NMI (NMIH) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results Overview NMI Holdings, Inc. reported strong Q2 2025 financial results, including net income of $96.2 million and continued growth in its insured portfolio Executive Summary NMI Holdings, Inc. reported Q2 2025 net income of $96.2 million and adjusted net income of $96.5 million, with the CEO emphasizing strong operating performance and portfolio growth - NMI Holdings, Inc. reported net income of $96.2 million, or $1.21 per diluted share, for the second quarter ended June 30, 2025[2] - Adjusted net income for the quarter was $96.5 million, or $1.22 per diluted share[2] - CEO Adam Pollitzer highlighted strong operating performance, continued growth in the high-quality insured portfolio, and standout financial results[3] Selected Financial and Operational Highlights Q2 2025 highlights include year-over-year growth in primary insurance-in-force and total revenue, alongside a significant increase in insurance claims and a higher loss ratio Selected Q2 2025 Financial and Operational Highlights | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Q/Q Change | Y/Y Change | | :--------------------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Primary Insurance-in-Force ($B) | $214.7 | $211.3 | $203.5 | 2 % | 5 % | | Net Premiums Earned ($M) | $149.1 | $149.4 | $141.2 | — % | 6 % | | Total Revenue ($M) | $173.8 | $173.2 | $162.1 | — % | 7 % | | Insurance Claims & Claim Expenses ($M) | $13.4 | $4.5 | $0.3 | 200 % | (3) NM | | Loss Ratio | 9.0 % | 3.0 % | 0.2 % | | | | Underwriting & Operating Expenses ($M) | $29.5 | $30.2 | $28.3 | (2)% | 4 % | | Expense Ratio | 19.8 % | 20.2 % | 20.1 % | | | | Net Income ($M) | $96.2 | $102.6 | $92.1 | (6)% | 4 % | | Diluted EPS | $1.21 | $1.28 | $1.13 | (5)% | 7 % | | Adjusted Net Income ($M) | $96.5 | $102.5 | $97.6 | (6)% | (1)% | | Adjusted Diluted EPS | $1.22 | $1.28 | $1.20 | (5)% | 1 % | | Book Value per Share (excl. unrealized G/L) | $32.08 | $30.85 | $27.54 | 4 % | 16 % | | Annualized Return on Equity | 16.2 % | 18.1 % | 18.3 % | | | | Annualized Adjusted Return on Equity | 16.3 % | 18.1 % | 19.4 % | | | | PMIERs Available Assets ($B) | $3.2 | | | | | | Net Risk-Based Required Assets ($B) | $1.9 | | | | | Company Information & Disclosures This section provides an overview of NMI Holdings, Inc., details for the upcoming conference call, and important cautionary notes regarding forward-looking statements About NMI Holdings, Inc. NMI Holdings, Inc. is the parent company of National Mortgage Insurance Corporation, a private mortgage insurance provider enabling homeownership and protecting lenders - NMI Holdings, Inc. (NASDAQ: NMIH) is the parent company of National Mortgage Insurance Corporation (National MI)[7] - National MI is a U.S.-based, private mortgage insurance company[7] - The company enables low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default[7] Conference Call and Webcast Details A live conference call and webcast for Q2 2025 results are scheduled for July 29, 2025, accessible via the company's investor relations website - A conference call and live webcast will be held on July 29, 2025, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time[6] - The webcast will be available on the company's website, www.nationalmi.com, in the 'Investor Relations' section[6] Cautionary Note Regarding Forward-Looking Statements This document contains forward-looking statements subject to various risks and uncertainties, including economic conditions and regulatory changes, with no obligation to update them - Certain statements in the press release may constitute forward-looking statements under Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the PSLRA[8] - Forward-looking statements involve estimates, known and unknown risks, assumptions, and uncertainties that could cause actual results to differ materially[8] - Important factors that could cause actual events or results to differ materially include changes in general economic, market, and political conditions, changes in GSE policies, regulatory changes, and actions of competitors[8][9] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures used by NMI Holdings to provide enhanced transparency into its fundamental financial performance Use and Definition of Non-GAAP Measures NMI Holdings utilizes non-GAAP measures like adjusted net income and EPS to improve comparability and provide relevant investor information, not as GAAP alternatives - The company uses non-GAAP measures such as adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio, and book value per share (excluding net unrealized gains and losses)[10] - These measures enhance comparability of fundamental financial performance between periods and provide relevant information to investors, aligning with how management evaluates business performance[10] - Definitions are provided for various adjusted metrics, detailing specific exclusions like net realized investment gains/losses and capital markets transaction costs[11][12][13][14][15] Non-GAAP Reconciliations Detailed reconciliations of GAAP to non-GAAP financial measures are provided for Q2 2025 and comparative periods, highlighting adjustments for investment gains/losses and transaction costs Non-GAAP Financial Measure Reconciliations | Metric | Q2 2025 (3 months) ($K) | Q1 2025 (3 months) ($K) | Q2 2024 (3 months) ($K) | YTD 2025 (6 months) ($K) | YTD 2024 (6 months) ($K) | | :------------------------------------ | :---------------------- | :---------------------- | :---------------------- | :----------------------- | :----------------------- | | Net income (GAAP) ($K) | $96,151 | $102,559 | $92,079 | $198,710 | $181,129 | | Adjustments: | | | | | | | Net realized investment losses (gains) ($K) | $400 | $(24) | — | $376 | — | | Capital markets transaction costs ($K) | — | — | $6,966 | — | $6,966 | | Adjusted net income ($K) | $96,467 | $102,540 | $97,582 | $199,007 | $186,632 | | Diluted EPS (GAAP) | $1.21 | $1.28 | $1.13 | $2.50 | $2.22 | | Adjusted diluted EPS | $1.22 | $1.28 | $1.20 | $2.50 | $2.28 | | Return on equity (GAAP) | 16.2 % | 18.1 % | 18.3 % | 17.1 % | 18.2 % | | Adjusted return on equity | 16.3 % | 18.1 % | 19.4 % | 17.2 % | 18.8 % | | Book value per share (GAAP) | $31.14 | $29.65 | $25.65 | | | | Book value per share (excluding net unrealized gains and losses) | $32.08 | $30.85 | $27.54 | | | - The marginal tax impact of non-GAAP adjustments is calculated based on a statutory U.S. federal corporate income tax rate of 21%[23] Consolidated Financial Statements This section presents the consolidated statements of operations, comprehensive income, and balance sheets for NMI Holdings, Inc., detailing revenue, expenses, assets, and equity Consolidated Statements of Operations and Comprehensive Income Q2 2025 saw total revenues increase to $173.8 million (up 7% YoY), but total expenses significantly rose to $50.2 million (up 15% YoY) due to higher insurance claims Consolidated Statements of Operations and Comprehensive Income (In Thousands) | Metric | Q2 2025 ($K) | Q2 2024 ($K) | YTD 2025 ($K) | YTD 2024 ($K) | | :-------------------------------- | :----------- | :----------- | :------------ | :------------ | | Net premiums earned | $149,066 | $141,168 | $298,432 | $277,825 | | Net investment income | $24,949 | $20,688 | $48,635 | $40,124 | | Total revenues | $173,779 | $162,122 | $347,025 | $318,375 | | Insurance claims and claim expenses | $13,445 | $276 | $17,923 | $3,970 | | Underwriting and operating expenses | $29,508 | $28,330 | $59,683 | $58,145 | | Total expenses | $50,178 | $43,478 | $92,053 | $85,164 | | Income before income taxes | $123,601 | $118,644 | $254,972 | $233,211 | | Net income | $96,151 | $92,079 | $198,710 | $181,129 | | Diluted EPS | $1.21 | $1.13 | $2.50 | $2.22 | | Loss ratio | 9.0 % | 0.2 % | 6.0 % | 1.4 % | | Expense ratio | 19.8 % | 20.1 % | 20.0 % | 20.9 % | | Combined ratio | 28.8 % | 20.3 % | 26.0 % | 22.4 % | - Insurance claims and claim expenses increased significantly to $13.4 million in Q2 2025 from $0.3 million in Q2 2024, leading to a loss ratio of 9.0% compared to 0.2% in the prior year quarter[18] Consolidated Balance Sheets As of June 30, 2025, total assets grew to $3.59 billion and total shareholders' equity rose to $2.42 billion, driven by increased retained earnings and reduced comprehensive loss Consolidated Balance Sheets (In Thousands) | Metric | June 30, 2025 ($K) | December 31, 2024 ($K) | | :------------------------------------ | :----------------- | :--------------------- | | Fixed maturities, available-for-sale | $2,929,117 | $2,723,541 | | Cash and cash equivalents | $84,013 | $54,308 | | Total assets | $3,591,085 | $3,349,973 | | Debt | $416,073 | $415,146 | | Reserve for insurance claims and claim expenses | $163,033 | $152,071 | | Deferred tax liability, net | $441,389 | $386,192 | | Total liabilities | $1,170,978 | $1,132,541 | | Retained earnings | $1,781,969 | $1,583,259 | | Accumulated other comprehensive loss, net of tax | $(72,757) | $(124,804) | | Total shareholders' equity | $2,420,107 | $2,217,432 | - Total assets increased by $241.1 million (7.2%) from December 31, 2024, to $3.59 billion as of June 30, 2025[20] - Total shareholders' equity increased by $202.7 million (9.1%) from December 31, 2024, to $2.42 billion as of June 30, 2025, driven by higher retained earnings and a reduced accumulated other comprehensive loss[20] Historical Quarterly Financial Data This section provides historical quarterly consolidated statements of operations, illustrating trends in net income, EPS, and loss ratios over the past five quarters Quarterly Consolidated Statements of Operations NMI Holdings' Q2 2025 net income was $96.2 million, lower than Q1 2025 but higher than Q2 2024, with significant volatility in the loss ratio over the past five quarters Historical Quarterly Consolidated Statements of Operations (In Thousands) | Metric | Q2 2025 ($K) | Q1 2025 ($K) | Q4 2024 ($K) | Q3 2024 ($K) | Q2 2024 ($K) | | :-------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Net premiums earned | $149,066 | $149,366 | $143,520 | $143,343 | $141,168 | | Total revenues | $173,779 | $173,246 | $166,504 | $166,092 | $162,122 | | Insurance claims and claim expenses | $13,445 | $4,478 | $17,253 | $10,321 | $276 | | Total expenses | $50,178 | $41,875 | $55,631 | $46,765 | $43,478 | | Net income | $96,151 | $102,559 | $86,167 | $92,810 | $92,079 | | Diluted EPS | $1.21 | $1.28 | $1.07 | $1.15 | $1.13 | | Loss ratio | 9.0 % | 3.0 % | 12.0 % | 7.2 % | 0.2 % | | Expense ratio | 19.8 % | 20.2 % | 21.7 % | 20.3 % | 20.1 % | | Combined ratio | 28.8 % | 23.2 % | 33.7 % | 27.5 % | 20.3 % | - Net income decreased by 6.2% quarter-over-quarter from $102.6 million in Q1 2025 to $96.2 million in Q2 2025[24] - The loss ratio significantly increased from 0.2% in Q2 2024 to 9.0% in Q2 2025, indicating a rise in claims[24] Insurance Portfolio Performance This section details the primary insurance portfolio trends, new insurance written, insurance-in-force composition, reinsurance programs, and geographic dispersion of risk Primary Portfolio Trends The primary insurance portfolio grew to $214.7 billion in insurance-in-force, but the number of loans in default and the default rate increased year-over-year to 1.00% Primary Portfolio Trends (As of and for the three months ended) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------------------------ | :-------------- | :------------- | :------------ | | New insurance written (NIW) ($M) | $12,464 | $9,221 | $12,503 | | Insurance-in-force (IIF) ($M) | $214,653 | $211,308 | $203,501 | | Risk-in-force (RIF) ($M) | $57,496 | $56,515 | $53,956 | | Policies in force (count) | 668,638 | 661,490 | 645,276 | | Loans in default (count) | 6,709 | 6,859 | 4,904 | | Default rate | 1.00 % | 1.04 % | 0.76 % | | Annual persistency | 84.1 % | 84.3 % | 85.4 % | - Primary Insurance-in-Force grew 5% year-over-year to $214.7 billion as of June 30, 2025[28] - The default rate increased from 0.76% in Q2 2024 to 1.00% in Q2 2025[28] New Insurance Written (NIW) and Insurance-in-Force (IIF) New Insurance Written (NIW) for Q2 2025 was $12.46 billion, contributing to a total primary Insurance-in-Force (IIF) of $214.7 billion, predominantly for purchase mortgages NIW Composition (FICO, LTV, Purchase/Refinance) Q2 2025 New Insurance Written (NIW) was primarily for purchase mortgages (94.8%), with a weighted average FICO of 756 and LTV of 92.0% - New insurance written (NIW) for Q2 2025 was $12,464 million, a 35% increase from Q1 2025 ($9,221 million)[28][31] - The majority of NIW in Q2 2025 was for purchase mortgages ($11,813 million, or 94.8%)[36] - Weighted average FICO for NIW in Q2 2025 was 756, and weighted average LTV was 92.0%[35] NIW by FICO, LTV, and Purchase/Refinance Mix (Q2 2025) | Category | Q2 2025 ($M) | Percentage of Total NIW | | :------------------------ | :------------- | :---------------------- | | NIW by FICO | | | | >= 760 | $6,523 | 52.3 % | | 740-759 | $2,281 | 18.3 % | | 720-739 | $1,585 | 12.7 % | | 700-719 | $1,061 | 8.5 % | | 680-699 | $590 | 4.7 % | | <=679 | $424 | 3.4 % | | NIW by LTV | | | | 95.01% and above | $1,544 | 12.4 % | | 90.01% to 95.00% | $5,486 | 44.0 % | | 85.01% to 90.00% | $3,887 | 31.2 % | | 85.00% and below | $1,547 | 12.4 % | | NIW by Mix | | | | Purchase | $11,813 | 94.8 % | | Refinance | $651 | 5.2 % | IIF and RIF Composition (Book Year, FICO, LTV) As of June 30, 2025, total primary Insurance-in-Force (IIF) was $214.7 billion, with the largest portions by FICO (>=760) and LTV (90.01%-95.00%) - Total primary Insurance-in-Force (IIF) was $214,653 million and Risk-in-Force (RIF) was $57,496 million as of June 30, 2025[37] - The largest portion of IIF by FICO (50.2%) is from loans with FICO scores >= 760 ($107,677 million)[38] - The largest portion of IIF by LTV (49.4%) is from loans with LTVs between 90.01% and 95.00% ($106,017 million)[39] - Fixed-rate mortgages constitute 98% of the primary RIF by loan type[39] Change in Primary IIF Primary Insurance-in-Force (IIF) increased by $3.345 billion during Q2 2025, driven by $12.464 billion in new insurance written, partially offset by reductions Change in Total Primary IIF (In Millions) | Metric | June 30, 2025 ($M) | | :------------------------------------------ | :----------------- | | IIF, beginning of period | $211,308 | | NIW | $12,464 | | Cancellations, principal repayments and other reductions | $(9,119) | | IIF, end of period | $214,653 | - Primary IIF increased by $3,345 million during Q2 2025, driven by new insurance written of $12,464 million, partially offset by $9,119 million in reductions[40] Reinsurance Program Details NMI Holdings manages risk through quota-share, insurance-linked note, and excess-of-loss reinsurance transactions, with $12.76 billion in ceded risk-in-force for Q2 2025 - The company engages in quota-share reinsurance (QSR), insurance-linked note (ILN), and traditional excess-of-loss (XOL) transactions[32] Reinsurance Transactions (Q2 2025, In Thousands) | Metric | June 30, 2025 ($K) | | :-------------------------------- | :----------------- | | The QSR Transactions | | | Ceded risk-in-force | $12,764,708 | | Ceded premiums earned | $(40,227) | | Ceded claims and claim expenses (benefits) | $3,253 | | Ceding commission earned | $9,669 | | Profit commission | $19,958 | | The ILN Transactions | | | Ceded premiums | $(3,244) | | The XOL Transactions | | | Ceded Premiums | $(10,350) | - NMIC exercised optional termination rights for previously outstanding excess-of-loss reinsurance agreements with Oaktown Re III Ltd. and Oaktown Re V Ltd. in July and December 2024, respectively[33] Geographic Dispersion of Risk-in-Force NMI Holdings' primary risk-in-force (RIF) remains geographically diversified, with the top three states (California, Texas, Florida) accounting for 25.7% of total RIF Top 10 Primary RIF by State (As of June 30, 2025) | State | Percentage of RIF | | :------------ | :---------------- | | California | 10.1 % | | Texas | 8.4 % | | Florida | 7.2 % | | Georgia | 4.0 % | | Illinois | 3.9 % | | Washington | 3.8 % | | Virginia | 3.7 % | | Pennsylvania | 3.5 % | | Ohio | 3.4 % | | North Carolina | 3.2 % | | Total | 51.2 % | - The top 10 states accounted for 51.2% of primary RIF as of June 30, 2025, a slight decrease from 51.7% in Q2 2024[42] Portfolio Quality by Book Year Portfolio quality by book year shows recent years (2021-2025) with higher remaining insurance in force, while 2022 and 2023 exhibit higher incurred loss ratios Selected Primary Portfolio Statistics by Book Year (As of June 30, 2025) | Book Year | Remaining Insurance in Force ($M) | % Remaining of Original Insurance | Incurred Loss Ratio (Inception to Date) | Current Default Rate | | :---------------- | :-------------------------------- | :-------------------------------- | :-------------------------------------- | :------------------- | | 2016 and prior | $1,996 | 5 % | 2.2 % | 2.0 % | | 2017 | $1,667 | 8 % | 1.9 % | 2.5 % | | 2018 | $2,191 | 8 % | 2.4 % | 2.9 % | | 2019 | $5,612 | 12 % | 2.0 % | 1.7 % | | 2020 | $18,847 | 30 % | 1.3 % | 0.8 % | | 2021 | $45,409 | 53 % | 3.2 % | 1.0 % | | 2022 | $44,598 | 76 % | 16.5 % | 1.5 % | | 2023 | $32,013 | 79 % | 14.2 % | 0.9 % | | 2024 | $41,100 | 89 % | 10.1 % | 0.4 % | | 2025 | $21,220 | 98 % | 1.5 % | 0.0 % | - The 2022 and 2023 book years show the highest incurred loss ratios (inception to date) at 16.5% and 14.2%, respectively[43] - More recent book years (2024 and 2025) have significantly lower current default rates (0.4% and 0%, respectively)[43] Claims and Loss Development This section reconciles the reserve for insurance claims, analyzes loans in default, details claims paid, and presents the average reserve per default Reserve for Insurance Claims and Claim Expenses Reconciliation The reserve for insurance claims and claim expenses increased to $163.0 million by June 30, 2025, driven by $17.6 million in incurred claims, partially offset by $7.1 million paid Reconciliation of Reserve for Insurance Claims and Claim Expenses (In Thousands) | Metric | Q2 2025 (3 months) ($K) | YTD 2025 (6 months) ($K) | | :------------------------------------------ | :---------------------- | :----------------------- | | Beginning balance | $151,847 | $152,071 | | Beginning balance, net of reinsurance recoverables | $120,468 | $119,811 | | Total claims and claim expenses incurred | $13,112 | $17,590 | | Total claims and claim expenses paid | $3,252 | $7,073 | | Ending balance, net of reinsurance recoverables | $130,328 | $130,328 | | Ending balance | $163,033 | $163,033 | - The ending reserve balance for insurance claims and claim expenses (gross) increased to $163.0 million as of June 30, 2025, from $152.1 million at December 31, 2024[45] - For the six months ended June 30, 2025, total claims and claim expenses incurred were $17.6 million, while total claims and claim expenses paid were $7.1 million[45] Loans in Default Reconciliation The number of loans in default decreased slightly in Q2 2025 to 6,709, as 2,215 cures and other reductions exceeded 2,169 new defaults Reconciliation of Loans in Default | Metric | Q2 2025 (3 months) | YTD 2025 (6 months) | | :-------------------------- | :----------------- | :------------------ | | Beginning default inventory | 6,859 | 6,642 | | Plus: new defaults | 2,169 | 4,590 | | Less: cures | (2,215) | (4,309) | | Less: claims paid | (93) | (188) | | Less: rescission and claims denied | (11) | (26) | | Ending default inventory | 6,709 | 6,709 | - The ending default inventory decreased from 6,859 at the start of Q2 2025 to 6,709 at the end, primarily due to cures exceeding new defaults[49] Claims Paid Analysis In Q2 2025, NMI Holdings paid 93 claims totaling $5.5 million, with an average amount of $59 thousand per claim and a significantly higher severity of 82% Claims Paid Details (Q2 2025, In Thousands) | Metric | Q2 2025 ($K) | Q2 2024 ($K) | | :-------------------------- | :----------- | :----------- | | Number of claims paid | 93 | 59 | | Total amount paid for claims | $5,512 | $1,877 | | Average amount paid per claim | $59 | $32 | | Severity | 82 % | 54 % | - The number of claims paid increased by 57.6% year-over-year, from 59 in Q2 2024 to 93 in Q2 2025[50] - Claim severity increased significantly from 54% in Q2 2024 to 82% in Q2 2025[50] Average Reserve per Default As of June 30, 2025, the average reserve per default was $24.3 thousand, a decrease from $25.6 thousand in Q2 2024, comprising case and IBNR reserves Average Reserve per Default (As of June 30, In Thousands) | Metric | 2025 ($K) | 2024 ($K) | | :---------- | :-------- | :-------- | | Case | $22.3 | $23.6 | | IBNR | $2.0 | $2.0 | | Total | $24.3 | $25.6 | - The total average reserve per default decreased from $25.6 thousand in Q2 2024 to $24.3 thousand in Q2 2025[51] Regulatory Capital Position This section outlines NMI Holdings' strong regulatory capital position, detailing PMIERs available assets and net risk-based required assets PMIERs Available Assets and Required Assets As of June 30, 2025, NMI Holdings maintained $3.24 billion in PMIERs available assets, significantly exceeding $1.93 billion in net risk-based required assets PMIERs Available Assets and Net Risk-Based Required Assets (As of, In Thousands) | Metric | June 30, 2025 ($K) | March 31, 2025 ($K) | June 30, 2024 ($K) | | :------------------------------ | :----------------- | :------------------ | :----------------- | | Available assets | $3,244,517 | $3,230,653 | $2,827,721 | | Net risk-based required assets | $1,926,517 | $1,867,414 | $1,651,569 | - PMIERs available assets of $3.24 billion significantly exceeded net risk-based required assets of $1.93 billion as of June 30, 2025[52] - Available assets increased by 14.7% year-over-year from $2.83 billion in Q2 2024 to $3.24 billion in Q2 2025[52]