NMI Holdings, Inc. Reports First Quarter 2023 Financial Results

EMERYVILLE, Calif., May 02, 2023 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $74.5 million, or $0.88 per diluted share, for the first quarter ended March 31, 2023, which compares to $72.9 million, or $0.86 per diluted share, in the fourth quarter ended December 31, 2022 and $67.7 million, or $0.77 per diluted share, in the first quarter ended March 31, 2022. Adjusted net income for the quarter was $74.5 million, or $0.88 per diluted share, which compares to $72.9 million, or $0.86 per diluted share, in the fourth quarter ended December 31, 2022 and $67.5 million, or $0.77 per diluted share, in the first quarter ended March 31, 2022.

Adam Pollitzer, President and Chief Executive Officer of National MI, said, “We started the year with significant momentum, delivering strong operating performance, continued growth in our high-quality insured portfolio, and standout financial results in the first quarter. We continue to manage our business with discipline and a focus on through-the-cycle performance, and looking forward, we’re well positioned to continue to serve our customers and their borrowers, support our talented team, and deliver sustained performance and long-term value for our shareholders.”

Selected first quarter 2023 highlights include:

• Primary insurance-in-force at quarter end was $186.7 billion, compared to $184.0 billion at the end of the fourth quarter of 2022 and $158.9 billion at the end of the first quarter of 2022

• Net premiums earned were $121.8 million, compared to $119.6 million in the fourth quarter of 2022 and $116.5 million in the first quarter of 2022
  

• Total revenue was $136.8 million, compared to $133.1 million in the fourth quarter of 2022 and $127.4 million in the first quarter of 2022

• Underwriting and operating expenses were $25.8 million, compared to $26.7 million in the fourth quarter of 2022 and $32.9 million in the first quarter of 2022

• Insurance claims and claim expenses were $6.7 million, compared to $3.4 million in the fourth quarter of 2022 and a benefit of $0.6 million in the first quarter of 2022

• Shareholders’ equity was $1.7 billion at quarter end and book value per share was $20.49. Book value per share excluding the impact of net unrealized gains and losses in the investment portfolio was $22.56, up 4% compared to $21.76 in the fourth quarter of 2022 and 19% compared to $18.97 in the first quarter of 2022

• Annualized return on equity for the quarter was 17.9%, compared to 18.6% in the fourth quarter of 2022 and 17.5% in the first quarter of 2022

• At quarter-end, total PMIERs available assets were $2.5 billion and net risk-based required assets were $1.2 billion
  

		Quarter Ended			Quarter Ended			Quarter Ended			Change(1)	Change(1)
		3/31/2023			12/31/2022			3/31/2022			Q/Q	Y/Y
INSURANCE METRICS ($billions)
Primary Insurance-in-Force		$	186.7		$	184.0		$	158.9		1%	18%
New Insurance Written - NIW
	Monthly premium		8.6			10.5			13.1		(18)%	(35)%
	Single premium		0.2			0.3			1.1		(31)%	(83)%
	Total(2)		8.7			10.7			14.2		(19)%	(38)%
FINANCIAL HIGHLIGHTS (Unaudited, $millions, except per share amounts)
Net Premiums Earned			121.8			119.6			116.5		2%	5%
Insurance Claims and Claim Expenses (Benefits)			6.7			3.4			(0.6	)	94%	N/A
Underwriting and Operating Expenses			25.8			26.7			32.9		(3)%	(22)%
Net Income			74.5			72.9			67.7		2%	10%
Book Value per Share (excluding net unrealized gains and losses)(3)			22.56			21.76			18.97		4%	19%
Loss Ratio			5.5	%		2.9	%		(0.5	)%
Expense Ratio			21.2	%		22.3	%		28.3	%

(1)  Percentages may not be replicated based on the rounded figures presented in the table.
(2)  Total may not foot due to rounding.
(3) Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.

Conference Call and Webcast Details

The company will hold a conference call, which will be webcast live today, May 2, 2023, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The conference call can also be accessed by dialing (844) 481-2708 in the U.S., or (412) 317-0664 internationally by referencing NMI Holdings, Inc.

About NMI Holdings, Inc.

NMI Holdings, Inc. (NASDAQ: NMIH), is the parent company of National Mortgage Insurance Corporation (National MI), a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the U.S. Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "perceive," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: changes in general economic, market and political conditions and policies (including rising interest rates and inflation) and investment results or other conditions that affect the U.S. housing market or the U.S. markets for home mortgages, mortgage insurance, reinsurance and credit risk transfer markets, including the risk related to geopolitical instability, inflation, an economic downturn (including any decline in home prices) or recession, and their impacts on our business, operations and personnel; changes in the charters, business practices, policy, pricing or priorities of Fannie Mae and Freddie Mac (collectively, the GSEs), which may include decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement generally, or with first time homebuyers or on very high loan-to-value mortgages; or changes in the direction of housing policy objectives of the Federal Housing Finance Agency (FHFA), such as the FHFA's priority to increase the accessibility to and affordability of homeownership for low-and-moderate income borrowers and underrepresented communities; our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (PMIERs) and other requirements imposed by the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia (D.C.) and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including other private mortgage insurers and government mortgage insurers such as the Federal Housing Administration, the U.S. Department of Agriculture's Rural Housing Service and the U.S. Department of Veterans Affairs (collectively, government MIs), and potential market entry by new competitors or consolidation of existing competitors; adoption of new or changes to existing laws, rules and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including the implementation of the final rules defining and/or concerning "Qualified Mortgage" and "Qualified Residential Mortgage"; U.S. federal tax reform and other potential changes in tax law and their impact on us and our operations; legislative or regulatory changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance industry in particular; potential legal and regulatory claims, investigations, actions, audits or inquiries that could result in adverse judgements, settlements, fines or other reliefs that could require significant expenditures or have other negative effects on our business; uncertainty relating to the coronavirus (COVID-19) virus and its variants or the measures taken by governmental authorities and other third-parties to contain the spread of COVID-19, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and our business, operations and personnel; our ability to successfully execute and implement our capital plans, including our ability to access the equity, credit and reinsurance markets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; lenders, the GSEs, or other market participants seeking alternatives to private mortgage insurance; our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry; our ability to attract and retain a diverse customer base, including the largest mortgage originators; failure of risk management or pricing or investment strategies; decrease in the length of time our insurance policies are in force; emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience; potential adverse impacts arising from natural disasters including, with respect to affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; climate risk and efforts to manage or regulate climate risk by government agencies could affect our business and operations; potential adverse impacts arising from the occurrence of any man-made disasters or public health emergencies, including pandemics; the inability of our counter-parties, including third-party reinsurers, to meet their obligations to us; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; effectiveness and security of our information technology systems and digital products and services, including the risks these systems, products or services may fail to operate as expected or planned, or expose us to cybersecurity or third-party risks (including exposure of our confidential customer and other confidential information); and ability to recruit, train and retain key personnel. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

Use of Non-GAAP Financial Measures

We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors. These non-GAAP financial measures align with the way the company's business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.

Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.

Adjusted net income is defined as GAAP net income, excluding the after-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred. Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.

Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the periods that non-vested shares are anti-dilutive under GAAP.

Adjusted return on equity is calculated by dividing adjusted net income on an annualized basis by the average shareholders' equity for the period.

Adjusted expense ratio is defined as GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions, divided by net premiums earned.

Adjusted combined ratio is defined as the total of GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions and insurance claims and claims expenses, divided by net premiums earned.

Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on investments, divided by shares outstanding.

Although adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.

(1)  Change in fair value of warrant liability. Outstanding warrants at the end of each reporting period are revalued, and any change in fair value is reported in the statement of operations in the period in which the change occurred. The change in fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors that do not impact or reflect our current period operating results. Furthermore, all unexercised warrants expired in April 2022 and, as such, no change in fair value will be recognized in future reporting periods. We believe trends in our operating performance can be more clearly identified by excluding fluctuations related to the change in fair value of our warrant liability.

(2)  Capital markets transaction costs. Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles.

(3)  Net realized investment gains and losses. The recognition of the net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results.

(4)  Other infrequent, unusual or non-operating items. Items that are the result of unforeseen or uncommon events, and are not expected to recur with frequency in the future. Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include infrequent, unusual or non-operating adjustments related to severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced in September 2021 and the effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are infrequent or non-recurring in nature, and are not indicative of the performance of, or ongoing trends in, our primary operating activities or business.

(5) Net unrealized gains and losses on investments. The recognition of the net unrealized gains or losses on investment can vary significantly across periods and is influenced by factors such as interest rate movement, overall market and economic conditions, and tax and capital profiles. These valuation adjustments may not necessarily result in economic gains or losses and not reflective of ongoing operations. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these unrealized gains or losses.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Consolidated statements of operations and comprehensive income (loss) (unaudited)	For the three months ended March 31,
		2023				2022
	(In Thousands, except for per share data)
Revenues
Net premiums earned	$	121,754			$	116,495
Net investment income		14,894				10,199
Net realized investment (losses) gains		(33	)			408
Other revenues		164				339
Total revenues		136,779				127,441
Expenses
Insurance claims and claim expenses (benefits)		6,701				(619	)
Underwriting and operating expenses		25,786				32,935
Service expenses		80				430
Interest expense		8,039				8,041
Gain from change in fair value of warrant liability		—				(93	)
Total expenses		40,606				40,694
Income before income taxes		96,173				86,747
Income tax expense		21,715				19,067
Net income	$	74,458			$	67,680
Earnings per share
Basic	$	0.89			$	0.79
Diluted	$	0.88			$	0.77
Weighted average common shares outstanding
Basic		83,600				85,953
Diluted		84,840				87,310
Loss ratio(1)		5.5	%			(0.5	)%
Expense ratio(2)		21.2	%			28.3	%
Combined ratio(3)		26.7	%			27.7	%
Net income	$	74,458			$	67,680
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) in accumulated other comprehensive income (loss), net of tax expense (benefit) of $8,633 and $(26,176) for the quarters ended March 31, 2023 and 2022, respectively		32,476				(98,471	)
Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of $(7) and $86 for the quarters ended March 31, 2023 and 2022, respectively		26				(323	)
Other comprehensive income (loss), net of tax		32,502				(98,794	)
Comprehensive income (loss)	$	106,960			$	(31,114	)

(1)  Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) by net premiums earned.
(2)  Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(3)  Combined ratio may not foot due to rounding.

Consolidated balance sheets (unaudited)	March 31, 2023				December 31, 2022
Assets	(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $2,383,982 and $2,352,747 as of March 31, 2023 and December 31, 2022, respectively)	$	2,171,766			$	2,099,389
Cash and cash equivalents (including restricted cash of $2,197 and $2,176 as of March 31, 2023 and December 31, 2022, respectively)		83,104				44,426
Premiums receivable		70,198				69,680
Accrued investment income		15,702				14,144
Deferred policy acquisition costs, net		59,921				58,564
Software and equipment, net		31,830				31,930
Intangible assets and goodwill		3,634				3,634
Reinsurance recoverable		23,479				21,587
Prepaid federal income taxes		154,409				154,409
Other assets		19,733				18,267
Total assets	$	2,633,776			$	2,516,030
Liabilities
Debt	$	396,426			$	396,051
Unearned premiums		114,064				123,035
Accounts payable and accrued expenses		70,341				74,576
Reserve for insurance claims and claim expenses		108,157				99,836
Reinsurance funds withheld		2,313				2,674
Deferred tax liability, net		223,368				193,859
Other liabilities		12,396				12,272
Total liabilities		927,065				902,303
Shareholders' equity
Common stock - class A shares, $0.01 par value; 86,869,169 shares issued and 83,279,886 shares outstanding as of March 31, 2023 and 86,472,742 shares issued and 83,549,879 shares outstanding as of December 31, 2022 (250,000,000 shares authorized)		869				865
Additional paid-in capital		973,599				972,717
Treasury Stock, at cost: 3,589,283 and 2,922,863 common shares as of March 31, 2023 and December 31, 2022, respectively		(71,437	)			(56,575	)
Accumulated other comprehensive loss, net of tax		(171,821	)			(204,323	)
Retained earnings		975,501				901,043
Total shareholders' equity		1,706,711				1,613,727
Total liabilities and shareholders' equity	$	2,633,776			$	2,516,030

Non-GAAP Financial Measure Reconciliations (unaudited)
	For the three months ended
	3/31/2023				12/31/2022				3/31/2022
As Reported	(In Thousands, except for per share data)
Revenues
Net premiums earned	$	121,754			$	119,584			$	116,495
Net investment income		14,894				13,341				10,199
Net realized investment (losses) gains		(33	)			6				408
Other revenues		164				176				339
Total revenues		136,779				133,107				127,441
Expenses
Insurance claims and claim expenses (benefits)		6,701				3,450				(619	)
Underwriting and operating expenses		25,786				26,711				32,935
Service expenses		80				131				430
Interest expense		8,039				8,035				8,041
Gain from change in fair value of warrant liability		—				—				(93	)
Total expenses		40,606				38,327				40,694
Income before income taxes		96,173				94,780				86,747
Income tax expense		21,715				21,840				19,067
Net income	$	74,458			$	72,940			$	67,680
Adjustments:
Net realized investment losses (gains)		33				(6	)			(408	)
Gain from change in fair value of warrant liability		—				—				(93	)
Capital markets transaction costs		—				—				260
Adjusted income before taxes		96,206				94,774				86,506
Income tax expense (benefit) on adjustments(1)		7				(1	)			(31	)
Adjusted net income	$	74,484			$	72,935			$	67,470
Weighted average diluted shares outstanding		84,840				84,809				87,310
Diluted EPS	$	0.88			$	0.86			$	0.77
Adjusted diluted EPS	$	0.88			$	0.86			$	0.77
Return-on-equity		17.9	%			18.6	%			17.5	%
Adjusted return-on-equity		17.9	%			18.6	%			17.4	%
Expense ratio(2)		21.2	%			22.3	%			28.3	%
Adjusted expense ratio(3)		21.2	%			22.3	%			28.0	%
Combined ratio(4)		26.7	%			25.2	%			27.7	%
Adjusted combined ratio(5)		26.7	%			25.2	%			27.5	%
Book value per share(6)	$	20.49			$	19.31			$	17.84
Book value per share (excluding net unrealized gains and losses)(7)	$	22.56			$	21.76			$	18.97

(1) Marginal tax impact of non-GAAP adjustments is calculated based on our statutory U.S. federal corporate income tax rate of 21%, except for those items that are not eligible for an income tax deduction.
(2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
(3) Adjusted expense ratio is calculated by dividing adjusted underwriting and operating expense (underwriting and operating expenses excluding costs related to capital markets reinsurance transactions) by net premiums earned.
(4) Combined ratio is calculated by dividing the total of underwriting and operating expenses and insurance claims and claims expense by net premiums earned.
(5) Adjusted combined ratio is calculated by dividing the total of adjusted underwriting and operating expenses (underwriting and operating expenses excluding costs related to capital market reinsurance transaction) and insurance claims and claims expense by net premiums earned.
(6) Book value per share is calculated by dividing total shareholder's equity by shares outstanding.
(7) Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.

Historical Quarterly Data		2023				2022																2021
	March 31				December 31				September 30				June 30				March 31				December 31
	(In Thousands, except for per share data)
Revenues
Net premiums earned	$	121,754			$	119,584			$	118,317			$	120,870			$	116,495			$	113,933
Net investment income		14,894				13,341				11,945				10,921				10,199				10,045
Net realized investment (losses) gains		(33	)			6				14				53				408				714
Other revenues		164				176				301				376				339				380
Total revenues		136,779				133,107				130,577				132,220				127,441				125,072
Expenses
Insurance claims and claim expenses (benefits)		6,701				3,450				(3,389	)			(3,036	)			(619	)			(500	)
Underwriting and operating expenses		25,786				26,711				27,144				30,700				32,935				38,843
Service expenses		80				131				197				336				430				650
Interest expense		8,039				8,035				8,036				8,051				8,041				8,029
Gain from change in fair value of warrant liability		—				—				—				(1,020	)			(93	)			(112	)
Total expenses		40,606				38,327				31,988				35,031				40,694				46,910
Income before income taxes		96,173				94,780				98,589				97,189				86,747				78,162
Income tax expense		21,715				21,840				21,751				21,745				19,067				17,639
Net income	$	74,458			$	72,940			$	76,838			$	75,444			$	67,680			$	60,523
Earnings per share
Basic	$	0.89			$	0.87			$	0.91			$	0.88			$	0.79			$	0.71
Diluted	$	0.88			$	0.86			$	0.90			$	0.86			$	0.77			$	0.69
Weighted average common shares outstanding
Basic		83,600				83,592				84,444				85,734				85,953				85,757
Diluted		84,840				84,809				85,485				86,577				87,310				87,117
Other data
Loss ratio(1)		5.5	%			2.9	%			(2.9	)%			(2.5	)%			(0.5	)%			(0.4	)%
Expense ratio(2)		21.2	%			22.3	%			22.9	%			25.4	%			28.3	%			34.1	%
Combined ratio(3)		26.7	%			25.2	%			20.1	%			22.9	%			27.7	%			33.7	%

(1)  Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) by net premiums earned.
(2)  Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
(3)  Combined ratio may not foot due to rounding.

Portfolio Statistics

The table below highlights trends in our primary portfolio as of the date and for the periods indicated.

Primary portfolio trends	As of and for the three months ended
	March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
	($ Values In Millions, except as noted below)
New insurance written (NIW)	$	8,734			$	10,719			$	17,239			$	16,611			$	14,165			$	18,342
New risk written		2,258				2,797				4,616				4,386				3,721				4,786
Insurance in force (IIF)(1)		186,724				183,968				179,173				168,639				158,877				152,343
Risk in force(1)		48,494				47,648				46,259				43,260				40,522				38,661
Policies in force (count)(1)		600,294				594,142				580,525				551,543				526,976				512,316
Average loan size($ value in thousands)(1)	$	311			$	310			$	309			$	306			$	301			$	297
Coverage percentage(2)		26.0	%			25.9	%			25.8	%			25.7	%			25.5	%			25.4	%
Loans in default (count)(1)		4,475				4,449				4,096				4,271				5,238				6,227
Default rate(1)		0.75	%			0.75	%			0.71	%			0.77	%			0.99	%			1.22	%
Risk in force on defaulted loans(1)	$	337			$	323			$	284			$	295			$	362			$	435
Net premium yield(3)		0.26	%			0.26	%			0.27	%			0.30	%			0.30	%			0.31	%
Earnings from cancellations	$	1.4			$	1.5			$	1.8			$	2.2			$	2.9			$	5.1
Annual persistency(4)		85.1	%			83.5	%			80.1	%			76.0	%			71.5	%			63.8	%
Quarterly run-off(5)		3.2	%			3.3	%			4.0	%			4.3	%			5.0	%			6.7	%

(1)  Reported as of the end of the period.
(2)  Calculated as end of period risk-in-force (RIF) divided by end of period IIF.
(3)  Calculated as net premiums earned, divided by average primary IIF for the period, annualized.
(4)  Defined as the percentage of IIF that remains on our books after a given twelve-month period.
(5)  Defined as the percentage of IIF that is no longer on our books after a given three-month period.

NIW, IIF and Premiums

The tables below present primary NIW and primary and pool IIF, as of the dates and for the periods indicated.

Primary NIW	For the three months ended
	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
	(In Millions)
Monthly	$	8,550		$	10,451		$	16,676		$	15,695		$	13,094		$	16,972
Single		184			268			563			916			1,071			1,370
Primary	$	8,734		$	10,719		$	17,239		$	16,611		$	14,165		$	18,342

Primary and pool IIF	As of
	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
	(In Millions)
Monthly	$	166,924		$	163,903		$	158,897		$	148,488		$	139,156		$	133,104
Single		19,800			20,065			20,276			20,151			19,721			19,239
Primary		186,724			183,968			179,173			168,639			158,877			152,343
Pool		1,025			1,049			1,078			1,114			1,162			1,229
Total	$	187,749		$	185,017		$	180,251		$	169,753		$	160,039		$	153,572

The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction, 2018 QSR Transaction, 2020 QSR Transaction, 2021 QSR Transaction, 2022 QSR Transaction, 2022 Seasoned QSR Transaction, and 2023 QSR Transaction and collectively, the QSR Transactions), insurance-linked note transactions (2018 ILN Transaction, 2019 ILN Transaction, 2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN Transaction and collectively, the ILN Transactions), and traditional reinsurance transactions (2022-1 XOL Transaction, 2022-2 XOL Transaction, 2022-3 XOL Transaction and 2023-1 XOL Transaction and collectively, the XOL Transactions) for the periods indicated.

	For the three months ended
	March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
	(In Thousands)
The QSR Transactions
Ceded risk-in-force	$	12,635,442			$	12,617,169			$	12,511,797			$	9,040,944			$	8,504,853			$	8,194,604
Ceded premiums earned		(42,096	)			(42,246	)			(42,265	)			(30,231	)			(29,005	)			(28,490	)
Ceded claims and claim expenses (benefits)		1,965				1,934				248				(403	)			(159	)			19
Ceding commission earned		9,965				10,089				10,193				6,146				5,886				6,208
Profit commission		22,279				22,314				23,899				17,778				16,723				16,142
The ILN Transactions(1)
Ceded premiums	$	(9,095	)		$	(10,112	)		$	(10,730	)		$	(10,132	)		$	(10,939	)		$	(11,344	)
The XOL Transactions
Ceded Premiums	$	(7,237	)		$	(6,199	)		$	(4,808	)		$	(2,907	)		$	—			$	—

(1) Effective March 25, 2022 and April 25, 2022, NMIC exercised its optional clean-up call to terminate and commute its previously outstanding excess of loss reinsurance agreements with Oaktown Re Ltd. and Oaktown Re IV Ltd., respectively. NMIC no longer makes risk premium payments to Oaktown Re Ltd. and Oaktown Re IV Ltd. thereafter.

The tables below present our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated.

Primary NIW by FICO	For the three months ended
	March 31, 2023			December 31, 2022			March 31, 2022
	(In Millions)
>= 760	$	5,251		$	5,574		$	6,372
740-759		1,514			1,902			2,388
720-739		1,107			1,564			1,937
700-719		456			918			1,639
680-699		342			638			1,244
<=679		64			123			585
Total	$	8,734		$	10,719		$	14,165
Weighted average FICO		762			756			748

Primary NIW by LTV	For the three months ended
	March 31, 2023				December 31, 2022				March 31, 2022
	(In Millions)
95.01% and above	$	358			$	646			$	1,366
90.01% to 95.00%		4,085				5,325				7,055
85.01% to 90.00%		3,234				3,492				3,868
85.00% and below		1,057				1,256				1,876
Total	$	8,734			$	10,719			$	14,165
Weighted average LTV		91.6	%			92.0	%			92.1	%

Primary NIW by purchase/refinance mix	For the three months ended
	March 31, 2023			December 31, 2022			March 31, 2022
	(In Millions)
Purchase	$	8,494		$	10,500		$	13,398
Refinance		240			219			767
Total	$	8,734		$	10,719		$	14,165

The table below presents a summary of our primary IIF and RIF by book year as of March 31, 2023.

Primary IIF and RIF	As of March 31, 2023
	IIF			RIF
	(In Millions)
March 31, 2023	$	8,674		$	2,243
2022		55,664			14,730
2021		70,771			18,195
2020		32,679			8,403
2019		8,798			2,324
2018 and before		10,138			2,599
Total	$	186,724		$	48,494

The tables below present our total primary IIF and RIF by FICO and LTV and total primary RIF by loan type as of the dates indicated.

Primary IIF by FICO	As of
	March 31, 2023			December 31, 2022			March 31, 2022
	(In Millions)
>= 760	$	91,623		$	89,554		$	79,141
740-759		33,156			32,691			27,406
720-739		26,233			25,910			22,176
700-719		18,203			18,245			15,236
680-699		12,502			12,480			10,347
<=679		5,007			5,088			4,571
Total	$	186,724		$	183,968		$	158,877

Primary RIF by FICO	As of
	March 31, 2023			December 31, 2022			March 31, 2022
	(In Millions)
>= 760	$	23,472		$	22,834		$	19,883
740-759		8,692			8,556			7,054
720-739		6,903			6,807			5,735
700-719		4,847			4,859			4,010
680-699		3,311			3,305			2,706
<=679		1,269			1,287			1,134
Total	$	48,494		$	47,648		$	40,522

Primary IIF by LTV	As of
	March 31, 2023			December 31, 2022			March 31, 2022
	(In Millions)
95.01% and above	$	17,583		$	17,577		$	14,918
90.01% to 95.00%		89,125			87,354			72,381
85.01% to 90.00%		56,425			55,075			48,406
85.00% and below		23,591			23,962			23,172
Total	$	186,724		$	183,968		$	158,877

Primary RIF by LTV	As of
	March 31, 2023			December 31, 2022			March 31, 2022
	(In Millions)
95.01% and above	$	5,413		$	5,408		$	4,527
90.01% to 95.00%		26,326			25,797			21,358
85.01% to 90.00%		13,937			13,584			11,895
85.00% and below		2,818			2,859			2,742
Total	$	48,494		$	47,648		$	40,522

Primary RIF by Loan Type	As of
	March 31, 2023			December 31, 2022			March 31, 2022
Fixed	98	%		99	%		99	%
Adjustable rate mortgages:
Less than five years	—			—			—
Five years and longer	2			1			1
Total	100	%		100	%		100	%

 

The table below presents a summary of the change in total primary IIF during the periods indicated.

Primary IIF	As of and for the three months ended
	March 31, 2023				December 31, 2022				March 31, 2022
	(In Millions)
IIF, beginning of period	$	183,968			$	179,173			$	152,343
NIW		8,734				10,719				14,165
Cancellations, principal repayments and other reductions		(5,978	)			(5,924	)			(7,631	)
IIF, end of period	$	186,724			$	183,968			$	158,877

Geographic Dispersion

The following table shows the distribution by state of our primary RIF as of the periods indicated.

Top 10 primary RIF by state	As of
	March 31, 2023			December 31, 2022			March 31, 2022
California	10.5	%		10.6	%		10.8	%
Texas	8.8			8.7			9.5
Florida	8.0			8.2			8.4
Georgia	4.1			4.1			3.9
Virginia	4.1			4.1			4.5
Washington	4.0			3.9			3.7
Illinois	3.9			3.9			3.8
Colorado	3.5			3.5			3.7
Pennsylvania	3.4			3.4			3.3
Maryland	3.3			3.4			3.6
Total	53.6	%		53.8	%		55.2	%

 

The table below presents selected primary portfolio statistics, by book year, as of March 31, 2023.

	As of March 31, 2023
Book Year	Original Insurance Written			Remaining Insurance in Force			% Remaining of Original Insurance			Policies Ever in Force		Number of Policies in Force		Number of Loans in Default		# of Claims Paid		Incurred Loss Ratio (Inception to Date)(1)			Cumulative Default Rate(2)			Current default rate(3)
	($ Values In Millions)
2014 and prior	$	3,613		$	198		5	%		15,441		1,248		22		53		3.8	%		0.5	%		1.8	%
2015		12,422			1,158		9	%		52,548		6,488		119		129		2.6	%		0.5	%		1.8	%
2016		21,187			2,447		12	%		83,626		12,851		259		148		2.0	%		0.5	%		2.0	%
2017		21,582			2,930		14	%		85,897		15,691		422		122		2.7	%		0.6	%		2.7	%
2018		27,295			3,405		12	%		104,043		17,572		558		111		4.1	%		0.6	%		3.2	%
2019		45,141			8,798		19	%		148,423		37,100		595		35		4.1	%		0.4	%		1.6	%
2020		62,702			32,679		52	%		186,174		107,371		589		7		2.5	%		0.3	%		0.5	%
2021		85,574			70,771		83	%		257,972		222,036		1,339		4		6.2	%		0.5	%		0.6	%
2022		58,734			55,664		95	%		163,281		156,817		572		—		19.3	%		0.4	%		0.4	%
2023		8,734			8,674		99	%		23,250		23,120		—		—		—	%		—	%		—	%
Total	$	346,984		$	186,724					1,120,655		600,294		4,475		609

(1)  Calculated as total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2)  Calculated as the sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force.
(3)  Calculated as the number of loans in default divided by number of policies in force.

The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim expenses (benefits).

	For the three months ended
	March 31, 2023				March 31, 2022
	(In Thousands)
Beginning balance	$	99,836			$	103,551
Less reinsurance recoverables(1)		(21,587	)			(20,320	)
Beginning balance, net of reinsurance recoverables		78,249				83,231
Add claims incurred:
Claims and claim expenses (benefits) incurred:
Current year(2)		27,608				10,080
Prior years(3)		(20,907	)			(10,699	)
Total claims and claim expenses (benefits) incurred		6,701				(619	)
Less claims paid:
Claims and claim expenses paid:
Current year(2)		—				—
Prior years(3)		272				320
Total claims and claim expenses paid		272				320
Reserve at end of period, net of reinsurance recoverables		84,678				82,292
Add reinsurance recoverables(1)		23,479				20,080
Ending balance	$	108,157			$	102,372

(1)  Related to ceded losses recoverable under the QSR Transactions.
(2)  Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the default would be included in the current year. Amounts are presented net of reinsurance and included $22.3 million attributed to net case reserves and $4.9 million attributed to net IBNR reserves for the three months ended March 31, 2023 and $5.2 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022.
(3)  Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance and included $16.2 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the three months ended March 31, 2023 and $5.8 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022.

The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.

	For the three months ended
	March 31, 2023			March 31, 2022
Beginning default inventory	4,449			6,227
Plus: new defaults	1,558			1,163
Less: cures	(1,507	)		(2,132	)
Less: claims paid	(21	)		(19	)
Less: rescission and claims denied	(4	)		(1	)
Ending default inventory	4,475			5,238

The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions, for the periods indicated.

	For the three months ended
	March 31, 2023				March 31, 2022
	($ Values In Thousands)
Number of claims paid(1)		21				19
Total amount paid for claims	$	344			$	402
Average amount paid per claim	$	16			$	21
Severity(2)		39	%			39	%

(1)  Count includes seven and six claims settled without payment during the three months ended March 31, 2023 and 2022, respectively.
(2)  Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment.

The following table shows our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the dates indicated.

	As of
Average reserve per default:	March 31, 2023			March 31, 2022
	(In Thousands)
Case(1)	$	22.4		$	18.0
IBNR(1)(2)		1.8			1.5
Total	$	24.2		$	19.5

(1)  Defined as the gross reserve per insured loan in default.
(2)  Amount includes claims adjustment expenses.

The following table provides a comparison of the PMIERs financial requirements as reported by NMIC as of the dates indicated.

	As of
	March 31, 2023			December 31, 2022			March 31, 2022
	(In Thousands)
Available Assets	$	2,480,882		$	2,378,627		$	2,127,030
Risk-Based Required Assets		1,231,780			1,203,708			1,341,217