NMI Holdings, Inc. Reports Record Third Quarter 2017 Financial Results

NMI Holdings, Inc. Reports Record Third Quarter 2017 Financial Results

EMERYVILLE, CA--(Marketwired - November 01, 2017) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $12.3 million, or $0.21 per share, for the third quarter ended September 30, 2017. This compares with net income of $6.0 million, or $0.10 per share, in the prior quarter, and net income of $6.2 million, or $0.10 per share, in the third quarter of 2016.

Bradley Shuster, Chairman and CEO of National MI, said, "In the third quarter, National MI delivered record financial results, including record new insurance written of $6.1 billion, record net premiums earned of $44.5 million, and record pre-tax income of $19.5 million. We were also pleased to deliver annualized return-on-average equity of 9.8%. National MI continued to build its portfolio of high-quality insurance in force at a rate that leads our industry, and we continued to make significant strides in customer development, activating 25 new customers in the third quarter and 98 new customers for the year-to-date."

As of September 30, 2017, the company had primary insurance-in-force of $43.3 billion, up 12% from $38.6 billion at the prior quarter end and up 53% over $28.2 billion as of September 30, 2016.

Premiums earned for the quarter were $44.5 million, including $4.3 million attributable to cancellation of single premium policies, which compares with $37.9 million, including $3.8 million related to cancellations, in the prior quarter. Premiums earned in the third quarter of 2017 were up 40% over premium revenue of $31.8 million in the same quarter a year ago, which included $5.8 million related to cancellations.

NIW mix was 79% monthly premium product, which compares with 81% in the prior quarter and 71% in the third quarter of 2016.

Total underwriting and operating expenses in the third quarter were $24.6 million. This compares with total underwriting and operating expenses of $28.0 million, including approximately $3.1 million of fees and expenses associated with the issuance of Insurance-Linked Notes in the prior quarter and $24.0 million in the same quarter a year ago.

Claims expense for the quarter was $1.0 million, resulting in a loss ratio of 2.1%.

At quarter-end, cash and investments were $713 million, including $62 million at the holding company, and book equity was $511 million, equal to $8.53 per share.

At quarter-end, the company had total PMIERs available assets of $495 million, which compares with risk- based required assets under PMIERs of $356 million.


		Quarter	Quarter	Quarter
		Ended	Ended	Ended	Change	Change
		9/30/2017	6/30/2017	9/30/2016	Q/Q	Y/Y
Primary Insurance-in-Force ($billions)		43.26	38.63	28.22	12%	53%
New Insurance Written - NIW ($billions)
	Monthly premium	4.83	4.10	4.16	18%	16%
	Single premium	1.28	0.94	1.70	36%	-25%
	Total	6.11	5.04	5.86	21%	4%

Premiums Earned ($millions)		44.52	37.92	31.81	17%	40%
Underwriting & Operating Expense ($millions)		24.65	28.05	24.04	-12%	3%
Loss Expense ($millions)		0.96	1.37	0.66	-30%	45%
Loss Ratio		2.1%	3.6%	2.1%
Cash & Investments ($millions)		713	694	686	3%	4%
Book Equity ($millions)		511	495	430	3%	19%
Book Value per Share		8.53	8.27	7.28	3%	17%

Conference Call and Webcast Details

The company will hold a conference call and live webcast 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 (888) 734-0328 in the U.S., or (914) 495-8578 for international callers using Conference ID: 1906690, 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: changes in the business practices of the GSEs that may impact the use of private mortgage insurance as credit enhancement; our ability to remain an eligible mortgage insurer under the PMIERs, including the financial requirements, and other requirements of 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 governmental agencies like the Federal Housing Administration (FHA) and the Veterans Administration (VA), 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; 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; 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 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; 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 claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; potential adverse impacts arising from recent natural disasters, including, with respect to the 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 counter-parties, including third party reinsurers, to meet their obligations to us; 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; 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, 2016, 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
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com


Consolidated statements of operations and comprehensive income		For the three months ended						For the nine months ended
		September 30,						September 30,
		2017			2016			2017			2016
Revenues		(In Thousands, except for share data)
	Net premiums earned	$	44,519		$	31,808		$	115,661		$	77,656
	Net investment income		4,170			3,544			11,885			10,117
	Net realized investment gains (losses)		69			66			198			(758	)
	Other revenues		195			102			461			172
Total revenues			48,953			35,520			128,205			87,187
Expenses
	Insurance claims and claims expenses		957			664			2,965			1,592
	Underwriting and operating expenses		24,645			24,037			78,682			69,943
Total expenses			25,602			24,701			81,647			71,535
Other expense

	Loss from change in fair value of warrant liability		(502	)		(797	)		(679	)		(187	)
	Interest expense		(3,352	)		(3,733	)		(10,146	)		(11,072	)
Total other expense			(3,854	)		(4,530	)		(10,825	)		(11,259	)

Income before income taxes			19,497			6,289			35,733			4,393
	Income tax expense		7,185			114			11,917			114
Net income		$	12,312		$	6,175		$	23,816		$	4,279

Earnings per share
	Basic	$	0.21		$	0.10		$	0.40		$	0.07
	Diluted	$	0.20		$	0.10		$	0.38		$	0.07

Weighted average common shares outstanding
Basic			59,883,629			59,130,401			59,680,166			59,047,758
Diluted			63,088,958			60,284,746			62,773,333			59,861,916

Loss Ratio⁽¹⁾			2.1	%		2.1	%		2.6	%		2.1	%
Expense Ratio⁽²⁾			55.4			75.6			68.0			90.1
Combined ratio			57.5	%		77.7	%		70.6	%		92.2	%

Net income		$	12,312		$	6,175		$	23,816		$	4,279
Other comprehensive income, net of tax:
	Net unrealized gain (loss) in accumulated other comprehensive income, net of tax expense of $366 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $2,439 and $0 for the nine months ended September 30, 2017 and 2016		768			(82	)		4,786			17,690
	Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $24 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $69 and $0 for the nine months ended September 30, 2017 and 2016		(45	)		(66	)		(129	)		758
Other comprehensive income, net of tax			723			(148	)		4,657			18,448
Comprehensive income		$	13,035		$	6,027		$	28,473		$	22,727

⁽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		September 30, 2017			December 31, 2016 ⁽¹⁾
Assets		(In Thousands, except for share data)
	Fixed maturities, available-for-sale, at fair value (amortized cost of $687,284 and $630,688 as of September 30, 2017 and December 31, 2016, respectively)	$	692,729		$	628,969
	Cash and cash equivalents		20,698			47,746
	Premiums receivable		21,056			13,728
	Accrued investment income		4,598			3,421
	Prepaid expenses		2,651			1,991
	Deferred policy acquisition costs, net		36,101			30,109
	Software and equipment, net		21,767			20,402
	Intangible assets and goodwill		3,634			3,634
	Prepaid reinsurance premiums		39,915			37,921
	Deferred tax asset, net		38,490			51,434
	Other assets		4,973			542
Total assets		$	886,612		$	839,897

Liabilities
	Term loan	$	143,969		$	144,353
	Unearned premiums		161,345			152,906
	Accounts payable and accrued expenses		22,028			25,297
	Reserve for insurance claims and claim expenses		6,123			3,001
	Reinsurance funds withheld		33,105			30,633
	Deferred ceding commission		4,971			4,831
	Warrant liability, at fair value		4,046			3,367
Total liabilities			375,587			364,388
Commitments and contingencies

Shareholders' equity
	Common stock - class A shares, $0.01 par value;59,928,092 and 59,145,161 shares issued and outstanding as of September 30,2017 and December 31, 2016, respectively (250,000,000 shares authorized)		599			591
	Additional paid-in capital		583,447			576,927
	Accumulated other comprehensive loss, net of tax		(630	)		(5,287	)
	Accumulated deficit		(72,391	)		(96,722	)
Total shareholders' equity			511,025			475,509
Total liabilities and shareholders' equity		$	886,612		$	839,897

⁽¹⁾The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended September 30, 2017 for further details.


Historical Quarterly Data			2017									2016
			September 30			June 30			March 31			December 31⁽⁴⁾			September 30			June 30
Revenues		(In Thousands, except for share data)
	Net premiums earned		$	44,519		$	37,917		$	33,225		$	32,825		$	31,808		$	26,041
	Net investment income			4,170			3,908			3,807			3,634			3,544			3,342
	Net realized investment gains (losses)			69			188			(58	)		65			66			61
	Other revenues			195			185			80			105			102			37
Total revenues				48,953			42,198			37,054			36,629			35,520			29,481
Expenses
	Insurance claims and claims expenses			957			1,373			635			800			664			470
	Underwriting and operating expenses			24,645			28,048			25,989			23,281			24,037			23,234
Total expenses				25,602			29,421			26,624			24,081			24,701			23,704

Other expense ⁽¹⁾				(3,854	)		(3,281	)		(3,690	)		(5,490	)		(4,530	)		(3,766	)

Income before income taxes				19,497			9,496			6,740			7,058			6,289			2,011
	Income tax expense (benefit)			7,185			3,484			1,248			(52,664	)		114			-
Net income			$	12,312		$	6,012		$	5,492		$	59,722		$	6,175		$	2,011

Earnings per share
	Basic		$	0.21		$	0.10		$	0.09		$	1.01		$	0.10		$	0.03
	Diluted		$	0.20		$	0.10		$	0.09		$	0.98		$	0.10		$	0.03

Weighted average common shares outstanding
Basic				59,883,629			59,823,396			59,183,973			59,140,011			59,130,401			59,105,613
Diluted				63,088,958			63,010,362			62,338,856			61,229,338			60,284,746			59,830,899

Other data
Loss Ratio ⁽²⁾				2.1	%		3.6	%		1.9	%		2.4	%		2.1	%		1.8	%
Expense Ratio ⁽³⁾				55.4	%		74.0	%		78.2	%		70.9	%		75.6	%		89.2	%
Combined ratio				57.5	%		77.6	%		80.1	%		73.3	%		77.7	%		91.0	%

⁽¹⁾ Other expense 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.

⁽⁴⁾ The Q4 2016 quarterly data has been revised. Please refer to our Form 10-Q for the quarter ended September 30, 2017 for further details.


New Insurance Written (NIW), Insurance in Force (IIF) and Premiums
The tables below present primary and pool NIW and IIF, as of the dates and for the periods indicated.

Primary NIW	Three months ended
	September 30, 2017		June 30, 2017		March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
		(In Millions)
Monthly	$	4,833	$	4,099	$	2,892		$	3,904		$	4,162		$	3,700
Single		1,282		938		667			1,336			1,695			2,138
Primary	$	6,115	$	5,037	$	3,559		$	5,240		$	5,857		$	5,838

Primary and pool IIF		As of
		September 30, 2017		June 30, 2017		March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
		(In Millions)
Monthly	$	28,707	$	24,865	$	21,511		$	19,205		$	16,038		$	12,529
Single		14,552		13,764		13,268			12,963			12,190			11,095
Primary		43,259		38,629		34,779			32,168			28,228			23,624

Pool		3,330		3,447		3,545			3,650			3,826			3,999
Total	$	46,589	$	42,076	$	38,324		$	35,818		$	32,054		$	27,623

The following table presents the amounts related to the 2016 QSR transaction, for the last five quarters.

		September 30, 2017				June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
		(In Thousands)
Ceded risk-in-force	$	2,682,982			$	2,403,027		$	2,167,745		$	2,008,385		$	1,778,235
Ceded premiums written		(14,389)				(12,034	)		(10,292	)		(11,576	)		(38,977	)
Ceded premiums earned		(13,393)				(11,463	)		(9,865	)		(9,746	)		(2,885	)
Ceded claims and claims expenses		277				342			268			206			90
Ceding commission written		2,878				2,407			2,058			2,316			7,795
Ceding commission earned		2,581				2,275			2,065			1,752			551
Profit commission		7,758				6,536			5,651			5,642			1,641


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
		September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
		($ Values In Millions)
	New insurance written	$	6,115		$	5,037		$	3,559		$	5,240		$	5,857		$	5,838
	New risk written		1,496			1,242			868			1,244			1,415			1,411
	Insurance in force ⁽¹⁾		43,259			38,629			34,779			32,168			28,228			23,624
	Risk in force ⁽¹⁾		10,572			9,417			8,444			7,790			6,847			5,721
	Policies in force (count) ⁽¹⁾		180,089			161,195			145,632			134,662			119,002			100,547
	Average loan size ⁽¹⁾	$	0.240			0.240			0.239			0.239			0.237			0.235
	Weighted-average coverage ⁽²⁾		24.4	%		24.4	%		24.3	%		24.2	%		24.3	%		24.2	%
	Loans in default (count)		350			249			207			179			115			79
	Percentage of loans in default		0.2	%		0.2	%		0.1	%		0.1	%		0.1	%		0.1	%
	Risk in force on defaulted loans	$	19		$	14		$	12		$	10		$	6		$	4
	Average premium yield ⁽³⁾		0.43	%		0.41	%		0.40	%		0.44	%		0.48	%		0.47	%
	Earnings from cancellations	$	4.3		$	3.8		$	2.5		$	5.1		$	5.8		$	3.5
	Annual persistency ⁽⁴⁾		85.1	%		83.1	%		81.3	%		80.7	%		81.8	%		83.3	%
	Quarterly run-off ⁽⁵⁾		3.8	%		3.4	%		2.9	%		4.6	%		5.3	%		4.2	%

⁽¹⁾Reported as of the end of the period.

⁽²⁾Calculated as end of period risk in force (RIF) divided by IIF.

⁽³⁾Calculated as net primary and pool premiums earned, net of reinsurance, divided 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.

⁽⁵⁾Defined as the percentage of IIF that are no longer on our books after any 3-month period


Primary NIW by FICO		For the three months ended
		September 30, 2017		June 30, 2017		September 30, 2016
		($ In Millions)
	>= 760	$	2,806	$	2,376	$	2,975
	740-759		934		793		934
	720-739		807		626		725
	700-719		697		568		588
	680-699		456		368		387
	<=679		415		306		248
Total		$	6,115	$	5,037	$	5,857
Weighted average FICO			747		749		753


Primary NIW by LTV		For the three months ended
		September 30, 2017			June 20, 2017			September 30, 2016
		(In Millions)
	95.01% and above	$	722		$	474		$	347
	90.01% to 95.00%		2,714			2,297			2,557
	85.01% to 90.00%		1,765			1,506			1,844
	85.00% and below		914			760			1,109
Total		$	6,115		$	5,037		$	5,857
Weighted average LTV			92.3	%		92.2	%		91.7	%


Primary NIW by purchase/refinance mix		For the three months ended
		September 30, 2017			June 30, 2017			September 30, 2016
		(In Millions)
	Purchase	$	5,387		$	4,518		$	4,400
	Refinance		728			519			1,457
Total		$	6,115		$	5,037		$	5,857

The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.

Primary IIF and RIF					As of September 30, 2017
					IIF			RIF
					(In Millions)
September 30, 2017					$	14,315		$	3,508
2016						18,684			4,520
2015						8,742			2,167
2014						1,479			368
2013						39			9
Total					$	43,259		$	10,572

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
		September 30, 2017			June 30, 2017			September 30, 2016
		(In Millions)
	>= 760	$	21,329		$	19,224		$	14,258
	740-759		6,983			6,269			4,612
	720-739		5,547			4,927			3,648
	700-719		4,505			3,973			2,813
	680-699		2,942			2,615			1,863
	<=679		1,953			1,621			1,034
Total		$	43,259		$	38,629		$	28,228


Primary RIF by FICO			As of
			September 30, 2017			June 30, 2017			September 30, 2016
			(In Millions)
	>= 760		$	5,251		$	4,720			3,470
	740-759			1,713			1,535			1,130
	720-739			1,349			1,198			887
	700-719			1,092			960			680
	680-699			707			627			443
	<=679			460			377			237
Total			$	10,572		$	9,417		$	6,847


Primary IIF by LTV			As of
			September 30, 2017			June 30, 2017			September 30, 2016
			(In Millions)
	95.01% and above		$	3,038		$	2,367		$	1,363
	90.01% to 95.00%			19,562			17,441			12,644
	85.01% to 90.00%			13,437			12,157			9,157
	85.00% and below			7,222			6,664			5,064
Total			$	43,259		$	38,629		$	28,228


Primary RIF by LTV			As of
			September 30, 2017			June 30, 2017			September 30, 2016
			(In Millions)
	95.01% and above		$	822		$	648		$	380
	90.01% to 95.00%			5,722			5,120			3,725
	85.01% to 90.00%			3,205			2,893			2,174
	85.00% and below			823			756			568
Total			$	10,572		$	9,417		$	6,847


Primary RIF by Loan Type			As of
			September 30, 2017			June 30, 2017			September 30, 2016

	Fixed			98	%		98	%		98	%
	Adjustable rate mortgages:
		Five years and longer		2			2			2
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
			September 30, 2017			June 30, 2017			September 30, 2016
						(In Millions)
IIF, beginning of period			$	38,629		$	34,779		$	23,624
	NIW			6,115			5,037			5,857
	Cancellations and other reductions			(1,485	)		(1,187	)		(1,253	)
IIF, end of period			$	43,259		$	38,629		$	28,228


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
	September 30, 2017		June 30, 2017		September 30, 2016
California	13.6	%	13.8	%	13.2	%
Texas	7.6		7.5		6.8
Virginia	5.6		6.0		6.6
Arizona	4.4		4.2		3.8
Florida	4.3		4.4		4.7
Colorado	3.8		3.9		4.0
Michigan	3.7		3.6		3.9
Pennsylvania	3.6		3.6		3.6
Utah	3.6		3.7		3.6
Maryland	3.6		3.7		3.6
Total	53.8	%	54.4	%	53.8	%

The following table shows portfolio data by book year, as of September 30, 2017.


As of September 30, 2017
Book 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	$	39	24%	655	201	-	1	0.2%	0.2%
2014		3,451		1,479	43%	14,786	7,451	54	9	3.8%	0.4%
2015		12,422		8,742	70%	52,548	39,727	164	14	2.9%	0.3%
2016		21,187		18,684	88%	83,626	76,095	119	3	1.6%	0.1%
2017	$	14,711	$	14,315	97%	57,800	56,615	13	-	0.5%	-
Total	$	51,933	$	43,259		209,415	180,089	350	27

⁽¹⁾The ratio of claims 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						For the nine months ended
			September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016

			(In Thousands)
Beginning balance			$	5,048		$	1,475		$	3,001		$	679
Less reinsurance recoverables ⁽¹⁾				(899	)		-			(297	)		-
Beginning balance, net of reinsurance recoverables				4,149			1,475			2,704			679

Add claims incurred:
	Claims and claim expenses incurred:
		Current year ⁽²⁾		1,215			690			3,546			1,803
		Prior years ⁽³⁾		(258	)		(29	)		(581	)		(214	)
Total claims and claims expenses incurred				957			661			2,965			1,589

Less claims paid:
	Claims and claim expenses paid:
		Current year ⁽²⁾		-			-			-			-
		Prior years ⁽³⁾		157			93			720			225
Total claims and claim expenses paid				157			93			720			225

Reserve at end of period, net of reinsurance recoverables				4,949			2,043			4,949			2,043
Add reinsurance recoverables ⁽¹⁾				1,174			90			1,174			90
Ending balance			$	6,123		$	2,133		$	6,123		$	2,133

(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheet.

(2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year.

(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.

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 nine months ended
	September 30,		September 30,		September 30,		September 30,
	2017		2016		2017		2016
Beginning default inventory	249		79		179		36
Plus: new defaults	208		69		479		158
Less: cures	(103	)	(30	)	(292	)	(73	)
Less: claims paid	(4	)	(3	)	(16	)	(6	)
Ending default inventory	350		115		350		115

The following tables provide details of our claims and reserves for the periods indicated, before claims paid covered under the 2016 QSR Transaction.


	For the three months ended					For the nine months ended
	September 30,		September 30,			September 30,		September 30,
	2017		2016			2017		2016
	($ Values In Thousands)
Number of claims paid		4		3			16		6
Total amount paid for claims	$	160	$	93		$	731	$	225
Average amount paid per claim	$	40	$	31		$	46	$	32
Severity⁽¹⁾		73%		53	%		83%		62	%

⁽¹⁾Severity represents the total amount of claims paid divided by the related RIF on the loan at the time the claim is perfected.

⁽¹⁾Defined as the gross reserve per insured loan in default.

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


	As of
	September 30, 2017		June 30, 2017		September 30, 2016
	(In thousands)
Available assets	$	495,182	$	485,019	$	488,635
Risk-based required assets		356,207		298,091		320,609

/EINPresswire.com/ -- Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com

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Average reserve per default:

As of September 30, 2017

As of September 30, 2016

(In Thousands)

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