NMI Holdings, Inc. Enters Into New Quota Share Reinsurance Arrangement
June 01 2020 - 8:00AM
NMI Holdings, Inc. (Nasdaq: NMIH) today announced that National
Mortgage Insurance Corporation (National MI), its wholly-owned
insurance subsidiary, has entered into a new quota share
reinsurance arrangement, subject to customary approvals, with a
broad panel of highly rated reinsurers.
Under the new agreement, National MI will cede, subject to
certain limitations, exclusions, and conditions, 10.5% of its
primary new insurance written for the period from April 1, 2020
through December 31, 2020. The ceded percentage may be
increased with additions to the reinsurance panel. The
company will receive a ceding commission equal to 20% of ceded
premiums, as well as a profit commission of up to 50% of ceded
premiums, reduced by any losses ceded under the
agreement.
Adam Pollitzer, Chief Financial Officer of National MI, said,
“We are pleased with our ability to secure additional reinsurance
capacity at this time. This transaction builds upon the
success we have achieved in the risk transfer markets to date and
is particularly valuable in light of the COVID-19 outbreak. Our
ability to secure coverage in the current environment broadly
demonstrates the durability of reinsurance markets as a source of
support for mortgage insurance risk and highlights the confidence
that our reinsurance partners have in our front-end pricing and
credit risk management approach. This treaty provides us with
an expanded ability to pursue incremental, high-quality new
business production and support our lender customers and their
borrowers in the current market.”
About National MINational
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 StatementsCertain statements contained in
this press release or any other written or oral statements made by
or on behalf of the Company in connection therewith may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), Section
21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the U.S. Private Securities Litigation Reform
Act of 1995 (the "PSLRA"). The PSLRA provides a "safe harbor"
for any forward-looking statements. All statements other than
statements of historical fact included in or incorporated by
reference in this release are forward-looking statements, including
any statements about our expectations, outlook, beliefs, plans,
predictions, forecasts, objectives, assumptions or future events or
performance. These statements are often, but not always, made
through the use of words or phrases such as "anticipate,"
"believe," "can," "could," "may," "predict," "assume," "potential,"
"should," "will," "estimate," "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 Item 1A of Part II
of our Quarterly Report on Form 10-Q for the quarter ended March
31, 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.
Investor ContactJohn M.
SwensonVice President, Investor Relations and
Treasuryjohn.swenson@nationalmi.com(510) 788-8417
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