NMI (US:NMIH)2025-02-06 23:00Financial 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 adjusted EPS of $4.50, up 17% compared to 2023 [7][14][22] - Total revenue for Q4 was a record $166.5 million, compared to $151.4 million in Q4 2023, marking a 12% increase year-over-year [12][19][21] - The adjusted return on equity for the quarter was 15.6% [18][22] Business Line Data and Key Metrics Changes - The company generated $11.9 billion of new insurance written (NIW) in Q4 2024, with a total of $46 billion for the year [12][14] - The primary insurance in force grew to $210.2 billion, up 1% from Q3 2024 and 7% compared to Q4 2023 [18][21] - The company maintained a high-quality insured portfolio with a default rate of 1% at year-end [20][35] 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 [14][15] - The company activated 118 new lenders in 2024, ending the year with over 1,600 active accounts [13] Company Strategy and Development Direction - The company plans to continue focusing on customer service, value-added engagement, and technology leadership to differentiate itself in the evolving mortgage market [9][10] - The management emphasized the importance of maintaining a disciplined approach to risk management while growing the insured portfolio [10][15] - The company aims to build value for shareholders through earnings growth, compounding book value, and prudent capital distribution [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the macroeconomic outlook and the private MI market opportunity, indicating a strong position to deliver value for stakeholders [16][22] - The management noted constructive conversations with policymakers in Washington, recognizing the role of private mortgage insurance in expanding access to homeownership [10][11] Other Important Information - The company repurchased $27.9 million of common stock in Q4, with a total of $245 million repurchased throughout the year [21] - The company has $80 million of repurchase capacity remaining under its existing program, with an additional $250 million authorization [21] Q&A Session Summary Question: How should we think about the pacing of capital return? - The company plans to maintain a consistent repurchase pace of about $25 million per quarter, with flexibility to be opportunistic if market conditions change [25][26] 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 coming from loans that defaulted in earlier quarters [30][31] Question: Any updates on credit and claims activity? - Claims expense for the quarter was $17.3 million, with a 12% loss ratio, and the company remains encouraged by the credit performance of its book [33][34] Question: When might dividends become part of the capital return strategy? - Currently, the focus is on the repurchase program, but there may be potential for dividends in the future as the company continues to perform and grow [40][41] Question: What is the current competitive landscape regarding pricing? - The company does not receive much pushback on pricing from lenders and aims to strike a balance between supporting lenders and protecting returns [45][46] Question: Will premium yield trend up or down? - Core yield is expected to remain stable, while net yield may vary based on claims experience [52][53] Question: What is the right amount of PMIERs excess to operate with? - The company aims for a balanced approach, maintaining a comfortable PMIERs excess position while delivering strong returns [61][62] Question: Why is the expense ratio not decreasing as expected? - The company targets a low to mid-20s expense ratio and continues to seek efficiency, but the current ratio reflects operational realities [63][64]