NMI : Reports Second Quarter Net Income of $2 Million, Enters Into Reinsurance Treaty to Support Growth

NMI Holdings, Inc. Reports Second Quarter Net Income of $2 Million, Enters Into Reinsurance Treaty to Support Growth

Aug 02, 2016

NMI Holdings, Inc. Reports Second Quarter Net Income of $2 Million, Enters Into Reinsurance Treaty to Support Growth111.3 KB

EMERYVILLE, CA -- (Marketwired) -- 08/02/16 --

NMI Holdings, Inc.(NASDAQ: NMIH)today reported net income of $2.0 million, or $0.03 per share, for the second quarter ended June 30, 2016. This compares with a net loss of $3.9 million, or $(0.07) per share, in the prior quarter and a net loss of $10.4 million, or $(0.18) per share, in the second quarter of 2015. Total revenue for the quarter was $29.6 million, up 33% from $22.2 million in the prior quarter and up 171% from $10.9 million in the second quarter of 2015.

The company also announced today that it has entered into a quota share reinsurance agreement with a panel of third-party reinsurance providers. The company expects that Fannie Mae and Freddie Mac will allow full credit under the Private Mortgage Insurer Eligibility Requirements (PMIERs) for risk ceded under the agreement.

Bradley Shuster, chairman and CEO of National MI, said, "In the second quarter we achieved GAAP profitability, a significant milestone for this young company just three years after writing our first mortgage insurance policy. It is a reflection of our dedication to customer service, our disciplined approach to account development, and diligent management of both risk and expenses. We are grateful to our customers for their belief in us, our employees for their hard work and loyalty, and our shareholders and other business partners for their support of National MI since its founding. We are at an exciting inflection point in our development as we now have visibility to rapid earnings growth for many years to come. Looking ahead, we now expect to report pre-tax income of $7 to $10 million for the full year 2016, and are reaffirming our guidance for pre-tax income of at least $60 million in 2017."

• As of June 30, 2016, the company had primary insurance-in-force of $23.6 billion, up 27% from $18.6 billion at the prior quarter end and up 229% over $7.2 billion as of June 30, 2015.
• Premiums earned for the quarter were $26.0 million, up 31% from $19.8 million in the prior quarter and up 194% over $8.9 million in the same quarter a year ago.
• Total NIW of $5.8 billion in the second quarter was up 37% over $4.3 billion in the prior quarter and up 129% over $2.5 billion in the second quarter of 2015.
• Monthly premium NIW was $3.7 billion, an increase of 49% over $2.5 billion in the prior quarter and an increase of 153% over the second quarter of 2015. Single premium NIW of $2.1 billion was up 21% from the prior quarter and up 96% compared with the same quarter a year ago.
• Total underwriting and operating expenses in the second quarter were $23.2 million, including share-based compensation expense of $1.8 million. This compares with total underwriting and operating expenses of $22.7 million, including $1.4 million of share-based compensation, in the prior quarter, and $20.9 million, including $2.1 million of share-based compensation, in the same quarter a year ago.
• Loss expense for the quarter was $0.4 million, resulting in a loss ratio of 1.8%.
• As of the end of the second quarter, the company had approved master policies in place with 1,061 customers, up from 1,023 as of the end of the prior quarter, and up from 842 as of the end of the second quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 518, which compares with 469 in the prior quarter and 340 in the same quarter a year ago. On an ever-to-date basis, customers delivering NIW grew to 649.
• At quarter-end, cash and investments were $654 million, including $78 million at the holding company, and book equity was $422 million, equal to $7.14 per share. This book value excludes any benefit attributable to the company's deferred tax asset of approximately $66 million as of Dec. 31, 2015.
• At quarter-end, the company had total PMIERs available assets of $432 million, which compares with risk- based required assets under PMIERs of $377 million.

		Quarter			Quarter			Quarter
		Ended			Ended			Ended		Growth			Growth
		6/30/2016			3/31/2016			6/30/2015		Q/Q			Y/Y
Primary Insurance-in-Force ($billions)			23.62				18.56				7.19		27	%		228	%
New Insurance Written - NIW ($billions)
	Monthly premium			3.70				2.49				1.46		49	%		153	%
	Single premium			2.14				1.76				1.09		21	%		96	%
	Total			5.84				4.25				2.55		37	%		129	%
Premiums Earned ($millions)			26.04				19.81				8.86		31	%		194	%
Underwriting & Operating Expense ($millions)			23.23				22.67				20.91		2	%		11	%
Loss Expense ($millions)			0.47				0.46				-		3	%		-
Loss Ratio			1.8	%			2.3	%			-
Cash & Investments ($millions)			654				630				434		4	%		51	%
Book Equity ($millions)			422				410				412		3	%		2	%
Book Value per Share		$	7.14			$	6.94			$	7.01		3	%		2	%
Approved Master Policies			1061				1023				842		4	%		26	%
Customers Generating NIW			518				469				340		10	%		52	%

Reinsurance Agreement
Effective Sept. 1, 2016, the company's quota share reinsurance agreement covers the following components of its portfolio, subject to certain limitations and conditions:

• Approximately 23% of existing policies written as of Aug. 31, 2016.
• Approximately 95% of the company's pool agreement with Fannie Mae.
• Approximately 23% of policies written from Sept. 1, 2016 through Dec. 31, 2017.

National MI will receive a 20% ceding commission for ceded premiums related to this transaction, as well as a profit commission provided that the loss ratio on the loans covered under the agreement generally remains below 60%. For risk ceded under the agreement, the implied after-tax cost of capital over the term of the transaction is expected to be approximately 3%.

Conference Call and Webcast Details
The company will hold a conference call and live webcast today at 1:30 p.m. Pacific Time / 4:30 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: 40158937, 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 enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us and to the GSEs; 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 June 30,			For the six months ended June 30,
		2016			2015			2016			2015
Revenues		(In Thousands, except for share data)
	Net premiums written		$	48,862			$	20,347			$	86,991			$	33,268
	Increase in unearned premiums			(22,821	)			(11,491	)			(41,143	)			(17,476	)
	Net premiums earned			26,041				8,856				45,848				15,792
	Net investment income			3,342				1,688				6,573				3,283
	Net realized investment gains (losses)			61				354				(824	)			967
	Other revenues			37				-				69				-
Total revenues			29,481				10,898				51,666				20,042
Expenses
	Insurance claims and claims expenses			470				(6	)			928				98
	Underwriting and operating expenses			23,234				20,910				45,906				39,259
Total expenses			23,704				20,904				46,834				39,357
Other (expense) income
	(Loss) gain from change in fair value of warrant
	liability			(59	)			(106	)			611				1,142
	Interest expense			(3,707	)			-				(7,339	)			-
Total other (expense) income			(3,766	)			(106	)			(6,728	)			1,142
Income (loss) before income taxes			2,011				(10,112	)			(1,896	)			(18,173	)
	Income tax expense			-				241				-				-
Net income (loss)		$	2,011			$	(10,353	)		$	(1,896	)		$	(18,173	)
Earnings (loss) per share
	Basic		$	0.03			$	(0.18	)		$	(0.03	)		$	(0.31	)
	Diluted		$	0.03			$	(0.18	)		$	(0.03	)		$	(0.31	)
Weighted average common shares outstanding
Basic			59,105,613				58,720,095				59,005,983				58,603,644
Diluted			59,830,899				58,720,095				59,005,983				58,603,644
Loss Ratio(1)			2	%			-	%			2	%			1	%
Expense Ratio(2)			89				236				100				249
Combined ratio			91	%			236	%			102	%			249	%
Net income (loss)		$	2,011			$	(10,353	)		$	(1,896	)		$	(18,173	)
Other comprehensive income (loss), net of tax:
	Net unrealized gains (losses) in accumulated other comprehensive gain (loss), net of tax (benefit) expense of $0 and ($1,431) for the three monthsended June 30, 2016 and 2015, respectively, and $0 for both the six months ended June 30, 2016 and 2015			8,670				(2,205	)			17,771				467
	Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented			(61	)			(354	)			824				(967	)
Other comprehensive income (loss), net of tax			8,609				(2,559	)			18,595				(500	)
Comprehensive income (loss)		$	10,620			$	(12,912	)		$	16,699			$	(18,673	)

(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		June 30, 2016			December 31, 2015
Assets		(In Thousands, except for share data)
	Fixed maturities, available-for-sale, at fair value (amortized cost of $593,807 and $564,319 as of June 30, 2016 and December 31, 2015, respectively)		$	607,318			$	559,235
	Cash and cash equivalents			46,827				57,317
	Premiums receivable			8,868				5,143
	Accrued investment income			3,068				2,873
	Prepaid expenses			1,810				1,428
	Deferred policy acquisition costs, net			25,128				17,530
	Software and equipment, net			19,690				15,201
	Intangible assets and goodwill			3,634				3,634
	Other assets			85				90
Total assets		$	716,428			$	662,451
Liabilities
	Term loan		$	144,107			$	143,939
	Unearned premiums			131,916				90,773
	Accounts payable and accrued expenses			15,502				22,725
	Reserve for insurance claims and claim expenses			1,475				679
	Warrant liability, at fair value			856				1,467
	Deferred tax			137				137
Total liabilities			293,993				259,720
Commitments and contingencies
Shareholders' equity
	Common stock - class A shares, $0.01 par value; 59,128,011 and 58,807,825 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively (250,000,000 shares authorized)			591				588
	Additional paid-in capital			573,342				570,340
	Accumulated other comprehensive income (loss), net of tax			11,121				(7,474	)
	Accumulated deficit			(162,619	)			(160,723	)
Total shareholders' equity			422,435				402,731
Total liabilities and shareholders' equity		$	716,428			$	662,451

Historical Quarterly Data		2016			2015
		June 30			March 31			December 31			September 30			June 30			March 31
Revenues		(In Thousands, except for share data)
	Net premiums written		$	48,862			$	38,129			$	45,582			$	35,360			$	20,347			$	12,921
	Increase in unearned premiums			(22,821	)			(18,322	)			(28,702	)			(22,526	)			(11,491	)			(5,985	)
	Net premiums earned			26,041				19,807				16,880				12,834				8,856				6,936
	Net investment income			3,342				3,231				2,078				1,884				1,688				1,596
	Net realized investment gains
	(losses)			61				(885	)			(121	)			(15	)			354				613
	Other revenues			37				32				25				-				-				-
Total revenues			29,481				22,185				18,862				14,703				10,898				9,145
Expenses
	Insurance claims and claims expenses			470				458				371				181				(6	)			104
	Underwriting and operating expenses			23,234				22,672				21,686				19,653				20,910				18,350
Total expenses			23,704				23,130				22,057				19,834				20,904				18,454
Other (expense) income (1)			(3,766	)			(2,962	)			(1,626	)			332				(106	)			1,248
Income (loss) before income taxes			2,011				(3,907	)			(4,821	)			(4,799	)			(10,112	)			(8,061	)
	Income tax expense (benefit)			-				-				-				-				241				(241	)
Net income (loss)		$	2,011			$	(3,907	)		$	(4,821	)		$	(4,799	)		$	(10,353	)		$	(7,820	)
Earnings (loss) per share
	Basic		$	0.03			$	(0.07	)		$	(0.08	)		$	(0.08	)		$	(0.18	)		$	(0.13	)
	Diluted			0.03				(0.07	)			(0.08	)			(0.08	)			(0.18	)			(0.13	)
Weighted average common shares
outstanding
Basic			59,105,613				58,936,694				58,781,566				58,741,328				58,720,095				58,485,899
Diluted			59,830,899				58,936,694				58,781,566				58,741,328				58,720,095				58,485,899
Other data
Loss Ratio (2)			2	%			2	%			2	%			1	%			-	%			1	%
Expense Ratio (3)			89	%			114	%			128	%			153	%			236	%			265	%
Combined ratio			91	%			117	%			131	%			155	%			236	%			266	%

(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
		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015		June 30 2015		March 31, 2015
		(In Millions)
Monthly		$	3,700		$	2,492		$	2,029		$	1,582		$	1,460		$	919
Single			2,138			1,762			2,518			2,051			1,089			777
Primary		$	5,838		$	4,254		$	4,547		$	3,633		$	2,549		$	1,696
Primary and pool IIF		As of
		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015		June 30 2015		March 31, 2015
		(In Millions)
Monthly		$	12,529		$	9,210		$	6,958		$	5,087		$	3,617		$	2,259
Single			11,095			9,354			7,866			5,514			3,573			2,576
Primary			23,624			18,564			14,824			10,601			7,190			4,835
Pool			3,999			4,136			4,238			4,340			4,476			4,621
Total		$	27,623		$	22,700		$	19,062		$	14,941		$	11,666		$	9,457

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
		June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015
		($ Values In Millions)
New insurance written		$	5,838			$	4,254			$	4,547			$	3,633			$	2,549			$	1,696
New risk written			1,411				1,016				1,105				887				615				396
Insurance in force (1)			23,624				18,564				14,824				10,601				7,190				4,835
Risk in force (1)			5,721				4,487				3,586				2,553				1,715				1,146
Policies in force (count) (1)			100,547				79,700				63,948				46,175				31,682				21,225
Weighted-average coverage (2)			24.2	%			24.2	%			24.2	%			24.1	%			23.9	%			23.7	%
Loans in default (count)			79				55				36				20				9				6
Percentage of loans in default			0.1	%			0.1	%			0.1	%			-	%			-	%			-	%
Risk in force on defaulted
loans		$	4			$	3			$	2			$	1			$	1			$	-
Average premium yield (3)			0.47	%			0.45	%			0.49	%			0.52	%			0.51	%			0.55	%
Annual persistency (4)			83.3	%			82.7	%			79.6	%			71.6	%			65.5	%			59.2	%

(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 by average 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, LTV, and purchase/refinance mix.
Primary NIW by FICO		Three months ended
		June 30, 2016			March 31, 2016			June 30, 2015
		(In Millions)
	> = 760		$	3,160			$	2,283			$	1,182
	740-759			961				712				377
	720-739			672				473				422
	700-719			541				411				242
	680-699			308				245				203
	< =679			196				130				123
Total		$	5,838			$	4,254			$	2,549
Primary NIW by LTV		Three months ended
		June 30, 2016			March 31, 2016			June 30, 2015
		(In Millions)
	95.01% and above		$	362			$	209			$	84
	90.01% to 95.00%			2,633				1,816				1,149
	85.01% to 90.00%			1,732				1,420				842
	85.00% and below			1,111				809				474
Total		$	5,838			$	4,254			$	2,549
Primary NIW by purchase/refinance mix		Three months ended
		June 30, 2016			March 31, 2016			June 30, 2015
		(In Millions)
	Purchase		$	4,199			$	2,919			$	1,619
	Refinance			1,639				1,335				930
Total		$	5,838			$	4,254			$	2,549
The tables below show the primary weighted average FICO and the weighted average loan-to-value ratio (LTV), by policy type, for NIW in the quarters presented.
Weighted Average FICO
		June 30, 2016			March 31, 2016			June 30, 2015
Monthly			752				753				742
Single			762				759				760
Weighted Average LTV
		June 30, 2016			March 31, 2016			June 30, 2015
Monthly			92	%			92	%			92	%
Single			91				91				91

The table below reflects a summary of our primary IIF and RIF by book year.
Primary IIF and RIF				As of June 30, 2016
				IIF		RIF
				(In Millions)
June 30, 2016					$	9,951		$	2,393
2015						11,348			2,762
2014						2,266			552
2013						59			14
Total					$	23,624		$	5,721
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
		June 30, 2016		March 31, 2016		June 30, 2015
		(In Millions)
	> = 760		$	11,929		$	9,146		$	3,323
	740-759			3,876			3,045			1,153
	720-739			3,082			2,515			1,109
	700-719			2,341			1,877			706
	680-699			1,561			1,305			595
	< =679			835			676			304
Total		$	23,624		$	18,564		$	7,190
Primary RIF by FICO		As of
		June 30, 2016		March 31, 2016		June 30, 2015
		(In Millions)
	> = 760		$	2,895		$	2,206		$	772
	740-759			951			747			276
	720-739			750			614			273
	700-719			566			453			173
	680-699			369			312			147
	< =679			190			155			74
Total		$	5,721		$	4,487		$	1,715
Primary Average Loan Size by FICO		As of
		June 30, 2016		March 31, 2016		June 30, 2015
		(In Millions)
	> = 760		$	249		$	247		$	241
	740-759			239			237			233
	720-739			234			232			227
	700-719			232			229			221
	680-699			223			220			217
	< =679			209			206			205

Primary IIF by LTV					As of
		June 30, 2016			March 31, 2016			June 30, 2015
		(In Millions)
	95.01% and above		$	1,049			$	699			$	122
	90.01% to 95.00%			10,574				8,220				3,132
	85.01% to 90.00%			7,754				6,326				2,534
	85.00% and below			4,247				3,319				1,402
Total		$	23,624			$	18,564			$	7,190
Primary RIF by LTV					As of
		June 30, 2016			March 31, 2016			June 30, 2015
		(In Millions)
	95.01% and above		$	293			$	196			$	36
	90.01% to 95.00%			3,116				2,423				927
	85.01% to 90.00%			1,838				1,498				598
	85.00% and below			474				370				154
Total		$	5,721			$	4,487			$	1,715
Primary RIF by Loan Type					As of
		June 30, 2016			March 31, 2016			June 30, 2015
	Fixed			98	%			98	%			97	%
	Adjustable rate mortgages:
		Less than five years			-				-				-
		Five years and longer			2				2				3
Total			100	%			100	%			100	%

As of June 30, 2016 and June 30, 2015, 100% 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
		June 30, 2016			March 31, 2016			June 30, 2015
		(In Millions)
IIF, beginning of period		$	18,564			$	14,824			$	4,835
	NIW			5,838				4,254				2,548
	Cancellations and other reductions			(778	)			(514	)			(193	)
IIF, end of period		$	23,624			$	18,564			$	7,190

Geographic Dispersion
The following table shows the distribution by state of our primary RIF.
Top 10 primary RIF by state		As of
		June 30, 2016			March 31, 2016			June 30, 2015
California		13.0	%		13.2	%		13.6	%
Texas		6.8			6.8			7.4
Virginia		6.4			5.8			5.3
Florida		5.0			5.3			4.8
Colorado		4.1			4.3			4.2
Michigan		4.1			4.1			3.6
Arizona		3.8			3.8			3.7
Pennsylvania		3.5			3.5			3.3
Maryland		3.4			3.6			3.5
North Carolina		3.4			3.1			2.1
Total		53.5	%		53.5	%		51.5	%

The following table shows portfolio data by origination year.

Origination year		As of June 30, 2016
		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		$	59		36	%		655		289		-		1		-	%		0.2	%
2014			3,451			2,266		66	%		14,786		10,640		30		2		2.0	%		-	%
2015			12,422			11,348		91	%		52,550		49,180		47		2		1.9	%		0.4	%
2016 (through June 30)			10,092			9,951		99	%		40,862		40,438		2		-		0.2	%		-	%
Total		$	26,127		$	23,624					108,853		100,547		79		5

(1)		The ratio of total losses incurred (paid and reserved) divided by the total premiums earned.
(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:
		Three months ended			Six months ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
		(In Thousands)
Beginning balance		$	1,137			$	187			$	679			$	83
Add claims incurred:
	Claims and claim expenses incurred:
		Current year			560				59				1,113				139
		Prior years			(90	)			(65	)			(185	)			(41	)
Total claims and claims expenses incurred			470				(6	)			928				98
Less claims paid:
	Claims and claim expenses paid:
		Current year			-				-				-				-
		Prior years			132				-				132				-
Total claims and claim expenses paid			132				-				132				-
Balance, June 30		$	1,475			$	181			$	1,475			$	181

The following table provides a reconciliation of the beginning and ending count of loans in default.
		Three months ended			Six months ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Beginning default inventory			55				6				36				4
Plus: new defaults			50				5				89				10
Less: cures			(23	)			(2	)			(43	)			(5	)
Less: claims paid			(3	)			-				(3	)			-
Ending default inventory			79				9				79				9
The following tables provide details of our claims and reserves.
		Three months ended			Six months ended
		June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
		($ Values In Thousands)
Number of claims paid			3				-				3				-
Total amount paid for claims		$	132			$	-			$	132			$	-
Average amount paid per claim		$	44			$	-			$	44			$	-
Severity			71	%			-				71	%			-

Average reserve per default:			As of June 30, 2016		As of June 30, 2015
			(In Thousands)
Case			$	17		$	19
IBNR				1			1
Total			$	18		$	20

The following table provides a trended comparison of the PMIERs financial requirements as reported by National MI.
		As of
		June 30, 2016			March 31, 2016			June 30, 2015
							(In thousands	)
Available Assets		$	432,074			$	434,138			$	431,411
Risk-Based Required Assets			377,468				302,852				249,805
Asset charge % (1)			6.10	%			6.12	%			6.17	%

(1)		Asset charge represents the risk based required asset amount 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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