• NMI Holdings, Inc. Reports Third Quarter 2021 Financial Results

    ソース: Nasdaq GlobeNewswire / 02 11 2021 16:01:01   America/New_York

    EMERYVILLE, Calif., Nov. 02, 2021 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $60.2 million, or $0.69 per diluted share, for the third quarter ended September 30, 2021, which compares to $57.5 million, or $0.65 per diluted share, in the second quarter ended June 30, 2021 and $38.2 million, or $0.45 per diluted share, in the third quarter ended September 30, 2020. Adjusted net income for the quarter was $61.8 million, or $0.71 per diluted share, which compares to $58.1 million, or $0.67 per diluted share, in the second quarter ended June 30, 2021 and $40.4 million, or $0.47 per diluted share, in the third quarter ended September 30, 2020. The non-GAAP financial measures adjusted net income, adjusted diluted earnings per share and adjusted return on equity are presented in this release to enhance the comparability of financial results between periods. See "Use of Non-GAAP Financial Measures" and our reconciliation of such measures to their most comparable GAAP measures, below.

    Claudia Merkle, CEO of National MI, said, “We delivered strong operating performance, significant growth in our high-quality insured portfolio and record financial results in the third quarter. Our credit performance continued to trend in a favorable direction, and we remain optimistic about the broad strength of the economy and resiliency of the housing market. We are an organization that is leading with impact, and believe we are well positioned to continue to support borrowers in need of down payment assistance, drive disciplined growth in our insurance in-force and deliver strong risk-adjusted returns going forward.”

    Selected third quarter 2021 highlights include:

    • Primary insurance-in-force at quarter end was $143.6 billion, up 5% from $136.6 billion in the second quarter and 37% compared to $104.5 billion in the third quarter of 2020

    • Net premiums earned were $113.6 million, up 2% compared to $110.9 million in the second quarter and 15% compared to $98.8 million in the third quarter of 2020

    • Underwriting and operating expenses were $34.7 million, including $1.3 million of costs incurred in connection with our CEO transition and $0.5 million of capital market transaction costs, compared to $34.7 million in the second quarter and $34.0 million in the third quarter of 2020

    • Insurance claims and claim expenses were $3.2 million, compared to $4.6 million in the second quarter and $15.7 million in the third quarter of 2020

    • Shareholders' equity was $1.5 billion at quarter end, equal to $17.68 per share, up 4% compared to $17.03 per share in the second quarter and 15% compared to $15.42 per share in the third quarter of 2020

    • Annualized return on equity for the quarter was 16.2% and annualized adjusted return on equity was 16.6%

    • At quarter-end, total PMIERs available assets were $2.0 billion and net risk-based required assets were $1.4 billion

      Quarter EndedQuarter EndedQuarter EndedChange (1)Change (1)
      9/30/20216/30/20219/30/2020Q/QY/Y
    INSURANCE METRICS ($billions)
    Primary Insurance-in-Force143.6 136.6 104.5  %37  %
    New Insurance Written - NIW     
     Monthly premium16.9 19.4 16.5 (13)% %
     Single premium1.2 3.3 2.0 (63)%(38)%
     Total (2)18.1 22.8 18.5 (21)%(2)%
          
    FINANCIAL HIGHLIGHTS (Unaudited, $millions, except per share amounts)
          
    Net Premiums Earned113.6 110.9 98.8  %15  %
    Insurance Claims and Claim Expenses3.2 4.6 15.7 (31)%(80)%
    Underwriting and Operating Expenses34.7 34.7 34.0 —  % %
    Net Income60.2 57.5 38.2  %58  %
    Adjusted Net Income61.8 58.1 40.4  %53  %
    Cash and Investments2,152 2,062 1,884  %14  %
    Shareholders' Equity1,516 1,460 1,308  %16  %
    Book Value per Share17.68 17.03 15.42  %15  %
    Loss Ratio2.8%4.2%15.9%  
    Expense Ratio30.5%31.3%34.4%  

    (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, November 2, 2021, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The conference call can also be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 internationally, and using Conference ID: 1091419 or by referencing NMI Holdings, Inc.

    About NMI Holdings, Inc.

    NMI Holdings, Inc. (NASDAQ: NMIH), is the parent company of National Mortgage Insurance Corporation (National MI), a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.

    Cautionary Note Regarding Forward-Looking Statements

    Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the U.S. Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: uncertainty relating to the COVID-19 pandemic and the measures taken by governmental authorities and other third parties to combat it, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and the Company’s business, operations and personnel; changes in the business practices of Fannie Mae and Freddie Mac (collectively, the "GSEs"), including decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement generally, or with first time homebuyers or on very high loan-to-value mortgages; our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements ("PMIERs") and other requirements imposed by the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia ("D.C.") and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including other private mortgage insurers and government mortgage insurers, such as the Federal Housing Administration, U.S. Department of Agriculture's Rural Housing Service and the U.S. Department of Veterans Affairs, and potential market entry by new competitors or consolidation of existing competitors; developments in the world’s financial and capital markets and our access to such markets, including reinsurance; adoption of new or changes to existing laws, 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; 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 nine months ended September 30, 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
    September 30,
     For the nine months ended
    September 30,
     2021
     2020
     2021
     2020
    Revenues(In Thousands, except for per share data)
    Net premiums earned$113,594  $98,802  $330,361  $296,463 
    Net investment income9,831  8,337  28,027  23,511 
    Net realized investment gains (losses)3  (4) 15  635 
    Other revenues613  648  1,597  2,771 
    Total revenues124,041  107,783  360,000  323,380 
    Expenses       
    Insurance claims and claim expenses3,204  15,667  12,806  55,698 
    Underwriting and operating expenses34,669  33,969  103,460  96,616 
    Service expenses787  557  1,859  2,381 
    Interest expense7,930  7,796  23,767  16,481 
    (Gain) loss from change in fair value of warrant liability  437  (454) (4,286)
    Total expenses46,590  58,426  141,438  166,890 
            
    Income before income taxes77,451  49,357  218,562  156,490 
    Income tax expense17,258  11,178  47,956  33,192 
    Net income$60,193  $38,179  $170,606  $123,298 
            
    Earnings per share       
    Basic$0.70  $0.45  $1.99  $1.63 
    Diluted$0.69  $0.45  $1.96  $1.55 
            
    Weighted average common shares outstanding       
    Basic85,721  84,805  85,563  75,695 
    Diluted86,880  85,599  86,794  76,867 
            
    Loss ratio (1)2.8% 15.9% 3.9% 18.8%
    Expense ratio (2)30.5% 34.4% 31.3% 32.6%
    Combined ratio (3)33.3% 50.2% 35.2% 51.4%
            
    Net income$60,193  $38,179  $170,606  $123,298 
            
    Other comprehensive income (loss), net of tax:       
    Unrealized (losses) gains in accumulated other comprehensive gain (loss), net of tax (benefit) expense of $(2,165) and $2,494 for the three months ended September 30, 2021 and 2020, and $(9,168) and $7,655 for the nine months ended September 30, 2021 and 2020, respectively(8,144) 9,381  (34,487) 28,799 
    Reclassification adjustment for realized (gains) losses included in net income, net of tax expense (benefit) of $1 and ($1) for the three months ended September 30, 2021 and 2020, and $3 and ($258) for the nine months ended September 30, 2021 and 2020, respectively(2) 3  (12) 972 
    Other comprehensive income (loss), net of tax(8,146) 9,384  (34,499) 29,771 
    Comprehensive income$52,047  $47,563  $136,107  $153,069 

    (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)September 30, 2021 December 31, 2020
    Assets(In Thousands, except for share data)
    Fixed maturities, available-for-sale, at fair value (amortized cost of $2,024,639 and $1,730,835 as of September 30, 2021 and December 31, 2020, respectively)$2,054,419  $1,804,286 
    Cash and cash equivalents (including restricted cash of $3,572 and $5,555 as of September 30, 2021 and December 31, 2020, respectively)97,260  126,937 
    Premiums receivable58,499  49,779 
    Accrued investment income12,114  9,862 
    Prepaid expenses4,409  3,292 
    Deferred policy acquisition costs, net61,362  62,225 
    Software and equipment, net32,066  29,665 
    Intangible assets and goodwill3,634  3,634 
    Prepaid reinsurance premiums2,969  6,190 
    Reinsurance recoverable20,420  17,608 
    Other assets51,162  53,188 
    Total assets$2,398,314  $2,166,666 
        
    Liabilities   
    Debt$394,282  $393,301 
    Unearned premiums139,624  118,817 
    Accounts payable and accrued expenses78,657  61,716 
    Reserve for insurance claims and claim expenses104,604  90,567 
    Reinsurance funds withheld6,280  8,653 
    Warrant liability, at fair value3,010  4,409 
    Deferred tax liability, net151,364  112,586 
    Other liabilities4,267  7,026 
    Total liabilities882,088  797,075 
        
    Shareholders' equity   
    Common stock - class A shares, $0.01 par value; 85,743,638 and 85,163,039 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively (250,000,000 shares authorized)857  852 
    Additional paid-in capital948,395  937,872 
    Accumulated other comprehensive income, net of tax19,357  53,856 
    Retained earnings547,617  377,011 
    Total shareholders' equity1,516,226  1,369,591 
    Total liabilities and shareholders' equity$2,398,314  $2,166,666 


    Non-GAAP Financial Measure Reconciliations (unaudited)
     For the three months ended For the nine months ended
     9/30/2021 6/30/2021 9/30/2020 9/30/2021 9/30/2020
    As Reported(In Thousands, except for per share data)    
    Revenues         
    Net premiums earned$113,594   $110,888   $98,802   $330,361   $296,463  
    Net investment income9,831   9,382   8,337   28,027   23,511  
    Net realized investment gains (losses)3   12   (4)  15   635  
    Other revenues613   483   648   1,597   2,771  
    Total revenues124,041   120,765   107,783   360,000   323,380  
    Expenses         
    Insurance claims and claim expenses3,204   4,640   15,667   12,806   55,698  
    Underwriting and operating expenses34,669   34,725   33,969   103,460   96,616  
    Service expenses787   481   557   1,859   2,381  
    Interest expense7,930   7,922   7,796   23,767   16,481  
    (Gain) loss from change in fair value of warrant liability   (658)  437   (454)  (4,286) 
    Total expenses46,590   47,110   58,426   141,438   166,890  
              
    Income before income taxes77,451   73,655   49,357   218,562   156,490  
    Income tax expense17,258   16,133   11,178   47,956   33,192  
    Net income $60,193   $57,522   $38,179   $170,606   $123,298  
              
    Adjustments:         
    Net realized investment (gains) losses(3)  (12)  4   (15)  (635) 
    (Gain) loss from change in fair value of warrant liability   (658)  437   (454)  (4,286) 
    Capital markets transaction costs481   1,615   2,254   2,474   5,518  
    Other infrequent, unusual or non-operating items (6)1,289         1,289     
    Adjusted income before taxes79,218   74,600   52,052   221,856   157,087  
              
    Income tax expense on adjustments (7)139   337   474   555   1,025  
    Adjusted net income$61,821   $58,130   $40,400   $173,345   $122,870  
              
    Weighted average diluted shares outstanding86,880   86,819   85,599   86,794   76,867  
              
    Diluted EPS (1)$0.69   $0.65   $0.45   $1.96   $1.55  
    Adjusted diluted EPS $0.71   $0.67   $0.47   $2.00   $1.60  
              
    Return-on-equity 16.2 % 16.2 % 11.9 % 15.8 % 14.7 %
    Adjusted return-on-equity16.6 % 16.4 % 12.6 % 16.0 % 14.6 %
              
    Expense ratio (2)30.5 % 31.3 % 34.4 % 31.3 % 32.6 %
    Adjusted expense ratio (3)29.0 % 29.9 % 32.1 % 30.2 % 31.6 %
              
    Combined ratio (4)33.3 % 35.5 % 50.2 % 35.2 % 51.4 %
    Adjusted combined ratio (5)31.8 % 34.0 % 48.0 % 34.1 % 50.4 %

    (1) Diluted net income for the quarter ended September 30, 2020, excludes the impact of the warrant fair value change as it was anti-dilutive. For all other periods presented, diluted net income equals reported net income as the impact of the warrant fair value change was dilutive.
    (2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
    (3) Adjusted expense ratio is calculated by dividing adjusted underwriting and operating expense (underwriting and operating expenses excluding costs related to capital markets reinsurance transactions 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 Data2021 2020
     September 30 June 30 March 31 December 31 September 30 June 30
    Revenues(In Thousands, except for per share data)
    Net premiums earned$113,594  $110,888   $105,879  $100,709  $98,802   $98,944 
    Net investment income9,831  9,382   8,814  8,386  8,337   7,070 
    Net realized investment gains (losses)3  12     295  (4)  711 
    Other revenues613  483   501  513  648   1,223 
    Total revenues124,041  120,765   115,194  109,903  107,783   107,948 
    Expenses           
    Insurance claims and claim expenses3,204  4,640   4,962  3,549  15,667   34,334 
    Underwriting and operating expenses34,669  34,725   34,065  34,994  33,969   30,370 
    Service expenses787  481   591  459  557   1,090 
    Interest expense7,930  7,922   7,915  7,906  7,796   5,941 
    (Gain ) loss from change in fair value of warrant liability  (658)  205  1,379  437   1,236 
    Total expenses46,590  47,110   47,738  48,287  58,426   72,971 
                
    Income before income taxes77,451  73,655   67,456  61,616  49,357   34,977 
    Income tax expense17,258  16,133   14,565  13,348  11,178   8,129 
    Net income$60,193  $57,522   $52,891  $48,268  $38,179   $26,848 
                
    Earnings per share           
    Basic$0.70  $0.67   $0.62  $0.57  $0.45   $0.36 
    Diluted$0.69  $0.65   $0.61  $0.56  $0.45   $0.36 
                
    Weighted average common shares outstanding           
    Basic85,721  85,647   85,317  84,956  84,805   73,617 
    Diluted86,880  86,819   86,487  86,250  85,599   74,174 
                
    Other data           
    Loss Ratio(1)2.8% 4.2 % 4.7% 3.5% 15.9 % 34.7%
    Expense Ratio(2)30.5% 31.3 % 32.2% 34.7% 34.4 % 30.7%
    Combined ratio (3)33.3% 35.5 % 36.9% 38.3% 50.2 % 65.4%

    (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
     September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
     ($ Values In Millions, except as noted below)
    New insurance written$18,084  $22,751  $26,397  $19,782  $18,499  $13,124 
    New risk written$4,640  5,650  6,531  4,868  4,577  3,260 
    Insurance in force (IIF) (1)143,618  136,598  123,777  111,252  104,494  98,905 
    Risk in force (1)$36,253  34,366  31,206  28,164  26,568  25,238 
    Policies in force (count) (1)490,714  471,794  436,652  399,429  381,899  372,934 
    Average loan size ($ value in thousands) (1)$293  $290  $283  $279  $274  $265 
    Coverage percentage (2)25.2% 25.2% 25.2% 25.3% 25.4% 25.5%
    Loans in default (count) (1)7,670  8,764  11,090  12,209  13,765  10,816 
    Default rate (1)1.56% 1.86% 2.54% 3.06% 3.60% 2.90%
    Risk in force on defaulted loans (1)$546  $625  $785  $874  $1,008  $799 
    Net premium yield (3)0.32% 0.34% 0.36% 0.37% 0.39% 0.40%
    Earnings from cancellations$7.7  $7.0  $9.9  $11.7  $12.6  $15.5 
    Annual persistency (4)58.1% 53.9% 51.9% 55.9% 60.0% 64.1%
    Quarterly run-off (5)8.1% 8.0% 12.5% 12.5% 13.1% 12.9%

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

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

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

    Primary NIWThree months ended
     September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
     (In Millions)
    Monthly$16,861  $19,422  $23,764  $17,789  $16,516  $11,885 
    Single1,223  3,329  2,633  1,993  1,983  1,239 
    Primary$18,084  $22,751  $26,397  $19,782  $18,499  $13,124 


    Primary and pool IIFAs of
     September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
     (In Millions)
    Monthly$124,767  $117,629  $106,920  $95,336  $88,584  $82,848 
    Single18,851  18,969  16,857  15,916  15,910  16,057 
    Primary143,618  136,598  123,777  111,252  104,494  98,905 
                
    Pool1,339  1,460  1,642  1,855  2,115  2,340 
    Total$144,957  $138,058  $125,419  $113,107  $106,609  $101,245 


    The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction, 2018 QSR Transaction, 2020 QSR Transaction and 2021 QSR Transaction, and collectively, the QSR Transactions), and Insurance-Linked Note transactions (the 2017 ILN Transaction, 2018 ILN Transaction, 2019 ILN Transaction, 2020-1 ILN Transaction, 2020-2 ILN Transaction and 2021 -1 ILN Transaction and collectively, the ILN Transactions) for the periods indicated.

     For the three months ended
     September 30,
    2021
     June 30, 2021 March 31,
    2021
     December 31,
    2020
     September 30,
    2020
     June 30, 2020
     (In Thousands)
    The QSR Transactions           
    Ceded risk-in-force$7,610,870   $7,113,707   $6,330,409   $5,543,969   $5,159,061   $4,563,676  
    Ceded premiums earned(28,366)  (27,537)  (25,747)  (24,161)  (24,517)  (23,210) 
    Ceded claims and claim expenses840   1,194   1,180   601   3,200   8,669  
    Ceding commission earned6,142   5,961   5,162   4,787   4,798   4,428  
    Profit commission15,191   14,391   13,380   13,184   11,034   5,271  
                
    The ILN Transactions           
    Ceded premiums$(10,390)  $(10,169)  $(9,397)  $(9,422)  $(6,268)  $(3,267) 


    Primary NIW by FICOFor the three months ended For the nine months ended 
     September 30,
    2021
     June 30, 2021 September 30,
    2020
     September 30,
    2021

     September 30,
    2020
     
     ($ In Millions)
    >= 760$8,073  $11,390  $11,600  $32,377 $25,942  
    740-7593,254  4,246  2,575  12,812 6,056  
    720-7392,563  3,152  2,187  9,678 5,373  
    700-7192,099  1,798  1,217  6,255 3,214  
    680-6991,487  1,292  793  4,139 1,872  
    <=679608  873  127  1,971 463  
    Total$18,084  $22,751  $18,499  $67,232 $42,920  
    Weighted average FICO749  754  764 753 761  


    Primary NIW by LTVFor the three months ended  For the nine months ended
     September 30,
    2021
     June 30, 2021 September 30,
    2020
     September 30,
    2021

     September 30,
    2020
     (In Millions)
    95.01% and above$1,957   $2,177   $587   $6,585   $1,855  
    90.01% to 95.00%8,344   9,941   7,767   29,336   18,161  
    85.01% to 90.00%4,961   6,262   6,968   19,071   16,117  
    85.00% and below2,822   4,371   3,177   12,240   6,787  
    Total$18,084   $22,751   $18,499   $67,232   $42,920  
    Weighted average LTV91.8 % 91.3 % 90.7 % 91.3 % 90.8 %


    Primary NIW by purchase/refinance mixFor the three months ended For the nine months ended
     September 30,
    2021
     June 30, 2021 September 30,
    2020
     September 30,
    2021

     September 30,
    2020
     (In Millions)
    Purchase$16,400  $18,911  $12,764  $53,220 $28,531 
    Refinance1,684  3,840  5,735  14,012 14,389 
    Total$18,084  $22,751  $18,499  $67,232 $42,920 

    The table below presents a summary of our primary IIF and RIF by book year as of September 30, 2021.

    Primary IIF and RIFAs of September 30, 2021
     IIF RIF
     (In Millions)
    September 30, 2021$64,885  $16,274 
    202047,196  11,848 
    201914,502  3,800 
    20185,675  1,446 
    20174,845  1,213 
    2016 and before6,515  1,672 
    Total$143,618  $36,253 

    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
     September 30, 2021 June 30, 2021 September 30, 2020
     (In Millions)
    >= 760$73,080  $70,583  $53,742 
    740-75924,676  23,175  16,193 
    720-73919,898  18,857  14,352 
    700-71913,206  12,230  10,235 
    680-6998,678  7,927  6,713 
    <=6794,080  3,826  3,259 
    Total$143,618  $136,598  $104,494 


    Primary RIF by FICOAs of
     September 30, 2021 June 30, 2021 September 30, 2020
     (In Millions)
    >= 760$18,200  $17,531  $13,563 
    740-7596,280  5,873  4,141 
    720-7395,086  4,798  3,694 
    700-7193,432  3,161  2,635 
    680-6992,243  2,047  1,730 
    <=6791,012  956  805 
    Total$36,253  $34,366  $26,568 


    Primary IIF by LTVAs of
     September 30, 2021 June 30, 2021 September 30, 2020
     (In Millions)
    95.01% and above$13,179  $12,026  $8,130 
    90.01% to 95.00%63,828  60,358  47,828 
    85.01% to 90.00%44,451  43,064  35,224 
    85.00% and below22,160  21,150  13,312 
    Total$143,618  $136,598  $104,494 


    Primary RIF by LTVAs of
     September 30, 2021 June 30, 2021 September 30, 2020
     (In Millions)
    95.01% and above$3,932  $3,552  $2,310 
    90.01% to 95.00%18,810  17,774  14,056 
    85.01% to 90.00%10,902  10,555  8,642 
    85.00% and below2,609  2,485  1,560 
    Total$36,253  $34,366  $26,568 


    Primary RIF by Loan TypeAs of
     September 30, 2021 June 30, 2021 September 30, 2020
          
    Fixed99 % 99 % 99 %
    Adjustable rate mortgages     
    Less than five years—   —   —  
    Five years and longer     
    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
     September 30, 2021 June 30, 2021 September 30, 2020
     (In Millions)
    IIF, beginning of period$136,598   $123,777   $98,905  
    NIW18,084   22,751   18,499  
    Cancellations, principal repayments and other reductions(11,064)  (9,930)  (12,910) 
    IIF, end of period$143,618   $136,598   $104,494  

    Geographic Dispersion

    The following table shows the distribution by state of our primary RIF as of the periods indicated.

    Top 10 primary RIF by stateAs of
     September 30, 2021 June 30, 2021 September 30, 2020
    California10.2% 10.3% 11.3%
    Texas9.9  9.8  8.3 
    Florida8.6  8.3  6.7 
    Virginia4.9  5.0  5.4 
    Colorado4.0  4.1  4.0 
    Maryland3.8  3.9  3.6 
    Illinois3.7  3.8  4.0 
    Georgia3.7  3.5  3.0 
    Washington3.5  3.6  3.5 
    Pennsylvania3.2  3.2  3.5 
    Total55.5% 55.5% 53.3%
          

    The table below presents selected primary portfolio statistics, by book year, as of September 30, 2021.

     As of September 30, 2021
    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)  
    2013$162  $7  4% 655  52  3  1  0.5% 0.6% 5.8%
    20143,451  310  9% 14,786  1,898  68  49  4.2% 0.8% 3.6%
    201512,422  1,923  15% 52,548  10,427  366  115  3.3% 0.9% 3.5%
    201621,187  4,275  20% 83,626  21,244  797  128  2.9% 1.1% 3.8%
    201721,582  4,845  22% 85,897  24,478  1,286  93  4.5% 1.6% 5.3%
    201827,295  5,675  21% 104,043  27,844  1,723  81  8.6% 1.7% 6.2%
    201945,141  14,502  32% 148,423  57,685  2,038  16  12.7% 1.4% 3.5%
    202062,702  47,196  75% 186,174  147,395  1,170  1  6.7% 0.6% 0.8%
    202167,232  64,885  97% 205,291  199,691  219    1.2% 0.1% 0.1%
    Total$261,174  $143,618    881,443  490,714  7,670  484       

    (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 nine months ended
     September 30,
    2021
     September 30,
    2020
     September 30,
    2021
     September 30,
    2020
     (In Thousands)
    Beginning balance$101,235   $69,903   $90,567   $23,752  
    Less reinsurance recoverables (1)(19,726)  (14,307)  (17,608)  (4,939) 
    Beginning balance, net of reinsurance recoverables81,509   55,596   72,959   18,813  
            
    Add claims incurred:       
    Claims and claim expenses incurred:       
    Current year (2)3,649   18,682   19,275   61,198  
    Prior years (3)(445)  (3,015)  (6,469)  (5,500) 
    Total claims and claim expenses incurred3,204   15,667   12,806   55,698  
            
    Less claims paid:       
    Claims and claim expenses paid:       
    Current year (2)3   113   15   152  
    Prior years (3)526   1,100   1,566   4,309  
    Total claims and claim expenses paid529   1,213   1,581   4,461  
            
    Reserve at end of period, net of reinsurance recoverables84,184   70,050   84,184   70,050  
    Add reinsurance recoverables (1)20,420   17,180   20,420   17,180  
    Ending balance$104,604   $87,230   $104,604   $87,230  

    (1)  Related to ceded losses recoverable under the QSR Transactions.
    (2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the default would be included in the current year. Amounts are presented net of reinsurance and included $14.0 million attributed to net case reserves and $4.8 million attributed to net IBNR reserves for the nine months ended September 30, 2021 and $55.4 million attributed to net case reserves and $4.8 million attributed to net IBNR reserves for the nine months ended September 30, 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 $1.8 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for the nine months ended September 30, 2021 and $4.0 million attributed to net case reserves and $1.3 million attributed to net IBNR reserves for the nine months ended September 30, 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 nine months ended
     September 30,
    2021
     September 30,
    2020
     September 30,
    2021
     September 30,
    2020
    Beginning default inventory8,764   10,816   12,209   1,448  
    Plus: new defaults1,624   6,588   4,486   16,870  
    Less: cures(2,694)  (3,598)  (8,964)  (4,426) 
    Less: claims paid(24)  (40)  (59)  (123) 
    Less: claims denied   (1)  (2)  (4) 
    Ending default inventory7,670   13,765   7,670   13,765  

    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 nine months ended
     September 30,
    2021
     September 30,
    2020
     September 30,
    2021
     September 30,
    2020
     (In Thousands)
    Number of claims paid (1)24  40  59  123 
    Total amount paid for claims$674  $1,540  $1,982  $5,621 
    Average amount paid per claim$28  $39  $34  $46 
    Severity(2)55% 67% 60% 80%

    (1) Count includes six and ten claims settled without payment during the three and nine months ended September 30, 2021, respectively, and six and eight claims settled without payment during the three and nine months ended 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 September 30, 2021 As of September 30, 2020
     (In Thousands)
    Case (1)$12.6  $5.8 
    IBNR (1)(2)1.0  0.5 
    Total$13.6  $6.3 

    (1) Defined as the gross reserve per insured loan in default.
    (2) Amount includes claims adjustment expenses.

    The following table provides a comparison of the PMIERs financial requirements as reported by NMIC as of the dates indicated.

     As of
     September 30, 2021 June 30, 2021 September 30, 2020
     (In Thousands)
    Available Assets$1,992,964  $1,886,993  $1,671,990 
    Risk-Based Required Assets1,365,656  1,170,854  990,678 

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