NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of
$75.4 million, or $0.86 per diluted share, for the second quarter
ended June 30, 2022, which compares to $67.7 million, or $0.77 per
diluted share, in the first quarter ended March 31, 2022 and $57.5
million, or $0.65 per diluted share, in the second quarter ended
June 30, 2021. Adjusted net income for the quarter was $74.3
million, or $0.86 per diluted share, which compares to $67.5
million, or $0.77 per diluted share, in the first quarter ended
March 31, 2022 and $58.1 million, or $0.67 per diluted share, in
the second quarter ended June 30, 2021. The non-GAAP financial
measures adjusted net income, adjusted diluted earnings per share
and adjusted return on equity are presented in this release to
enhance the comparability of financial results between periods. See
"Use of Non-GAAP Financial Measures" and our reconciliation of such
measures to their most comparable GAAP measures, below.
Adam Pollitzer, President and Chief Executive
Officer of National MI, said, “We delivered resoundingly strong
results in the second quarter, with significant new business
production and increasing persistency driving growth in our
high-quality insured portfolio, and favorable credit performance
and expense discipline driving record profitability and strong
returns. We have long been successful managing National MI with
discipline and a focus on through-the-cycle performance, and are
taking steps to further insulate our business from the impact of
any economic volatility that may emerge. Looking forward, we're
well positioned to continue to serve our customers and their
borrowers, drive growth in our high-quality insured portfolio and
deliver strong performance for our shareholders.”
The company also announced today that it has
entered into a new quota share reinsurance agreement, primarily
covering a seasoned pool of existing mortgage insurance policies
that were previously ceded under its 2017 and 2020-1 ILN
transactions.
Selected second quarter 2022 highlights
include:
- Primary insurance-in-force at
quarter end was $168.6 billion, up 6% from $158.9 billion in the
first quarter and 23% compared to $136.6 billion in the second
quarter of 2021
- Net premiums earned were $120.9
million, up 4% from $116.5 million in the first quarter and 9%
compared to $110.9 million in the second quarter of 2021
- Underwriting and operating expenses
were $30.7 million, down 7% from $32.9 million in the first quarter
and 12% compared to $34.7 million in the second quarter of
2021
- Insurance claims and claim expenses
was a benefit of $3.0 million, compared to a benefit of $0.6
million in the first quarter and an expense of $4.6 million in the
second quarter of 2021
- Shareholders’ equity was $1.5
billion at quarter end and book value per share was $18.01. Book
value per share excluding the impact of net unrealized gains and
losses in the investment portfolio was $19.91, up 5% compared to
$18.97 per share in the first quarter and 19% compared to $16.71
per share in the second quarter of 2021
- Annualized return on equity for the
quarter was 19.7% and annualized adjusted return on equity was
19.4%
- At quarter-end, total PMIERs
available assets were $2.2 billion and net risk-based required
assets were $1.2 billion
|
|
Quarter Ended |
Quarter Ended |
Quarter Ended |
Change(1) |
Change(1) |
|
|
6/30/2022 |
3/31/2022 |
6/30/2021 |
Q/Q |
Y/Y |
INSURANCE METRICS
($billions) |
Primary
Insurance-in-Force |
$ |
168.6 |
|
$ |
158.9 |
|
$ |
136.6 |
|
6 |
% |
23 |
% |
New Insurance
Written - NIW |
|
|
|
|
|
|
Monthly premium |
|
15.7 |
|
|
13.1 |
|
|
19.4 |
|
20 |
% |
(19 |
)% |
|
Single premium |
|
0.9 |
|
|
1.1 |
|
|
3.3 |
|
(14 |
)% |
(72 |
)% |
|
Total(2) |
|
16.6 |
|
|
14.2 |
|
|
22.8 |
|
17 |
% |
(27 |
)% |
|
|
|
|
|
|
|
|
FINANCIAL
HIGHLIGHTS (Unaudited, $millions, except per share amounts) |
|
|
|
|
|
|
|
Net Premiums
Earned |
|
120.9 |
|
|
116.5 |
|
|
110.9 |
|
4 |
% |
9 |
% |
Insurance Claims
and Claim (Benefits) Expenses |
|
(3.0 |
) |
|
(0.6 |
) |
|
4.6 |
|
390 |
% |
(165 |
)% |
Underwriting and
Operating Expenses |
|
30.7 |
|
|
32.9 |
|
|
34.7 |
|
(7 |
)% |
(12 |
)% |
Net Income |
|
75.4 |
|
|
67.7 |
|
|
57.5 |
|
11 |
% |
31 |
% |
Adjusted Net
Income |
|
74.3 |
|
|
67.5 |
|
|
58.1 |
|
10 |
% |
28 |
% |
Book Value per
Share (excluding net unrealized gains and losses)(3) |
|
19.91 |
|
|
18.97 |
|
|
16.71 |
|
5 |
% |
19 |
% |
Loss Ratio |
|
(2.5 |
)% |
|
(0.5 |
)% |
|
4.2 |
% |
|
|
|
Expense Ratio |
|
25.4 |
% |
|
28.3 |
% |
|
31.3 |
% |
|
|
(1) |
Percentages may not be replicated based on the rounded figures
presented in the table. |
(2) |
Total may not foot due to
rounding. |
(3) |
Book value per share (excluding
net unrealized gains and losses) is defined as total shareholder's
equity, excluding the after-tax effects of unrealized gains and
losses on our investment portfolio, divided by shares
outstanding. |
Conference Call and Webcast
Details The company will hold a conference call, which
will be webcast live today, August 2, 2022, at 2:00 p.m. Pacific
Time / 5:00 p.m. Eastern Time. The webcast will be available on the
company's website, www.nationalmi.com, in the "Investor Relations"
section. The conference call can also be accessed by dialing (877)
270-2148 in the U.S., or (412) 902-6510 internationally by
referencing NMI Holdings, Inc.
About NMI Holdings, Inc.
NMI Holdings, Inc. (NASDAQ: NMIH), is the parent
company of National Mortgage Insurance Corporation (National MI), a
U.S.-based, private mortgage insurance company enabling low down
payment borrowers to realize home ownership while protecting
lenders and investors against losses related to a borrower's
default. To learn more, please visit www.nationalmi.com.
Cautionary Note Regarding Forward-Looking
Statements
Certain statements contained in this press
release or any other written or oral statements made by or on
behalf of the Company in connection therewith may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), Section
21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the U.S. Private Securities Litigation Reform
Act of 1995 (the "PSLRA"). The PSLRA provides a "safe harbor" for
any forward-looking statements. All statements other than
statements of historical fact included in or incorporated by
reference in this release are forward-looking statements, including
any statements about our expectations, outlook, beliefs, plans,
predictions, forecasts, objectives, assumptions or future events or
performance. These statements are often, but not always, made
through the use of words or phrases such as "anticipate,"
"believe," "can," "could," "may," "predict," "assume," "potential,"
"should," "will," "estimate," "perceive," "plan," "project,"
"continuing," "ongoing," "expect," "intend" and similar words or
phrases. All forward-looking statements are only predictions and
involve estimates, known and unknown risks, assumptions and
uncertainties that may turn out to be inaccurate and could cause
actual results to differ materially from those expressed in them.
Many risks and uncertainties are inherent in our industry and
markets. Others are more specific to our business and operations.
Important factors that could cause actual events or results to
differ materially from those indicated in such statements include,
but are not limited to: uncertainty relating to the coronavirus
(“COVID-19”) pandemic and the measures taken by governmental
authorities and other third parties to contain the spread of
COVID-19, including their impact on the global economy, the U.S.
housing, real estate, housing finance and mortgage insurance
markets, and our business, operations and personnel; changes in the
charters, business practices, policy or priorities of Fannie Mae
and Freddie Mac (collectively, the GSEs), which may include
decisions that have the impact of decreasing or discontinuing the
use of mortgage insurance as credit enhancement generally, or with
first time homebuyers or on very high loan-to-value mortgages; or
changes in the direction of housing policy objectives of the
Federal Housing Finance Agency (“FHFA”), such as the FHFA's
priority to increase the accessibility to and affordability of
homeownership for low-and-moderate income borrowers and
underrepresented communities; our ability to remain an eligible
mortgage insurer under the private mortgage insurer eligibility
requirements (“PMIERs”) and other requirements imposed by the GSEs,
which they may change at any time; retention of our existing
certificates of authority in each state and the District of
Columbia (“D.C.”) and our ability to remain a mortgage insurer in
good standing in each state and D.C.; our future profitability,
liquidity and capital resources; actions of existing competitors,
including other private mortgage insurers and government mortgage
insurers such as the Federal Housing Administration, the U.S.
Department of Agriculture's Rural Housing Service and the U.S.
Department of Veterans Affairs, and potential market entry by new
competitors or consolidation of existing competitors; developments
in the world's financial, capital and credit markets and our access
to such markets, including reinsurance; adoption of new or changes
to existing laws, rules and regulations that impact our business or
financial condition directly or the mortgage insurance industry
generally or their enforcement and implementation by regulators,
including the implementation of the final rules defining and/or
concerning "Qualified Mortgage" and "Qualified Residential
Mortgage"; U.S. federal tax reform and other potential changes in
tax law and their impact on us and our operations; legislative or
regulatory changes to the GSEs' role in the secondary mortgage
market or other changes that could affect the residential mortgage
industry generally or mortgage insurance industry in particular;
potential legal and regulatory claims, investigations, actions,
audits or inquiries that could result in adverse judgements,
settlements, fines or other reliefs that could require significant
expenditures or have other negative effects on our business;
changes in general economic, market and political conditions and
policies (including rising interest rates and inflation) and
investment results or other conditions that affect the 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; lenders, the GSEs, or other market
participants seeking alternatives to private mortgage insurance;
our ability to implement our business strategy, including our
ability to write mortgage insurance on high quality low down
payment residential mortgage loans, implement successfully and on a
timely basis, complex infrastructure, systems, procedures, and
internal controls to support our business and regulatory and
reporting requirements of the insurance industry; our ability to
attract and retain a diverse customer base, including the largest
mortgage originators; failure of risk management or pricing or
investment strategies; decrease in the length of time our insurance
policies are in force; emergence of unexpected claim and coverage
issues, including claims exceeding our reserves or amounts we had
expected to experience; potential adverse impacts arising from
natural disasters (including those that may be caused or
exacerbated by climate change), 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;
potential adverse impacts arising from the occurrence of any
man-made disasters or public health emergencies, including
pandemics; the inability of our counter-parties, including third
party reinsurers, to meet their obligations to us; failure to
maintain, improve and continue to develop necessary information
technology systems or the failure of technology providers to
perform; effectiveness and security of our information technology
systems and digital products and services, including the risks
these systems, products or services may fail to operate as expected
or planned, or expose us to cybersecurity or third-party risks
(including the exposure of our confidential customer and other
confidential information); and ability to recruit, train and retain
key personnel. These risks and uncertainties also include, but are
not limited to, those set forth under the heading "Risk Factors"
detailed in Item 1A of Part I of our Annual Report on Form 10-K for
the year ended December 31, 2021, as subsequently updated through
other reports we file with the SEC. All subsequent written and oral
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
these cautionary statements. We caution you not to place undue
reliance on any forward-looking statement, which speaks only as of
the date on which it is made, and we undertake no obligation to
publicly update or revise any forward-looking statement to reflect
new information, future events or circumstances that occur after
the date on which the statement is made or to reflect the
occurrence of unanticipated events except as required by law.
Use of Non-GAAP Financial Measures
We believe the use of the non-GAAP measures of
adjusted income before tax, adjusted net income, adjusted diluted
EPS, adjusted return-on-equity, adjusted expense ratio, adjusted
combined ratio and book value per share (excluding net unrealized
gains and losses) and enhances the comparability of our fundamental
financial performance between periods, and provides relevant
information to investors. These non-GAAP financial measures align
with the way the company's business performance is evaluated by
management. These measures are not prepared in accordance with GAAP
and should not be viewed as alternatives to GAAP measures of
performance. These measures have been presented to increase
transparency and enhance the comparability of our fundamental
operating trends across periods. Other companies may calculate
these measures differently; their measures may not be comparable to
those we calculate and present.
Adjusted income before tax is
defined as GAAP income before tax, excluding the pre-tax effects of
the gain or loss related to the change in fair value of our warrant
liability, periodic costs incurred in connection with capital
markets transactions, net realized gains or losses from our
investment portfolio, and other infrequent, unusual or
non-operating items in the periods in which such items are
incurred.
Adjusted net income is defined
as GAAP net income, excluding the after-tax effects of the gain or
loss related to the change in fair value of our warrant liability,
periodic costs incurred in connection with capital markets
transactions, net realized gains or losses from our investment
portfolio, and other infrequent, unusual or non-operating items in
the periods in which such items are incurred. Adjustments to
components of pre-tax income are tax effected using the applicable
federal statutory tax rate for the respective periods.
Adjusted diluted EPS is defined
as adjusted net income divided by adjusted weighted average diluted
shares outstanding. Adjusted weighted average diluted shares
outstanding is defined as weighted average diluted shares
outstanding, adjusted for changes in the dilutive effect of
non-vested shares that would otherwise have occurred had GAAP net
income been calculated in accordance with adjusted net income.
There will be no adjustment to weighted average diluted shares
outstanding in the periods that non-vested shares are anti-dilutive
under GAAP.
Adjusted return on equity is
calculated by dividing adjusted net income on an annualized basis
by the average shareholders' equity for the period.
Adjusted expense ratio is
defined as GAAP underwriting and operating expenses, excluding the
pre-tax effects of periodic costs incurred in connection with
capital markets transactions, divided by net premiums earned.
Adjusted combined ratio is
defined as the total of GAAP underwriting and operating expenses,
excluding the pre-tax effects of periodic costs incurred in
connection with capital markets transactions and insurance claims
and claims expenses, divided by net premiums earned.
Book value per share (excluding net
unrealized gains and losses) is defined as total
shareholder's equity, excluding the after-tax effects of unrealized
gains and losses on investments, divided by shares outstanding.
Although adjusted income before tax, adjusted
net income, adjusted diluted EPS, adjusted return-on-equity,
adjusted expense ratio, adjusted combined ratio and book value per
share (excluding net unrealized gains and losses) exclude certain
items that have occurred in the past and are expected to occur in
the future, the excluded items: (1) are not viewed as part of the
operating performance of our primary activities; or (2) are
impacted by market, economic or regulatory factors and are not
necessarily indicative of operating trends, or both. These
adjustments, and the reasons for their treatment, are described
below.
(1) |
Change in fair value of warrant liability. Outstanding warrants at
the end of each reporting period are revalued, and any change in
fair value is reported in the statement of operations in the period
in which the change occurred. The change in fair value of our
warrant liability can vary significantly across periods and is
influenced principally by equity market and general economic
factors that do not impact or reflect our current period operating
results. Furthermore, all unexercised warrants expired in April
2022 and, as such, no change in fair value will be recognized in
future reporting periods. We believe trends in our operating
performance can be more clearly identified by excluding
fluctuations related to the change in fair value of our warrant
liability. |
|
|
(2) |
Capital markets transaction costs. Capital markets transaction
costs result from activities that are undertaken to improve our
debt profile or enhance our capital position through activities
such as debt refinancing and capital markets reinsurance
transactions that may vary in their size and timing due to factors
such as market opportunities, tax and capital profile, and overall
market cycles. |
|
|
(3) |
Net realized investment gains and losses. The recognition of the
net realized investment gains or losses can vary significantly
across periods as the timing is highly discretionary and is
influenced by factors such as market opportunities, tax and capital
profile, and overall market cycles that do not reflect our current
period operating results. |
|
|
(4) |
Other infrequent, unusual or non-operating items. Items that are
the result of unforeseen or uncommon events, and are not expected
to recur with frequency in the future. Identification and exclusion
of these items provides clarity about the impact special or rare
occurrences may have on our current financial performance. Past
adjustments under this category include infrequent, unusual or
non-operating adjustments related to severance, restricted stock
modification and other expenses incurred in connection with the CEO
transition announced in September 2021 and the effects of the
release of the valuation allowance recorded against our net federal
and certain state net deferred tax assets in 2016 and the
re-measurement of our net deferred tax assets in connection with
tax reform in 2017. We believe such items are infrequent or
non-recurring in nature, and are not indicative of the performance
of, or ongoing trends in, our primary operating activities or
business. |
|
|
(5) |
Net unrealized gains and losses on investments. The recognition of
the net unrealized gains or losses on investment can vary
significantly across periods and is influenced by factors such as
interest rate movement, overall market and economic conditions, and
tax and capital profiles. These valuation adjustments may not
necessarily result in economic gains or losses and not reflective
of ongoing operations. Trends in the profitability of our
fundamental operating activities can be more clearly identified
without the fluctuations of these unrealized gains or losses. |
Investor ContactJohn M.
SwensonVice President, Investor Relations and
Treasuryjohn.swenson@nationalmi.com(510) 788-8417
Consolidated
statements of operations and comprehensive income (loss)
(unaudited) |
For the three months ended June 30, |
|
For the six months ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Revenues |
(In Thousands, except for per share data) |
Net premiums earned |
$ |
120,870 |
|
|
$ |
110,888 |
|
|
$ |
237,365 |
|
|
$ |
216,767 |
|
Net investment income |
|
10,921 |
|
|
|
9,382 |
|
|
|
21,120 |
|
|
|
18,196 |
|
Net realized investment gains |
|
53 |
|
|
|
12 |
|
|
|
461 |
|
|
|
12 |
|
Other revenues |
|
376 |
|
|
|
483 |
|
|
|
715 |
|
|
|
984 |
|
Total revenues |
|
132,220 |
|
|
|
120,765 |
|
|
|
259,661 |
|
|
|
235,959 |
|
Expenses |
|
|
|
|
|
|
|
Insurance claims and claim (benefits) expenses |
|
(3,036 |
) |
|
|
4,640 |
|
|
|
(3,655 |
) |
|
|
9,602 |
|
Underwriting and operating expenses |
|
30,700 |
|
|
|
34,725 |
|
|
|
63,635 |
|
|
|
68,790 |
|
Service expenses |
|
336 |
|
|
|
481 |
|
|
|
766 |
|
|
|
1,072 |
|
Interest expense |
|
8,051 |
|
|
|
7,922 |
|
|
|
16,092 |
|
|
|
15,837 |
|
Gain from change in fair value of warrant liability |
|
(1,020 |
) |
|
|
(658 |
) |
|
|
(1,113 |
) |
|
|
(453 |
) |
Total expenses |
|
35,031 |
|
|
|
47,110 |
|
|
|
75,725 |
|
|
|
94,848 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
97,189 |
|
|
|
73,655 |
|
|
|
183,936 |
|
|
|
141,111 |
|
Income tax expense |
|
21,745 |
|
|
|
16,133 |
|
|
|
40,812 |
|
|
|
30,697 |
|
Net income |
$ |
75,444 |
|
|
$ |
57,522 |
|
|
$ |
143,124 |
|
|
$ |
110,414 |
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
Basic |
$ |
0.88 |
|
|
$ |
0.67 |
|
|
$ |
1.67 |
|
|
$ |
1.29 |
|
Diluted |
$ |
0.86 |
|
|
$ |
0.65 |
|
|
$ |
1.63 |
|
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
Basic |
|
85,734 |
|
|
|
85,647 |
|
|
|
85,842 |
|
|
|
85,483 |
|
Diluted |
|
86,577 |
|
|
|
86,819 |
|
|
|
86,943 |
|
|
|
86,729 |
|
|
|
|
|
|
|
|
|
Loss ratio(1) |
|
(2.5 |
)% |
|
|
4.2 |
% |
|
|
(1.5 |
)% |
|
|
4.4 |
% |
Expense ratio(2) |
|
25.4 |
% |
|
|
31.3 |
% |
|
|
26.8 |
% |
|
|
31.7 |
% |
Combined ratio(3) |
|
22.9 |
% |
|
|
35.5 |
% |
|
|
25.3 |
% |
|
|
36.2 |
% |
|
|
|
|
|
|
|
|
Net income |
$ |
75,444 |
|
|
$ |
57,522 |
|
|
$ |
143,124 |
|
|
$ |
110,414 |
|
Other comprehensive (loss)
income, net of tax: |
|
|
|
|
|
|
|
Unrealized (losses) gains in
accumulated other comprehensive income (loss), net of tax (benefit)
expense of $(17,004) and $4,995 for the three months ended June 30,
2022 and 2021, and $(43,180) and $(7,003) for the six month ended
June 30, 2022 and 2021, respectively |
|
(63,967 |
) |
|
|
18,790 |
|
|
|
(162,438 |
) |
|
|
(26,343 |
) |
Reclassification adjustment
for realized gains included in net income, net of tax expense of
$11 and $3 for the three months ended June 30, 2022 and 2021, and
$97 and $3 for the six months ended June 30, 2022 and 2021,
respectively |
|
(44 |
) |
|
|
(10 |
) |
|
|
(367 |
) |
|
|
(10 |
) |
Other comprehensive (loss)
income, net of tax |
|
(64,011 |
) |
|
|
18,780 |
|
|
|
(162,805 |
) |
|
|
(26,353 |
) |
Comprehensive income
(loss) |
$ |
11,433 |
|
|
$ |
76,302 |
|
|
$ |
(19,681 |
) |
|
$ |
84,061 |
|
(1) |
Loss ratio is calculated by dividing insurance claims and claim
expenses by net premiums earned. |
(2) |
Expense ratio is calculated by
dividing other underwriting and operating expenses by net premiums
earned. |
(3) |
Combined ratio may not foot due
to rounding. |
Consolidated balance
sheets (unaudited) |
June 30, 2022 |
|
December 31, 2021 |
Assets |
(In Thousands, except for share data) |
Fixed maturities, available-for-sale, at fair value (amortized cost
of $2,218,344 and $2,078,773 as of June 30, 2022 and December 31,
2021, respectively) |
$ |
2,019,420 |
|
|
$ |
2,085,931 |
Cash and cash equivalents (including restricted cash of $2,152 and
$3,165 as of June 30, 2022 and December 31, 2021,
respectively) |
|
72,398 |
|
|
|
76,646 |
Premiums receivable |
|
63,708 |
|
|
|
60,358 |
Accrued investment income |
|
12,430 |
|
|
|
11,900 |
Prepaid expenses |
|
4,994 |
|
|
|
3,530 |
Deferred policy acquisition costs, net |
|
59,768 |
|
|
|
59,584 |
Software and equipment, net |
|
32,071 |
|
|
|
32,047 |
Intangible assets and goodwill |
|
3,634 |
|
|
|
3,634 |
Prepaid reinsurance premiums |
|
1,711 |
|
|
|
2,393 |
Reinsurance recoverable |
|
19,588 |
|
|
|
20,320 |
Other assets |
|
102,566 |
|
|
|
94,238 |
Total assets |
$ |
2,392,288 |
|
|
$ |
2,450,581 |
|
|
|
|
Liabilities |
|
|
|
Debt |
$ |
395,323 |
|
|
$ |
394,623 |
Unearned premiums |
|
135,681 |
|
|
|
139,237 |
Accounts payable and accrued expenses |
|
58,947 |
|
|
|
72,000 |
Reserve for insurance claims and claim expenses |
|
98,462 |
|
|
|
103,551 |
Reinsurance funds withheld |
|
4,489 |
|
|
|
5,601 |
Warrant liability, at fair value |
|
— |
|
|
|
2,363 |
Deferred tax liability, net |
|
161,658 |
|
|
|
164,175 |
Other liabilities |
|
12,636 |
|
|
|
3,245 |
Total liabilities |
|
867,196 |
|
|
|
884,795 |
|
|
|
|
Shareholders' equity |
|
|
|
Common stock - class A shares, $0.01 par value; 86,375,154 shares
issued and 84,701,092 shares outstanding as of June 30, 2022 and
85,792,849 shares issued and outstanding as of December 31, 2021
(250,000,000 shares authorized) |
|
864 |
|
|
|
858 |
Additional paid-in capital |
|
964,654 |
|
|
|
955,302 |
Treasury Stock, at cost: 1,674,062 and 0 common shares as of June
30, 2022 and December 31, 2021, respectively |
|
(30,371 |
) |
|
|
— |
Accumulated other comprehensive (loss) income, net of tax |
|
(161,320 |
) |
|
|
1,485 |
Retained earnings |
|
751,265 |
|
|
|
608,141 |
Total shareholders'
equity |
|
1,525,092 |
|
|
|
1,565,786 |
Total liabilities and
shareholders' equity |
$ |
2,392,288 |
|
|
$ |
2,450,581 |
Non-GAAP
Financial Measure Reconciliations (unaudited) |
|
As of and for the three months ended |
|
For the six months ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
6/30/2022 |
|
6/30/2021 |
As
Reported |
(In Thousands, except for per share data) |
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
120,870 |
|
|
$ |
116,495 |
|
|
$ |
110,888 |
|
|
$ |
237,365 |
|
|
$ |
216,767 |
|
Net investment income |
|
10,921 |
|
|
|
10,199 |
|
|
|
9,382 |
|
|
|
21,120 |
|
|
|
18,196 |
|
Net realized investment gains |
|
53 |
|
|
|
408 |
|
|
|
12 |
|
|
|
461 |
|
|
|
12 |
|
Other revenues |
|
376 |
|
|
|
339 |
|
|
|
483 |
|
|
|
715 |
|
|
|
984 |
|
Total revenues |
|
132,220 |
|
|
|
127,441 |
|
|
|
120,765 |
|
|
|
259,661 |
|
|
|
235,959 |
|
Expenses |
|
|
|
|
|
|
|
|
|
Insurance claims and claim (benefits) expenses |
|
(3,036 |
) |
|
|
(619 |
) |
|
|
4,640 |
|
|
|
(3,655 |
) |
|
|
9,602 |
|
Underwriting and operating expenses |
|
30,700 |
|
|
|
32,935 |
|
|
|
34,725 |
|
|
|
63,635 |
|
|
|
68,790 |
|
Service expenses |
|
336 |
|
|
|
430 |
|
|
|
481 |
|
|
|
766 |
|
|
|
1,072 |
|
Interest expense |
|
8,051 |
|
|
|
8,041 |
|
|
|
7,922 |
|
|
|
16,092 |
|
|
|
15,837 |
|
Gain from change in fair value of warrant liability |
|
(1,020 |
) |
|
|
(93 |
) |
|
|
(658 |
) |
|
|
(1,113 |
) |
|
|
(453 |
) |
Total expenses |
|
35,031 |
|
|
|
40,694 |
|
|
|
47,110 |
|
|
|
75,725 |
|
|
|
94,848 |
|
Income before income
taxes |
|
97,189 |
|
|
|
86,747 |
|
|
|
73,655 |
|
|
|
183,936 |
|
|
|
141,111 |
|
Income tax expense |
|
21,745 |
|
|
|
19,067 |
|
|
|
16,133 |
|
|
|
40,812 |
|
|
|
30,697 |
|
Net
income |
$ |
75,444 |
|
|
$ |
67,680 |
|
|
$ |
57,522 |
|
|
$ |
143,124 |
|
|
$ |
110,414 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Net realized investment
gains |
|
(53 |
) |
|
|
(408 |
) |
|
|
(12 |
) |
|
|
(461 |
) |
|
|
(12 |
) |
Gain from change in fair value
of warrant liability |
|
(1,020 |
) |
|
|
(93 |
) |
|
|
(658 |
) |
|
|
(1,113 |
) |
|
|
(453 |
) |
Capital markets transaction
costs |
|
(55 |
) |
|
|
260 |
|
|
|
1,615 |
|
|
|
205 |
|
|
|
1,993 |
|
Adjusted income before
taxes |
|
96,061 |
|
|
|
86,506 |
|
|
|
74,600 |
|
|
|
182,567 |
|
|
|
142,639 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense on
adjustments(1) |
|
(23 |
) |
|
|
(31 |
) |
|
|
337 |
|
|
|
(54 |
) |
|
|
416 |
|
Adjusted net
income |
$ |
74,339 |
|
|
$ |
67,470 |
|
|
$ |
58,130 |
|
|
$ |
141,809 |
|
|
$ |
111,526 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares outstanding |
|
86,577 |
|
|
|
87,310 |
|
|
|
86,819 |
|
|
|
86,943 |
|
|
|
86,729 |
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
$ |
0.86 |
|
|
$ |
0.77 |
|
|
$ |
0.65 |
|
|
$ |
1.63 |
|
|
$ |
1.27 |
|
Adjusted diluted
EPS |
$ |
0.86 |
|
|
$ |
0.77 |
|
|
$ |
0.67 |
|
|
$ |
1.63 |
|
|
$ |
1.29 |
|
|
|
|
|
|
|
|
|
|
|
Return-on-equity |
|
19.7 |
% |
|
|
17.5 |
% |
|
|
16.2 |
% |
|
|
18.5 |
% |
|
|
15.6 |
% |
Adjusted
return-on-equity |
|
19.4 |
% |
|
|
17.4 |
% |
|
|
16.4 |
% |
|
|
18.4 |
% |
|
|
15.8 |
% |
|
|
|
|
|
|
|
|
|
|
Expense
ratio(2) |
|
25.4 |
% |
|
|
28.3 |
% |
|
|
31.3 |
% |
|
|
26.8 |
% |
|
|
31.7 |
% |
Adjusted expense
ratio(3) |
|
25.4 |
% |
|
|
28.0 |
% |
|
|
29.9 |
% |
|
|
26.7 |
% |
|
|
30.8 |
% |
|
|
|
|
|
|
|
|
|
|
Combined
ratio(4) |
|
22.9 |
% |
|
|
27.7 |
% |
|
|
35.5 |
% |
|
|
25.3 |
% |
|
|
36.2 |
% |
Adjusted combined
ratio(5) |
|
22.9 |
% |
|
|
27.5 |
% |
|
|
34.0 |
% |
|
|
25.2 |
% |
|
|
35.2 |
% |
|
|
|
|
|
|
|
|
|
|
Book value per
share(6) |
$ |
18.01 |
|
|
$ |
17.84 |
|
|
$ |
17.03 |
|
|
|
|
|
Book value per share
(excluding net unrealized gains and
losses)(7) |
$ |
19.91 |
|
|
$ |
18.97 |
|
|
$ |
16.71 |
|
|
|
|
|
(1) |
Marginal tax impact of non-GAAP adjustments is calculated based on
our statutory U.S. federal corporate income tax rate of 21%, except
for those items that are not eligible for an income tax deduction.
Such non-deductible items include gains or losses from the change
in the fair value of our warrant liability and certain costs
incurred in connection with the CEO transition, which are limited
under Section 162(m) of the Internal Revenue Code. |
(2) |
Expense ratio is calculated by dividing underwriting and operating
expenses by net premiums earned. |
(3) |
Adjusted expense ratio is calculated by dividing adjusted
underwriting and operating expense (underwriting and operating
expenses excluding costs related to capital markets reinsurance
transactions) by net premiums earned. |
(4) |
Combined ratio is calculated by dividing the total of underwriting
and operating expenses and insurance claims and claims expense by
net premiums earned. |
(5) |
Adjusted combined ratio is calculated by dividing the total of
adjusted underwriting and operating expenses (underwriting and
operating expenses excluding costs related to capital market
reinsurance transaction) and insurance claims and claims expense by
net premiums earned. |
(6) |
Book value per share is calculated by dividing total shareholder's
equity by shares outstanding. |
(7) |
Book value per share (excluding net unrealized gains and losses) is
defined as total shareholder's equity, excluding the after-tax
effects of unrealized gains and losses on our investment portfolio,
divided by shares outstanding. |
Historical Quarterly
Data |
2022 |
|
2021 |
|
June 30 |
|
March 31 |
|
December 31 |
|
September 30 |
|
June 30 |
|
March 31 |
Revenues |
(In Thousands, except for per share data) |
Net premiums earned |
$ |
120,870 |
|
|
$ |
116,495 |
|
|
$ |
113,933 |
|
|
$ |
113,594 |
|
|
$ |
110,888 |
|
|
$ |
105,879 |
|
Net investment income |
|
10,921 |
|
|
|
10,199 |
|
|
|
10,045 |
|
|
|
9,831 |
|
|
|
9,382 |
|
|
|
8,814 |
|
Net realized investment gains |
|
53 |
|
|
|
408 |
|
|
|
714 |
|
|
|
3 |
|
|
|
12 |
|
|
|
— |
|
Other revenues |
|
376 |
|
|
|
339 |
|
|
|
380 |
|
|
|
613 |
|
|
|
483 |
|
|
|
501 |
|
Total revenues |
|
132,220 |
|
|
|
127,441 |
|
|
|
125,072 |
|
|
|
124,041 |
|
|
|
120,765 |
|
|
|
115,194 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Insurance claims and claim (benefits) expenses |
|
(3,036 |
) |
|
|
(619 |
) |
|
|
(500 |
) |
|
|
3,204 |
|
|
|
4,640 |
|
|
|
4,962 |
|
Underwriting and operating expenses |
|
30,700 |
|
|
|
32,935 |
|
|
|
38,843 |
|
|
|
34,669 |
|
|
|
34,725 |
|
|
|
34,065 |
|
Service expenses |
|
336 |
|
|
|
430 |
|
|
|
650 |
|
|
|
787 |
|
|
|
481 |
|
|
|
591 |
|
Interest expense |
|
8,051 |
|
|
|
8,041 |
|
|
|
8,029 |
|
|
|
7,930 |
|
|
|
7,922 |
|
|
|
7,915 |
|
(Gain) loss from change in fair value of warrant liability |
|
(1,020 |
) |
|
|
(93 |
) |
|
|
(112 |
) |
|
|
— |
|
|
|
(658 |
) |
|
|
205 |
|
Total expenses |
|
35,031 |
|
|
|
40,694 |
|
|
|
46,910 |
|
|
|
46,590 |
|
|
|
47,110 |
|
|
|
47,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
97,189 |
|
|
|
86,747 |
|
|
|
78,162 |
|
|
|
77,451 |
|
|
|
73,655 |
|
|
|
67,456 |
|
Income tax expense |
|
21,745 |
|
|
|
19,067 |
|
|
|
17,639 |
|
|
|
17,258 |
|
|
|
16,133 |
|
|
|
14,565 |
|
Net income |
$ |
75,444 |
|
|
$ |
67,680 |
|
|
$ |
60,523 |
|
|
$ |
60,193 |
|
|
$ |
57,522 |
|
|
$ |
52,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.88 |
|
|
$ |
0.79 |
|
|
$ |
0.71 |
|
|
$ |
0.70 |
|
|
$ |
0.67 |
|
|
$ |
0.62 |
|
Diluted |
$ |
0.86 |
|
|
$ |
0.77 |
|
|
$ |
0.69 |
|
|
$ |
0.69 |
|
|
$ |
0.65 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
85,734 |
|
|
|
85,953 |
|
|
|
85,757 |
|
|
|
85,721 |
|
|
|
85,647 |
|
|
|
85,317 |
|
Diluted |
|
86,577 |
|
|
|
87,310 |
|
|
|
87,117 |
|
|
|
86,880 |
|
|
|
86,819 |
|
|
|
86,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other data |
|
|
|
|
|
|
|
|
|
|
|
Loss Ratio(1) |
|
(2.5 |
)% |
|
|
(0.5 |
)% |
|
|
(0.4 |
)% |
|
|
2.8 |
% |
|
|
4.2 |
% |
|
|
4.7 |
% |
Expense Ratio(2) |
|
25.4 |
% |
|
|
28.3 |
% |
|
|
34.1 |
% |
|
|
30.5 |
% |
|
|
31.3 |
% |
|
|
32.2 |
% |
Combined ratio(3) |
|
22.9 |
% |
|
|
27.7 |
% |
|
|
33.7 |
% |
|
|
33.3 |
% |
|
|
35.5 |
% |
|
|
36.9 |
% |
(1) |
Loss ratio is calculated by dividing insurance claims and claim
(benefit) expenses by net premiums earned. |
(2) |
Expense ratio is calculated by dividing underwriting and operating
expenses by net premiums earned. |
(3) |
Combined ratio may not foot due to rounding. |
Portfolio Statistics
The
table below highlights trends in our primary portfolio as of the
date and for the periods indicated.
Primary portfolio
trends |
As of and for the three months ended |
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
($ Values In Millions, except as noted below) |
New insurance written |
$ |
16,611 |
|
|
$ |
14,165 |
|
|
$ |
18,342 |
|
|
$ |
18,084 |
|
|
$ |
22,751 |
|
|
$ |
26,397 |
|
New risk written |
|
4,386 |
|
|
|
3,721 |
|
|
|
4,786 |
|
|
|
4,640 |
|
|
|
5,650 |
|
|
|
6,531 |
|
Insurance in force (IIF)(1) |
|
168,639 |
|
|
|
158,877 |
|
|
|
152,343 |
|
|
|
143,618 |
|
|
|
136,598 |
|
|
|
123,777 |
|
Risk in force(1) |
|
43,260 |
|
|
|
40,522 |
|
|
|
38,661 |
|
|
|
36,253 |
|
|
|
34,366 |
|
|
|
31,206 |
|
Policies in force (count)(1) |
|
551,543 |
|
|
|
526,976 |
|
|
|
512,316 |
|
|
|
490,714 |
|
|
|
471,794 |
|
|
|
436,652 |
|
Average loan size($ value in thousands)(1) |
$ |
306 |
|
|
$ |
301 |
|
|
$ |
297 |
|
|
$ |
293 |
|
|
$ |
290 |
|
|
$ |
283 |
|
Coverage percentage(2) |
|
25.7 |
% |
|
|
25.5 |
% |
|
|
25.4 |
% |
|
|
25.2 |
% |
|
|
25.2 |
% |
|
|
25.2 |
% |
Loans in default (count)(1) |
|
4,271 |
|
|
|
5,238 |
|
|
|
6,227 |
|
|
|
7,670 |
|
|
|
8,764 |
|
|
|
11,090 |
|
Default rate(1) |
|
0.77 |
% |
|
|
0.99 |
% |
|
|
1.22 |
% |
|
|
1.56 |
% |
|
|
1.86 |
% |
|
|
2.54 |
% |
Risk in force on defaulted loans(1) |
$ |
295 |
|
|
$ |
362 |
|
|
$ |
435 |
|
|
$ |
546 |
|
|
$ |
625 |
|
|
$ |
785 |
|
Net premium yield(3) |
|
0.30 |
% |
|
|
0.30 |
% |
|
|
0.31 |
% |
|
|
0.32 |
% |
|
|
0.34 |
% |
|
|
0.36 |
% |
Earnings from cancellations |
$ |
2.2 |
|
|
$ |
2.9 |
|
|
$ |
5.1 |
|
|
$ |
7.7 |
|
|
$ |
7.0 |
|
|
$ |
9.9 |
|
Annual persistency(4) |
|
76.0 |
% |
|
|
71.5 |
% |
|
|
63.8 |
% |
|
|
58.1 |
% |
|
|
53.9 |
% |
|
|
51.9 |
% |
Quarterly run-off(5) |
|
4.3 |
% |
|
|
5.0 |
% |
|
|
6.7 |
% |
|
|
8.1 |
% |
|
|
8.0 |
% |
|
|
12.5 |
% |
(1) |
Reported as of the end of the period. |
(2) |
Calculated as end of period risk-in-force (RIF) divided by end of
period IIF. |
(3) |
Calculated as net premiums earned, divided by average primary IIF
for the period, annualized. |
(4) |
Defined as the percentage of IIF that remains on our books after a
given twelve-month period. |
(5) |
Defined as the percentage of IIF that is no longer on our books
after a given three month period. |
New Insurance Written (NIW), Insurance in Force (IIF)
and Premiums
The tables
below present primary NIW and primary and pool IIF, as of the dates
and for the periods indicated.
Primary
NIW |
Three months ended |
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
(In Millions) |
Monthly |
$ |
15,695 |
|
$ |
13,094 |
|
$ |
16,972 |
|
$ |
16,861 |
|
$ |
19,422 |
|
$ |
23,764 |
Single |
|
916 |
|
|
1,071 |
|
|
1,370 |
|
|
1,223 |
|
|
3,329 |
|
|
2,633 |
Primary |
$ |
16,611 |
|
$ |
14,165 |
|
$ |
18,342 |
|
$ |
18,084 |
|
$ |
22,751 |
|
$ |
26,397 |
Primary and pool
IIF |
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
(In Millions) |
Monthly |
$ |
148,488 |
|
$ |
139,156 |
|
$ |
133,104 |
|
$ |
124,767 |
|
$ |
117,629 |
|
$ |
106,920 |
Single |
|
20,151 |
|
|
19,721 |
|
|
19,239 |
|
|
18,851 |
|
|
18,969 |
|
|
16,857 |
Primary |
|
168,639 |
|
|
158,877 |
|
|
152,343 |
|
|
143,618 |
|
|
136,598 |
|
|
123,777 |
|
|
|
|
|
|
|
|
|
|
|
|
Pool |
|
1,114 |
|
|
1,162 |
|
|
1,229 |
|
|
1,339 |
|
|
1,460 |
|
|
1,642 |
Total |
$ |
169,753 |
|
$ |
160,039 |
|
$ |
153,572 |
|
$ |
144,957 |
|
$ |
138,058 |
|
$ |
125,419 |
The following
table presents the amounts related to the company's quota-share
reinsurance transactions (the 2016 QSR Transaction, 2018 QSR
Transaction, 2020 QSR Transaction, 2021 QSR Transaction, and 2022
QSR Transaction, and collectively, the QSR Transactions),
Insurance-Linked Note transactions (the 2017 ILN Transaction, 2018
ILN Transaction, 2019 ILN Transaction, 2020-1 ILN Transaction,
2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN
Transaction and collectively, the ILN Transactions), and
traditional excess-of-loss transaction (2022 -1 XOL Transaction)
for the periods indicated.
|
For the three months ended |
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
(In Thousands) |
The QSR Transactions |
|
|
|
|
|
|
|
|
|
|
|
Ceded risk-in-force |
$ |
9,040,944 |
|
|
$ |
8,504,853 |
|
|
$ |
8,194,604 |
|
|
$ |
7,610,870 |
|
|
$ |
7,113,707 |
|
|
$ |
6,330,409 |
|
Ceded premiums earned |
|
(30,231 |
) |
|
|
(29,005 |
) |
|
|
(28,490 |
) |
|
|
(28,366 |
) |
|
|
(27,537 |
) |
|
|
(25,747 |
) |
Ceded claims and claim expenses |
|
(403 |
) |
|
|
(159 |
) |
|
|
19 |
|
|
|
840 |
|
|
|
1,194 |
|
|
|
1,180 |
|
Ceding commission earned |
|
6,146 |
|
|
|
5,886 |
|
|
|
6,208 |
|
|
|
6,142 |
|
|
|
5,961 |
|
|
|
5,162 |
|
Profit commission |
|
17,778 |
|
|
|
16,723 |
|
|
|
16,142 |
|
|
|
15,191 |
|
|
|
14,391 |
|
|
|
13,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The ILN Transactions |
|
|
|
|
|
|
|
|
|
|
|
Ceded premiums |
$ |
(10,132 |
) |
|
$ |
(10,939 |
) |
|
$ |
(11,344 |
) |
|
$ |
(10,390 |
) |
|
$ |
(10,169 |
) |
|
$ |
(9,397 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
2022-1 XOL Transaction |
|
|
|
|
|
|
|
|
|
|
|
Ceded Premiums |
$ |
(2,907 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Primary NIW by
FICO |
For the three months ended |
|
For the six months ended |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
($ In Millions) |
>= 760 |
$ |
7,990 |
|
$ |
6,372 |
|
$ |
11,390 |
|
$ |
14,362 |
|
$ |
24,304 |
740-759 |
|
2,900 |
|
|
2,388 |
|
|
4,246 |
|
|
5,288 |
|
|
9,558 |
720-739 |
|
2,056 |
|
|
1,937 |
|
|
3,152 |
|
|
3,993 |
|
|
7,115 |
700-719 |
|
1,650 |
|
|
1,639 |
|
|
1,798 |
|
|
3,289 |
|
|
4,156 |
680-699 |
|
1,277 |
|
|
1,244 |
|
|
1,292 |
|
|
2,521 |
|
|
2,652 |
<=679 |
|
738 |
|
|
585 |
|
|
873 |
|
|
1,323 |
|
|
1,363 |
Total |
$ |
16,611 |
|
$ |
14,165 |
|
$ |
22,751 |
|
$ |
30,776 |
|
$ |
49,148 |
Weighted average FICO |
|
751 |
|
|
748 |
|
|
754 |
|
|
750 |
|
|
755 |
Primary NIW by
LTV |
For the three months ended |
|
For the six months ended |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
June 30, 2021 |
|
(In Millions) |
95.01% and above |
$ |
1,577 |
|
|
$ |
1,366 |
|
|
$ |
2,177 |
|
|
$ |
2,943 |
|
$ |
4,628 |
|
90.01% to 95.00% |
|
8,253 |
|
|
|
7,055 |
|
|
|
9,941 |
|
|
|
15,308 |
|
|
20,992 |
|
85.01% to 90.00% |
|
4,772 |
|
|
|
3,868 |
|
|
|
6,262 |
|
|
|
8,640 |
|
|
14,110 |
|
85.00% and below |
|
2,009 |
|
|
|
1,876 |
|
|
|
4,371 |
|
|
|
3,885 |
|
|
9,418 |
|
Total |
$ |
16,611 |
|
|
$ |
14,165 |
|
|
$ |
22,751 |
|
|
$ |
30,776 |
|
$ |
49,148 |
|
Weighted average LTV |
|
92.2 |
% |
|
|
92.1 |
% |
|
|
91.3 |
% |
|
|
92.1 |
% |
|
91.1 |
% |
Primary NIW by
purchase/refinance mix |
For the three months ended |
|
For the six months ended |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
June 30, 2021 |
|
(In Millions) |
Purchase |
$ |
16,203 |
|
$ |
13,398 |
|
$ |
18,911 |
|
$ |
29,601 |
$ |
36,820 |
Refinance |
|
408 |
|
|
767 |
|
|
3,840 |
|
|
1,175 |
|
12,328 |
Total |
$ |
16,611 |
|
$ |
14,165 |
|
$ |
22,751 |
|
$ |
30,776 |
$ |
49,148 |
The table below presents a
summary of our primary IIF and RIF by book year as of June 30,
2022.
Primary IIF and
RIF |
As of June 30, 2022 |
|
IIF |
|
RIF |
|
(In Millions) |
June 30, 2022 |
$ |
30,249 |
|
$ |
7,972 |
2021 |
|
76,657 |
|
|
19,522 |
2020 |
|
39,154 |
|
|
9,928 |
2019 |
|
10,248 |
|
|
2,688 |
2018 |
|
4,021 |
|
|
1,030 |
2017 and before |
|
8,310 |
|
|
2,120 |
Total |
$ |
168,639 |
|
$ |
43,260 |
The
tables below present our total primary IIF and RIF by FICO and LTV
and total primary RIF by loan type as of the dates indicated.
Primary IIF by
FICO |
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
(In Millions) |
>= 760 |
$ |
83,769 |
|
$ |
79,141 |
|
$ |
70,583 |
740-759 |
|
29,195 |
|
|
27,406 |
|
|
23,175 |
720-739 |
|
23,240 |
|
|
22,176 |
|
|
18,857 |
700-719 |
|
16,221 |
|
|
15,236 |
|
|
12,230 |
680-699 |
|
11,160 |
|
|
10,347 |
|
|
7,927 |
<=679 |
|
5,054 |
|
|
4,571 |
|
|
3,826 |
Total |
$ |
168,639 |
|
$ |
158,877 |
|
$ |
136,598 |
Primary RIF by
FICO |
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
(In Millions) |
>= 760 |
$ |
21,159 |
|
$ |
19,883 |
|
$ |
17,531 |
740-759 |
|
7,564 |
|
|
7,054 |
|
|
5,873 |
720-739 |
|
6,044 |
|
|
5,735 |
|
|
4,798 |
700-719 |
|
4,289 |
|
|
4,010 |
|
|
3,161 |
680-699 |
|
2,936 |
|
|
2,706 |
|
|
2,047 |
<=679 |
|
1,268 |
|
|
1,134 |
|
|
956 |
Total |
$ |
43,260 |
|
$ |
40,522 |
|
$ |
34,366 |
Primary IIF by
LTV |
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
(In Millions) |
95.01% and above |
$ |
16,068 |
|
$ |
14,918 |
|
$ |
12,026 |
90.01% to 95.00% |
|
77,804 |
|
|
72,381 |
|
|
60,358 |
85.01% to 90.00% |
|
51,029 |
|
|
48,406 |
|
|
43,064 |
85.00% and below |
|
23,738 |
|
|
23,172 |
|
|
21,150 |
Total |
$ |
168,639 |
|
$ |
158,877 |
|
$ |
136,598 |
Primary RIF by
LTV |
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
(In Millions) |
95.01% and above |
$ |
4,914 |
|
$ |
4,527 |
|
$ |
3,552 |
90.01% to 95.00% |
|
22,974 |
|
|
21,358 |
|
|
17,774 |
85.01% to 90.00% |
|
12,553 |
|
|
11,895 |
|
|
10,555 |
85.00% and below |
|
2,819 |
|
|
2,742 |
|
|
2,485 |
Total |
$ |
43,260 |
|
$ |
40,522 |
|
$ |
34,366 |
Primary RIF by Loan
Type |
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
|
|
|
|
|
Fixed |
99 |
% |
|
99 |
% |
|
99 |
% |
Adjustable rate mortgages: |
|
|
|
|
|
Less than five years |
— |
|
|
— |
|
|
— |
|
Five years and longer |
1 |
|
|
1 |
|
|
1 |
|
Total |
100 |
% |
|
100 |
% |
|
100 |
% |
The
table below presents a summary of the change in total primary IIF
during the periods indicated.
Primary
IIF |
For the three months ended |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
(In Millions) |
IIF, beginning of period |
$ |
158,877 |
|
|
$ |
152,343 |
|
|
$ |
123,777 |
|
NIW |
|
16,611 |
|
|
|
14,165 |
|
|
|
22,751 |
|
Cancellations, principal repayments and other reductions |
|
(6,849 |
) |
|
|
(7,631 |
) |
|
|
(9,930 |
) |
IIF, end of period |
$ |
168,639 |
|
|
$ |
158,877 |
|
|
$ |
136,598 |
|
Geographic Dispersion
The following table
shows the distribution by state of our primary RIF as of the
periods indicated.
Top 10 primary RIF by
state |
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
California |
10.8 |
% |
|
10.8 |
% |
|
10.3 |
% |
Texas |
9.0 |
|
|
9.5 |
|
|
9.8 |
|
Florida |
8.3 |
|
|
8.4 |
|
|
8.3 |
|
Virginia |
4.3 |
|
|
4.5 |
|
|
5.0 |
|
Georgia |
4.0 |
|
|
3.9 |
|
|
3.5 |
|
Illinois |
3.9 |
|
|
3.8 |
|
|
3.8 |
|
Washington |
3.9 |
|
|
3.7 |
|
|
3.6 |
|
Colorado |
3.7 |
|
|
3.7 |
|
|
4.1 |
|
Maryland |
3.5 |
|
|
3.6 |
|
|
3.9 |
|
Pennsylvania |
3.3 |
|
|
3.3 |
|
|
3.2 |
|
Total |
54.7 |
% |
|
55.2 |
% |
|
55.5 |
% |
|
|
|
|
|
|
The
table below presents selected primary portfolio statistics, by book
year, as of June 30, 2022.
|
As of June 30, 2022 |
Book
year |
Original InsuranceWritten |
|
Remaining Insurance in Force |
|
% Remaining of Original Insurance |
|
Policies Ever in Force |
|
Number of Policies in Force |
|
Number of Loans in Default |
|
# of Claims Paid |
|
Incurred Loss Ratio (Inception to
Date)(1) |
|
Cumulative Default Rate(2) |
|
Current default rate(3) |
|
($ Values in Millions) |
|
|
2013 |
$ |
162 |
|
$ |
6 |
|
3 |
% |
|
655 |
|
40 |
|
1 |
|
1 |
|
0.6 |
% |
|
0.3 |
% |
|
2.5 |
% |
2014 |
|
3,451 |
|
|
235 |
|
7 |
% |
|
14,786 |
|
1,455 |
|
29 |
|
50 |
|
4.0 |
% |
|
0.5 |
% |
|
2.0 |
% |
2015 |
|
12,422 |
|
|
1,440 |
|
12 |
% |
|
52,548 |
|
7,941 |
|
170 |
|
121 |
|
3.0 |
% |
|
0.6 |
% |
|
2.1 |
% |
2016 |
|
21,187 |
|
|
3,145 |
|
15 |
% |
|
83,626 |
|
16,073 |
|
343 |
|
138 |
|
2.7 |
% |
|
0.6 |
% |
|
2.1 |
% |
2017 |
|
21,582 |
|
|
3,484 |
|
16 |
% |
|
85,897 |
|
18,205 |
|
607 |
|
112 |
|
3.9 |
% |
|
0.8 |
% |
|
3.3 |
% |
2018 |
|
27,295 |
|
|
4,021 |
|
15 |
% |
|
104,043 |
|
20,359 |
|
785 |
|
100 |
|
6.6 |
% |
|
0.9 |
% |
|
3.9 |
% |
2019 |
|
45,141 |
|
|
10,248 |
|
23 |
% |
|
148,423 |
|
42,491 |
|
812 |
|
25 |
|
8.5 |
% |
|
0.6 |
% |
|
1.9 |
% |
2020 |
|
62,702 |
|
|
39,154 |
|
62 |
% |
|
186,174 |
|
125,400 |
|
696 |
|
2 |
|
4.6 |
% |
|
0.4 |
% |
|
0.6 |
% |
2021 |
|
85,574 |
|
|
76,657 |
|
90 |
% |
|
257,972 |
|
236,705 |
|
811 |
|
1 |
|
4.3 |
% |
|
0.3 |
% |
|
0.3 |
% |
2022 |
|
30,776 |
|
|
30,249 |
|
98 |
% |
|
84,034 |
|
82,874 |
|
17 |
|
— |
|
1.0 |
% |
|
— |
% |
|
— |
% |
Total |
$ |
310,292 |
|
$ |
168,639 |
|
|
|
1,018,158 |
|
551,543 |
|
4,271 |
|
550 |
|
|
|
|
|
|
(1) |
Calculated as total claims incurred (paid and reserved)
divided by cumulative premiums earned, net of reinsurance. |
(2) |
Calculated as the sum of the number of claims paid ever to date and
number of loans in default divided by policies ever in force. |
(3) |
Calculated as the number of loans in default divided by number of
policies in force. |
The
following table provides a reconciliation of the beginning and
ending reserve balances for primary insurance claims and claim
(benefits) expenses:
|
For the three months ended |
|
For the six months ended |
|
June 30, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
(In Thousands) |
Beginning balance |
$ |
102,372 |
|
|
$ |
96,103 |
|
|
$ |
103,551 |
|
|
$ |
90,567 |
|
Less reinsurance
recoverables(1) |
|
(20,080 |
) |
|
|
(18,686 |
) |
|
|
(20,320 |
) |
|
|
(17,608 |
) |
Beginning balance, net of
reinsurance recoverables |
|
82,292 |
|
|
|
77,417 |
|
|
|
83,231 |
|
|
|
72,959 |
|
|
|
|
|
|
|
|
|
Add claims incurred: |
|
|
|
|
|
|
|
Claims and claim (benefits) expenses incurred: |
|
|
|
|
|
|
|
Current year(2) |
|
8,707 |
|
|
|
5,069 |
|
|
|
18,787 |
|
|
|
15,626 |
|
Prior years(3) |
|
(11,743 |
) |
|
|
(429 |
) |
|
|
(22,442 |
) |
|
|
(6,024 |
) |
Total claims and claim (benefits) expenses incurred |
|
(3,036 |
) |
|
|
4,640 |
|
|
|
(3,655 |
) |
|
|
9,602 |
|
|
|
|
|
|
|
|
|
Less claims paid: |
|
|
|
|
|
|
|
Claims and claim expenses paid: |
|
|
|
|
|
|
|
Current year(2) |
|
26 |
|
|
|
— |
|
|
|
26 |
|
|
|
12 |
|
Prior years(3) |
|
356 |
|
|
|
548 |
|
|
|
676 |
|
|
|
1,040 |
|
Total claims and claim expenses paid |
|
382 |
|
|
|
548 |
|
|
|
702 |
|
|
|
1,052 |
|
|
|
|
|
|
|
|
|
Reserve at end of period, net
of reinsurance recoverables |
|
78,874 |
|
|
|
81,509 |
|
|
|
78,874 |
|
|
|
81,509 |
|
Add reinsurance
recoverables(1) |
|
19,588 |
|
|
|
19,726 |
|
|
|
19,588 |
|
|
|
19,726 |
|
Ending balance |
$ |
98,462 |
|
|
$ |
101,235 |
|
|
$ |
98,462 |
|
|
$ |
101,235 |
|
(1) |
Related to ceded losses recoverable under the QSR
Transactions. |
(2) |
Related to insured loans with their most recent defaults occurring
in the current year. For example, if a loan defaulted in a prior
year and subsequently cured and later re-defaulted in the current
year, the default would be included in the current year. Amounts
are presented net of reinsurance and included $14.0 million
attributed to net case reserves and $4.5 million attributed to
net IBNR reserves for the six months ended June 30, 2022 and
$9.8 million attributed to net case reserves and
$5.6 million attributed to net IBNR reserves for the six
months ended June 30, 2021. |
(3) |
Related to insured loans with defaults occurring in prior years,
which have been continuously in default before the start of the
current year. Amounts are presented net of reinsurance and included
$17.0 million attributed to net case reserves and
$4.7 million attributed to net IBNR reserves for the six
months ended June 30, 2022 and $1.1 million attributed to
net case reserves and $5.0 million attributed to net IBNR
reserves for the six months ended June 30, 2021. |
The
following table provides a reconciliation of the beginning and
ending count of loans in default for the periods indicated.
|
For the three months ended |
|
For the six months ended |
|
June 30, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
Beginning default inventory |
5,238 |
|
|
11,090 |
|
|
6,227 |
|
|
12,209 |
|
Plus: new defaults |
1,069 |
|
|
1,095 |
|
|
2,232 |
|
|
2,862 |
|
Less: cures |
(2,011 |
) |
|
(3,402 |
) |
|
(4,143 |
) |
|
(6,270 |
) |
Less: claims paid |
(24 |
) |
|
(19 |
) |
|
(43 |
) |
|
(35 |
) |
Less: rescission and claims
denied |
(1 |
) |
|
— |
|
|
(2 |
) |
|
(2 |
) |
Ending default inventory |
4,271 |
|
|
8,764 |
|
|
4,271 |
|
|
8,764 |
|
The
following table provides details of our claims paid, before giving
effect to claims ceded under the QSR Transactions, for the periods
indicated.
|
For the three months ended |
|
For the six months ended |
|
June 30, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
(In Thousands) |
Number of claims paid(1) |
|
24 |
|
|
|
19 |
|
|
|
43 |
|
|
|
35 |
|
Total amount paid for
claims |
$ |
471 |
|
|
$ |
702 |
|
|
$ |
873 |
|
|
$ |
1,308 |
|
Average amount paid per
claim |
$ |
20 |
|
|
$ |
37 |
|
|
$ |
20 |
|
|
$ |
37 |
|
Severity(2) |
|
46 |
% |
|
|
66 |
% |
|
|
43 |
% |
|
|
64 |
% |
(1) |
Count includes 10 and 16 claims settled without payment during the
three and six months ended June 30, 2022, respectively, and
three and four claims settled with out payment during the three and
six months ended 2021, respectively. |
(2) |
Severity represents the total amount of claims paid including claim
expenses divided by the related RIF on the loan at the time the
claim is perfected, and is calculated including claims settled
without payment. |
The
following table shows our average reserve per default, before
giving effect to reserves ceded under the QSR Transactions, as of
the periods indicated.
Average reserve per
default: |
As of June 30, 2022 |
|
As of June 30, 2021 |
|
(In Thousands) |
Case(1) |
$ |
21.3 |
|
$ |
10.6 |
IBNR(1)(2) |
|
1.8 |
|
|
1.0 |
Total |
$ |
23.1 |
|
$ |
11.6 |
(1) |
Defined as the gross reserve per insured loan in default. |
(2) |
Amount includes claims adjustment
expenses. |
The
following table provides a comparison of the PMIERs financial
requirements as reported by NMIC as of the dates indicated.
|
As of |
|
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
(In Thousands) |
Available Assets |
$ |
2,169,388 |
|
$ |
2,127,030 |
|
$ |
1,886,993 |
Risk-Based Required
Assets |
|
1,240,143 |
|
|
1,341,217 |
|
|
1,170,854 |
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