NMI (US:NMIH)2025-07-29 22:02Financial Data and Key Metrics Changes - In Q2 2025, total revenue reached a record $173.8 million, with adjusted net income of $96.5 million or $1.22 per diluted share, and an adjusted return on equity of 16.3% [8][12] - The company generated $12.5 billion of new insurance written (NIW) and ended the period with a record $214.7 billion of primary insurance in force, reflecting a 2% increase from Q1 and a 5% increase year-over-year [5][12] - The expense ratio was a record low of 19.8%, indicating significant operating leverage and efficiency in managing costs [14] Business Line Data and Key Metrics Changes - Net premiums earned in Q2 were $149.1 million, slightly down from $149.4 million in Q1 but up from $141.2 million in Q2 2024 [13] - The core yield increased to 34.2 basis points from 34.1 basis points in the previous quarter, while the net yield for the quarter was 28 basis points [13] Market Data and Key Metrics Changes - The twelve-month persistency rate was 84.1%, slightly down from 84.3% in Q1 [12] - The company reported 6,709 defaults at the end of Q2, down from 6,859 at the end of Q1, with a default rate of 1% [14] Company Strategy and Development Direction - The company aims to continue serving customers and their borrowers, investing in employee success, and driving growth in its high-quality insured portfolio [11][16] - The management emphasized a proactive approach to pricing, risk selection, and reinsurance, maintaining discipline in capital return strategies [10][21] Management's Comments on Operating Environment and Future Outlook - The macro environment remains resilient despite elevated interest rates, with strong demand for down payment support from lenders and borrowers [9][10] - Management expressed confidence in the company's ability to navigate market changes and maintain strong credit performance, citing a favorable economic backdrop [28][42] Other Important Information - The company was recognized as a great place to work for the tenth consecutive year, highlighting the importance of team quality and workplace culture as competitive advantages [6][7] - The company has repurchased $23.2 million of common stock in Q2, with a total of $294 million repurchased to date [15] Q&A Session Summary Question: Capital return pacing in light of economic resilience - Management indicated a consistent approach to capital return, with an expectation of approximately $25 million per quarter, while remaining flexible to adjust based on market conditions [19][21] Question: Impact of rising home supply and pricing on underwriting - Management noted that while there are regional differences in the housing market, the overall economic growth and job market remain strong, allowing for proactive management of underwriting and risk [25][28] Question: Competitive environment and pricing relative to peers - Management described the industry pricing as balanced and constructive, with strong unit economics on new business [36] Question: Default trends and recovery drivers - Management highlighted the favorable credit performance of the portfolio, with borrowers benefiting from a strong labor market and embedded equity, aiding in recovery from defaults [41][42] Question: Regulatory impacts from FHFA proposals - Management stated that proposed changes to equitable housing programs are not expected to have a significant impact on the business or market [48][49]