NMI (US:NMIH)2022-05-05 01:24Financial Data and Key Metrics Changes - The company reported record GAAP net income of $67.7 million or $0.77 per diluted share, and record adjusted net income of $67.5 million also $0.77 per diluted share [11][19] - GAAP return on equity for the quarter was 17.5% and adjusted ROE was 17.4% [12] - Net premiums earned were a record $116.5 million, up from $113.9 million in the previous quarter [20][22] - The expense ratio was a record low of 28.3% for the quarter, and the adjusted expense ratio was a record low of 28% [22] Business Line Data and Key Metrics Changes - The company generated $14.2 billion of new insurance written (NIW) volume, including $13.4 billion of purchase volume [19] - Primary insurance-in-force grew to $158.9 billion, up 4% from the end of the fourth quarter and up 28% compared to the first quarter of 2021 [19][20] - The 12-month persistency ratio improved to 71.5% at March 31, from 63.8% at year-end [15][20] Market Data and Key Metrics Changes - The mortgage insurance market environment remains constructive despite increased macroeconomic uncertainties [12][13] - The average 30-year fixed-rate mortgage is now 5.4%, which is well above the weighted average note rate in the in-force portfolio [15] - The company anticipates some degree of pullback in total industry NIW this year, but expects the MI market will remain large by historical standards [14] Company Strategy and Development Direction - The company aims to build franchise value by delivering solutions for customers and borrowers while growing the insured portfolio with a balanced focus on risk and return [10] - The company has established a comprehensive credit risk management framework and has built a high-quality insured portfolio [9][17] - The focus remains on innovation in risk transfer markets and maintaining a strong balance sheet with a robust funding position [18][27] Management's Comments on Operating Environment and Future Outlook - Management highlighted that despite macroeconomic headwinds, the job market remains healthy, consumer balance sheets are strong, and house prices continue to appreciate [16] - The company expects to continue delivering strong growth, consistent returns, and compound growth in book value per share [30] - Management noted that rising interest rates and accelerated house price appreciation will remain dominant themes through the remainder of the year [29] Other Important Information - The company repurchased $5 million of common stock and has $120 million of repurchase capacity remaining under the program announced in February [24][48] - An excess of loss reinsurance agreement of $290 million was completed, providing additional risk protection [25][26] Q&A Session Summary Question: Pricing stability amid macro uncertainties - Management indicated that pricing remains stable and balanced, with some adjustments made for higher-risk business [32] Question: Impact of COVID on expense ratio and operating leverage - Management explained that operating leverage is achieved through disciplined expense management and improved persistency [34] Question: Managing risk during competitive periods - Management emphasized the importance of utilizing established risk management strategies during uncertain times [40] Question: Trends in the ILN market - Management noted that better execution was found in the excess of loss market compared to the ILN market [44] Question: Purchase origination market outlook - Management expects a larger overall purchase market compared to last year, driven by demographic trends and affordability challenges [51]