NMI HOLDINGS, INC. EMERYVILLE, Calif., Nov. 6, 2014 /PRNewswire/ -- NMI Holdings, Inc., (NASDAQ: NMIH) (the "Company"), the parent company of National Mortgage Insurance Corporation (National MI), a U.S.-based, private mortgage insurance company, today reported its results for the three and nine months ended September 30, 2014. The Company reported a net loss for the three months ended September 30, 2014 of $11.0 million or $0.19 per share. The Company reported a net loss for the nine months ended September 30, 2014 of $38.9 million, or $0.67 per share.
For the three months ended September 30, 2014, the Company had primary new insurance written of $974.9 million compared to $429.9 million of primary new insurance written for the three months ended June 30, 2014. The Company did not write any new pool insurance in the first nine months of 2014.
"National MI saw tremendous growth in our new insurance written and risk-in-force during the third quarter," said Bradley Shuster, president and CEO of NMI Holdings, Inc. "National MI continues to increase our footprint in the market place and continues to acquire new customers while strengthening existing customer relationships."
As of September 30, 2014, the Company had primary risk-in-force of $435.7 million compared to primary risk-in-force of $220.9 million as of June 30, 2014. Pool risk-in-force was unchanged as of September 30, 2014 remaining at $93.1 million.
Total revenues for the third quarter were $6.6 million, comprised of $3.9 million in premiums earned, $1.3 million of investment income, $0.1 million of net realized gains and $1.2 million of gain from change in the fair value of the warrant liability. Total expenses for the quarter were $17.9 million.
Total revenues for the first nine months of 2014 were $15.4 million, comprised of $7.9 million in premiums earned, $4.3 million of investment income, $0.1 million of net realized gains and $3.0 million of gain from the change in the fair value of the warrant liability. Total expenses for the nine months ended September 30, 2014 were $55.8 million compared to $45.5 million for the nine months ended September 30, 2013, driven primarily by expanding operations and the hiring of personnel.
At September 30, 2014, the Company had approximately $446.0 million of cash and investments and book equity of $434.4 million or $7.44 in book value per share, based on shares outstanding of 58,363,334. This book value excludes any benefit attributable to the Company's net deferred tax asset.
Cash and investments at the holding company stood at $172.9 million at September 30, 2014, excluding investments in the Company's insurance subsidiaries. Cash and investments at the Company's insurance subsidiaries at September 30, 2014 was $273.2 million.
"I am pleased with the solid growth we have seen in the third quarter. We believe there is tremendous opportunity ahead for National MI and I am confident that we have positioned ourselves very well to realize our potential," Shuster added. "I, my executive management team and every employee at National MI are looking forward to closing out 2014, our first full year of writing business, on a very strong note," Shuster said.
Conference Call and Webcast Details
NMI Holdings, Inc. will hold a conference call today, November 6, 2014 at 2:00 p.m. Pacific time / 5:00 p.m. Eastern time to allow analysts and stockholders the opportunity to hear management discuss the Company's quarterly results. The conference call will be broadcast live on the Company's website, on the "Events and Presentations" page of the "Investors" section at http://ir.nationalmi.com. The call may also be accessed by dialing (888) 734-0328 inside the U.S., or (678) 894-3054 for international callers, using conference ID: 15462916 or by referencing NMI Holdings, Inc. Investors and analysts are asked to dial-in ten minutes before the conference call begins.
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 (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 ("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, 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," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "intends" 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 the development and maintenance of our customer base and implementing continued enhancements to our infrastructure and systems; changes in the business practices of the GSEs, including the timing of and final requirements in their proposed new mortgage insurer eligibility requirements or any of their decisions that may impact the use of private mortgage insurance; actions of existing competitors; changes to laws and regulations that impact the role of the GSEs in the secondary market or the use of private mortgage insurance 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" in our most recent Registration Statement on Form S-1, and described from time to time in subsequent reports filed with the U.S. Securities and Exchange Commission, including our Risk Factors detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2013, as updated from time to time in subsequent reports filed 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. Any forward-looking statement 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.
Media Contact:
Mary McGarity
Strategic Vantage Marketing & Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended September For the Nine Months Ended September
30, 30,
------------------------------------- ------------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Revenues (In Thousands, except for share data)
Premiums written
Direct $9,661 $482 $19,890 $483
Net premiums written 9,661 482 19,890 483
Increase in unearned premiums (5,761) - (11,993) -
Net premiums earned 3,900 482 7,897 483
Net investment income 1,342 1,519 4,299 3,336
Net realized investment gains (losses) 134 (308) 134 172
Gain (loss) from change in fair value of warrant
liability 1,240 468 3,009 (610)
Gain from settlement of warrants - - 37 -
Total Revenues 6,616 2,161 15,376 3,381
----- ----- ------ -----
Expenses
Insurance claims and claims expenses (26) - 2 -
Amortization of deferred policy acquisition costs 47 - 108 -
Other underwriting and operating expenses 17,848 16,034 55,725 45,480
Total Expenses 17,869 16,034 55,835 45,480
Loss before income taxes (11,253) (13,873) (40,459) (42,099)
Income tax benefit (277) - (1,574) -
Net Loss $(10,976) $(13,873) $(38,885) $(42,099)
======== ======== ======== ========
Loss per share
Basic and diluted loss per share $(0.19) $(0.25) $(0.67) $(0.76)
Weighted average common shares outstanding 58,363,334 55,637,480 58,239,251 55,589,674
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, December 31,
2014 2013
-------------- -------------
(In Thousands)
Total
investment
portfolio $308,564 $409,088
Cash and
cash
equivalents 137,485 55,929
Deferred
policy
acquisition
costs,
net 1,651 90
Software
and
equipment,
net 10,777 8,876
Other
assets 7,101 7,236
Total
Assets $465,578 $481,219
======== ========
Reserve
for
insurance
claims
and
claims
expenses $2 $ -
Accounts
payable
and
accrued
expenses 13,691 10,052
Unearned
premiums 13,440 1,446
Warrant
liability 3,312 6,371
Current
tax
payable 602 -
Deferred
tax
liability 133 133
Total
Liabilities 31,180 18,002
------ ------
Total
Shareholders'
Equity 434,398 463,217
Total
Liabilities
and
Shareholders'
Equity $465,578 $481,219
======== ========
New Insurance Written ("NIW"), Insurance in Force ("IIF") and Risk in Force ("RIF")
A significant portion of our NIW in the first nine months of 2014 was comprised of single premium policies. Our single premium polices are currently written in two ways: single premium policies written on a loan by loan basis ("Single") and single premium policies written on individual loans that are aggregated and delivered by the lender in a single transaction ("Aggregated Single"). Prior to writing Aggregated Single policies, the lender solicits single premium bids from us and other private MI companies. Because of the lower acquisition cost, the competitive bidding process and traditionally higher FICO scores associated with these policies, Aggregated Single policies have lower premiums than our Single premium policies.
While our single premium policies (including Single and Aggregated Single) currently represent the majority of our NIW and IIF, we expect the mix of our policy types to change meaningfully in future quarters with an increasing percentage of monthly premium policies. Our current long term expectation is for our total single premium polices (including Single and Aggregated Single) to collectively represent ten to twenty percent of our NIW and IIF as we expand our customer base and our business develops.
The tables on the following pages provide information on our IIF by different metrics for the periods presented, including weighted average premiums (in basis points), FICO distributions, LTVs, premiums written and earned, average loan sizes and geographic distribution.
The table below shows NIW, IIF, RIF, policies in force, the weighted-average coverage and loans in default, by quarter, for the last five quarters, for our primary book.
Primary Three Months Ended
------------------
September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
---- ---- ---- ---- ----
(Dollars in Thousands)
New insurance written $974,910 $429,944 $354,313 $157,568 $3,560
Insurance in force (1) $1,812,956 $939,753 $514,796 $161,731 $4,604
Risk in force (1) $435,722 $220,949 $115,467 $36,516 $1,196
Policies in force (1) 7,628 3,865 2,072 653 22
Weighted-average coverage (2) 24.0% 23.5% 22.4% 22.6% 26.0%
Loans in default (count) - 1 - - -
Risk in force on defaulted loans $ - $100 $ - $ - $ -
(1) Reported as of the end of the period.
(2) End of period RIF divided by IIF.
The table below shows primary and pool IIF, NIW and premiums written and earned by policy type.
Primary and Pool
As of and for the Three Months Ended September 30, 2014 As of and for the Three Months Ended June 30, 2014
------------------------------------------------------- --------------------------------------------------
IIF NIW Premiums Premiums IIF NIW Premiums Premiums
Written Earned Written Earned
--- --- -------- -------- --- --- -------- --------
(In Thousands)
Monthly $690,081 $423,625 $883 $883 $277,490 $206,767 $301 $301
Single 257,557 132,973 2,771 353 125,056 97,037 2,086 224
Aggregated Single 865,318 418,312 4,666 1,323 537,207 126,140 1,292 196
Total Primary 1,812,956 974,910 8,320 2,559 939,753 429,944 3,679 721
------------- --------- ------- ----- ----- ------- ------- ----- ---
Pool 4,822,061 - 1,341 1,341 4,936,751 - 1,372 1,372
Total $6,635,017 $974,910 $9,661 $3,900 $5,876,504 $429,944 $5,051 $2,093
===== ========== ======== ====== ====== ========== ======== ====== ======
As of and for the Three Months Ended March 31, 2014 As of and for the Three Months Ended December 31, 2013
--------------------------------------------------- ------------------------------------------------------
IIF NIW Premiums Premiums IIF NIW Premiums Premiums
Written Earned Written Earned
--- --- -------- -------- --- --- -------- --------
(In Thousands)
Monthly $73,734 $50,136 $99 $99 $24,558 $20,395 $25 $25
Single 28,020 26,518 535 56 1,790 1,790 47 7
Aggregated Single 413,042 277,659 3,150 355 135,383 135,383 1,572 166
Total Primary 514,796 354,313 3,784 510 161,731 157,568 1,644 198
------------- ------- ------- ----- --- ------- ------- ----- ---
Pool 5,028,677 - 1,394 1,394 5,089,517 - 1,414 1,414
Total $5,543,473 $354,313 $5,178 $1,904 $5,251,248 $157,568 $3,058 $1,612
===== ========== ======== ====== ====== ========== ======== ====== ======
As of and for the Three Months ended September 30, 2013
-------------------------------------------------------
IIF NIW Premiums Premiums
Written Earned
--- --- --------- ---------
(In Thousands)
Monthly $4,604 $3,560 $6 $6
Single - - - -
Aggregated
Single - - - -
Total
Primary 4,604 3,560 6 6
------- ----- ----- --- ---
Pool 5,171,664 5,171,664 476 476
Total $5,176,268 $5,175,224 $482 $482
===== ========== ========== ==== ====
The tables below show the initial weighted average premium, in basis points, the weighted average FICO and the weighted average LTV, by policy type, for the quarter in which the policy was originated.
Weighted Average Premium
September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
---- ---- ---- ---- ----
(Shown in Basis Points)
Monthly 59 58 56 64 66
Single 208 215 205 251 -
Aggregated
Single 112 102 113 116 -
Weighted Average FICO
September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
---- ---- ---- ---- ----
Monthly 746 747 749 747 762
Single 747 746 752 735 -
Aggregated
Single 760 758 759 759 -
Weighted Average LTV
September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
---- ---- ---- ---- ----
Monthly 92% 93% 92% 93% 92%
Single 92 93 92 92 -
Aggregated
Single 89 90 90 90 -
The table below reflects our total NIW, IIF and RIF by FICO as of September 30, 2014.
Total Portfolio NIW IIF RIF
--- --- ---
(Dollars in Thousands)
As of September 30, 2014
>= 740 $5,460,869 77.0% $5,104,453 76.9% $357,517 67.6%
680 - 739 1,431,757 20.2 1,344,541 20.3 156,291 29.6
620 - 679 200,377 2.8 186,023 2.8 15,004 2.8
<= 619 - - - - - -
Total $7,093,003 100.0% $6,635,017 100.0% $528,812 100.0%
========== ===== ========== ===== ======== =====
The table below reflects our primary NIW, IIF and RIF by FICO for the 2014 and 2013 books as of September 30, 2014.
Primary - 2014 Book NIW IIF RIF
--- --- ---
(Dollars in Thousands)
As of September 30, 2014
>= 740 $1,160,118 65.9% $1,106,148 65.6% $262,386 64.6%
680 - 739 551,900 31.4 532,697 31.6 131,980 32.5
620 - 679 47,149 2.7 46,439 2.8 12,022 2.9
<= 619 - - - - - -
Total $1,759,167 100.0% $1,685,284 100.0% $406,388 100.0%
---------- ----- ---------- ----- -------- -----
Primary - 2013 Book NIW * IIF RIF
---- --- ---
(Dollars in Thousands)
As of September 30, 2014
>= 740 $113,907 70.2% $87,918 68.9% $19,829 67.6%
680 - 739 47,102 29.0 38,751 30.4 9,232 31.5
620 - 679 1,163 0.8 1,003 0.7 273 0.9
<= 619 - - - - - -
Total $162,172 100.0% $127,672 100.0% $29,334 100.0%
-------- ----- -------- ----- ------- -----
The table below reflects our pool NIW, IIF and RIF by FICO for the 2013 book as of September 30, 2014.
Pool - 2013 Book NIW * IIF RIF
---- --- ---
(Dollars in Thousands)
As of September 30, 2014
>= 740 $4,186,844 81.0% $3,910,387 81.1% $75,302 80.9%
680 - 739 832,755 16.1 773,093 16.0 15,079 16.2
620 - 679 152,065 2.9 138,581 2.9 2,709 2.9
<= 619 - - - - - -
Total $5,171,664 100.0% $4,822,061 100.0% $93,090 100.0%
---------- ----- ---------- ----- ------- -----
* Represents total NIW for the year ended December 31, 2013.
The tables below reflect our average primary loan size by FICO and the percentage of our RIF by loan type.
September 30, December 31,
2014 2013
------------- ------------
Average Primary Loan Size
by FICO (In Thousands)
>= 740 $241 $253
680 - 739 233 237
620 - 679 216 194
<= 619 - -
Percentage of RIF by Loan Type Primary Pool
------- ----
As of September 30, 2014
Fixed 94.2% 100.0%
Adjustable rate mortgages:
Less than five years 0.1 -
Five years and longer 5.7 -
Total 100.0% 100.0%
===== =====
The following chart reflects our RIF by LTV ratio. We calculate the LTV ratio of a loan as a percentage of the original loan amount to the original value of the property securing the loan. In general, the lower the LTV ratio the lower the likelihood of a default, and for loans that default, a lower LTV ratio generally results in a lower severity for any claim, as the borrower has a higher amount of equity in the property.
Total RIF by LTV Primary Pool
------- ----
RIF % of Total Policy RIF % of Total Policy
LTV Count LTV Count
--- ---------- ------ --- ---------- ------
As of September 30, 2014 (Dollars in Thousands)
95.01% and above $2,236 0.5% 39 $ - - % -
90.01% to 95.00% 234,174 53.7 3,583 - - -
85.01% to 90.00% 164,794 37.8 2,735 - - -
80.01% to 85.00% 34,518 8.0 1,271 - - -
80.00% and below - - - 93,090 100.0 20,890
Total RIF $435,722 100.0% 7,628 $93,090 100.0% 20,890
======== ===== ===== ======= ===== ======
The following charts show the distribution by state of our IIF and RIF for primary and pool insurance. The distribution of risk across the states as of September 30, 2014 is not necessarily representative of the geographic distribution we expect in the future.
Top 10 Primary IIF and RIF by State IIF RIF
--- ---
As of September 30, 2014
1. California 18.5% 18.2%
2. Texas 6.1 6.3
3. Florida 4.4 4.4
4. Michigan 4.0 4.3
5. Virginia 4.0 4.0
6. Pennsylvania 4.0 3.8
7. North Carolina 3.7 3.8
8. Ohio 3.5 3.6
9. Arizona 3.3 3.4
10. Georgia 3.3 3.4
Total 54.8% 55.2%
===== ====
Top 10 Pool IIF and RIF by State IIF RIF
--- ---
As of September 30, 2014
1. California 28.6% 28.0%
2. Texas 5.4 5.5
3. Colorado 3.9 3.9
4. Washington 3.9 3.8
5. Massachusetts 3.7 3.6
6. Virginia 3.7 3.7
7. Illinois 3.6 3.7
8. New York 2.9 2.9
9. Florida 2.7 2.8
10. New Jersey 2.7 2.7
Total 61.1% 60.6%
===== ====
SOURCE NMI Holdings, Inc.
