per share amounts)
    Net Premiums Earned  113.9  113.6  100.7 %13%
    Insurance Claims and Claim Expenses  (0.5) 3.2  3.5 (116)%(114)%
    Underwriting and Operating Expenses  38.8  34.7  35.0 12%11%
    Net Income  60.5  60.2  48.3 1%25%
    Adjusted Net Income  63.5  61.8  50.8 3%25%
    Cash and Investments  2,163  2,152  1,931 1%12%
    Shareholders' Equity  1,566  1,516  1,370 3%14%
    Book Value per Share  18.25  17.68  16.08 3%13%
    Loss Ratio  (0.4)% 2.8% 3.5%    
    Expense Ratio  34.1% 30.5% 34.7%    


    (1)Percentages may not be replicated based on the rounded figures presented in the table.
    (2)Total may not foot due to rounding.

    Conference Call and Webcast Details

    The company will hold a conference call, which will be webcast live today, February 15, 2022, 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: 9990952 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 charters, business practices, policy or priorities of Fannie Mae and Freddie Mac (collectively, the "GSEs"), which may include 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; or changes in the direction of housing policy objectives of the Federal Housing Finance Agency (FHFA), such as the FHFA's priority to increase the accessibility and affordability of homeownership for low-and-moderate income borrowers and minority communities; 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, rules and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including the implementation of the final rules defining and/or concerning "Qualified Mortgage" and “Qualified Residential Mortgage”; U.S. federal tax reform and other potential changes in tax law and their impact on us and our operations; 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; decrease in the length of time our insurance policies are in force; 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; effectiveness and security of our information technology systems and digital products and services, including the risks these systems, products or services may fail to operate as expected or planned, or expose us to cybersecurity or third-party risks; and, our ability to recruit, train and retain key personnel. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2020, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

    Use of Non-GAAP Financial Measures

    We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio and adjusted combined ratio enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors. These non-GAAP financial measures align with the way the company's business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.

    Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and 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.

    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)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. Infrequent, unusual or non-operating adjustments for the three and twelve months ended December 31, 2021, include severance, restricted stock modification and other expenses incurred in connection with the CEO transition we announced on September 9, 2021. 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 infrequent or non-recurring in nature, and are not indicative of the performance of, or ongoing trends in, our primary operating activities or business.

    Investor Contact
    John M. Swenson
    Vice President, Investor Relations and Treasury
    john.swenson@nationalmi.com
    (510) 788-8417


    Consolidated statements of operations and comprehensive income (unaudited)For the three months ended December 31, For the year ended December 31,
      2021   2020   2021   2020 
    Revenues(In Thousands, except for per share data)
    Net premiums earned$113,933  $100,709  $444,294  $397,172 
    Net investment income 10,045   8,386   38,072   31,897 
    Net realized investment gains 714   295   729   930 
    Other revenues 380   513   1,977   3,284 
    Total revenues 125,072   109,903   485,072   433,283 
    Expenses       
    Insurance claims and claim (benefits) expenses (500)  3,549   12,305   59,247 
    Underwriting and operating expenses 38,843   34,994   142,303   131,610 
    Service expenses 650   459   2,509   2,840 
    Interest expense 8,029   7,906   31,796   24,387 
    (Gain) loss from change in fair value of warrant liability (112)  1,379   (566)  (2,907)
    Total expenses 46,910   48,287   188,347   215,177 
            
    Income before income taxes 78,162   61,616   296,725   218,106 
    Income tax expense 17,639   13,348   65,595   46,540 
    Net income$60,523  $48,268  $231,130  $171,566 
            
    Earnings per share       
    Basic$0.71  $0.57  $2.70  $2.20 
    Diluted$0.69  $0.56  $2.65  $2.13 
            
    Weighted average common shares outstanding       
    Basic 85,757   84,956   85,620   78,023 
    Diluted 87,117   86,250   86,885   79,263 
            
    Loss ratio(1) (0.4)%  3.5%  2.8%  14.9%
    Expense ratio(2) 34.1%  34.7%  32.0%  33.1%
    Combined ratio (3) 33.7%  38.3%  34.8%  48.1%
            
    Net income$60,523  $48,268  $231,130  $171,566 
    Other comprehensive (loss) income, net of tax:       
    Unrealized (losses) gains in accumulated other comprehensive income, net of tax (benefit) expense of $(4,601) and $1,869 for the three months ended December 31, 2021 and 2020, respectively, and $(13,768) and $9,525 for the years ended December 31, 2021, and 2020, respectively (17,307)  7,031   (51,795)  35,829 
    Reclassification adjustment for realized (gains) losses included in net income, net of tax expense (benefit) of $150 and $62 for the three months ended December 31, 2021 and 2020, respectively, and $153 and $(196) for the years ended December 31, 2021, and 2020 respectively (564)  (233)  (576)  739 
    Other comprehensive income (loss), net of tax (17,871)  6,798   (52,371)  36,568 
    Comprehensive income$42,652  $55,066  $178,759  $208,134 


    (1)Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
    (2)Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
    (3)Combined ratio may not foot due to rounding.



    Consolidated balance sheets (unaudited)December 31, 2021 December 31, 2020
    Assets(In Thousands, except for share data)
    Fixed maturities, available-for-sale, at fair value (amortized cost of $2,078,773 and $1,730,835 as of December 31, 2021 and December 31, 2020, respectively)$2,085,931 $1,804,286
    Cash and cash equivalents (including restricted cash of $3,165 and $5,555 as of December 31, 2021 and December 31, 2020, respectively) 76,646  126,937
    Premiums receivable 60,358  49,779
    Accrued investment income 11,900  9,862
    Prepaid expenses 3,530  3,292
    Deferred policy acquisition costs, net 59,584  62,225
    Software and equipment, net 32,047  29,665
    Intangible assets and goodwill 3,634  3,634
    Prepaid reinsurance premiums 2,393  6,190
    Reinsurance recoverable 20,320  17,608
    Other assets 94,238  53,188
    Total assets$2,450,581 $2,166,666
        
    Liabilities   
    Debt$394,623 $393,301
    Unearned premiums 139,237  118,817
    Accounts payable and accrued expenses 72,000  61,716
    Reserve for insurance claims and claim expenses 103,551  90,567
    Reinsurance funds withheld 5,601  8,653
    Warrant liability, at fair value 2,363  4,409
    Deferred tax liability, net 164,175  112,586
    Other liabilities 3,245  7,026
    Total liabilities 884,795  797,075
        
    Shareholders' equity   
    Common stock - class A shares, $0.01 par value; 85,792,849 and 85,163,039 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively (250,000,000 shares authorized) 858  852
    Additional paid-in capital 955,302  937,872
    Accumulated other comprehensive income, net of tax 1,485  53,856
    Retained earnings 608,141  377,011
    Total shareholders' equity 1,565,786  1,369,591
    Total liabilities and shareholders' equity$2,450,581 $2,166,666



    Non-GAAP Financial Measure Reconciliations (unaudited)
     For the three months ended For the year ended
     12/31/2021 9/30/2021 12/31/2020 12/31/2021 12/31/2020
    As Reported(In Thousands, except for per share data)
    Revenues         
    Net premiums earned$113,933  $113,594  $100,709  $444,294  $397,172 
    Net investment income 10,045   9,831   8,386   38,072   31,897 
    Net realized investment gains 714   3   295   729   930 
    Other revenues 380   613   513   1,977   3,284 
    Total revenues 125,072   124,041   109,903   485,072   433,283 
    Expenses         
    Insurance claims and claim (benefits) expenses (500)  3,204   3,549   12,305   59,247 
    Underwriting and operating expenses 38,843   34,669   34,994   142,303   131,610 
    Service expenses 650   787   459   2,509   2,840 
    Interest expense 8,029   7,930   7,906   31,796   24,387 
    (Gain) loss from change in fair value of warrant liability (112)     1,379   (566)  (2,907)
    Total expenses 46,910   46,590   48,287   188,347   215,177 
              
    Income before income taxes 78,162   77,451   61,616   296,725   218,106 
    Income tax expense 17,639   17,258   13,348   65,595   46,540 
    Net income $60,523  $60,193  $48,268  $231,130  $171,566 
              
    Adjustments:         
    Net realized investment gains (714)  (3)  (295)  (729)  (930)
    (Gain) loss from change in fair value of warrant liability (112)     1,379   (566)  (2,907)
    Capital markets transaction costs 1,505   481   1,719   3,979   7,237 
    Other infrequent, unusual or non-operating items (6) 2,540   1,289      3,829    
    Adjusted income before taxes 81,381   79,218   64,419   303,238   221,506 
              
    Income tax expense on adjustments (7) 251   139   299   806   1,324 
    Adjusted net income$63,491  $61,821  $50,772  $236,837  $173,642 
              
    Weighted average diluted shares outstanding 87,117   86,880   86,250   86,885   79,263 
    Adjusted weighted average diluted shares outstanding 87,117   86,880   86,250   86,885   79,263 
              
    Diluted EPS (1)$0.69  $0.69  $0.56  $2.65 (1)$2.13 
    Adjusted diluted EPS $0.73  $0.71  $0.59  $2.73  $2.19 
              
    Return on equity  15.7%  16.2%  14.4%  15.7%  14.9%
    Adjusted return on equity 16.5%  16.6%  15.2%  16.1%  15.1%
              
    Expense ratio (2) 34.1%  30.5%  34.7%  32.0%  33.1%
    Adjusted expense ratio (3) 30.5%  29.0%  33.0%  30.3%  32.0%
              
    Combined ratio (4) 33.7%  33.3%  38.3%  34.8%  48.1%
    Adjusted combined ratio (5) 30.1%  31.8%  36.6%  33.0%  46.9%


    (1)Diluted net income for the three months ended December 31, 2021, the year ended December 31, 2021 and 2020, excludes the impact of the warrant fair value change as it was dilutive. For all other periods presented, diluted net income equals reported net income as the impact of the warrant fair value change was anti-dilutive.
    (2)Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
    (3)Adjusted expense ratio is calculated by dividing adjusted underwriting and operating expense (underwriting and operating expenses excluding costs related to capital markets reinsurance transactions and infrequent or unusual non-operating items) 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 infrequent or unusual non-operating items) and insurance claims and claims expense by net premiums earned.
    (6)Represents severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced on September 9, 2021.
    (7)Marginal tax impact of non-GAAP adjustments is calculated based on our statutory U.S. federal corporate income tax rate of 21%, except for those items that are not eligible for an income tax deduction. Such non-deductible items include gains or losses from the change in the fair value of our warrant liability and certain costs incurred in connection with the CEO transition, which are limited under Section 162(m) of the Internal Revenue Code.



    Historical Quarterly Data 2021   2020 
     December 31 September 30 June 30 March 31 December 31 September 30
    Revenues(In Thousands, except for per share data)
    Net premiums earned$113,933  $113,594  $110,888  $105,879  $100,709  $98,802 
    Net investment income 10,045   9,831   9,382   8,814   8,386   8,337 
    Net realized investment gains (losses) 714   3   12      295   (4)
    Other revenues 380   613   483   501   513   648 
    Total revenues 125,072   124,041   120,765   115,194   109,903   107,783 
    Expenses           
    Insurance claims and claim (benefits) expenses (500)  3,204   4,640   4,962   3,549   15,667 
    Underwriting and operating expenses 38,843   34,669   34,725   34,065   34,994   33,969 
    Service expenses 650   787   481   591   459   557 
    Interest expense 8,029   7,930   7,922   7,915   7,906   7,796 
    (Gain) loss from change in fair value of warrant liability (112)     (658)  205   1,379   437 
    Total expenses 46,910   46,590   47,110   47,738   48,287   58,426 
                
    Income before income taxes 78,162   77,451   73,655   67,456   61,616   49,357 
    Income tax expense 17,639   17,258   16,133   14,565   13,348   11,178 
    Net income$60,523  $60,193  $57,522  $52,891  $48,268  $38,179 
                
    Earnings per share           
    Basic$0.71  $0.70  $0.67  $0.62  $0.57  $0.45 
    Diluted$0.69  $0.69  $0.65  $0.61  $0.56  $0.45 
                
    Weighted average common shares outstanding           
    Basic 85,757   85,721   85,467   85,317   84,956   84,805 
    Diluted 87,117   86,880   86,819   86,487   86,250   85,599 
                
    Other data           
    Loss Ratio(1) (0.4)%  2.8%  4.2%  4.7%  3.5%  15.9%
    Expense Ratio(2) 34.1%  30.5%  31.3%  32.2%  34.7%  34.4%
    Combined ratio (3) 33.7%  33.3%  35.5%  36.9%  38.3%  50.2%


    (1)Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
    (2)Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
    (3)Combined ratio may not foot due to rounding.


    Portfolio Statistics

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

    Primary portfolio trendsAs of and for the three months ended
     December 31,
    2021
     September 30,
    2021
     June 30,
    2021
     March 31,
    2021
     December 31,
    2020
     September 30,
    2020
     ($ Values In Millions)
    New insurance written$18,342  $18,084  $22,751  $26,397  $19,782  $18,499 
    New risk written$4,786   4,640   5,650   6,531   4,868   4,577 
    Insurance in force (IIF) (1) 152,343   143,618   136,598   123,777   111,252   104,494 
    Risk in force (1)$38,661   36,253   34,366   31,206   28,164   26,568 
    Policies in force (count) (1) 512,316   490,714   471,794   436,652   399,429   381,899 
    Average loan size ($ value in thousands) (1)$297  $293  $290  $283  $279  $274 
    Coverage percentage (2) 25.4%  25.2%  25.2%  25.2%  25.3%  25.4%
    Loans in default (count) (1) 6,227   7,670   8,764   11,090   12,209   13,765 
    Default rate (1) 1.22%  1.56%  1.86%  2.54%  3.06%  3.60%
    Risk in force on defaulted loans (1)$435  $546  $625  $785  $874  $1,008 
    Net premium yield (3) 0.34%  0.32%  0.34%  0.36%  0.37%  0.39%
    Earnings from cancellations$5.1  $7.7  $7.0  $9.9  $11.7  $12.6 
    Annual persistency (4) 63.8%  58.1%  53.9%  51.9%  55.9%  60.0%
    Quarterly run-off (5) 6.7%  8.1%  8.0%  12.5%  12.5%  13.1%


    (1)Reported as of the end of the period.
    (2)Calculated as end of period risk-in-force (RIF) divided by end of period IIF.
    (3)Calculated as net premiums earned, divided by average primary IIF for the period, annualized.
    (4)Defined as the percentage of IIF that remains on our books after a given twelve-month period.
    (5)Defined as the percentage of IIF that is no longer on our books after a given three-month period.


    New Insurance Written (NIW), Insurance in Force (IIF) and Premiums

    The tables below present primary NIW and primary and pool IIF, as of the dates and for the periods indicated

    Primary NIWFor the three months ended
     December 31,
    2021
     September 30,
    2021
     June 30,
    2021
     March 31,
    2021
     December 31,
    2020
     September 30,
    2020
     (In Millions)
    Monthly$16,972 $16,861 $19,422 $23,764 $17,789 $16,516
    Single 1,370  1,223  3,329  2,633  1,993  1,983
    Primary$18,342 $18,084 $22,751 $26,397 $19,782 $18,499


    Primary and pool IIFAs of
     December 31,
    2021
     September 30,
    2021
     June 30,
    2021
     March 31,
    2021
     December 31,
    2020
     September 30,
    2020
     (In Millions)
    Monthly$133,104 $124,767 $117,629 $106,920 $95,336 $88,584
    Single 19,239  18,851  18,969  16,857  15,916  15,910
    Primary 152,343  143,618  136,598  123,777  111,252  104,494
                
    Pool 1,229  1,339  1,460  1,642  1,855  2,115
    Total$153,572 $144,957 $138,058 $125,419 $113,107 $106,609


    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, and 2022 QSR Transaction, and collectively, the QSR Transactions), and Insurance-Linked Note transactions (the 2017 ILN Transaction, 2018 ILN Transaction, 2019 ILN Transaction, 2020-1 ILN Transaction, 2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN Transaction and and collectively, the ILN Transactions) for the periods indicated.

     For the three months ended
     December 31,
    2021
     September 30,
    2021
     June 30,
    2021
     March 31,
    2021
     December 31,
    2020
    September 30,
    2020
     (In Thousands)
    The QSR Transactions          
    Ceded risk-in-force$8,194,604  $7,610,870  $7,113,707  $6,330,409  $5,543,969 $5,159,061 
    Ceded premiums earned (28,490)  (28,366)  (27,537)  (25,747)  (24,161) (24,517)
    Ceded claims and claim expenses 19   840   1,194   1,180   601  3,200 
    Ceding commission earned 6,208   6,142   5,961   5,162   4,787  4,798 
    Profit commission 16,142   15,191   14,391   13,380   13,184  11,034 
               
    The ILN Transactions          
    Ceded premiums$(11,344) $(10,390) $(10,169) $(9,397) $(9,422)$(6,268)


    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 For the year ended
     December 31,
    2021
     September 30,
    2021
     December 31,
    2020
     December 31,
    2021
     December 31,
    2020
     ($ In Millions)
    >= 760$8,032 $8,073 $11,495 $40,408 $37,437
    740-759 3,115  3,254  3,387  15,927  9,443
    720-739 2,833  2,563  2,447  12,511  7,820
    700-719 2,196  2,099  1,430  8,450  4,644
    680-699 1,653  1,487  820  5,792  2,692
    <=679 514  608  203  2,486  666
    Total$18,342 $18,084 $19,782 $85,574 $62,702
    Weighted average FICO 748  749  761  752  761


    Primary NIW by LTVFor the three months ended  For the year ended
     December 31,
    2021
     September 30,
    2021
     December 31,
    2020
     December 31,
    2021
     December 31,
    2020
     (In Millions)
    95.01% and above$1,569  $1,957  $1,877  $8,153  $3,732 
    90.01% to 95.00% 8,879   8,344   7,839   38,215   26,000 
    85.01% to 90.00% 5,583   4,961   6,239   24,655   22,356 
    85.00% and below 2,311   2,822   3,827   14,551   10,614 
    Total$18,342  $18,084  $19,782  $85,574  $62,702 
    Weighted average LTV 91.9%  91.8%  90.9%  91.4%  90.9%


    Primary NIW by purchase/refinance mixFor the three months ended For the year ended
     December 31,
    2021
     September 30,
    2021
     December 31,
    2020
     December 31,
    2021
     December 31,
    2020
     (In Millions)
    Purchase$17,097 $16,400 $13,085 $70,318 $41,616
    Refinance 1,245  1,684  6,697  15,256  21,086
    Total$18,342 $18,084 $19,782 $85,574 $62,702


    The table below presents a summary of our primary IIF and RIF by book year as of December 31, 2021.

    Primary IIF and RIFAs of December 31, 2021
     IIF RIF
     (In Millions)
    December 31, 2021$81,226 $20,591
    2020 43,795  11,023
    2019 12,407  3,249
    2018 4,929  1,258
    2017 4,233  1,062
    2016 and before 5,753  1,478
    Total$152,343 $38,661


    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, 2021 September 30, 2021 December 31, 2020
     (In Millions)
    >= 760$76,449 $73,080 $58,368
    740-759 26,219  24,676  17,442
    720-739 21,356  19,898  15,091
    700-719 14,401  13,206  10,442
    680-699 9,654  8,678  6,777
    <=679 4,264  4,080  3,132
    Total$152,343 $143,618 $111,252


    Primary RIF by FICOAs of
     December 31, 2021 September 30, 2021 December 31, 2020
     (In Millions)
    >= 760$19,125 $18,200 $14,634
    740-759 6,707  6,280  4,449
    720-739 5,497  5,086  3,868
    700-719 3,771  3,432  2,692
    680-699 2,511  2,243  1,748
    <=679 1,050  1,012  773
    Total$38,661 $36,253 $28,164


    Primary IIF by LTVAs of
     December 31, 2021 September 30, 2021 December 31, 2020
     (In Millions)
    95.01% and above$14,058 $13,179 $9,129
    90.01% to 95.00% 68,537  63,828  49,898
    85.01% to 90.00% 46,971  44,451  36,972
    85.00% and below 22,777  22,160  15,253
    Total$152,343 $143,618 $111,252


    Primary RIF by LTVAs of
     December 31, 2021 September 30, 2021 December 31, 2020
     (In Millions)
    95.01% and above$4,230 $3,932 $2,637
    90.01% to 95.00% 20,210  18,810  14,673
    85.01% to 90.00% 11,533  10,902  9,067
    85.00% and below 2,688  2,609  1,787
    Total$38,661 $36,253 $28,164


    Primary RIF by Loan TypeAs of
     December 31, 2021 September 30, 2021 December 31, 2020
          
    Fixed99% 99% 99%
    Adjustable rate mortgages:     
    Less than five years     
    Five years and longer1  1  1 
    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, 2021 September 30, 2021 December 31, 2020
     (In Millions)
    IIF, beginning of period$143,618  $136,598  $104,494 
    NIW 18,342   18,084   19,782 
    Cancellations, principal repayments and other reductions (9,617)  (11,064)  (13,024)
    IIF, end of period$152,343  $143,618  $111,252 


    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, 2021 September 30, 2021 December 31, 2020
    California10.4% 10.2% 11.2%
    Texas9.7  9.9  8.8 
    Florida8.6  8.6  7.3 
    Virginia4.7  4.9  5.1 
    Colorado3.8  4.0  4.1 
    Georgia3.8  3.7  3.1 
    Maryland3.7  3.8  3.7 
    Washington3.7  3.5  3.5 
    Illinois3.6  3.7  3.8 
    Pennsylvania3.3  3.2  3.4 
    Total55.3% 55.5% 54.0%


    The table below presents selected primary portfolio statistics, by book year, as of December 31, 2021.

     As of December 31, 2021
    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 $6 4% 655 46 1 1 0.4% 0.3% 2.2%
    2014 3,451  274 8% 14,786 1,693 60 49 4.3% 0.7% 3.5%
    2015 12,422  1,706 14% 52,548 9,341 275 117 3.3% 0.7% 2.9%
    2016 21,187  3,768 18% 83,626 18,987 591 129 2.8% 0.9% 3.1%
    2017 21,582  4,233 20% 85,897 21,718 950 101 4.3% 1.2% 4.4%
    2018 27,295  4,928 18% 104,043 24,448 1,328 89 8.2% 1.4% 5.4%
    2019 45,141  12,407 27% 148,423 50,313 1,479 20 11.4% 1.0% 2.9%
    2020 62,702  43,795 70% 186,174 138,203 1,070 1 6.0% 0.6% 0.8%
    2021 85,574  81,226 95% 257,972 247,567 473  2.0% 0.2% 0.2%
    Total$279,516 $152,343   934,124 512,316 6,227 507      


    (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,
    2021
     December 31,
    2020
     December 31,
    2021
     December 31,
    2020
     (In Thousands)
    Beginning balance$104,604  $87,230  $90,567  $23,752 
    Less reinsurance recoverables (1) (20,420)  (17,180)  (17,608)  (4,939)
    Beginning balance, net of reinsurance recoverables 84,184   70,050   72,959   18,813 
            
    Add claims incurred:       
    Claims and claim expenses incurred:       
    Current year (2) 4,159   5,745   23,433   66,943 
    Prior years (3) (4,659)  (2,196)  (11,128)  (7,696)
    Total claims and claim expenses incurred (500)  3,549   12,305   59,247 
            
    Less claims paid:       
    Claims and claim expenses paid:       
    Current year (2) 1   434   16   586 
    Prior years (3) 452   206   2,017   4,515 
    Total claims and claim expenses paid 453   640   2,033   5,101 
            
    Reserve at end of period, net of reinsurance recoverables 83,231   72,959   83,231   72,959 
    Add reinsurance recoverables (1) 20,320   17,608   20,320   17,608 
    Ending balance$103,551  $90,567  $103,551  $90,567 


    (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 $18.1 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the year ended December 31, 2021, $60.8 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for year ended December 31, 2020.
    (3)Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance and included $6.3 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for the year ended December 31, 2021, $6.2 million attributed to net case reserves and $1.3 million attributed to net IBNR reserves for the year ended December 31, 2020.


    The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.

     For the three months ended  For the year ended
     December 31,
    2021
     December 31,
    2020
     December 31,
    2021
     December 31,
    2020
    Beginning default inventory7,670  13,765  12,209  1,448 
    Plus: new defaults1,244  2,589  5,730  19,459 
    Less: cures(2,664) (4,122) (11,626) (8,548)
    Less: claims paid(23) (20) (82) (143)
    Less: claims denied  (3) (4) (7)
    Ending default inventory6,227  12,209  6,227  12,209 


    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,
    2021
     December 31,
    2020
     December 31,
    2021
     December 31,
    2020
     (In Thousands)
    Number of claims paid (1) 23   20   82   143 
    Total amount paid for claims$572  $813  $2,554  $6,434 
    Average amount paid per claim$25  $41  $31  $45 
    Severity(2) 53%  75%  59%  80%


    (1)Count includes five and 15 claims settled without payment for the three months and year ended December 31, 2021, respectively, and one and nine claims settled without payment for the three months and year ended December 31, 2020, 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,
    2021
     As of December 31,
    2020
     (In Thousands)
    Case (1)$15.3 $6.8
    IBNR (1)(2) 1.3  0.6
    Total$16.6 $7.4


    (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, 2021 September 30, 2021 December 31, 2020
     (In Thousands)
    Available Assets$2,041,193 $1,992,964 $1,750,668
    Risk-Based Required Assets 1,186,272  1,365,656  984,372

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