NMI Holdings, Inc. Reports Second Quarter 2015 Financial Results, New Insurance Written Grows 50% Sequentially

Aug 04, 2015, 16:01 ET from NMI Holdings, Inc.

EMERYVILLE, Calif., Aug. 4, 2015 /PRNewswire/ -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported results for the second quarter ended Jun. 30, 2015.  The company reported a net loss for the second quarter of $10.4 million, or $0.18 per share, which compares with a net loss of $7.8 million, or $0.13 per share, in the prior quarter, and a net loss of $12.9 million, or $0.22 per share, in the second quarter of 2014.

Bradley Shuster, chairman and CEO of National MI, said, "In the second quarter, we drove significant growth in new insurance written (NIW).  This is primarily attributable to strength in our flow business, which grew 69% over the prior quarter, driven by significant gains with customers who delivered NIW in 2014, contributions from new customers added in 2015, and a stronger than expected origination market.  We believe our rapid growth reflects customers' favorable response to our differentiated value proposition as well as solid execution by our team."

  • Total new insurance written (NIW) for the second quarter was $2.5 billion, up 50% from $1.7 billion in the prior quarter.
  • Excluding aggregated single, the company's "flow" NIW for the second quarter was $1.9 billion, up 69% from $1.2 billion in the prior quarter.
  • Aggregated single-premium NIW for the second quarter was $0.6 billion, up 11% from $0.5 billion in the prior quarter.
  • Premiums earned for the quarter were $8.9 million, up from $6.9 million in the prior quarter.  Investment income in the second quarter was $1.7 million, up from $1.6 million in the prior quarter. Total revenues were $10.9 million, up from $9.1 million in the prior quarter.
  • Total underwriting and operating expenses in the second quarter were $20.9 million, including share-based compensation expense of $2.1 million.  This compares with total underwriting and operating expenses of $18.4 million, including $2.0 million of share-based compensation, in the prior quarter.
  • As of the end of the second quarter, the company had approved master policies in place with 842 customers, up from 777 as of the end of the prior quarter, and up from 570 as of the end of the second quarter of 2014.  Customers delivering NIW in the quarter grew to 340, which compares with 291 in the prior quarter and 94 in the same quarter a year ago.
  • As of Jun. 30, 2015, the company had primary insurance-in-force of $7.2 billion, which compares with $4.8 billion at the prior quarter end and $0.9 billion as of Jun. 30, 2014.  Pool insurance-in-force as of the end of the second quarter was $4.5 billion, which compares with $4.6 billion at the prior quarter-end and $4.9 billion as of Jun. 30, 2014.
  • As of Jun. 30, 2015, cash and investments were $434 million, including $163 million at the holding company, and book equity was $412 million, equal to $7.01 per share.  This book value excludes any benefit attributable to the company's deferred tax asset of approximately $54 million as of Dec. 31, 2014.
  • As of Jun. 30, 2015, the company's risk-to-available assets ratio in its primary insurance company was 8:1, which compares with the maximum risk-to-available assets ratio under the final PMIERs of 18:1.

Conference Call and Webcast Details
NMI Holdings, Inc. will hold a conference call today, Aug. 4, 2015, at 2:00 p.m. Pacific / 5:00 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 (678) 894-3054 for international callers using Conference ID: 83506045, 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 ability to comply with the financial requirements of the PMIERs, once effective; 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, including 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 and potential future lawsuits, investigations or inquiries or resolution of current inquiries, including a June 2015 letter from the Wisconsin Office of the Commissioner of Insurance requesting that each MI company, including us, respond to a number of inquiries related to whether the company has offered customized terms or rates; 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 and as 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.

Investor Contact

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

Press Contact

Mary McGarity Strategic Vantage Mortgage Public Relations (203) 513-2721 MaryMcGarity@StrategicVantage.com

 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the three months ended June 30,

For the six months ended June 30,

2015

2014

2015

2014

Revenues

(In Thousands)

Net premiums written

$

20,347

$

5,051

33,268

10,229

Increase in unearned premiums

(11,491)

(2,958)

(17,476)

(6,232)

Net premiums earned

8,856

2,093

15,792

3,997

Net investment income

1,688

1,468

3,283

2,957

Net realized investment gains

354

967

Total revenues

10,898

3,561

20,042

6,954

Expenses

Insurance claims and claims expenses

(6)

28

98

28

Underwriting and operating expenses

20,910

18,637

39,259

37,938

Total expenses

20,904

18,665

39,357

37,966

Other (loss) income

(Loss) gain from change in fair value  of warrant liability

(106)

952

1,142

1,769

Gain from settlement of warrants

37

Loss before income taxes

(10,112)

(14,152)

(18,173)

(29,206)

Income tax expense (benefit)

241

(1,297)

(1,297)

Net loss

$

(10,353)

$

(12,855)

$

(18,173)

$

(27,909)

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30, 2015

December 31, 2014

(In Thousands)

Total investment portfolio

$

370,042

$

336,501

Cash and cash equivalents

64,301

103,021

Deferred policy acquisition costs, net

8,218

2,985

Software and equipment, net

13,284

11,806

Other assets

10,244

8,952

Total assets

$

466,089

$

463,265

Reserve for insurance claims and claims expenses

$

181

$

83

Accounts payable and accrued expenses

12,309

10,646

Unearned premiums

39,545

22,069

Warrant liability

2,230

3,372

Deferred tax liability

137

137

Total liabilities

54,402

36,307

Total shareholders' equity

411,687

426,958

Total liabilities and shareholders' equity

$

466,089

$

463,265

 

New Insurance Written (NIW), Insurance in Force (IIF) and Risk in Force (RIF)

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

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

(Dollars in Thousands)

New insurance written

$

2,548,515

$

1,696,142

$

1,692,187

$

974,910

$

429,944

Insurance in force (1)

$

7,190,414

$

4,835,248

$

3,369,664

$

1,812,956

$

939,753

Risk in force (1)

$

1,715,442

$

1,145,602

$

801,561

$

435,722

$

220,949

Policies in force (1)

31,682

21,225

14,603

7,628

3,865

Weighted average coverage (2)

23.9

%

23.7

%

23.8

%

24.0

%

23.5

%

Loans in default (count)

9

6

4

1

Risk in force on defaulted loans

$

528

$

350

$

208

$

$

100

(1) Reported as of the end of the period.

(2) End of period RIF divided by IIF.

 

 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 quarter ended

June 30, 2015

March 31, 2015

IIF

NIW

IIF

NIW

(In Thousands)

Monthly

$

3,616,951

$

1,460,166

$

2,258,776

$

918,697

Single

1,155,482

485,252

680,880

235,517

Aggregated single

2,417,981

603,097

1,895,592

541,928

Total primary

$

7,190,414

$

2,548,515

$

4,835,248

$

1,696,142

Pool

4,475,653

4,621,346

Total

$

11,666,067

$

2,548,515

$

9,456,594

$

1,696,142

 

Primary and pool premiums written and earned

For the quarter ended

June 30, 2015

March 31, 2015

(In Thousands)

Net premiums written

$

20,347

$

12,921

Net premiums earned

8,856

6,936

 

The tables below show the primary weighted average FICO and the weighted average loan-to-value ratio (LTV), by policy type, for the quarter in which the policy was originated.

Weighted Average FICO

June 30, 2015

March 31, 2015

June 30, 2014

Monthly

742

740

747

Single

756

749

746

Aggregated single                       

763

774

758

Weighted Average LTV

June 30, 2015

March 31, 2015

June 30, 2014

Monthly

92

%

91

%

93

%

Single

91

91

93

Aggregated single

89

88

90

 

The table below reflects a summary of the change in total primary IIF for the three and six months ended June 30, 2015 and 2014.

Primary IIF

For the three months ended June 30,

For the six months ended June 30,

2015

2014

2015

2014

(In Thousands)

(In Thousands)

IIF, beginning of period

4,835,248

514,796

3,369,664

161,731

NIW

2,548,515

429,944

4,244,657

784,257

Cancellations and other reductions

(193,349)

(4,987)

(423,907)

(6,235)

IIF, end of period

7,190,414

939,753

7,190,414

939,753

 

The table below reflects a summary of our primary IIF and RIF by book year.

Primary IIF and RIF

As of June 30, 2015

IIF

RIF

(In Thousands)

2015, through June 30, 2015

4,191,649

997,998

2014

2,915,538

698,016

2013

83,227

19,428

Total

7,190,414

1,715,442

 

The table below reflects our total primary IIF and RIF by FICO.

As of June 30, 2015

Primary IIF and RIF

IIF

RIF

(Dollars in Thousands)

>= 740

$

4,476,199

62.3

%

$

1,048,651

61.1

%

680 - 739

2,409,995

33.5

593,075

34.6

620 - 679

304,220

4.2

73,716

4.3

<= 619

Total

$

7,190,414

100.0

%

$

1,715,442

100.0

%

 

 

The tables below reflect our average primary loan size by FICO and the percentage of our RIF by loan type.

June 30, 2015

December 31, 2014

Average primary loan size by FICO

(In Thousands)

>= 740

$

233

$

236

680 - 739

219

225

620 - 679

203

205

<= 619

Percentage of RIF by loan type

Primary

Pool

As of June 30, 2015

Fixed

97.1

%

100.0

%

Adjustable rate mortgages:

Less than five years

Five years and longer

2.9

Total

100.0

%

100.0

%

 

 

The following table reflects our RIF by LTV.

Total RIF by LTV

Primary

Pool

RIF

% of Total LTV

Policy Count

RIF

% of Total LTV

Policy Count

As of June 30, 2015

(Dollars in Thousands)

95.01% and above

$

35,966

2.1

%

680

$

%

90.01% to 95.00%

926,987

54.0

14,681

85.01% to 90.00%

597,954

34.9

10,417

80.01% to 85.00%

154,521

9.0

5,903

80.00% and below

14

1

93,090

100.0

19,784

Total RIF

$

1,715,442

100.0

%

31,682

$

93,090

100.0

%

19,784

 

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 June 30, 2015

1.

California

14.1

%

13.6

%

2.

Texas

7.0

7.4

3.

Florida

5.2

5.3

4.

Michigan

4.7

4.8

5.

Colorado

4.2

4.2

6.

Ohio

3.7

3.9

7.

New Jersey

3.7

3.3

8.

Pennsylvania

3.6

3.6

9.

Arizona

3.6

3.7

10.

North Carolina

3.5

3.5

Total

53.3

%

53.3

%

Top 10 pool IIF and RIF by state

IIF

RIF

As of June 30, 2015

1.

California

28.3

%

27.7

%

2.

Texas

5.3

5.4

3.

Colorado

3.9

3.8

4.

Washington

3.9

3.8

5.

Massachusetts

3.7

3.7

6.

Illinois

3.7

3.7

7.

Virginia

3.7

3.7

8.

New York

2.8

2.9

9.

New Jersey

2.8

2.8

10.

Florida

2.7

2.8

Total

60.8

%

60.3

%

 

 

SOURCE NMI Holdings, Inc.



RELATED LINKS

http://www.nationalmi.com