Core Viewpoint - NMI Holdings, Inc. will report its first quarter results for the period ending March 31, 2025, on April 29, 2025, after market close [1]. Company Information - NMI Holdings, Inc. is the parent company of National Mortgage Insurance Corporation, a private mortgage insurance company in the U.S. that supports low-down-payment borrowers and protects lenders and investors from losses due to borrower defaults [3]. Conference Call Details - The company will host a conference call and live webcast on April 29, 2025, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time, accessible via the company's website [2]. - Participants can join the call by dialing (844) 481-2708 in the U.S. or (412) 317-0664 internationally, referencing NMI Holdings, Inc. [2].

Core Viewpoint - NMI Holdings (NMIH) has underperformed the industry and finance sector year-to-date but has outperformed the S&P 500 composite [1] Valuation - NMIH shares are trading at a price-to-book multiple of 1.31, below the industry average of 1.65, indicating an attractive valuation with a Value Score of B [4] - Other insurers like Kinsale Capital, MGIC Investment Corporation, and Radian Group are also trading at a discount to the industry average [5] Financial Performance - NMIH's return on equity (ROE) for the trailing 12 months is 17.3%, significantly higher than the industry average of 8.3%, indicating efficient use of shareholders' funds [6] - The return on invested capital for NMIH in the trailing 12 months is 13.9%, compared to the industry average of 6.4%, reflecting strong income generation efficiency [6] Market Outlook - The mortgage insurance market is expected to grow, providing business opportunities for NMIH, with a strong mortgage insurance portfolio anticipated to support future earnings [9] - The U.S. residential mortgage market is substantial, with nearly $13 trillion in mortgage debt outstanding, which is expected to benefit the mortgage insurance sector [10] - NMIH expects continued strength in the housing market, driven by demand, house price appreciation, and solid new insurance written volume [11] Risk Management - NMIH has a comprehensive reinsurance program that mitigates credit volatility and supports capital growth, enhancing its return profile [12] Shareholder Returns - NMIH has an $80 million share repurchase authorization remaining, indicating a commitment to returning wealth to shareholders [12] Analyst Projections - The average target price for NMIH is $42.50 per share, suggesting a 16.2% upside from the last closing price [13] - The Zacks Consensus Estimate for 2025 earnings is $4.59, reflecting a 2% increase year-over-year, with revenues projected at $686.4 million [14] - For 2026, earnings per share are estimated at $5.01, indicating a 9.1% year-over-year increase on revenues of $712.7 million [14] Growth Potential - NMIH's improving mortgage insurance portfolio, higher new insurance written volume, and effective capital deployment position the company for growth [15]

Core Viewpoint - NMI Holdings Inc. (NMIH) is trading at a discount compared to its industry peers, with a forward price-to-book value of 1.3X, lower than the industry average of 1.56X, indicating potential investment opportunity [1] Group 1: Financial Performance - NMIH has a market capitalization of $2.86 billion and an average trading volume of 0.4 million shares over the last three months [2] - The company has a solid track record of beating earnings estimates in three of the last four quarters, with an average beat of 7.21% [2] - NMIH shares have gained 23.7% over the past year, outperforming the Finance sector's return of 22.3% and the S&P 500's appreciation of 17.1%, although it underperformed the industry's growth of 25.7% [4] Group 2: Growth Projections - The Zacks Consensus Estimate for NMIH's 2025 earnings per share indicates a year-over-year increase of 2.2%, with revenues projected at $687.07 million, reflecting a 5.5% improvement [5] - For 2026, earnings per share and revenues are expected to increase by 9.1% and 3.9%, respectively, compared to 2024 estimates [5] - NMIH's earnings grew by 15.7% over the past five years, driven by its superior primary insurance in-force portfolio [6] Group 3: Return on Capital - NMIH's return on equity (ROE) for the trailing 12 months was 17.3%, significantly higher than the industry's 8.2%, indicating efficient use of shareholders' funds [10] Group 4: Market Opportunities - The U.S. residential mortgage market, valued at nearly $13 trillion, presents significant growth opportunities for NMIH in the mortgage insurance sector [11] - Growth in policy production is linked to increased penetration of existing customer accounts and activation of new accounts [12] Group 5: Strategic Initiatives - NMIH is focused on efficiency and expense management to drive margin expansion, engaging in share buybacks totaling $245 million, with $80 million remaining under the current program [13] - The company has a comprehensive reinsurance program to enhance its return profile and mitigate credit volatility [12] Group 6: Conclusion - NMIH is well-positioned for growth due to new primary insurance written, a strong reinsurance program, and favorable growth estimates, making it a stock to hold [14]

Insurance Portfolio and Market Position - As of December 31, 2024, the company had issued master policies with 2,086 customers and had $210.2 billion of primary insurance-in-force (IIF) and $56.1 billion of primary risk-in-force (RIF) [19] - For the year ended December 31, 2024, the company generated new insurance written (NIW) of $46.0 billion [19] - The U.S. residential mortgage market had approximately $13 trillion of mortgage debt outstanding as of December 31, 2024 [21] - Government mortgage insurers accounted for an estimated 58% of the total insured mortgage origination market in 2024, down from a peak of approximately 82% in 2009 [28] - The company aims to maintain a RIF across all policies written to approximate 25% of primary IIF, with coverage levels varying between 6% and 35% [32] - The private mortgage insurance industry consists of six active participants, including the company, with competition based on terms of coverage, pricing, and customer service [27] - The company’s strategy focuses on expanding its customer base and growing its insured portfolio through long-term relationships and disciplined risk selection [20] - No individual customer accounted for greater than 10% of consolidated revenues in 2024 [44] Underwriting and Risk Management - The company employs a proprietary risk-based pricing platform, Rate GPS®, to establish individualized premium rates based on various risk factors [60] - The underwriting guidelines incorporate credit eligibility requirements, including borrower credit scores (FICO), maximum DTI levels, and maximum LTVs [47] - The company has established processes for independent validations and rescission relief, enhancing the underwriting review process [52] - The company has implemented a quality control process to ensure adherence to underwriting guidelines, conducting audits of insured loans on a random and targeted basis [75] - The company has established enterprise-wide policies for risk management, with oversight from the Risk Committee of the Board of Directors [73] - The company’s underwriting and credit risk management policies may not fully anticipate unforeseen risks, potentially leading to increased losses [154] - The company’s underwriting and credit risk management policies may not fully anticipate risks, potentially leading to material adverse effects on its financial condition [173] Financial Performance and Economic Factors - The company’s NIW and revenues are highly dependent on the volume of high-LTV loan originations, which may be negatively affected by rising interest rates and stricter underwriting standards [172] - Changes in inflation, interest rates, and mortgage interest rates could adversely impact the company’s future revenue and financial condition [154] - The company expects claims to increase as its insured loan portfolio grows and matures, influenced by macroeconomic factors [190] - The company may experience increased claims if third-party underwriting service providers fail to perform adequately [154] - The company’s substantial indebtedness may adversely affect its financial condition and ability to access capital [157] - The premiums charged by the company may be insufficient to cover future claim payments and operating costs, which could adversely affect operating results [178] - Economic downturns in specific regions could lead to higher rates of default and loss, adversely affecting the company's financial condition [177] Regulatory Environment and Compliance - NMIC is required to maintain available assets of at least $400 million or a risk-based required asset amount, whichever is greater [98] - NMIC certified compliance with PMIERs as of December 31, 2023, by April 15, 2024 [99] - NMIC holds a certificate of authority in all 50 states and D.C., subject to ongoing financial reporting and regulatory requirements [100] - The maximum permitted risk-to-capital (RTC) ratio is typically 25:1, with Wisconsin having slightly higher limits [113] - State insurance regulators have the authority to change regulations governing mortgage insurance, including capital requirements and underwriting standards [115] - MI premium rates in certain states require prior approval to protect policyholders from excessive or unfairly discriminatory rates [119] Technology and Operational Risks - The company relies on technology for service delivery, and failure to maintain technological demands could adversely impact financial performance [214] - The company processes, transmits, stores, and protects large amounts of personal information related to borrowers' mortgages, which is critical to its business operations [216] - IT systems and networks are vulnerable to unauthorized access and failures due to cyber-attacks, natural disasters, and technology failures [216] - Remote and hybrid working arrangements may increase the risk of cybersecurity attacks and data security incidents [216] - Employees and vendors rely on portable computers and mobile devices, which can heighten security vulnerabilities [216] Employee and Organizational Culture - The company has 230 full-time and part-time employees as of December 31, 2024, and engages third-party vendors for additional support services [87] - As of December 31, 2024, 83% of the employee population identified as members of a diverse group, including 55% as women and 34% as racial/ethnic minorities [90] - The company was recognized as a Great Place to Work for the ninth consecutive year in 2024, highlighting its commitment to employee satisfaction and development [91] Market Competition and Challenges - The company faces intense competition in the private mortgage insurance industry, with six active competitors, which could negatively impact its ability to achieve business goals [159] - The company is at risk of losing business from significant mortgage lenders, which could negatively impact its market share and financial performance [171] - The company faces increased competition from government mortgage insurers, which have captured a significant share of the high-LTV MI market, remaining above historical levels [166] - The volume of new insurance written (NIW) could decline if lenders and investors opt for alternatives to private mortgage insurance (MI), particularly for high-LTV loans [163] Claims and Reserves Management - The company expects claims to increase as its insured loan portfolio grows and matures, influenced by macroeconomic factors [190] - If estimates for claims reserves are incorrect, actual claim payments may exceed reserves, adversely affecting financial results [194] - Reserves are established based on estimated claim frequency and severity, which are influenced by historical loan performance data [195] - The establishment of claims and IBNR reserves involves significant judgment and is influenced by economic conditions such as unemployment rates and housing price trends [196] - Natural disasters and pandemics pose risks that could lead to increased claims and defaults, adversely affecting financial results [198] - The company has observed that loans in disaster zones typically cure at a higher rate than non-disaster related loans, impacting reserve levels [200]

Core Viewpoint - NMI Holdings (NMIH) reported mixed financial results for the fourth quarter of 2024, with operating net income per share of $1.07, missing estimates, despite a year-over-year increase in earnings and revenues [1][5]. Financial Performance - Fourth-quarter operating revenues reached $167 million, a 10.6% increase year over year, driven by higher net premiums earned (up 8%) and net investment income (up 25%), although it fell short of estimates by 1.7% [3]. - Full-year operating net income per share was $4.50, slightly below the consensus estimate of $4.54, with a year-over-year increase of 5.9% [5]. - Total operating revenues for the year amounted to $650.9 million, reflecting a 12.4% increase year over year, but also missing the consensus estimate of $653.8 million [5]. Underwriting and Claims - Underwriting and operating expenses totaled $31.1 million, up 5% year over year, while insurance claims and claim expenses surged to $17.3 million, a 110% increase year over year [4]. - The loss ratio deteriorated to 12%, worsening by 580 basis points year over year, while the combined ratio also deteriorated to 34, down 580 basis points [4]. Operational Metrics - Primary insurance in force increased by 7% to $210.2 billion, with new insurance written at $11.9 billion, a 34% year-over-year increase [3]. - Annual persistency decreased to 84.6%, down 150 basis points year over year [3]. Financial Position - As of December 31, 2024, book value per share rose 18.5% year over year to $28.21, while cash and cash equivalents decreased by 43.8% to $54.3 million [6]. - The debt balance increased by 4.4% to $415 million, and the annualized adjusted return on equity contracted by 80 basis points to 17% [6]. Shareholder Actions - The board of directors approved an additional $250 million share repurchase plan, effective through December 31, 2027 [7].

Financial Data and Key Metrics Changes - In Q4 2024, the company reported record adjusted net income of $365.6 million, up 13% compared to 2023, and record adjusted EPS of $4.50, up 17% compared to 2023 [8][17] - Total revenue for Q4 was a record $166.5 million, with adjusted net income of $86.1 million, or $1.07 per diluted share, and a 15.6% adjusted return on equity [21][14] - The company closed 2024 with $46 billion of total new insurance written (NIW) volume and a record $210.2 billion of primary insurance-in-force [7][13] Business Line Data and Key Metrics Changes - The primary insurance-in-force grew to $210.2 billion, up 1% from Q3 and 7% compared to Q4 2023 [22] - The company activated 118 new lenders in 2024, ending the year with over 1,600 active accounts [15] - The net premiums earned in Q4 were a record $143.5 million, compared to $143.3 million in Q3 and $132.9 million in Q4 2023 [22] Market Data and Key Metrics Changes - The total MI industry NIW volume was estimated at $300 billion in 2024, demonstrating strength despite elevated interest rates [17] - The company reported a 1% default rate at year-end, with 6,642 defaults, including 471 new notices for loans in FEMA-declared disaster areas [24][25] Company Strategy and Development Direction - The company plans to continue focusing on customer service, value-added engagement, and technology leadership while prioritizing discipline and risk responsibility [10] - The management emphasized the importance of building value for shareholders, growing earnings, and prudently distributing excess capital [10][20] - The company is well-positioned to support housing goals and expand access to home ownership, as recognized by bipartisan discussions in Washington [11][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the macro outlook and the private MI market opportunity, highlighting the strength of their customer franchise and the quality of their insured portfolio [20] - The company expects continued growth in their high-quality insured portfolio and strong returns for shareholders [30] - Management noted that credit performance remains strong, with existing borrowers well-positioned against the resilient U.S. economy [19] Other Important Information - The company completed a successful debt refinancing and returned capital to shareholders through a repurchase program, purchasing $27.9 million of common stock in Q4 [16][26] - Shareholders' equity at year-end was $2.2 billion, with book value per share at $28.21, up 4% from Q3 and 17% from Q4 2023 [26] Q&A Session Summary Question: How should we think about the pacing of capital return? - Management indicated that the repurchase program is expected to maintain a consistent pace of about $25 million per quarter, with a total of approximately $330 million available over the next 12 quarters [35][36] Question: Can you provide color on the reserve release for prior period defaults? - The reserve release for prior years was $4.4 million, with the majority of cures in the quarter coming from loans that defaulted in earlier quarters [44][45] Question: Any updates on claims activity and underwriting assumptions? - Claims expense for the quarter was $17.3 million, with a 12% loss ratio, and management remains encouraged by the credit performance of their book [48][49] Question: What about dividends in the future? - Currently, the focus is on the repurchase program, but there may be an ability to introduce a common dividend as performance continues to grow [60] Question: Any updates on specific markets of concern? - Management noted that there have been no fundamental changes in risk profiles for specific markets, and they continue to actively manage their mix of business [62] Question: How does credit deterioration impact yield? - A deterioration in credit could put pressure on net yield, as claims experience affects the profit commission from reinsurance treaties [77][78]

Core Insights - NMI Holdings (NMIH) reported a revenue of $166.5 million for the quarter ended December 2024, reflecting a 10% increase year-over-year, but fell short of the Zacks Consensus Estimate by -1.65% [1] - The earnings per share (EPS) for the quarter was $1.07, an increase from $1.01 in the same quarter last year, but also missed the consensus estimate of $1.11 by -3.60% [1] Financial Performance Metrics - Insurance in force (IIF) was reported at $210.18 billion, slightly below the average estimate of $210.88 billion from three analysts [4] - Risk in force (RIF) stood at $56.11 billion, exceeding the average estimate of $55.53 billion [4] - The combined ratio was 33.7%, slightly higher than the average estimate of 33.3% [4] - The loss ratio was reported at 12%, better than the estimated 12.3% [4] - The expense ratio was 21.7%, compared to the average estimate of 21% [4] - Net investment income reached $22.72 million, which is a year-over-year increase of +24.5%, but slightly below the average estimate of $22.80 million [4] - Net premiums earned were $143.52 million, lower than the average estimate of $146.26 million, but represented an 8% year-over-year increase [4] - Other revenues were reported at $0.23 million, matching the average estimate and showing a +20.7% change compared to the year-ago quarter [4] Stock Performance - NMI Holdings' shares have returned +9.5% over the past month, outperforming the Zacks S&P 500 composite, which saw a +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - NMI Holdings (NMIH) reported quarterly earnings of $1.07 per share, missing the Zacks Consensus Estimate of $1.11 per share, but showing an increase from $1.01 per share a year ago, indicating a -3.60% earnings surprise [1][2] Financial Performance - The company posted revenues of $166.5 million for the quarter ended December 2024, which was below the Zacks Consensus Estimate by 1.65%, compared to $151.38 million in the same quarter last year [2] - Over the last four quarters, NMI Holdings has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - NMI Holdings shares have increased approximately 6.2% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The current consensus EPS estimate for the upcoming quarter is $1.13 on revenues of $173.11 million, and for the current fiscal year, it is $4.68 on revenues of $701.75 million [7] Industry Outlook - The Zacks Industry Rank for Insurance - Property and Casualty is currently in the bottom 47% of over 250 Zacks industries, suggesting that the industry outlook may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net income for Q4 2024 was $86.2 million, or $1.07 per diluted share, compared to $92.8 million, or $1.15 per diluted share in Q3 2024, and $83.4 million, or $1.01 per diluted share in Q4 2023[2][3] - Full year net income for 2024 was $360.1 million, or $4.43 per diluted share, up from $322.1 million, or $3.84 per diluted share in 2023[3] - Total revenue for Q4 2024 was $166.5 million, compared to $166.1 million in Q3 2024 and $151.4 million in Q4 2023[6][7] - Total revenues for the year ended December 31, 2024, reached $650,971,000, up from $579,003,000 in 2023, reflecting an increase of 12.3%[21] - Net income for Q4 2024 was $86,167,000, compared to $83,413,000 in Q4 2023, marking a rise of 3.3%[21] - The diluted earnings per share (EPS) for the year 2024 was $4.43, up from $3.84 in 2023, indicating a growth of 15.4%[21] Premiums and Insurance - Net premiums earned in Q4 2024 were $143.5 million, slightly up from $143.3 million in Q3 2024 and an 8% increase from $132.9 million in Q4 2023[6][7] - Net premiums earned increased to $143,520,000 in Q4 2024 from $132,940,000 in Q4 2023, representing a growth of 6.4%[21] - New Insurance Written (NIW) for Q4 2024 was $11.9 billion, a 2% decrease from $12.2 billion in Q3 2024 but a 34% increase from $8.9 billion in Q4 2023[7] - The total Primary NIW for the year ended December 31, 2024, was $46,044 million, compared to $40,473 million for the year ended December 31, 2023[38] Claims and Expenses - Insurance claims and claim expenses in Q4 2024 were $17.3 million, a 67% increase from $10.3 million in Q3 2024 and a 110% increase from $8.2 million in Q4 2023[6][7] - The total claims and claim expenses incurred for the year ended December 31, 2024, were $31,544 thousand, compared to $21,895 thousand in 2023[51] - The average amount paid per claim increased to $44 for the three months ended December 31, 2024, compared to $29 in the same period of 2023[55] Ratios and Performance Metrics - The adjusted combined ratio for Q4 2024 was 33.7%, compared to 28.5% in Q4 2023, reflecting a deterioration of 5.2 percentage points[21] - The loss ratio for Q4 2024 was 12.0%, up from 6.2% in Q4 2023, indicating an increase of 5.8 percentage points[21] - The expense ratio for the year 2024 was 21.0%, slightly down from 21.7% in 2023, showing a minor improvement[21] - The combined ratio for Q4 2024 was 33.7%, compared to 28.5% in Q4 2023, indicating a deterioration in underwriting performance[27] Assets and Equity - Total assets increased to $3,349,973,000 as of December 31, 2024, from $2,940,507,000 in 2023, an increase of 13.9%[23] - Shareholders' equity rose to $2,217,432,000 as of December 31, 2024, compared to $1,926,004,000 in 2023, representing a growth of 15.1%[23] - Available assets as of December 31, 2024, were $3,108,211 thousand, an increase from $2,717,804 thousand in 2023[57] Share Repurchase and Book Value - The company announced an additional $250 million share repurchase authorization effective through December 31, 2027[4] - Book value per share, excluding net unrealized gains and losses, was $29.80, up 4% from $28.71 in Q3 2024 and 17% from $25.54 in Q4 2023[6][7] - Book value per share increased to $28.21 in Q4 2024 from $23.81 in Q4 2023, reflecting a growth of 18.5%[25] Risk and Default Rates - The default rate increased to 1.01% in Q4 2024 from 0.87% in Q3 2024[30] - The cumulative default rate for policies ever in force is 6.2% as of December 31, 2024, with a current default rate of 0.2%[48] - The ending default inventory as of December 31, 2024, was 6,642, up from 5,099 in 2023, with new defaults totaling 8,757 for the year[54]

Core Insights - NMI Holdings, Inc. reported a net income of $86.2 million for Q4 2024, a decrease from $92.8 million in Q3 2024 but an increase from $83.4 million in Q4 2023 [1][6] - For the full year 2024, net income was $360.1 million, up from $322.1 million in 2023, with adjusted net income at $365.6 million compared to $322.1 million in the previous year [2][24] - The company announced a $250 million share repurchase plan effective through December 31, 2027, indicating confidence in its financial position [3][4] Financial Performance - Q4 2024 highlights include: - Primary insurance-in-force reached $210.2 billion, up 1% quarter-over-quarter and 7% year-over-year [5][6] - New Insurance Written (NIW) was $11.9 billion, down 2% from Q3 2024 but up 34% from Q4 2023 [5][6] - Net premiums earned were $143.5 million, a slight increase from $143.3 million in Q3 2024 and an 8% increase from $132.9 million in Q4 2023 [5][6] - Total revenue for Q4 2024 was $166.5 million, compared to $166.1 million in Q3 2024 and $151.4 million in Q4 2023 [6][24] - Insurance claims and claim expenses rose to $17.3 million, significantly higher than $10.3 million in Q3 2024 and $8.2 million in Q4 2023, resulting in a loss ratio of 12.0% [6][7] Shareholder Value - The company reported a book value per share of $28.21, up 4% from $28.71 in Q3 2024 and 17% from $25.54 in Q4 2023 [6][7] - The annualized return on equity for Q4 2024 was 15.6%, down from 17.5% in Q3 2024 and 18.0% in Q4 2023 [6][7] - Shareholders' equity at the end of Q4 2024 was $2.2 billion, reflecting a strong capital position [6][24]