NMI (US:NMIH)2023-11-01 21:52Financial Performance - Net premiums earned for Q3 2023 were $130,089 thousand, a 9.8% increase from $118,317 thousand in Q3 2022; for the nine months ended September 30, 2023, net premiums earned were $377,828 thousand, up 6.2% from $355,682 thousand in the same period of 2022 [21]. - Net income for Q3 2023 was $83,955 thousand, up 9.2% from $76,838 thousand in Q3 2022; for the nine months, net income increased to $238,697 thousand from $219,962 thousand, a 8.5% increase [21]. - Earnings per share (EPS) for Q3 2023 were $1.02 (basic) and $1.00 (diluted), compared to $0.91 and $0.90 in Q3 2022, reflecting a 12.1% and 11.1% increase respectively [21]. - Total revenues for the nine months ended September 30, 2023, reached $427,623,000, up from $390,238,000 in the same period of 2022, reflecting a year-over-year increase of 9.6% [213]. - Adjusted net income for the nine months ended September 30, 2023, was $238,723,000, up from $218,636,000 in the same period of 2022, a growth of 9.2% [213]. - Basic earnings per share rose to $1.02 in Q3 2023 from $0.91 in Q3 2022, an increase of 12.1% [213]. - Income before income taxes for the nine months ended September 30, 2023, was $307,522,000, compared to $282,525,000 in the same period of 2022, an increase of 8.8% [213]. Asset and Liability Management - Total assets increased to $2,762,031 thousand as of September 30, 2023, up from $2,516,030 thousand as of December 31, 2022, representing a growth of 9.8% [18]. - Total liabilities increased to $971,070 thousand as of September 30, 2023, from $902,303 thousand as of December 31, 2022, an increase of 7.6% [18]. - Shareholders' equity rose to $1,790,961 thousand as of September 30, 2023, compared to $1,613,727 thousand as of December 31, 2022, representing an increase of 11.0% [18]. - The company’s cash and cash equivalents increased to $176,463 thousand as of September 30, 2023, compared to $44,426 thousand as of December 31, 2022, a substantial increase of 297.5% [18]. - Available assets increased to $2,602,680,000 as of September 30, 2023, from $2,275,487,000 in 2022, marking a growth of approximately 14.4% [209]. - Risk-based required assets were $1,414,233,000 as of September 30, 2023, compared to $1,172,581,000 in 2022, reflecting an increase of about 20.6% [210]. Investment Performance - Net investment income rose to $17,853 thousand in Q3 2023, compared to $11,945 thousand in Q3 2022, marking a 49.5% increase; for the nine months, it increased to $49,265 thousand from $33,065 thousand, a 49.0% rise [21]. - The investment portfolio had gross unrealized losses of $265.2 million as of September 30, 2023, with $250.1 million associated with securities in an unrealized loss position for twelve months or longer [39]. - The amortized cost of total investments as of September 30, 2023, was $2,462.8 million, with a fair value of $2,197.7 million, indicating a significant difference due to market fluctuations [38]. - The company did not recognize an allowance for credit loss for any security in the investment portfolio as of September 30, 2023 [41]. - Gross realized investment gains for the three months ended September 30, 2023, were $0, while gross realized investment losses were $0, resulting in net realized investment losses of $33,000 for the nine months ended September 30, 2023 [44]. Claims and Insurance Operations - The reserve for insurance claims and claim expenses increased to $116,078 thousand as of September 30, 2023, from $99,836 thousand as of December 31, 2022, an increase of 16.3% [18]. - Gross reserves for insurance claims and claim expenses totaled $116.1 million as of September 30, 2023, compared to $94.9 million as of September 30, 2022, reflecting a 22.4% increase [99]. - The company paid 129 claims totaling $3.1 million during the nine months ended September 30, 2023, including $0.6 million of ceded claims and claim expenses [99]. - The total claims incurred for the period were influenced by macroeconomic factors, including unemployment trends and housing values [184]. - The ending default inventory increased to 4,594 loans as of September 30, 2023, from 4,096 loans in 2022, primarily due to growth in the insured portfolio [195]. Reinsurance and Risk Management - NMIC utilizes third-party reinsurance to manage risk and ensure compliance with PMIERs, with quota share agreements reducing premiums written and providing capital relief [137]. - The company ceded aggregate premiums to the Oaktown Re Vehicles of $6.9 million and $24.8 million during the three and nine months ended September 30, 2023, respectively [65]. - The current reinsurance coverage amount for the 2019 ILN Transaction is $163.19 million, down from the initial coverage of $326.91 million [73]. - NMIC holds optional termination rights for each XOL Transaction, allowing termination if the outstanding reinsurance coverage amount amortizes to 10% or less of the initial coverage [79]. - The 2022 Seasoned QSR Transaction allows NMIC to cede 95% of the net risk on eligible policies, scheduled to terminate on June 30, 2032 [91]. Market and Economic Conditions - Macroeconomic factors such as inflation and increasing interest rates could negatively affect the housing market and the mortgage insurance industry, potentially impacting future new insurance written (NIW) volume [131]. - The persistency rate improved to 86.2% at September 30, 2023, up from 80.1% at September 30, 2022, reflecting a slowdown in refinancing activity [163]. - The default rate in the primary insured portfolio was 0.74% as of September 30, 2023, slightly down from 0.75% as of December 31, 2022 [100]. - The average loan size remained stable at $313,000 as of September 30, 2023, consistent with previous quarters [168]. - The company is currently monitoring litigation regarding the refund of certain mortgage insurance premiums, which may impact future financial results [113].