NMI (NMIH) - 2021 Q1 - Quarterly Report

Financial Performance - Total revenues for Q1 2021 were $115.194 million, an increase of 6.9% from $107.649 million in Q1 2020[21] - Net premiums earned rose to $105.879 million, up 7.3% from $98.717 million in the same period last year[21] - Net income for Q1 2021 was $52.891 million, a decrease of 9.5% compared to $58.271 million in Q1 2020[21] - Basic earnings per share decreased to $0.62 in Q1 2021 from $0.85 in Q1 2020[21] - The company reported a comprehensive income of $7.758 million for Q1 2021, down from $45.447 million in Q1 2020[21] Assets and Liabilities - Total assets increased to $2.188 billion as of March 31, 2021, compared to $2.167 billion at the end of 2020[20] - Total liabilities rose to $807.523 million as of March 31, 2021, up from $797.075 million at the end of 2020[20] - Shareholders' equity increased to $1.380 billion as of March 31, 2021, compared to $1.370 billion at the end of 2020[20] - Cash and cash equivalents decreased to $115.517 million as of March 31, 2021, from $126.937 million at the end of 2020[20] Investment Portfolio - As of March 31, 2021, total investments amounted to $1,831.5 million, with gross unrealized losses of $25.5 million[41] - The amortized cost of total investments as of December 31, 2020, was $1,730.8 million, with a fair value of $1,804.3 million[46] - The investment portfolio had gross unrealized losses of $0.5 million as of December 31, 2020, with $8,000 in an unrealized loss position for over twelve months[47] - As of March 31, 2021, net investment income was $8,814,000, an increase of 8.7% from $8,104,000 in the same period of 2020[50] - The investment portfolio was comprised of 100% fixed income assets, all rated investment grade, with an average rating of "A+" and an aggregate unrealized gain position of $16 million as of March 31, 2021[171] Reinsurance and Risk Management - The company has four outstanding quota share reinsurance treaties, with the 2021 QSR Transaction ceding 22.5% of the risk on eligible policies written in 2021[89] - NMIC ceded aggregate premiums to the Oaktown Re Vehicles of $9.4 million for the three months ended March 31, 2021, compared to $3.9 million for the same period in 2020, reflecting an increase of 141%[76] - The company established lower reserves for defaults connected to the COVID-19 outbreak, reflecting expectations of higher cure rates due to forbearance and assistance programs[102] - The company did not recognize any allowance for credit loss with respect to its reinsurance recoverables as of March 31, 2021[96] Market Conditions and Economic Impact - The path of global economic recovery remains uncertain, impacting the mortgage insurance market and business performance[32] - The company updated its underwriting guidelines and policy pricing due to increased macroeconomic volatility caused by COVID-19[31] - The U.S. mortgage insurance industry new insurance written (NIW) volume reached record levels following the onset of the COVID pandemic[141] Customer and Loan Metrics - As of March 31, 2021, total insurance-in-force (IIF) was $125.4 billion, with primary IIF at $123.8 billion[126] - The default rate for the company's primary insured portfolio was 2.5% as of March 31, 2021, with 11,090 defaulted loans out of 436,652 total policies in force[148] - The company reported a decline in the default population from a peak of 13,765 loans in September 2020 to 10,060 loans by April 30, 2021, reflecting a default rate of 2.24%[150] - The primary new insurance written (NIW) for the three months ended March 31, 2021, was $26,397 million, compared to $11,297 million for the same period in 2020, indicating a significant increase of 134%[210] Compliance and Regulatory Matters - The company maintained compliance with all covenants under the 2020 Revolving Credit Facility, including a maximum debt-to-total capitalization ratio of 35%[71] - The company expects to remain compliant with PMIERs asset requirements, with a $549 million excess available asset position as of March 31, 2021[162] Operational Highlights - The company activated its disaster continuity program in response to COVID-19 to ensure business operations continued without interruption[31] - The company introduced a proprietary risk-based pricing platform, Rate GPS, to enhance its ability to evaluate and price risk, which is now used for most new business[176]