NMI (US:NMIH)2025-02-07 01:16Financial 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]