NMI : Reports Fourth Quarter Net Income of $61.6 Million

NMI Holdings, Inc. Reports Fourth Quarter Net Income of $61.6 Million

Feb 15, 2017

NMI Holdings, Inc. Reports Fourth Quarter Net Income of $61.6 Million101.2 KB

EMERYVILLE, CA -- (Marketwired) -- 02/15/17 --

NMI Holdings, Inc.(NASDAQ: NMIH)today reported net income of $61.6 million, or $1.01 per share, for the fourth quarter ended Dec. 31, 2016. Results for the quarter include a tax benefit of $54.5 million resulting from reversal of the valuation allowance on the company's deferred tax asset and a charge of $1.7 million related to the change in fair value of outstanding warrants as a result of the company's higher stock price at Dec. 31, 2016. The company reported net income of $6.2 million, or $0.10 per share, in the prior quarter and a net loss of ($4.8) million, or ($0.08) per share, in the fourth quarter of 2015.

Bradley Shuster, chairman and CEO of National MI, said, "We are proud of our performance in the fourth quarter and for the full year. In 2016 we achieved profitability, more than doubled insurance in force and premiums earned, negotiated a reinsurance treaty to support our growth, and solidified our position as a strong, returns-oriented mortgage insurance provider. We are excited about our growing operating leverage and returns profile, realizing the business model we envisioned at our founding. We want to thank our customers and employees, as well as business partners, lenders and shareholders for making it possible."

Shuster added, "Looking ahead, we believe 2017 will be an even better year as we continue to layer on more high-quality insurance in force and drive strong revenue growth while prudently managing expenses and risk. With our largely fixed expense base, we expect that the operating leverage we already have demonstrated will drive increasing profits and returns throughout the year."

• As of December 31, 2016, the company had primary insurance-in-force of $32.2 billion, up 14% from $28.2 billion at the prior quarter end and up 117% over $14.8 billion as of December 31, 2015.
• Premiums earned for the quarter were $32.8 million, up 3% from $31.8 million in the prior quarter and up 94% over $16.9 million in the same quarter a year ago.
• NIW mix was 75% monthly premium product, which compares with 71% in the prior quarter and 45% in the fourth quarter of 2015.
• Total underwriting and operating expenses in the fourth quarter were $23.3 million, including share-based compensation expense of $1.9 million. This compares with total underwriting and operating expenses of $24.0 million, including $1.8 million of share-based compensation, in the prior quarter, and $21.7 million, including $2.3 million of share-based compensation, in the same quarter a year ago.
• Loss expense for the quarter was $0.8 million, resulting in a loss ratio of 2%.
• As of the end of the fourth quarter, the company had approved master policies in place with 1,131 customers, up from 1,100 as of the end of the prior quarter, and up from 964 as of the end of the fourth quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 638, which compares with 525 in the prior quarter and 500 in the same quarter a year ago.
• At quarter-end, cash and investments were $677 million, including $74 million at the holding company, and book equity was $477 million, equal to $8.07 per share.
• In 2016, the company generated $71.9 million of cash from operations, which compares with $41.5 million for 2015.
• At quarter-end, the company had total PMIERs available assets of $454 million, which compares with risk- based required assets under PMIERs of $367 million.

		Quarter		Quarter		Quarter		Growth		Growth
		Ended		Ended		Ended		Q/Q		Y/Y
		12/31/2016		9/30/2016		12/31/2015
Primary Insurance-in-Force ($billions)		32.17		28.22		14.82		14	%	117	%
New Insurance Written - NIW ($billions)
	Monthly premium		3.90		4.16		2.03		-6	%	92	%
	Single premium		1.34		1.70		2.52		-21	%	-47	%
	Total		5.24		5.86		4.55		-11	%	15	%
Premiums Earned ($millions)		32.83		31.81		16.88		3	%	94	%
Underwriting & Operating Expense ($millions)		23.28		24.04		21.69		-3	%	7	%
Loss Expense ($millions)		0.80		0.66		0.37		21	%	116	%
Loss Ratio		2	%	2	%	2	%
Cash & Investments ($millions)		677		686		617		-1	%	10	%
Book Equity ($millions)		477		430		403		11	%	18	%
Book Value per Share		8.07		7.28		6.85		11	%	18	%
Approved Master Policies		1,131		1,100		964		3	%	17	%
Customers Generating NIW		638		525		500		22	%	28	%

Conference Call and Webcast Details

The company will hold a conference call and live webcast today 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 call also can be accessed by dialing [phone] in the U.S., or [phone] for international callers using Conference ID: 41208251, or by referencing NMI Holdings, Inc.

About National MI

National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc.(NASDAQ: NMIH), is 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 (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (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: our ability to implement our business strategy, including our ability to attract and retain a diverse customer base and to achieve a diversified mix of business across the spectrum of our product offerings; changes in the business practices of the GSEs that may impact the use of private mortgage insurance; our ongoing ability to comply with the financial requirements of the PMIERs; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; our ability to successfully execute and implement our capital plans, including our ability to access the reinsurance market and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; heightened competition for our mortgage insurance business from other private mortgage insurers and the FHA; adoption of new or changes to existing laws and regulations or their enforcement and implementation by regulators; changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; our ability to utilize our net operating loss carryforwards, which could be limited or eliminated in various ways, including if we experience an ownership change as defined in Section 382 of the Internal Revenue Code; and general economic downturns and volatility. 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, 2015, 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.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
[e-mail]
[phone]

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
[phone]
[e-mail]

Consolidated statements of operations and comprehensive income	For the three months ended December 31,			For the year ended December 31,
	2016			2015			2016			2015
Revenues	(In Thousands, except for share data)
	Net premiums earned	$	32,825			$	16,880			$	110,481			$	45,506
	Net investment income		3,634				2,078				13,751				7,246
	Net realized investment gains (losses)		65				(121	)			(693	)			831
	Other revenues		105				25				276				25
Total revenues		36,629				18,862				123,815				53,608
Expenses
	Insurance claims and claims expenses		800				371				2,392				650
	Underwriting and operating expenses		23,281				21,686				93,223				80,599
Total expenses		24,081				22,057				95,615				81,249
Other (expense) income
	(Loss) gain from change in fair value of warrant liability		(1,713	)			431				(1,900	)			1,905
	Interest expense		(3,777	)			(2,057	)			(14,848	)			(2,057	)
Total other (expense)		(5,490	)			(1,626	)			(16,748	)			(152	)
Income (loss) before income taxes		7,058				(4,821	)			11,452				(27,793	)
	Income tax benefit		(54,502	)			-				(54,389	)			-
Net income (loss)	$	61,562			$	(4,821	)		$	65,841			$	(27,793	)
Earnings (loss) per share
	Basic	$	1.04			$	(0.08	)		$	1.11			$	(0.47	)
	Diluted	$	1.01			$	(0.08	)		$	1.08			$	(0.47	)
Weighted average common shares outstanding
	Basic		59,140,011				58,781,566				59,070,948				58,683,194
	Diluted		61,229,338				58,781,566				60,829,372				58,683,194
Loss Ratio(1)		2	%			2	%			2	%			1	%
Expense Ratio(2)		71				128				84				177
Combined ratio		73	%			131	%			87	%			179	%
Net income (loss)	$	61,562			$	(4,821	)		$	65,841			$	(27,793	)
Other comprehensive (loss) income, net of tax:
	Net unrealized (losses) gains in accumulated other comprehensive income (loss), net of tax expense of $1,178, and $0 for the years ended December 31, 2016 and December 31, 2015, respectively and $1,178, and $0 for the quarters ended December 31, 2016 and December 31, 2015		(16,196	)			(3,503	)			1,429				(3,518	)
	Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented		(65)				603				758				(349	)
Other comprehensive (loss) income, net of tax		(16,261	)			(2,900	)			2,187				(3,867	)
Comprehensive income (loss)	$	45,301			$	(7,700	)		$	68,028			$	(31,660	)

⁽¹⁾ Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
⁽²⁾ Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.

Consolidated balance sheets	December 31, 2016			December 31, 2015
Assets	(In Thousands, except for share data)
	Fixed maturities, available-for-sale, at fair value (amortized cost of $630,688 and $564,319 as of December 31, 2016 and December 31, 2015, respectively)	$	628,969			$	559,235
	Cash and cash equivalents		47,746				57,317
	Premiums receivable		13,728				5,143
	Accrued investment income		3,421				2,873
	Prepaid expenses		1,991				1,428
	Deferred policy acquisition costs, net		30,109				17,530
	Software and equipment, net		20,402				15,201
	Intangible assets and goodwill		3,634				3,634
	Prepaid reinsurance premiums		37,921				-
	Deferred tax asset, net		53,274				-
	Other assets		542				90
Total assets	$	841,737			$	662,451
Liabilities
	Term loan	$	144,353			$	143,939
	Unearned premiums		152,906				90,773
	Accounts payable and accrued expenses		25,297				22,725
	Reserve for insurance claims and claim expenses		3,001				679
	Reinsurance funds withheld		30,633				-
	Deferred ceding commission		4,831				-
	Warrant liability, at fair value		3,367				1,467
	Deferred tax liability, net		-				137
Total liabilities		364,388				259,720
Commitments and contingencies
Shareholders' equity
	Common stock - class A shares, $0.01 par value; 59,145,161 and 58,807,825 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively (250,000,000 shares authorized)		591				588
	Additional paid-in capital		576,927				570,340
	Accumulated other comprehensive loss, net of tax		(5,287	)			(7,474	)
	Accumulated deficit		(94,882	)			(160,723	)
Total shareholders' equity		477,349				402,731
Total liabilities and shareholders' equity	$	841,737			$	662,451

Historical Quarterly Data	2016			2015
	December 31,			September 30			June 30			March 31			December 31			September 30
Revenues	(In Thousands, except for share data)
	Net premiums earned	$	32,825			$	31,808			$	26,041			$	19,807			$	16,880			$	12,834
	Net investment income		3,634				3,544				3,342				3,231				2,078				1,884
	Net realized investment gains (losses)		65				66				61				(885	)			(121	)			(15	)
	Other revenues		105				102				37				32				25				-
Total revenues		36,629				35,520				29,481				22,185				18,862				14,703
Expenses
	Insurance claims and claims expenses		800				664				470				458				371				181
	Underwriting and operating expenses		23,281				24,037				23,234				22,672				21,686				19,653
Total expenses		24,081				24,701				23,704				23,130				22,057				19,834
Other (expense) income (1)		(5,490	)			(4,530	)			(3,766	)			(2,962	)			(1,626	)			332
Income (loss) before income taxes		7,058				6,289				2,011				(3,907	)			(4,821	)			(4,799	)
	Income tax (benefit) expense		(54,502	)			114				-				-				-				-
Net income (loss)	$	61,562			$	6,175			$	2,011			$	(3,907	)		$	(4,821	)		$	(4,799	)
Earnings (loss) per share
	Basic	$	1.04			$	0.10			$	0.03			$	(0.07	)		$	(0.08	)		$	(0.08	)
	Diluted	$	1.01			$	0.10				0.03				(0.07	)			(0.08	)			(0.08	)
Weighted average common shares
outstanding
Basic		59,140,011				59,130,401				59,105,613				58,936,694				58,781,566				58,741,328
Diluted		61,229,338				60,284,746				59,830,899				58,936,694				58,781,566				58,741,328
Other data
Loss Ratio (2)		2	%			2	%			2	%			2	%			2	%			1	%
Expense Ratio (3)		71	%			76	%			89	%			114	%			128	%			153	%
Combined ratio		73	%			78	%			91	%			117	%			131	%			155	%

⁽¹⁾ Other (expense) income includes the gain from change in fair value of warrant liability, gain from settlement of warrants, and interest expense.
⁽²⁾ Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
⁽³⁾ Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.

New Insurance Written (NIW), Insurance in Force (IIF) and Premiums

The tables below show primary and pool NIW and IIF, by quarter, for the last six quarters.

Primary NIW	Three months ended
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
	(In Millions)
Monthly	$	3,904		$	4,162		$	3,700		$	2,492		$	2,029		$	1,582
Single		1,336			1,695			2,138			1,762			2,518			2,051
Primary	$	5,240		$	5,857		$	5,838		$	4,254		$	4,547		$	3,633

Primary and pool IIF	As of
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
	(In Millions)
Monthly	$	19,205		$	16,038		$	12,529		$	9,210		$	6,958		$	5,087
Single		12,963			12,190			11,095			9,354			7,866			5,514
Primary		32,168			28,228			23,624			18,564			14,824			10,601
Pool		3,650			3,826			3,999			4,136			4,238			4,340
Total	$	35,818		$	32,054		$	27,623		$	22,700		$	19,062		$	14,941

Portfolio Statistics

The table below shows primary portfolio trends, by quarter, for the last six quarters.

Primary portfolio trends	As of and for the quarter ended
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
		($ Values In Millions)
New insurance written	$	5,240			$	5,857			$	5,838			$	4,254			$	4,547			$	3,633
New risk written		1,244				1,415				1,411				1,016				1,105				887
Insurance in force (1)		32,168				28,228				23,624				18,564				14,824				10,601
Risk in force (1)		7,790				6,847				5,721				4,487				3,586				2,553
Policies in force (count) (1)		134,662				119,002				100,547				79,700				63,948				46,175
Weighted-average coverage (2)		24.2	%			24.3	%			24.2	%			24.2	%			24.2	%			24.1	%
Loans in default (count)		179				115				79				55				36				20
Percentage of loans in default		0.1	%			0.1	%			0.1	%			0.1	%			0.1	%			-	%
Risk in force on defaulted loans	$	10			$	6			$	4			$	3			$	2			$	1
Average premium yield (3)		0.44	%			0.48	%			0.47	%			0.45	%			0.49	%			0.52	%
Annual persistency (4)		80.7	%			81.8	%			83.3	%			82.7	%			79.6	%			71.6	%

⁽¹⁾ Reported as of the end of the period.
⁽²⁾ End of period risk in force (RIF) divided by IIF.
⁽³⁾ Average premium yield is calculated by dividing primary net premiums earned, net of reinsurance, by average gross IIF for the period, annualized.
⁽⁴⁾ Defined as the percentage of IIF that remains on our books after any 12-month period.

The tables below reflect our total primary NIW by FICO, loan-to-value (LTV), and purchase/refinance mix.

Primary NIW by FICO	Three months ended
	December 31, 2016		September 30, 2016		December 31, 2015
	(In Millions)
	> = 760	$	2,566		$	2,975		$	2,315
	740-759		846			934			754
	720-739		647			725			569
	700-719		560			588			485
	680-699		375			387			277
	< =679		246			248			147
Total	$	5,240		$	5,857		$	4,547
Primary NIW by LTV	Three months ended
	December 31, 2016		September 30, 2016		December 31, 2015
	(In Millions)
	95.01% and above	$	355		$	347		$	219
	90.01% to 95.00%		2,224			2,557			1,989
	85.01% to 90.00%		1,580			1,844			1,559
	85.00% and below		1,081			1,109			780
Total	$	5,240		$	5,857		$	4,547
Primary NIW by purchase/refinance mix	Three months ended
	December 31, 2016		September 30, 2016		December 31, 2015
	(In Millions)
	Purchase	$	3,776		$	4,400		$	3,138
	Refinance		1,464			1,457			1,409
Total	$	5,240		$	5,857		$	4,547

The tables below show the primary weighted average FICO and the weighted average LTV, by policy type, for NIW in the quarters presented.

Weighted Average FICO
	December 31, 2016			September 30, 2016			December 31, 2015
Monthly	746			748			750
Single	764			763			756
Weighted Average LTV
	December 31, 2016			September 30, 2016			December 31, 2015
Monthly	92	%		91	%		92	%
Single	90			90			91

The table below reflects a summary of our primary IIF and RIF by book year.

Primary IIF and RIF	As of December 31, 2016
	IIF		RIF
		(In Millions)
December 31, 2016	$	20,193		$	4,850
2015		10,071			2,472
2014		1,856			457
2013		48			11
Total	$	32,168		$	7,790

The tables below reflect our total primary IIF and RIF by FICO, average loan size, LTV, and loan type.

Primary IIF by FICO	As of
	December 31, 2016		September 30, 2016		December 31, 2015
	(In Millions)
	> = 760	$	16,166		$	14,258		$	7,124
	740-759		5,248			4,612			2,406
	720-739		4,130			3,648			2,111
	700-719		3,245			2,813			1,515
	680-699		2,151			1,863			1,100
	< =679		1,228			1,034			568
Total	$	32,168		$	28,228		$	14,824
Primary RIF by FICO	As of
	December 31, 2016		September 30, 2016		December 31, 2015
	(In Millions)
	> = 760	$	3,934		$	3,470		$	1,707
	740-759		1,281			1,130			590
	720-739		1,000			887			519
	700-719		782			680			369
	680-699		511			443			267
	< =679		282			237			134
Total	$	7,790		$	6,847		$	3,586
Primary Average Loan Size by FICO	As of
	December 31, 2016		September 30, 2016		December 31, 2015
	(In Thousands)
	> = 760	$	250		$	250		$	246
	740-759		241			240			235
	720-739		235			235			229
	700-719		233			233			228
	680-699		224			224			219
	< =679		210			209			207

Primary IIF by LTV	As of
	December 31, 2016			September 30, 2016			December 31, 2015
	(In Millions)
		95.01% and above	$	1,686			$	1,363			$	498
		90.01% to 95.00%		14,358				12,644				6,583
		85.01% to 90.00%		10,282				9,157				5,098
		85.00% and below		5,842				5,064				2,645
Total	$	32,168			$	28,228			$	14,824
Primary RIF by LTV	As of
	December 31, 2016			September 30, 2016			December 31, 2015
	(In Millions)
		95.01% and above	$	467			$	380			$	139
		90.01% to 95.00%		4,226				3,725				1,943
		85.01% to 90.00%		2,439				2,174				1,210
		85.00% and below		658				568				294
Total	$	7,790			$	6,847			$	3,586
Primary RIF by Loan Type	As of
	December 31, 2016			September 30, 2016			December 31, 2015
	Fixed		99	%			98	%			98	%
	Adjustable rate mortgages:
		Less than five years		-				-				-
		Five years and longer		1				2				2
Total		100	%			100	%			100	%

As of December 31, 2016 and December 31, 2015, 100% of each of our pool IIF and RIF was comprised of insurance on fixed rate mortgages.

The table below reflects a summary of the change in total primary IIF for the following periods.

Primary IIF	Three months ended
	December 31, 2016			September 30, 2016			December 31, 2015
	(In Millions)
IIF, beginning of period	$	28,228			$	23,624			$	10,601
	NIW		5,240				5,857				4,547
	Cancellations and other reductions		(1,300	)			(1,253	)			(324	)
IIF, end of period	$	32,168			$	28,228			$	14,824

Geographic Dispersion

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

Top 10 primary RIF by state	As of
	December 31, 2016			September 30, 2016			December 31, 2015
California	13.6	%		13.2	%		12.9	%
Texas	7.0			6.8			6.8
Virginia	6.5			6.6			5.2
Florida	4.5			4.7			5.3
Arizona	3.9			3.8			3.7
Colorado	3.9			4.0			4.2
Maryland	3.7			3.6			2.8
Michigan	3.7			3.9			4.4
Utah	3.7			3.6			3.0
Pennsylvania	3.6			3.6			3.7
Total	54.1	%		53.8	%		52.0	%

The following table shows portfolio data by origination year.

	As of December 31, 2016
Origination 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)
	($ Values in Millions)
2013	$	162		$	48		30	%		655		239		-		1		-	%		0.2	%
2014		3,451			1,857		54	%		14,786		9,003		48		3		2.6	%		0.3	%
2015		12,422			10,071		81	%		52,548		44,716		103		7		2.4	%		0.2	%
2016		21,189			20,192		95	%		83,633		80,704		28		-		0.6	%		-	%
Total	$	37,224		$	32,168					151,622		134,662		179		11

⁽¹⁾ The ratio of losses incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
⁽²⁾ The sum of claims paid ever to date and notices of default as of the end of the period divided by policies ever in force.

The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses:

	For the three months ended December 31,		For the year ended December 31,
	2016			2015		2016			2015
	(In Thousands)
Beginning balance	$	2,133			$	358		$	679			$	83
Less reinsurance recoverables (1)		(90	)			-			-				-
Beginning balance, net of reinsurance recoverables		2,043				358			679				83
Add claims incurred:
	Claims and claim expenses incurred:
		Current year (2)		654				341			2,457				699
		Prior years (3)		149				30			(65	)			(49	)
Total claims and claims expenses incurred		803				371			2,392				650
Less claims paid:
	Claims and claim expenses paid:
		Current year (2)		171				50			171				50
		Prior years (3)		(29	)			-			196				4
Total claims and claim expenses paid		142				50			367				54
Reserve at end of period, net of reinsurance recoverables		2,704				679			2,704				679
Add reinsurance recoverables (1)		297				-			297				-
Balance, December 31	$	3,001			$	679		$	3,001			$	679

⁽¹⁾ Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction. To date, ceded losses have been immaterial.
⁽²⁾ Related to defaults occurring in the current year.
⁽³⁾ Related to defaults occurring in prior years.

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

	Three months ended			Year ended
	December 31,			December 31,			December 31,			December 31,
	2016			2015			2016			2015
Beginning default inventory	115			20			36			4
Plus: new defaults	126			27			284			51
Less: cures	(59	)		(10	)		(132	)		(17	)
Less: claims paid	(3	)		(1	)		(9	)		(2	)
Ending default inventory	179			36			179			36

The following tables provide details of our claims and reserves.

	Three months ended			Year ended
	December 31,			December 31,			December 31,			December 31,
	2016			2015			2016			2015
	($ Values In Thousands)
Number of claims paid		3				1				9				2
Total amount paid for claims	$	136			$	50			$	367			$	54
Average amount paid per claim	$	45			$	50			$	41			$	27
Severity		65	%			104	%			64	%			44	%

Average reserve per default:	As of December 31, 2016		As of December 31, 2015
	(In Thousands)
Case	$	15		$	18
IBNR		2			1
Total	$	17		$	19

The following table provides a comparison of the PMIERs financial requirements as reported by National MI.

	As of
	December 31, 2016			September 30, 2016			December 31, 2015
	(In thousands)
Available Assets	$	453,523			$	488,635			$	431,411
Net Risk-Based Required Assets		366,584				320,609				249,805
Asset charge % (1)		6.15	%			6.14	%			6.17	%

⁽¹⁾ Asset charge represents the risk based required asset amount as defined in the PMIERs, divided by the outstanding RIF on performing primary loans.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
[e-mail]
[phone]

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
[phone]
[e-mail]

Source: NMI Holdings, Inc.

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