NMI : 2020 Investor Day Presentation

© 2017 Copyright. NMI Holdings Inc.

2020 Virtual Investor Day

• Welcome to NMI Holdings, Inc. - 2020 Virtual Investor Day
• Presentation materials will be displayed on screen alongside a video of management through each section of today's discussion
• Audience members have the opportunity to submit questions at any time through the course of the presentation in the dialogue box located on screen
• Submissions must include your name and organizational affiliation
• Questions will be aggregated and addressed during the Q&A session after formal presentations
• A replay of today's meeting will be available on our website athttps://ir.nationalmi.com/events-and-presentations

1

Our Use of Forward-Looking Statements and Non-GAAP Financial Measures

During the course of this 2020 Investor Day discussion, we may make comments about our expectations for the future. Actual results could differ materially from those contained in these forward-looking statements.

Additional information about the factors that could cause actual results or trends to differ materially from those discussed today can be found on page 84 of this deck and on our website, or through our filings with the SEC, which are also on our website.

If, and to the extent, we make forward-looking statements, we do not undertake any obligation to update those statements in the future in light of subsequent developments. Further, no interested party should rely on the fact that the guidance of such statements is current at any time other than the time of this presentation.

Also note that we will refer to certain non-GAAP measures and provide a reconciliation in this presentation to the most comparable measures under GAAP on pages 82 and 83, and on the investor relations section of our website.

2

Agenda

Chairman's Message	Brad Shuster	Executive Chairman &
		Chairman of the Board
Building on Our Success	Claudia Merkle	Chief Executive Officer

Customer Development	Norm Fitzgerald	Senior VP &
		Chief Sales Officer
Risk Management	Rob Smith	Executive VP &
		Chief Risk Officer
Financial Review	Adam Pollitzer	Executive VP &
		Chief Financial Officer
Questions & Answers

3

Chairman's Message

Brad Shuster

Executive Chairman and Chairman of the Board

© 2017 Copyright. NMI Holdings Inc.

Themes for Today

• Significant success to date provides strong foundation
• Immediate and decisive action in face of COVID crisis
• Housing market resiliency presents enormous opportunity
• Well positioned to survive and thrive through COVID and beyond

5

Delivering significant value for shareholders and securing future outperformance across all market cycles

Founding Principles

• Help qualified borrowers achieve the

Dream of Home Ownership

• Be a Credible and Durable Counterparty

for our customers and policyholders

• Deliver a Great Customer Experience

through people and technology

• Manage Risk to ensure strong performance across all market cycles
• Create a Winning Culture that allows us to attract and retain the very best talent
• Generate sustainable Strong Mid-Teens Returns
  for our shareholders

6

Executive Management

Highly experienced senior management team supported by a deep bench of talent

Bradley Shuster	Claudia Merkle
Executive Chairman,
Chief Executive Officer
Chairman of the Board

William Leatherberry	Patrick Mathis
General Counsel	Chief Operating Officer

Adam Pollitzer	Robert Smith
Chief Financial Officer	Chief Risk Officer

Norm Fitzgerald

Chief Sales Officer

7

Significant Success to Date

• Performance Driven Culture
• Winning with Customers
• Building High-Quality Portfolio
• Strong Financial Results

Award

Winning

Culture

8

Significant Success to Date

• Performance Driven Culture
• Winning with Customers
• Building High-Quality Portfolio
• Strong Financial Results

Customer Value Proposition

Best-in-class	Consultative
sales team	engagement
Certainty of	Sensible
Coverage	Servicing

Active Customer Relationships

1,167

1,005

761

337

12/31/14 12/31/16 12/31/18 9/30/20

9

Significant Success to Date

• Performance Driven Culture
• Winning with Customers
• High-QualityPortfolio
• Strong Financial Results

Portfolio Characteristics

Prioritize higher	Rate GPS risk
quality loans	selection
Individual risk	Comprehensive
underwriting	reinsurance

Primary Insurance In-Force

$ billions

$104.5

$68.6

$32.2

$3.4

12/31/14 12/31/16 12/31/18 9/30/20

10

Significant Success to Date

• Performance Driven Culture
• Winning with Customers
• Building High-Quality Portfolio
• Strong Financial Results

		Performance in COVID Stress
		Balance sheet	Credit
			strength	performance
		Significant	Earnings
	funding runway	resiliency
		Adjusted Net Income & ROE*
				$ millions
					ROE	ROE
					16.1%
					21.1%
				ROE			$175.5
			16.3%	$161.9
	ROE
6.3%	$95.2
$29.5
LTM Q3'17 LTM Q3'18	LTM Q3'19 LTM Q3'20

* Adjusted net income and adjusted return on equity are non-GAAP measures. For a reconciliation to the most comparable GAAP measures, refer to the appendix or the company website at www.nationalmi.com.

11

Decisive Action at Outset of

COVID Pandemic

Discipline and strength prior to COVID outbreak provide strong foundation

Seamlessly transitioned to remote engagement

Leveraged digital tools to sustain and enhance customer engagement

Targeted guideline changes to increase underwriting rigor

Immediately increased Rate GPS pricing in recognition of COVID risk

Raised +$1.4 billion in capital and reinsurance markets

Rationalized expenses with launch of TCS partnership

Decisive action at earliest outset of pandemic sets up continued success

12

Housing Market Resiliency

Record purchase demand

Purchase mortgage application index
			2017-2019 average	2020
			Average = +25.8%
1	4	7	10 13 16 19 22 25 28 31 34 37 40 43
			Calendar week

Mortgage Bankers Association; Monthly, not seasonally adjusted

All-time low

mortgage rates

30-year fixed rate mortgage

4.5%

2.8%

8/30/18 3/19/19 10/6/19 4/24/20 11/12/20

St. Louis Federal Reserve Economic Data - 30-Year Fixed Rate Mortgage Average; weekly, not seasonally adjusted

Constrained housing supply

Monthly housing supply

Average = 5.5 mos

3.6 mos

7/1/15

10/15/16

1/30/18

5/17/19

9/1/20

St. Louis Federal Reserve Economic Data - monthly supply of houses, seasonally adjusted

	National house		Encouraging credit		Mortgage origination
	price appreciation		performance			volume
S&P / Case-Shiller U.S. National Home Price Index		% of GSE loans in forbearance		Purchase mortgage home originations volume
							($ billions)
				+9.7%						$1,564
									$1,496
								$1,326
			+5.5% YTD		3.4%	$1,234
6/1/18	12/16/18	7/2/19	1/16/20	8/1/20	3/8/20	11/8/20	2018	2019	2020E	2021E
St. Louis Federal Reserve Economic Data - S&P / Case-Shiller U.S. National	Mortgage Bankers Association Forbearance and Call Volume Survey	Fannie Mae Housing Forecast - October 2020, 1-4 Unit Single Family
Home Price Index, monthly, not seasonally adjusted; indexed to 7/1/18			Mortgage Originations

13

Regulatory Environment

• Broad policy efforts aimed at assisting borrowers and keeping them in their homes
• • CARES Act
  • FHFA / GSE forbearance program and foreclosure moratorium
  • Expansion of loan modification waterfall
• Frequent and constructive engagement with FHFA and GSEs through pandemic
• • GSE amendments to PMIERs recognize unique nature of forbearance-related defaults
  • FHFA directive to focus GSEs on their core mission and curtail "charter creep"
  • General recognition of the central role MI plays in functioning of housing market
• FHFA released final Enterprise Regulatory Capital Framework for GSEs on November 18th
• • Significant capital required for full privatization
  • Risk transfer provided by private mortgage insurers even more valuable to privatization goals
  • Uncertainties around timeline to implementation

14

Well-Positioned for the Future

Strong foundation

Customer engagement & pipeline

Comprehensive risk management framework

Highest quality insured portfolio

Resilient housing market fundamentals

Uniquely valuable new business opportunity

15

Built to perform

in all markets

Leading with

technology

Unique approach and credit outperformance

Industry-best portfolio

by any metric

Housing is the

"Bright Spot"

Volume and value of new

production

Building On Our Success

Claudia Merkle

Chief Executive Officer

© 2017 Copyright. NMI Holdings Inc.

National MI:

Building on Our Success

Culture		Customers		Innovation

Talented and	Building	Technology and
Durable
Committed People	Thought Leadership
Relationships

Built for Sustained Outperformance Across All Market Cycles

Comprehensive		Highest Quality,
Credit Risk			Strong Balance Sheet
	Best Performing
Management			and Resilient Earnings
	Insured Portfolio
Framework
Risk Management		Portfolio		Financials

17

Performance Driven Culture

• Corporate culture - a key differentiator
• 261 engaged, motivated employees
• Team driven and collaborative

Award

Winning

Culture

People	Profit	Customer	Community
Collaboration	Focused	Committed	Support
Trust	Accountable	Responsive	Philanthropy
Diversity	Deliver	Excellence	Homeownership
Core values embedded in our decision making and business day-to-day
		18

Winning with Customers

The National MI Advantage

• Best-in-classsales force
• Unique customer value proposition - Certainty and Service
• Rate GPS leadership
• Differentiation through consultative selling
• Embracing technology at forefront of digital mortgage evolution
• Consistent engagement on distanced basis through COVID pandemic

Growing Our Customer Base

Active Customers

1,167

1,076

968

855

9/30/17

9/30/18

9/30/19

9/30/20

19

Highest-Quality, Best Performing Insured Portfolio

Credit Risk Standards &

Rigorous Underwriting Process

• Highest quality by FICO, LTV and DTI
• Minimal layered risk concentration
• Risk-basedpricing - Rate GPS
• >85% underwritten or validated
• Lender diversification
• Geographic diversification
• No aggressive product types

Highest Quality & Best Performing

In-Force Portfolio

Primary Insurance In-Force

$ billions, at quarter end

$104

$90

$64

$43

$28

$11

3Q'15 3Q'16 3Q'17 3Q'18 3Q'19 3Q'20

20

Comprehensive Credit Risk

Management Framework

National MI has an industry-leadingcredit risk management

approach, built on three-foundationalpillars…

	Individual Risk		Granular		Comprehensive
		Pricing Engine		Reinsurance
	Underwriting
		Rate GPSSM		Program

…and has delivered best-in-classcredit performance

since its formation

21

Best-in-Class Credit Performance

Peak Reported COVID Default Rates1

NMI vs. Rest of Mortgage Insurance Industry

				6.35%	6.52%
	Rest of industry: 6%	5.98%
	5.14%	5.19%
3.78%
NMIH	ACGL	ESNT	GNW	MTG	RDN

1. Default rates as reported by each individual company in SEC filings, earnings releases, financial supplements or press releases. Periods may not align and underlying definitions and calculations of default rate may not be uniform across companies

22

Delivering Financial Success

		Q1'20 LTM	Q3'20
✓ NIW	$49.5 billion	$18.5 billion
✓ IIF	$98.5 billion	$104.5 billion
✓ Revenue	$405.3 million	$107.8 million
✓ Adjusted net income*	$196.7 million	$40.4 million
	✓ Adjusted return on equity*	22.8%	12.6%
✓ Book value	$1.0 billion	$1.3 billion
✓ Book value per share	$14.15	$15.42
	✓ Loss ratio	4.2%	15.9%

• Adjusted pre-taxincome and adjusted return on equity are non-GAAPmeasures. For a reconciliation to the most comparable GAAP measures, refer to the investor relations section of the company's website at www.nationalmi.com

23

Well-Positioned to Outperform

Through the COVID Pandemic

Our success to date provides the

foundation for our future performance

Performance-	Proven Credit Risk
Driven Team	Management Framework

Strong Customer	Strong Financial
Engagement & Pipeline	Foundation

Resilient Housing Market

Highest Quality

and Record Private

In-Force Portfolio

MI Opportunity

24

Record Private Mortgage

Insurance Market

✓ Skyrocketing demand for	✓
homeownership	Record low interest rates
✓ Greater need for down	✓ Expanding private MI
payment support	penetration rates

Total Private Mortgage Insurance NIW

✓

Increasing mortgage origination volume

• Record private mortgage insurance NIW opportunity

~$575

$ billions

$131

$267 $269

$215

$176 $168

$384

$291

2012 2013 2014 2015 2016 2017 2018 2019 2020E

Source: Inside Mortgage Finance

25

Attractive Opportunity for

Responsible, Profitable Growth

Opportunity to Responsibly Scale NIW Volume and Build Embedded Value

Primary NIW volume

$54.9bn

$ billions

$40.2bn

$27.2bn

$20.0bn

9/30/17 LTM

9/30/18 LTM

9/30/19 LTM

9/30/20 LTM

26

National MI:

Building on Our Success

Culture		Customers		Innovation

Talented and	Building	Technology and
Durable
Committed People	Thought Leadership
Relationships

Built for Sustained Outperformance Across All Market Cycles

Comprehensive		Highest Quality,
Credit Risk			Strong Balance Sheet
	Best Performing
Management			and Resilient Earnings
	Insured Portfolio
Framework
Risk Management		Portfolio		Financials

27

Sales and Customer Development

Norm Fitzgerald

Senior Vice President and Chief Sales Officer

© 2017 Copyright. NMI Holdings Inc.

Sales and Customer Development

• • Significant success to date
• Digital transformation driving account engagement and salesforce efficiency
• • Heightened engagement amidst COVID and record volume
  • • Strategy and tactics focused on a large opportunity

29

Significant Success to Date

Growing customer base		Driving significant		Industry leading growth in
and access to the market		NIW growth	high-quality insurance in-force
Active customers		New insurance written		Primary insurance in-force
1,167		$ billions		$ billions	$104.5
$54.9
1,076					$89.7
968	$40.2
			$68.6
855
	$27.2	$48.5
	$20.0

9/30/17	9/30/18	9/30/19	9/30/20	9/30/17	9/30/18	9/30/19	9/30/20	12/31/17	12/31/18	9/30/19	9/30/20
				LTM	LTM	LTM	LTM

30

Customer Development

Winning New Customers

Strong customer engagement

and activation pipeline

• Nearly 1,200 active customer relationships
• Current accounts represent ~80% of total mortgage insurance industry NIW
• 58 new account activations since COVID outbreak - 421 new account activations since 2017 - represents +$70bn of NIW opportunity
• Track record of growing wallet share within accounts steadily over time
• Large opportunity remains to both grow wallet share and activate new accounts

Active customer development

1,167

1,076

968

855

731

522

9/30/15 9/30/16 9/30/17 9/30/18 9/30/19 9/30/20

31

Why We Win

People and Value Proposition

Certainty of Coverage

• Standing behind our commitments
• "Iron Clad" rescission relief

Sensible Servicing

• Sensible Servicing® - customer-centric claims management process

Consultative Engagement

• Feedback loop - sharing best practices and insights from upfront underwrite
• Focus on digital mortgage roadmap and

Rate GPS

Value-added Programs

• Educational programs for lenders
• Webinars, roundtables and onsite events, access to industry experts

Customer Value Proposition

Best-in-Class		Consultative
Sales Team		Engagement

Certainty of	Sensible
Coverage	Servicing

32

Digital Mortgage Transformation

• Customers and borrowers becoming more digital
• Technology disrupts customer "habit" and legacy relationships - huge benefit to NMI as newest entrant
• Technology driving efficiency and flexibility for NMI and our customers
• Through technology leadership, NMI can target and serve a broader opportunity set (Top 600 Lenders)

Seamless

NMI

Integration

Electronic

Customer

Engagement

33

• Technology leadership shortens cycle from Master Policy to NIW
• Broad connectivity with third-party loan origination systems
• Leading with Rate GPS
• Virtual meetings, training, webinars
• Sophisticated communication tools and leveraging of social media
• Digital account and relationship management

Heightened Engagement Amidst COVID and Record Origination Volumes

• COVID has forced rapid transition to digital tools and virtual engagement
• NMI leveraging technology to expand customer outreach, stay current and connected in a "no-contact" way
• Being creative to enhance relevance and support customer productivity - critically important when customers are swamped by volume
• 58 new account activations since COVID speak to quality of our team and NMI engagement model

34

Strategy and Tactics

Focused on a Large Opportunity

• Top 600 lenders in the country represent ~92% of ~$575 market opportunity
• Significant penetration and active relationships with many leading lenders
• Also a sizeable opportunity remaining to continue adding new accounts and building wallet share with existing lenders

Top 600 Lenders ~$529 billion NIW opportunity

395 active relationships

(~$460bn NIW)

124

No master policy

81

Master policy

205 potential accounts

($69bn NIW opportunity)

35

Sustaining Our Positive Momentum

Top 600 Focus

New Account

Activation

NMI Technology

Leadership

Maintain Service

Excellence

• Know your customer - Win, Grow, Maintain
• Continue to leverage our success in client acquisition
• Lead with technology to drive salesforce efficiency and enhanced engagement
• Consultative engagement and value- added orientation

| 36

36

Risk Management

Rob Smith

Executive Vice President & Chief Risk Officer

© 2017 Copyright. NMI Holdings Inc.

Prioritizing Risk Management

• Enterprise Risk Management Focus
• "Three Pillars" of NMI's Credit Risk
  Management Framework
• Resiliency Through COVID Stress

38

Deploying a robust risk management program to secure performance across all market cycles

Enterprise Risk Management Framework

Strong Origination and Oversight Environment

Strong Borrower

Credit Profile

National MI has established the industry-

leading risk management framework

Board & management	Defined risk appetite &
risk committees dictate	portfolio concentration
policy	limits

Regulatory Guardrails on

Formal underwriting

Real-time portfolio

Origination Quality

monitoring & stress

PMIERs Capital

Standards

guidelines

testing

Comprehensive privacy

Regulatory & Rating

Lender approval &

protection & data

Agency Oversight

monitoring

39

security program

Prioritizing Risk Management

• Enterprise Risk Management Focus
• "Three Pillars" of NMI's Credit Risk
  Management Framework
• Resiliency Through COVID Stress

40

Deploying a robust risk management program to secure performance across all market cycles

Credit Risk Management Framework

• Three Foundational Pillars

National MI takes an "all seasons" approach to risk - developed and deploy our comprehensive credit risk management framework well before the onset of COVID

Individual risk		Rate GPS	Comprehensive
underwriting	Granular Pricing System	reinsurance program
✓ Losses occur at a loan level		✓ All buyers, lenders and		✓ Broad reinsurance
- credit risk management		homes are different -		program spanning
requires loan-level		these differences impact		traditional quota share
knowledge		loan performance		and capital markets ILN
				issuance
✓ NMI individually		✓ Rate GPS considers a
underwrites or validates		broad range of risk		✓ Enhances return profile
>85% of loans we insure		variables- far beyond		and mitigates impact of
		FICO and LTV		credit volatilityunder
✓ Rest of industry relies on				stress scenarios
portfolio QC reviews		✓ Prioritizes high-quality
		loansfrom high-quality
		lenders

41

Underwriting Matters

Non-Delegated

Delegated Assurance Review

% YTD Q3'20 NIW

Non-Delegated

33%	▪ NMI underwrites loan before close

Delegated with Independent Validation

• NMI innovation

58% ▪

Underwriting is delegated to lender ▪ NMI performs post-close validation

Total Underwritten / Validated	91%
		Traditional Delegated Underwriting
Traditional Delegated	9%	▪ Underwriting is delegated to lender
		▪ NMI performs post-close QC review

42

Individual Risk Underwriting Advantage

• Capture and assess full loan file
• Increased knowledge of individual loan characteristics and emerging risk trends
• Opportunity for corrective action before underwriting defects become defaults
• Embeds positive selection bias in client selection and delegated flow
• Supports sensible servicing approach and customer feedback loop

Best-in-class credit performance

Improved data capture and cycle awareness

Superior customer engagement

Cost efficient structure

43

Rate GPS Is a Powerful Credit Risk Management Tool

• Considers broad range of variables with proven impact on credit performance
• Dynamically considers relationship between multiple risk variables
• Prioritizes and attracts higher quality loans from high quality lenders
• Utilize to tactically shape insured portfolio
  - with immediate impact
• Allows for quick changes to address risks that may emerge in future
• Leverages NMI's individual risk underwriting approach

9M'20 NIW risk concentration

97% LTV		11%	12% Rest of MI
8%	9%
9%			sector:
4%						10%

NMIH ACGL MTG RDN ESNT GNW

<680 FICO				6%
			4%	4%	5%	Rest of MI
3%			sector:
1%						4%
NMIH RDN MTG	ACGL ESNT	GNW

>45% DTI

11%

7%

Not disclosed

NMIH MTG ACGL RDN ESNT GNW

Source: Public company SEC filings, earnings releases and financial supplements

44

National MI has the Highest Quality Insured Portfolio in the MI Industry

Credit Risk Standards &

Rigorous Underwriting Process

Highest Quality

In-Force Portfolio - $26.6bn RIF

• No pre-financial crisis exposure
• High quality by FICO, LTV and DTI
• Minimal layered risk concentration
• 100% fully documented loan files
• No aggressive product types
• Geographic diversification
• ~85% underwritten or validated
• Risk-basedpricing - Rate GPS

1 Represents 95.01% and above, as reported by NMIH and peers

Note: Data as of 9/30/20 as disclosed in SEC filings and/or quarterly financial supplements

Primary RIF by FICO

Weighted average

FICO = 754

>760 51%

740-759 16%

720-739 14%

700-719 10%

680-699 6%

<6793%

Primary RIF by LTV

Weighted average

LTV = 93%

<85% 6%

85-90% 32%

90-95% 53%

>95% 9%

MI industry comparison: <680 FICO RIF concentration

10% 10%

8% 8%

6%8%

3%

NMIH ESNT ACGL RDN GNW MTG

MI industry comparison: 97% LTV1 RIF concentration

18%

15%

14%15%

13%

11%

9%

NMIH MTG ACGL RDN ESNT GNW

45

National MI - Comprehensive Reinsurance Program

Reinsurance "Tower" Illustration

Comprehensive reinsurance coverage

on nearly all risk ever written

NMI "back on risk" when losses exceed

2008 Financial Crisis-like levels

~20%

quota share

(proportional)

◼ National MI utilizes reinsurance as both:

➢ Source of efficient funding for its PMIERs,

Standard & Poor's and state regulatory

capital needs; and

➢ Risk management tool to limit the

potential volatility of its credit portfolio

across market cycles

◼ National MI has secured reinsurance coverage

from both traditional reinsurers and capital

markets investors

reinsurance

ILNs 1.0 - 5.0

➢ 2016, 2018 and 2020 QSRs

"Excess-of-loss" reinsurance

NMI retains exposure up to attachment

point (deductible)1

➢ 2017, 2018, 2019 and 2020 ILNs

◼ National MI intends to be active in both

markets on a consistent basis going forward

- we view the traditional and ILN markets as

complimentary

(1) Attachment points may vary for each ILN transaction and National MI's retained exposure for each transaction is considered individually

46

Reinsurance - Protects Against

Loss in Stress Scenarios

• Evaluated a number of scenarios to test ultimate claims exposure in a severe stress environment
• NMI's best-in-class reinsurance program provides significant loss mitigation, substantially reducing expected net claim rates
• Best-in-classcredit quality and comprehensive reinsurance position NMI to continue to thrive through COVID stress

Stress Scenario 1

COVID-19
Related
Claims	2.1%
Rate	1.7%

Gross Claims Rate	Net Claims Rate
Through 2023	Through 2023

Stress Scenario 2

3.8%

2.3%

Gross Claims Rate	Net Claims Rate
Through 2023	Through 2023

Stress Scenario 3

6.7%

2.5%

Gross Claims Rate	Net Claims Rate
Through 2023	Through 2023

47

Reinsurance - Provides Regulatory Capital Buffer in Stress Scenarios

Quota share reinsurance

• Three treaties covering ~20% of our risk in-force
• Quota share coverage also known as
  "proportional coverage" because the reinsurer assumes a proportional amount of loss exposure (on a first dollar basis)

Insurance-linked notes

• ILN coverage in place on nearly all risk ever written
• Structures are deliberately overcollateralized upfront and amount of excess funding grows upon a lock-out event

• Quota share treaties effectively "accordion" up to absorb any amount of increased regulatory capital need (regardless of delinquency level)

• $361 million aggregate overcollateralization across all five Oaktown Re

Insurance-Linked Notes - Coverage Details

As of September 30th	ILN 1	ILN 2	ILN 3	ILN 4	ILN 51
Covered RIF	$2.3 billion	$2.7 billion	$3.4 billion	$6.1 billion	$6.1 billion
Eligible coverage2	$161.8 million	$281.8 million	$354.9 million	$491.6 million	$363.5 million
Subordinate coverage3	7.11%	10.43%	10.57%	8.00%	6.00%
PMIERs charge on covered RIF	5.93%	7.48%	7.79%	6.13%	5.33%
"Overcollateralization"	$26.9 million	$79.6 million	$93.3 million	$120.4 million	$40.6 million
Delinquency trigger	4.0%	4.0%	4.0%	6.0%	4.5%

1. ILN 5 completed on 10/29/20
2. Eligible coverage represents the current reinsurance coverage including current first layer retained loss
3. Subordinate coverage is the ratio of eligible coverage to covered RIF

48

Prioritizing Risk Management

• Enterprise Risk Management Focus
• "Three Pillars" of NMI's Credit Risk
  Management Framework
• Resiliency Through COVID Stress

49

Deploying a robust risk management program to secure performance across all market cycles

Comparison to 2008 Financial Crisis

Housing market is in a fundamentally better position at outset of the COVID-crisis than in the lead up to the financial crisis

• Balanced home prices driven by real market fundamentals - no risk of a deflating "bubble"
• High-qualityborrower base accessing plain vanilla loan products - drives sustainability of homeownership
• Tight underwriting standards - requiring fully-documented income and asset positions
• Well-developed(and expanding) toolkit to provide borrower relief - proven value of forbearance and other programs
• No moral hazard issues - paves way for immediate and widespread assistance for homeowners and others
• PMIERs fundamentally different framework - contemplates and requires funding of "perpetual" lifetime stress

50

Mortgage Insurance Market

Risk Profile

	Pre-crisis	Current
% RIF	MI group1	NMI
>97% LTV2	27%	9%
<680 FICO3	39%	4%
<620 FICO4	10%	0%
Average FICO5	713	754
ARM & I/O6	22%	2%
Cash out refi7	17%	0%

1. Average of MGIC and Radian as of 12/31/07 (include both bulk and flow RIF)
2. 95.01%+ primary RIF distribution by LTV for Radian; 97-100% total original LTV for MGIC; 95.01% and above for NMI
3. <=619 and 620-679 primary RIF distribution by FICO for Radian; <575, 575-619, and 620-679 original FICO for MGIC; <=679 primary RIF by FICO for NMI
4. <=619 primary RIF distribution by FICO for Radian; <575 and 575-619 original FICO for MGIC
5. Average current credit score for entire mortgage market entering 2007 per BlackKnight Financial COVID-19 Special Briefing
6. ARM and Interest Only/Negative Amortization for Radian; Includes ARM, Option ARM, ARM I/O, and FRM I/O for MGIC; NMIH has essentially no interest only loans and all ARM have a reset period >5years
7. Cashout loan purpose for Radian; Refi Equity loan purpose for MGIC

Source: Radian 2017 Investor Day (11/6/17) and MGIC Q4'07 Portfolio Supplement

Rapid Response - Underwriting & Pricing

Immediate and decisive action to protect credit

performance from the outset of the COVID pandemic

Underwriting Underwriting

GuidelinesProcess

Premium Rates

✓	✓	✓
Tightening of the credit	Increased rigor around	Immediate increase
box to limit incremental	employment	to account for
exposure to higher risk	verification and income	unprecedented macro
loans	continuance	stress and reduce
	determination	exposure to certain risk
		cohorts

51

Rapid Response - Underwriting & Pricing

Immediate and decisive underwriting and pricing actions have had a dramatic and positive impact

		NIW risk mix						NIW risk mix
	PMIERs require asset charge				<680 FICO
5.8%						1.9%
		5.4%	5.4%					1.0%	0.7%
	Q1'20	Q2'20	Q3'20			Q1'20	Q2'20	Q3'20

NIW risk mix

>45% DTI

10.3%

7.0%

4.9%

NIW risk mix

97% LTV

6.4%

4.2%

3.2%

Q1'20

Q2'20

Q3'20

Q1'20

Q2'20

Q3'20

52

Rapid Response - Reinsurance Coverage

Immediate and decisive action to secure additional credit

protection and funding runway in the capital and reinsurance markets

2020	ILN 4.0	ILN 5.0
Quota Share
Oaktown Re IV	Oaktown Re V
Treaty

✓	✓	✓
21% proportional	$322mm excess-of-loss	$242mm excess-of-loss
coverage for policies	coverage for policies	coverage for policies
originated from	originated from	primarily originated from
4/1/20-12/31/20	7/1/19-3/31/20	4/1/20-9/30/20
First quota share treaty	First "regular way" ILN	Most favorable terms and
secured in the MI market	issuance in the MI market	risk protection of all ILNs
post-COVID	post-COVID	issued post-COVID
	53

Rapid Response - Policy Stimulus

Immediate and overwhelming policy response to the COVID pandemic - driving social

and economic outcomes, and resiliency in the housing market

Federal Reserve

• Treasury Department

✓

Fed Funds rate - near zero

(for extended period)

Supporting functioning

financial markets

Encouraging free flow

of credit

Direct small business and

corporate support

Congress & the	FHFA &
White House	GSEs

✓	✓
$2.3 trillion CARES Act to	National forbearance
provide aid, relief and	program and foreclosure
economic security	moratorium
Additional assistance	Modification waterfall -
may still come	new payment deferral
	PMIERs bulletins
	(recognizing unique needs)

54

Forbearance Programs -

Significant Positive for the Market

◼ Housing security is more		Borrower reliance on GSE forbearance
important than ever		programs declining as recovery takes hold
◼ Providing borrowers (who are	MBA, weekly servicer forbearance and call volume summary,
facing challenges through no		% of GSE loans estimated to be in forbearance
fault of their own) an
opportunity to stay in their
homes is the right policy		Jun. 7th = 6.4%
	Peak COVID utilization
◼ Forbearance and foreclosure
moratoriums offer a "bridge" to
a better environment in the
future				Nov. 8th = 3.4%
◼ Well-defined (and expanded)				Lowest since April 5th
set of modification alternatives
eases the transition back to
performing status
◼ All efforts to keep borrowers in
their homes are favorable for	3/8/20	5/8/20	7/8/20	9/7/20	11/8/20
National MI credit performance
		55

Forbearance Programs Significant

Positive for the Market

Fannie Mae Forbearance Outcomes

Entered forbearance since March and exited by July

	Never Missed Payment		Missed Payments (62%)
(38%)

Resolution method		Exit/cancel		Prepay	Prepay (PIF)	Reinstate	Payment	Payment	Flex Mod*	Liquidation
		(PIF)	Plan	Deferal	Options*
								Temporary		Hardship
							Temporary	hardship		Borrower
							Temporary	unresolved;
							hardship	resolved.	hardship is
			Forbearance				hardship	new income
						resolved.	Borrower	permanent.
			was not		Could be		resolved.	is lower
					Borrower	can	Liquidation
			needed /		loan	Primarily	Borrower	than
				has	manage	options
Typical circumstances		temporary		refinance	property	can resume	previous
		adequate	slightly	include
			hardship		or property	sale	prior	income. A
				reserves to	higher	Short-Sale,
			shorter than		sale		payment,	lower
					catch up	monthly	Deed-in Lieu
			expected				but not	payment is
						missed	payment	or
							more.	deemed
							payments.	for a finite	Foreclosure
								necessary
								period.
To-date share of
COVID forbearance		30.5%		7.1%	8.5%	30.9%	1.7%	20.5%	0.6%	0.3%
exits

Source: Fannie Mae Single-Family Credit Risk Transfer Update October 20,2020.

* Modifications and other liquidations may result in losses to CRT investors/reinsurers.

56

Strong Credit Performance

Through COVID Stress

◼ Strategic focus on high-quality	Peak Reported COVID Default Rates
risk paying off in face of COVID	NMI vs. Rest of Mortgage Insurance Industry
stress

◼ Encouraging default experience					6.35%	6.52%
and forbearance utilization thus
	Rest of industry: 6%	5.98%
far
◼ Nearly all defaults relate to		5.14%	5.19%
COVID crisis:
◼ Borrowers directly benefiting
from forbearance and other
assistance programs	3.78%
◼ Paired with strong national
house price appreciation
◼ Currently expected to drive
significant benefit in our	NMIH	ACGL	ESNT	GNW	MTG	RDN
ultimate claim experience
(1) Default rates as reported by each individual company in SEC filings, earnings releases, financial supplements or press releases. Periods may not align and underlying definitions and calculations of default rate may not be
uniform across companies

57

Encouraging Credit Trends

in In-Force Portfolio

◼ Encouraging credit trends		Credit strength through COVID-19 -
eight months into pandemic		National MI default activity by month
◼ Defaults peaked at low			Default population		Default rate
absolute level (particularly
when considered against				14,175	14,236
magnitude of COVID stress)				13,765
						13,108
◼ Forbearance program and				3.8%	3.8%	3.6%
		10,816
expanded modification
waterfall are working - easing			2.9%			3.4%
the transition for borrowers
◼ Performance quickly improving
with rising number of cures by
COVID-impacted borrowers
◼ Population of borrowers who		1,610	2,265
1,449
have missed one payment, but	0.4%	0.4%	0.6%
not progressed to default
declining even more	3/31/20	4/30/20	5/31/20 6/30/20	7/31/20 8/31/20	9/30/20 10/31/20
dramatically
		58

Housing Market Resiliency - Nationwide House Price Appreciation

National Association of Realtors,

Quarterly Metropolitan Median Area Price Report - November 2020

• Median single-family home prices grew year-over-year in all 181 metropolitan statistical
  areas tracked by NAR
• 65% of metros - 117 areas out of
  181 - had double-digit price growth year-on-year
• At end of the third quarter, housing inventory totals were equivalent to 2.7 months at the current sales pace

House price appreciation accelerating

nationwide in nearly every market

NAR, median sales price of existing single-family homes,

Q3'20 vs. Q3'19 price change by region

13.7% 13.3%

11.4% 11.1%

8.2%

West	Northeast	Southwest	Midwest	Las Vegas -
Henderson

- Paradise

59

Home Prices are a Key Driver of Mortgage Credit Performance

House Prices Impact Both the Frequencyand Severityof

National MI's Ultimate Claim Experience

HPA: Frequency Impact

Probability of Default
-50%	-25%	0%	25%	50%	75%	100%	125%	150%

Home Equity

Foote, Christopher L., Kristopher Gerard, and Paul S. Willen, "Negative Equity and

Foreclosure: Theory and Evidence," Journal of Urban Economics 64, 2008, pp. 234-345

HPA: Severity Impact

Illustrative claims severity1

67.8%

38.2%

						8.7%
	-10% HPA	0% HPA	+10% HPA
				Scenario 1		Scenario 2	Scenario 3
	Original LTV	95%		95%	95%
	Original principal balance	285,000		285,000	285,000
	Original property value	300,000		300,000	300,000
	Loan balance at default	265,982		265,982	254,601
	As of default date
	Cumulative HPA		-10.0%		0.0%	10.0%
	Current property value	270,000		300,000	330,000
	Property sale net proceeds	243,000		270,000	297,000
	Claim scenario
	Delinquent interest & other	39,011		39,011	39,011
	Total claim amount	304,993		304,993	304,993
	Coverage	30.0%		30.0%	30.0%
	Claim amount1		61,993		34,993	7,993
	Claim severity1		67.75%		38.24%	8.74%

1 Assumes settlement under the third-party sale option

60

Case Study: Early 2000s

(Dotcom Recession)

• National unemployment spiked by 66% (at peak) in the early 2000s following the burst of the late- 1990s tech bubble and emergence of accounting scandals at Enron, WorldCom and other large firms
• Despite the significant increase in unemployment and a broad national recession, housing demand grew and house prices continued to rise (substantially) from 2000-2003 - aided by a significant drop in mortgage rates (8% in 2000 to 5% in 2003)
• Mortgage credit performance was strong through the entirety of this period - actually improving through the recession

National unemployment rate

		6.3% (Jun-03)
				6.2%
	+66%
4.3%
	3.8% (Apr-00)
1/1/99	2/23/00	4/16/01	6/8/02	7/31/03

• St. Louis Federal Reserve Economic Data - unemployment rate, monthly data; seasonally adjusted

S&P/Case-Shiller National

House Price Index

		143.7 (Jun-03)	145
	+30%
100	110.6 (Apr-00)
1/1/99	2/23/00	4/16/01	6/8/02	7/31/03

• St. Louis Federal Reserve Economic Data - S&P / Case-Shiller U.S. National Home Price Index, monthly, not seasonally adjusted; indexed to 1/1/99

Single-family residential

mortgage delinquency rate

	1.97% (Apr-00)
2.0%
		-12%
				1.7%
		1.74% (Jul-03)
1/1/99	2/23/00	4/16/01	6/8/02	7/31/03

• St. Louis Federal Reserve Economic Data - delinquency rate on single family residential mortgages (all commercial banks); seasonally adjusted

61

Perspective on Ultimate COVID-Related Loss Exposure

Highest quality insured

portfolio

Nationwide house price appreciation provides equity buffer to potential losses

Forbearance programs and foreclosure moratoriums extending "cure runway"

Comprehensive reinsurance

program absorbs loss

• High-qualityportfolio and encouraging credit trends thus far - modest level of default experience and rising cure activity
• Forbearance, foreclosure and other assistance programs providing significant time for borrowers to find their footing and shallow runway for them to resume timely payment
• Resiliency of the housing market and accelerating house price appreciation nationwide provide a dramatic buffer from both frequency and severity of loss
• Our ultimate loss exposure is driven by foreclosure activity
  - claims are paid when title is taken, not upon a default
• Altogether, we expect COVID to be far more of a default event than a claims event for National MI

62

Financial Review

Adam Pollitzer

Executive Vice President & Chief Financial Officer

© 2017 Copyright. NMI Holdings Inc.

Delivering Financial Success

Standout Success to Date

Balance Sheet Strength and Earnings Resiliency through COVID

Significant Long-term

Opportunity Remains Intact

64

Financial "Sweet Spot"

High-Growth,High-Returns,

Low Volatility

Navigating Through Stress

Delivering Resilient

Financial Performance

Long-Term Opportunity

Positioning to Achieve Strong

Mid-Teen Returns

Summary Financial Snapshot

		Q1'20 LTM	Q3'20
✓ NIW	$49.5 billion	$18.5 billion
✓ IIF	$98.5 billion	$104.5 billion
✓ Revenue	$405.3 million	$107.8 million
✓ Adjusted net income*	$196.7 million	$40.4 million
	✓ Adjusted return on equity*	22.8%	12.6%
✓ Book value	$1.0 billion	$1.3 billion
✓ Book value per share	$14.15	$15.42
	✓ Loss ratio	4.2%	15.9%

* Adjusted net income and adjusted return on equity are non-GAAP measures. For a reconciliation to the most comparable GAAP measures, refer to the appendix or the company website at www.nationalmi.com

65

COVID-19 Financial Impact

• COVID is impacting our financial performance - introducing certain direct and derivative "costs"

	Impact clears
Credit performance		post-COVID?
	✓
◼ Driving increase in forbearance-related default experience
◼ GAAP claims expense elevated compared what we otherwise would have incurred		✓
Record low interest rates / mortgage note rates

• Persistency - acceleration in portfolio turnover impacts premium revenue
• Investment yield - declining new money rates average down portfolio yield
• Operating expenses - portfolio turnover drives accelerated DAC recognition

Capital needs / costs

• Capital needs increased immediately to support record NIW production
• Cost of capital (debt, ILN and quota share reinsurance) increased
• Leverage profile evolved with increased equity funding contribution
• ILN lockout introduces "negative carry" on higher trust balances

✓

✓

✓

✓

✓

✓

✓

• While some of these "costs" will stay with us going forward, many will begin to clear quickly and allow performance to more fully rebound

66

Continued Performance in the

Face of COVID Stress

		Pre-COVID		COVID stress	Post-COVID
	Growth, Profitability		Capital Strength,	Positioning
		and Returns		Earnings Resiliency	for Success
					Strong
					Returns
		23.3%	22.1%
		23.7%
ROE	21.2%	$53mm	$53mm	12.6%
21.2%		$50mm
				10.7%

$39mm	$41mm	$40mm
		$30mm

Q1'19

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Q3'20

Post-COVID

Adjusted Net Income & ROE

Note: "Post-COVID" markers are not a forecast - for illustrative purposes only. Adjusted net income and adjusted return on equity are non-GAAP measures. For a reconciliation to the most comparable GAAP measures, refer to the appendix or the company website at www.nationalmi.com.

67

Effectively Navigating through COVID Stress

New Business		In-force Portfolio

Fully-deployed credit risk framework

Record volume and value

pre-COVID

Driving IIF growth despite heightened

Reinsurance largely ring-fences tail

refinancing activity

exposure

Positioning National MI for financial outperformance post-COVID

Capital and reinsurance activity		COVID driving lasting change in
provide funding and risk protection		operating needs and expense footprint
Conservative investment and		Continued focus on efficiency and long-
reserving posture		term value from TCS engagement
Balance Sheet		Expenses

68

Building Significant Incremental

Embedded Value

Responsibly Scaling New Business Production and Building Embedded Value

Primary NIW, $ billions

$54.9bnPricing

+10% nominal rate increase

	$40.2bn	Credit quality
		10bps layered risk concentration*
	$27.2bn
$20.0bn		Capital
	5.35% PMIERs charge*

"Stickiness"

3.16% average note rate*

9/30/17 LTM

9/30/18 LTM

9/30/19 LTM

9/30/20 LTM

* NIW production from 4/1/20-10/31/20

69

Strong Balance Sheet

• Strong liquidity and capital position
• Comprehensive reinsurance program
  protects balance sheet
• Conservative investment portfolio in
  substantial gain position
• Capital efforts provide significant
  capacity to pursue new business growth

Capital Structure

$millions

			$1,701
			$393
		$1,076
	$849	$146	$1,308
	$147	$930
	$701
12/31/2018	12/31/2019	9/30/2020
GAAP		Equity	Debt
17%	14%	23%
leverage

$ millions	12/31/18	12/31/19	PF 9/30/201
Available assets	$734	$1,016	$1,672
Required assets	511	773	791
PMIERs excess	$223	$243	$881
PMIERs sufficiency	144%	131%	211%

1 Pro Forma for ILN of $242 million aggregate principal amount of 10-year mortgage insurance-linked notes issued by Oaktown Re V Ltd. on October 29th providing an estimated $200mm of PMIERs credit.

70

Funding Capacity and Risk Protection - Capital and Reinsurance Activity

• Raised ~$1.4 billion across six capital markets and reinsurance transactions
• Secured reinsurance protection on nearly all risk ever written - ring-fencingpre-COVID exposure
• Dramatically expanded our funding runway - 211% PMIERs sufficiency at 9/30/201
• Proven durability of our preferred funding markets
• Seeing a rapid normalization of structures, terms and price in the capital and reinsurance markets
• Meaningfully compressed our
  ILN "cycle time"

2020 activity

Revolving credit facility - refinanced and upsized

$230 million common equity

$400 million high yield notes

$322 million ILN 4.0 (Oaktown Re IV)

$242 million ILN 5.0 (Oaktown Re V)

2020 quota share reinsurance (21% cession)

2021 expectations

Quota share renewal

ILNs 6.0 & 7.0

1 Pro Forma for ILN of $242 million aggregate principal amount of 10-year mortgage insurance-linked notes issued by Oaktown Re V Ltd. on October 29th providing an estimated $200mm of PMIERs credit.

71

High Quality Investment Portfolio

• Cash and invested assets = $1.9 billion at 9/30/20
• • $1.7 billion actively managed fixed income portfolio and $194 million cash/equivalents
  • $64.8 million aggregate unrealized gain
• Investment strategy prioritizes capital preservation alongside income generation
• • 100% fixed income portfolio
  • 100% investment grade holdings - average A+ across portfolio
  • Highly diversified by issuer, sector and asset type
    - largest single issuer concentration = 1.6%
  • Highly liquid - all level 1 & 2 assets
  • Weighted average duration = 4.53 years
• Limited exposure to individual issuers, sectors or asset classes in COVID-19 risk categories1

Portfolio by asset class

Cash & cash	U.S. treasury
2%
equivalents
10%
ABS
7%
Municipal debt
17%

Corporate debt

63%

Portfolio ratings at fair value

1. AAA
   18%14%

AA

23%

A

44%

1 Potential COVID-19 risk categories include airline and aircraft ABS, retail and REIT, oil & energy, consumer credit ABS and rental car ABS; NMI has no gaming, lodging, auto & related, metals & mining, CLO, CMBS or RMBS holdings. Note: Amounts presented on charts may not foot due to rounding.

72

Loss Reserve Snapshot

• Carry reserves based on individual assessment of each defaulted loan
• Utilize econometric model that considers borrower and loan risk attributes, as well as key macro factors
• Aimed to establish conservative reserves given unprecedented nature of COVID stress
• • Assume national decline in house prices through 2021
  • Have not released reserves held on COVID-related cures (as yet)
  • Have not accounted for positive impact of forbearance for pre- COVID defaults (~50% accessed)

COVID stress driving growth in default

population and increased reserving need

Gross claims and claims expense reserves

(for primary insurance)

$87.2 million

$69.9 million

$29.5 million

$23.8 million

12/31/19 3/31/20 6/30/20 9/30/20

73

Post-COVID Loss Perspective

Opportunity for continued credit strength over long-term

Highest quality new business

Highest quality

new business

Q1'20 NIW

Q3'20 NIW

Nationwide HPA

equitizing risk

NAR, median price of existing single-family home

ever originated

10.3%

4.9%

6.4%

Q3'20 vs. Q3'19

14% 13% 11% 11%

Most rigorous underwriting environment ever seen

1.9% 0.7%

3.2%

Accelerating HPA quickly equitizing exposure on new policies

Turnover is reducing average age of in-force policies

New borrowers demonstrating performance through stress

<680 FICO > 45% DTI

97% LTV

Turnover reducing age

of in-force portfolio

Weighted average age of IIF, months

19.8 mos

18.9 mos

18.9 mos

12/31/18 12/31/19 9/30/20

74

West	Northeast Southwest Midwest

Strong performance

on post-COVID policies

Forbearance utilization and default rate, NIW on or after 4/1/20

+108,000

276

New policies

Default count

Focus on Efficiency and Expense Management

• Smallest headcount and expense base in industry (by wide margin)
• TCS (Tata Consultancy) IT partnership provides long-term expense benefits
• COVID changing the way we operate and positively impacting expense outlook
• Increased recognition of DAC expenses given portfolio turnover

Number of employees1	1,400
980
724
383
261						NA
	NMIH ESNT MTG ACGL	RDN GNW

NMI adjusted expense ratio3

73%

32%

LTM operating expenses2$300

($ millions)

$246

$216

$193

$159

$125

NMIH ESNT MTG GNW RDN ACGL

1 Employee count as of most recent available reporting period; NMIH as of 9/30/20; ESNT as of 9/30/20; MTG and RDN as of 12/31/19 (MTG excludes "on call" employees, RDN includes all employees - MI only employee base not disclosed); ACGL represents Mortgage Segment employees as of 2/21/18 per 2017 10K. 2 NMIH presented on adjusted basis; ESNT and MTG total company as reported; RDN MI segment as reported - including RDN's allocation of corporate items; ACGL and GNW MI segment as reported - excluding corporate allocation . 3 Presented on an adjusted basis which is a non-GAAP measure. For a reconciliation of non-GAAP measures to the most comparable GAAP measures are available in the addendix, and on the company's website at www.nationlmi.com.

75

Post-COVID Opportunity -

Rebounding Performance and Returns

"Decomposition" of Adjusted Return on Equity

	2019	3Q'20	Long-term outlook
Underwriting contribution
Net premiums earned	$345.0mm	$98.8mm
Adjusted combined ratio	39.6%	48.0%	40.0-50.0%
Underwriting leverage (NPE / equity)	0.42x	0.31x	0.35-0.40x
Pre-tax underwriting RoE contribution	25.5%	16.0%	17.5-25.0%
Asset contribution
Net investment income	$30.9mm	$8.3mm
Net investment yield	3.0%	2.2%	1.5-2.0%
Asset leverage (invested assets / equity)	1.26x	1.18x	1.20-1.30x
Pre-tax investment RoE contribution	3.8%	2.6%	2.0-2.5%
Financing cost
Interest expense	$12.1mm	$7.8mm
Cost of debt (all in GAAP)	8.1%	7.8%	7.8%
Financial leverage (debt / equity)	18.2%	31.2%	15.0-20.0%
Pre-tax financing RoE impact	-1.5%	-2.4%	-1.0-1.5%
Adjusted pre-tax return on equity	27.9%	16.2%	+20.0%
Effective tax rate	19.8%	22.4%	23.0%
Adjusted return on equity	22.4%	12.6%	+15.0%

Note: Long-term outlook for illustration purposes; does not represent a forecast. Adjusted combined ratio, pre-tax return on equity and return on equity are non-GAAP measures. For a reconciliation to the most comparable GAAP measures, refer to the appendix or the company website at www.nationalmi.com.

76

Delivering Financial Success

Standout Success to Date

Balance Sheet Strength and Earnings Resiliency through COVID

Significant Long-term

Opportunity Remains Intact

77

Financial "Sweet Spot"

High-Growth,High-Returns,

Low Volatility

Navigating Through Stress

Delivering Resilient

Financial Performance

Long-Term Opportunity

Positioning to Achieve Strong

Mid-Teen Returns

Concluding Remarks

Delivering significant value for shareholders and securing future

outperformance across all market cycles

✓	✓	✓	✓
Significant	Immediate	Housing	Well
success to	and decisive	market	positioned to
date provides	action in face	resiliency	survive and
strong	of the COVID	presents	thrive through
foundation	crisis	enormous	COVID and
		opportunity	beyond

78

Questions & Answers

© 2017 Copyright. NMI Holdings Inc.

Appendix

© 2017 Copyright. NMI Holdings Inc.

Insured Portfolio Snapshot

$104.5 billion In-Force Portfolio

Current Portfolio Composition

Portfolio Metrics by Vintage as of 9/30/20

Weighted Average Composition	9/30/20 IIF
FICO	754
LTV	91.6%
DTI	34.9%

	Policies	Current	WA	WA	WA
	ever in	policies in	FICO	original	current	# loans in	# claims	Delinquency
Vintage	force	force	score1	LTV1	LTV1	default	paid	rate2
2013	655	82	752	91.3%	59.3%	4	1	4.88%

2014

14,786

3,172

746

92.5%

61.9%

139

48

4.38%

	% of
In-Focus Risk Segments	9/30/20 RIF
95.01-97.0% LTV	8.7%
620-659 FICO	1.1%
>45% DTI	8.9%
ARMS with Reset < 5 years	0.0%
Cash-Out Refinance	0.0%
Second Home	2.8%
Investor-Owned Home	0.2%

2015	52,548	17,706	752	92.5%	65.8%	674	108	3.81%
2016	83,626	36,731	756	92.6%	69.8%	1,609	116	4.38%
2017	85,897	44,498	746	93.0%	75.6%	2,584	79	5.81%
2018	104,043	52,967	742	93.2%	81.1%	3,246	49	6.13%
2019	148,423	105,991	751	92.7%	86.2%	4,327	4	4.08%
2020	125,639	120,752	761	91.8%	89.8%	1,182	0	0.98%
Total	615,617	381,899	754	92.4%	83.9%	13,765	405	3.60%

1. Weighted average shown on a RIF basis and Current LTV includes amortization and assumed home price appreciation per Corelogic
2. Ratio of loans in default to current policies in force

81

Use of Non-GAAP Financial Measures

We believe the use of the non-GAAP measures of adjusted operating expense, adjusted expense ratio, adjusted combined ratio, adjusted pre-tax income, adjusted net income, adjusted pre-taxreturn-on- equity, adjusted effective tax rate and adjusted return-on-equity 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 operating expense is defined as GAAP operating expense, excluding the periodic costs recorded to GAAP operating expense incurred in connection with capital markets transactions and discrete, non- recurring and non-operating items in the periods in which such items are incurred.

Adjusted operating expense ratio is defined as GAAP operating expense, excluding the periodic costs recorded to GAAP operating expense incurred in connection with capital markets transactions and discrete, non-recurring and non-operating items in the periods in which such items are incurred divided by net premiums earned during such periods.

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.

Adjusted pre-taxincome is defined as GAAP income before tax, excluding the 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 discrete, non-recurring and 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 discrete, non-recurring and 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 pre-tax return-on-equity is calculated by dividing adjusted pre-tax income on an annualized basis by the average shareholders' equity for the period.

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

Adjusted effective tax rate is calculated by diving GAAP income tax expense adjusted for the tax-effects of net realized gains or losses from our investment portfolio, periodic costs incurred in connection with capital market transaction and discrete, non-recurring and non-operating items in the periods in which such items are incurred, using the applicable federal statutory tax rate for the respective periods by adjusted pre-tax income for the period.

Although adjusted operating expense, adjusted expense ratio, adjusted combined ratio, adjusted pre-tax income, adjusted net income, adjusted pre-taxreturn-on-equity, adjusted effective tax rate and adjusted return-on-equity 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. 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. Infrequent or unusual non-operating items. Items that are the result of unforeseen or uncommon events, which occur separately from operating earnings and are not expected to recur 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 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 non-recurring in nature, are not part of our primary operating activities and do not reflect our current period operating results

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Financial Highlights and

Non-GAAP Reconciliation

Non-GAAP reconciliation
					Second				Fourth					Second									Second
		First Quarter		Quarter	Third Quarter		Quarter		First Quarter		Quarter	Third Quarter	Fourth Quarter		First Quarter		Quarter	Third Quarter
($ in thousands, except per share values)			3/31/2018		6/30/2018		9/30/2018		12/31/2018			3/31/2019		6/30/2019		9/30/2019		12/31/2019			3/31/2020	6/30/2020		9/30/2020
As Reported:
Revenues
Net premiums earned	$	54,914	$	61,615	$	65,407	$	69,261	$	73,868	$	83,249	$	92,381	$	95,517	$	98,717	$	98,944	$	98,802
Net Investment Income			4,574		5,735		6,277		6,952			7,383		7,629		7,882		7,962			8,104		7,070		8,337
Net realized investment gains (losses)			-		59		(8)		6			(187)		(113)		81		264			(72)		711		(4)
Other revenues			64		44		85		40			42		415		1,244		1,154			900		1,223		648
Total revenues	$	59,552	$	67,453	$	71,761	$	76,259	$	81,106	$	91,180	$	101,588	$	104,897	$	107,649	$	107,948	$	107,783
Expenses
Insurance claims and claims expenses	$	1,569	$	643	$	1,099	$	2,141	$	2,743	$	2,923	$	2,572	$	4,269	$	5,697	$	34,334	$	15,667
Underwriting and operating expenses			28,346		28,958		30,323		29,339			30,800		32,190		32,335		31,296			32,277		30,370		33,969
Service expenses			107		62		56		45			49		353		909		937			734		1,090		557
Interest expense			3,419		5,560		2,972		3,028			3,061		3,071		2,979		2,974			2,744		5,941		7,796
Loss (Gain) from change in fair value of warrant liability	$	(420)	$	(109)	$	5,464	$	(3,538)	$	5,479	$	1,685	$	(1,139)	$	2,632		$	(5,959)	$	1,236	$	437
Total expenses	$	33,021	$	35,114	$	39,914	$	31,015	$	42,132	$	40,222	$	37,656	$	42,108	$	35,493	$	72,971	$	58,426
Income before income taxes	$	26,531	$	32,339	$	31,847	$	45,244	$	38,974	$	50,958	$	63,932	$	62,789	$	72,156	$	34,977	$	49,357
Income tax expense (benefit)			4,176		7,098		7,036		9,724			6,075		11,858		14,169		12,594			13,885		8,129		11,178
Net income	$	22,355	$	25,241	$	24,811	$	35,520	$	32,899	$	39,100	$	49,763	$	50,195	$	58,271	$	26,848	$	38,179
Adjustments:
Loss (Gain) from change in fair value of warrant liability	$	(420)	$	(109)	$	5,464	$	(3,538)	$	5,479	$	1,685	$	(1,139)	$	2,632	$	(5,959)	$	1,236	$	437
Capital markets transaction costs			-		2,921		1,871		102			-		664		1,689		-			474		2,790		2,254
Net realized investment (gains) losses			-		(59)		8		(6)			187		113		(81)		(264)			72		(711)		4
Adjusted Income before income taxes	$	26,111	$	35,092	$	39,190	$	41,802	$	44,640	$	53,420	$	64,401	$	65,157	$	66,743	$	38,292	$	52,052
Income tax expense (benefit) on adjustments	$	(88)	$	578	$	395	$	20	$	39	$	163	$	338	$	(55)	$	115	$	437	$	474
Deferred tax (expense) benefit adjustments			-		-		-		-			-		-							-		-
Adjusted Net income	$	22,023	$	27,416	$	31,759	$	32,058	$	38,526	$	41,399	$	49,894	$	52,618	$	52,743	$	29,726	$	40,400
Weighted average diluted shares outstanding			65,697		68,616		68,844		69,013			68,996		69,590		70,137		70,276			70,401		74,174		85,599
Dilutive effect of non-vested shares and warrants			-		-		-		-			-
Weighted average diluted shares outstanding - Adjusted			65,697		68,616		68,844		69,013			68,996		69,590		70,137		70,276			70,401		74,174		85,599
Diluted EPS - Reported	$	0.34	$	0.37	$	0.36	$	0.46	$	0.48	$	0.56	$	0.69	$	0.71	$	0.74	$	0.36	$	0.45
Diluted EPS - Adjusted	$	0.34	$	0.40	$	0.46	$	0.46	$	0.56	$	0.59	$	0.71	$	0.75	$	0.75	$	0.40	$	0.47
Shareholders' equity	$	601,944	$	629,642	$	660,493	$	701,500	$	751,881	$	812,379	$	873,487	$	930,420	$	974,890	$	1,257,037	$	1,307,556
Return on equity - Reported			16.1%		16.4%		15.4%		20.9%			18.1%		20.0%		23.6%		22.3%			24.5%		9.6%		11.9%
Return on equity - Adjusted			15.9%		17.8%		19.7%		18.8%			21.2%		21.2%		23.7%		23.3%			22.1%		10.7%		12.6%
Expense ratio - Reported			51.6%		47.0%		46.4%		42.4%			41.7%		38.7%		35.0%		32.8%			32.7%		30.7%		34.4%
Expense ratio - Adjusted			51.6%		45.9%		43.5%		42.2%			41.7%		37.9%		33.2%		32.8%			32.2%		30.5%		32.1%
Loss ratio - Reported and Adjusted			2.9%		1.0%		1.7%		3.1%			3.7%		3.5%		2.8%		4.5%			5.8%		34.7%		15.9%
Combined ratio - Reported	#		54.5%		48.0%		48.0%		45.5%			45.4%		42.2%		37.8%		37.2%			38.5%		65.4%		50.2%
Combined ratio - Adjusted	#		54.5%		46.9%		45.2%		45.3%			45.4%		41.4%		36.0%		37.2%			38.0%		65.2%		48.0%

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Cautionary Note Regarding

Forward-Looking Statements

Certain statements contained in this presentation 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," "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: uncertainty relating to the coronavirus ("COVID-19") pandemic and the measures taken by governmental authorities and other third parties to combat it, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and the Company's business, operations and personnel, changes in the business practices of Fannie Mae and Freddie Mac (collectively, the "GSEs"), including 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; 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, U.S. Department of Agriculture's Rural Housing Service and the U.S. Department of Veterans Affairs, and potential market entry by new competitors or consolidation of existing competitors; developments in the world's financial and capital markets and our access to such markets, including reinsurance; adoption of new or changes to existing laws and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including any action by the Consumer Financial Protection Bureau to address the planned expiration of the "QM Patch" under the Dodd-Frank Act Ability to Repay/Qualified Mortgage Rule; 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 future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance; our ability to successfully execute and implement our capital plans, including our ability to access the capital, 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; 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; 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; the inability of our counterparties, 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; and, our 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, 2019 and in Part II, Item 1A of our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2020 and September 30, 2020, 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.

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