NMI Holdings, Inc. Reports Record Fourth Quarter and Full Year 2015 Financial Results
New Insurance Written Grows 25% Sequentially
EMERYVILLE, Calif., Feb. 18, 2016 /PRNewswire/ -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported results for the fourth quarter and year ended Dec. 31, 2015. In the fourth quarter, monthly premium new insurance written (NIW) was $2.0 billion, an increase of 28% over the prior quarter. Overall NIW of $4.5 billion increased 25% over $3.6 billion in the prior quarter. For the year, total NIW of $12.4 billion was up 254% from $3.5 billion in 2014.
The company reported a net loss for the fourth quarter of $4.8 million, or $0.08 per share, which includes interest expense of $2.1 million related to the company's term loan, which was entered into in the fourth quarter of 2015. This compares with a net loss of $4.8 million, or $0.08 per share, in the prior quarter, and a net loss of $10.0 million, or $0.17 per share, in the fourth quarter of 2014. Total net loss for the year ended Dec. 31, 2015 was $27.8 million, or $0.47 per share, which compares with $48.9 million, or $0.84 per share, for the year ended Dec. 31, 2014. In the fourth quarter, total revenue was $18.9 million, which compares with $14.7 million in the prior quarter. For the year, total revenue was $53.6 million, compared with $19.2 million in 2014.
Bradley Shuster, chairman and CEO of National MI, said, "In the fourth quarter we continued our strong growth trajectory, driven by our monthly premium product, which was up 28% over the prior quarter. We also achieved full compliance with the PMIERs requirements as of year-end. For 2016, we are focused on continuing to grow high-quality insurance-in-force, particularly monthly premium product, deploying our capital at attractive mid-teens returns. We expect to achieve GAAP profitability during the second half of 2016 and thereafter to demonstrate growing earnings leverage as we scale into our largely fixed expense base. With our continuing growth, we are evaluating capital alternatives, which include potential reinsurance relationships to help us continue to efficiently manage capital and risk in 2016 and beyond."
- Premiums earned for the quarter were $16.9 million, up from $12.8 million in the prior quarter. For the year, premiums earned were $45.5 million, up from $13.4 million in the prior year.
- Investment income in the fourth quarter was $2.1 million, up from $1.9 million in the prior quarter. Investment income for the year was $7.2 million, up from $5.6 million in 2014.
- Total underwriting and operating expenses in the fourth quarter were $21.7 million, including share-based compensation expense of $2.3 million. This compares with total underwriting and operating expenses of $19.7 million, including $1.8 million of share-based compensation, in the prior quarter. For the year, total underwriting and operating expenses were $80.6 million, including share-based compensation expense of $8.2 million. This compares with operating expenses of $73.4 million, including share-based compensation expense of $9.2 million, in 2014.
- As of the end of the fourth quarter, the company had approved master policies in place with 964 customers, up from 906 as of the end of the prior quarter, and up from 735 as of the end of the fourth quarter of 2014. Customers delivering NIW in the quarter grew to a new high of 427, which compares with 391 in the prior quarter and 277 in the same quarter a year ago.
- As of Dec. 31, 2015, the company had primary insurance-in-force of $14.8 billion, which compares with $10.6 billion at the prior quarter end and $3.4 billion as of Dec. 31, 2014. Pool insurance-in-force as of the end of the fourth quarter was $4.2 billion, which compares with $4.3 billion at the prior quarter-end and $4.7 billion as of Dec. 31, 2014.
- As of Dec. 31, 2015, cash and investments were $616.6 million, including $100.2 million at the holding company, and book equity was $402.7 million, equal to $6.85 per share. This book value excludes any benefit attributable to the company's deferred tax asset of approximately $66 million as of Dec. 31, 2015.
- As of Dec. 31, 2015, the company's risk-to-available assets ratio in its primary insurance company was 8.5:1 and it was compliant with the Private Mortgage Insurers Eligibility Requirements (PMIERs), including the minimum available asset requirement of $400 million.
Conference Call and Webcast Details
NMI Holdings, Inc. will hold a conference call today, February 18, 2016, at 1:30 p.m. Pacific / 4:30 p.m. Eastern to discuss results for the quarter. The conference call will be broadcast live on the company's website, on the "Events and Presentations" page of the "Investors" section at http://ir.nationalmi.com. The call may also be accessed by dialing (888) 734-0328 inside the U.S., or (914) 495-8578 for international callers using Conference ID: 26684423, or by referencing NMI Holdings, Inc. Investors and analysts are asked to dial-in ten minutes before the conference call begins.
About National MI
National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc. (NASDAQ: NMIH), is a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: our ability to implement our business strategy, including our ability to attract and retain a diverse customer base and to achieve a diversified mix of business across the spectrum of our product offerings; changes in the business practices of the GSEs that may impact the use of private mortgage insurance; our ongoing ability to comply with the financial requirements of the PMIERs; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; heightened competition for our mortgage insurance business from other private mortgage insurers and the FHA; adoption of new or changes to existing laws and regulations or their enforcement and implementation by regulators; changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular; potential future lawsuits, investigations or inquiries or resolution of current inquiries; and general economic downturns and volatility. 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, 2014, as updated in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015. 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.
Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
(510) 788-8417
[email protected]
Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
[email protected]
|
Consolidated statements of operations |
For the year ended December 31, | ||||||||||
|
2015 |
2014 |
2013 | |||||||||
|
Revenues |
(In Thousands, except for share data) | ||||||||||
|
Net premiums written |
$ |
114,210 |
$ |
34,029 |
$ |
3,541 | |||||
|
Increase in unearned premiums |
(68,704) |
(20,622) |
(1,446) | ||||||||
|
Net premiums earned |
45,506 |
13,407 |
2,095 | ||||||||
|
Net investment income |
7,246 |
5,618 |
4,808 | ||||||||
|
Net realized investment gains |
831 |
197 |
186 | ||||||||
|
Other revenues |
25 |
— |
— | ||||||||
|
Total revenues |
53,608 |
19,222 |
7,089 | ||||||||
|
Expenses |
|||||||||||
|
Insurance claims and claims expenses |
650 |
83 |
— | ||||||||
|
Underwriting and operating expenses |
80,599 |
73,417 |
60,744 | ||||||||
|
Total expenses |
81,249 |
73,500 |
60,744 | ||||||||
|
Other income (expense) |
|||||||||||
|
Gain (loss) from change in fair value of warrant liability |
1,905 |
2,949 |
(1,529) | ||||||||
|
Gain from settlement of warrants |
— |
37 |
— | ||||||||
|
Interest expense |
(2,057) |
— |
— | ||||||||
|
Loss before income taxes |
(27,793) |
(51,292) |
(55,184) | ||||||||
|
Income tax benefit |
— |
(2,386) |
— | ||||||||
|
Net loss |
$ |
(27,793) |
$ |
(48,906) |
$ |
(55,184) | |||||
|
Consolidated balance sheets |
December 31, |
December 31, | |||||||||
|
(In Thousands) | |||||||||||
|
Total investment portfolio |
$ |
559,235 |
$ |
336,501 | |||||||
|
Cash and cash equivalents |
57,317 |
103,021 | |||||||||
|
Deferred policy acquisition costs, net |
17,530 |
2,985 | |||||||||
|
Software and equipment, net |
15,201 |
11,806 | |||||||||
|
Other assets |
13,168 |
8,952 | |||||||||
|
Total assets |
$ |
662,451 |
$ |
463,265 | |||||||
|
Term loan |
$ |
143,939 |
$ |
— | |||||||
|
Unearned premiums |
90,773 |
22,069 | |||||||||
|
Reserve for insurance claims and claims expenses |
679 |
83 | |||||||||
|
Accounts payable and accrued expenses |
22,725 |
10,646 | |||||||||
|
Warrant liability |
1,467 |
3,372 | |||||||||
|
Deferred tax liability |
137 |
137 | |||||||||
|
Total liabilities |
259,720 |
36,307 | |||||||||
|
Total shareholders' equity |
402,731 |
426,958 | |||||||||
|
Total liabilities and shareholders' equity |
$ |
662,451 |
$ |
463,265 | |||||||
New Insurance Written, Insurance in Force and Premiums
The table below shows primary and pool IIF, NIW and premiums written and earned.
|
Primary and pool IIF and NIW |
As of and for the year ended | ||||||||||||||||||||||
|
December 31, 2015 |
December 31, 2014 |
December 31, 2013 | |||||||||||||||||||||
|
IIF |
NIW |
IIF |
NIW |
IIF |
NIW | ||||||||||||||||||
|
(In Thousands) | |||||||||||||||||||||||
|
Monthly |
$ |
6,957,788 |
$ |
5,989,731 |
$ |
1,400,893 |
$ |
1,416,087 |
$ |
24,558 |
$ |
24,999 | |||||||||||
|
Single |
7,866,138 |
6,434,425 |
1,968,771 |
2,035,267 |
137,173 |
137,173 | |||||||||||||||||
|
Primary |
14,823,926 |
12,424,156 |
3,369,664 |
3,451,354 |
161,731 |
162,172 | |||||||||||||||||
|
Pool |
4,237,842 |
— |
4,721,674 |
— |
5,089,517 |
5,171,664 | |||||||||||||||||
|
Total |
$ |
19,061,768 |
$ |
12,424,156 |
$ |
8,091,338 |
$ |
3,451,354 |
$ |
5,251,248 |
$ |
5,333,836 | |||||||||||
|
Primary and pool premiums written and earned |
For the year ended | ||||||||||
|
December 31, 2015 |
December 31, 2014 |
December 31, 2013 | |||||||||
|
(In Thousands) | |||||||||||
|
Net premiums written |
$ |
114,210 |
$ |
34,029 |
$ |
3,541 | |||||
|
Net premiums earned |
45,506 |
13,407 |
2,095 | ||||||||
Portfolio Statistics
The table below shows primary NIW, IIF, RIF, policies in force, the weighted average coverage and loans in default, by quarter, for the last five quarters.
|
Primary portfolio trends |
As of and for the quarter ended | ||||||||||||||||||
|
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
March 31, 2015 |
December 31, 2014 | |||||||||||||||
|
(Dollars in Thousands) | |||||||||||||||||||
|
New insurance written |
$ |
4,546,759 |
$ |
3,632,740 |
$ |
2,548,515 |
$ |
1,696,142 |
$ |
1,692,187 | |||||||||
|
Insurance in force (1) |
$ |
14,823,926 |
$ |
10,601,492 |
$ |
7,190,414 |
$ |
4,835,248 |
$ |
3,369,664 | |||||||||
|
Risk in force (1) |
$ |
3,586,462 |
$ |
2,553,347 |
$ |
1,715,442 |
$ |
1,145,602 |
$ |
801,561 | |||||||||
|
Policies in force (1) |
63,948 |
46,175 |
31,682 |
21,225 |
14,603 | ||||||||||||||
|
Weighted average coverage (2) |
24.2% |
24.1% |
23.9% |
23.7% |
23.8% | ||||||||||||||
|
Loans in default (count) |
36 |
20 |
9 |
6 |
4 | ||||||||||||||
|
Risk in force on defaulted loans |
$ |
1,705 |
$ |
962 |
$ |
528 |
$ |
350 |
$ |
208 | |||||||||
|
(1) |
Reported as of the end of the period. | |
|
(2) |
End of period RIF divided by IIF. |
The table below reflects a summary of the change in total primary IIF for the years ended December 31, 2015 and 2014.
|
Primary IIF |
For the year ended December 31, | ||||||
|
2015 |
2014 | ||||||
|
(In Thousands) | |||||||
|
IIF, beginning of period |
$ |
3,369,664 |
$ |
161,731 | |||
|
NIW |
12,424,156 |
3,451,354 | |||||
|
Cancellations and other reductions |
(969,894) |
(243,421) | |||||
|
IIF, end of period |
$ |
14,823,926 |
$ |
3,369,664 | |||
The table below reflects a summary of our primary IIF and RIF by book year.
|
Primary IIF and RIF |
As of December 31, 2015 |
As of December 31, 2014 | |||||||||||||
|
IIF |
RIF |
IIF |
RIF | ||||||||||||
|
(In Thousands) | |||||||||||||||
|
2015 |
$ |
12,110,411 |
$ |
2,932,035 |
$ |
— |
$ |
— | |||||||
|
2014 |
2,643,804 |
638,039 |
3,256,753 |
775,575 | |||||||||||
|
2013 |
69,711 |
16,388 |
112,911 |
25,986 | |||||||||||
|
Total |
$ |
14,823,926 |
$ |
3,586,462 |
$ |
3,369,664 |
$ |
801,561 | |||||||
The tables below reflect our total primary IIF, RIF and average loan size, by FICO.
|
As of December 31, 2015 | |||||||||||||||
|
Primary |
IIF |
RIF |
Average primary | ||||||||||||
|
(Dollars in Thousands) | |||||||||||||||
|
>= 740 |
$ |
9,529,358 |
64.3% |
$ |
2,297,405 |
64.1% |
$ |
239 | |||||||
|
680 - 739 |
4,725,731 |
31.9 |
1,154,969 |
32.2 |
223 | ||||||||||
|
620 - 679 |
568,837 |
3.8 |
134,088 |
3.7 |
204 | ||||||||||
|
<= 619 |
— |
— |
— |
— |
— | ||||||||||
|
Total |
$ |
14,823,926 |
100.0% |
$ |
3,586,462 |
100.0% |
|||||||||
|
As of December 31, 2014 | |||||||||||||||
|
Primary |
IIF |
RIF |
Average primary | ||||||||||||
|
(Dollars in Thousands) | |||||||||||||||
|
>= 740 |
$ |
2,116,068 |
62.8% |
$ |
496,172 |
61.9% |
$ |
236 | |||||||
|
680 - 739 |
1,138,843 |
33.8 |
277,047 |
34.6 |
225 | ||||||||||
|
620 - 679 |
114,753 |
3.4 |
28,342 |
3.5 |
205 | ||||||||||
|
<= 619 |
— |
— |
— |
— |
— | ||||||||||
|
Total |
$ |
3,369,664 |
100.0% |
$ |
801,561 |
100.0% |
|||||||||
The table below reflects the percentage of our primary RIF by loan type.
|
Percentage of Primary RIF by loan type |
As of December 31, 2015 |
As of December 31, 2014 | |
|
Fixed |
97.8% |
95.5% | |
|
Adjustable rate mortgages: |
|||
|
Less than five years |
— |
0.1 | |
|
Five years and longer |
2.2 |
4.4 | |
|
Total |
100.0% |
100.0% |
As of December 31, 2015 and 2014, 100% of our pool risk-in-force was comprised of insurance on fixed rate mortgages.
The following table reflects the percentage and policy count of our RIF by LTV.
|
Total RIF by LTV |
As of December 31, 2015 |
As of December 31, 2014 | |||||
|
% of Total RIF |
Policy Count |
% of Total RIF |
Policy Count | ||||
|
Primary |
|||||||
|
95.01% and above |
3.9% |
2,641 |
0.5% |
76 | |||
|
90.01% to 95.00% |
54.2 |
30,165 |
54.4 |
6,832 | |||
|
85.01% to 90.00% |
33.7 |
20,388 |
36.4 |
4,929 | |||
|
80.01% to 85.00% |
8.2 |
10,752 |
8.7 |
2,765 | |||
|
80.00% and below |
— |
2 |
— |
1 | |||
|
Total primary |
100.0% |
63,948 |
100% |
14,603 | |||
|
Pool |
|||||||
|
80.00% and below |
100.0% |
18,955 |
100% |
20,573 | |||
|
Total pool |
100.0% |
18,955 |
100% |
20,573 | |||
Geographic Dispersion
The following tables show the distribution by state of our IIF and RIF, for both primary and pool insurance.
|
Top 10 primary IIF and RIF by state |
IIF |
RIF | ||||
|
As of December 31, 2015 |
||||||
|
1. |
California |
13.8% |
12.9% | |||
|
2. |
Texas |
6.5 |
6.8 | |||
|
3. |
Virginia |
5.3 |
5.2 | |||
|
4. |
Florida |
5.1 |
5.3 | |||
|
5. |
Michigan |
4.3 |
4.4 | |||
|
6. |
Colorado |
4.2 |
4.2 | |||
|
7. |
Arizona |
3.6 |
3.7 | |||
|
8. |
Pennsylvania |
3.6 |
3.7 | |||
|
9. |
North Carolina |
3.5 |
3.5 | |||
|
10. |
New Jersey |
3.4 |
3.1 | |||
|
Total |
53.3% |
52.8% | ||||
|
Top 10 pool IIF and RIF by state |
IIF |
RIF | ||||
|
As of December 31, 2015 |
||||||
|
1. |
California |
28.3% |
27.7% | |||
|
2. |
Texas |
5.2 |
5.3 | |||
|
3. |
Washington |
3.9 |
3.9 | |||
|
4. |
Colorado |
3.8 |
3.8 | |||
|
5. |
Massachusetts |
3.7 |
3.7 | |||
|
6. |
Illinois |
3.7 |
3.7 | |||
|
7. |
Virginia |
3.6 |
3.6 | |||
|
8. |
New York |
2.9 |
2.9 | |||
|
9. |
New Jersey |
2.8 |
2.8 | |||
|
10. |
Florida |
2.8 |
2.8 | |||
|
Total |
60.7% |
60.2% | ||||
|
Top 10 Primary IIF and RIF by State |
IIF |
RIF | ||||
|
As of December 31, 2014 |
||||||
|
1. |
California |
16.6% |
16.3% | |||
|
2. |
Texas |
6.2 |
6.6 | |||
|
3. |
Michigan |
4.8 |
4.7 | |||
|
4. |
Florida |
4.7 |
4.6 | |||
|
5. |
Arizona |
3.8 |
3.9 | |||
|
6. |
Pennsylvania |
3.7 |
3.7 | |||
|
7. |
Ohio |
3.6 |
3.8 | |||
|
8. |
Virginia |
3.6 |
3.5 | |||
|
9. |
Colorado |
3.5 |
3.5 | |||
|
10. |
North Carolina |
3.5 |
3.6 | |||
|
Total |
54.0% |
54.2% | ||||
|
Top 10 Pool IIF and RIF by State |
IIF |
RIF | ||||
|
As of December 31, 2014 |
||||||
|
1. |
California |
28.6% |
28.0% | |||
|
2. |
Texas |
5.4 |
5.4 | |||
|
3. |
Colorado |
3.9 |
3.9 | |||
|
4. |
Washington |
3.9 |
3.8 | |||
|
5. |
Massachusetts |
3.7 |
3.6 | |||
|
6. |
Virginia |
3.7 |
3.7 | |||
|
7. |
Illinois |
3.7 |
3.7 | |||
|
8. |
New York |
2.8 |
2.8 | |||
|
9. |
Florida |
2.8 |
2.8 | |||
|
10. |
New Jersey |
2.8 |
2.8 | |||
|
Total |
61.3% |
60.5% | ||||
SOURCE NMI Holdings, Inc.
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