Total Revenue: $173.2 million, a record for the first quarter. Net Income: $102.6 million, or $1.28 per diluted share, a record figure. Return on Equity: 18.1% for the quarter. New Insurance Written (NIW): $9.2 billion. Primary Insurance in Force: $211.3 billion, up 1% from the previous quarter and 6% year-over-year. 12-Month Persistency: 84.3% in the first quarter. Net Premiums Earned: $149.4 million, a record for the quarter. Net Yield: 28.4 basis points, up from 27.5 basis points in the previous quarter. Investment Income: $23.7 million for the quarter. Underwriting and Operating Expenses: $30.2 million, with an expense ratio of 20.2%. Claims Expense: $4.5 million, down from $17.3 million in the previous quarter. Total Cash and Investments: $2.9 billion at quarter end. Shareholders' Equity: $2.3 billion, with a book value per share of $29.65. Common Stock Repurchase: $25.9 million, retiring 718,000 shares at an average price of $36.12. Total Available Assets under PMIERs: $3.2 billion, with excess available assets of $1.4 billion.

Warning! GuruFocus has detected 2 Warning Sign with NMIH.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

NMI Holdings Inc (NASDAQ:NMIH) delivered record financial results in the first quarter with total revenue reaching $173.2 million. The company achieved a record GAAP net income of $102.6 million, or $1.28 per diluted share, with an 18.1% return on equity. NMI Holdings Inc (NASDAQ:NMIH) generated $9.2 billion of new insurance written (NIW) volume, ending the quarter with a record $211.3 billion of high-quality primary insurance in force. The company extended its long-term IT engagement with Tata Consultancy Services on favorable terms, ensuring continued innovation and efficiency. NMI Holdings Inc (NASDAQ:NMIH) maintained a strong balance sheet with $2.9 billion in total cash and investments, and $1.4 billion in excess available assets under PMIERs.

Negative Points

The 12-month persistency rate slightly decreased to 84.3% from 84.6% in the previous quarter. The default rate remained unchanged at 1%, with 6,859 defaults reported at the end of the quarter. Claims expense in the first quarter was $4.5 million, although this was a decrease from $17.3 million in the fourth quarter. The company faced challenges related to the macroeconomic environment, including potential impacts from tariffs and other economic policies. Despite strong performance, there is a concern about the normalization of credit performance in newer vintages compared to pre-pandemic vintages.

Story Continues

Q & A Highlights

Q: Can you discuss the performance of newer vintages in your portfolio? Are you seeing stable performance or some normalization after strong past performance? A: (Adam Pollitzer, CEO) We apply the same rigorous underwriting and risk management to recent vintages as we have historically. Recent vintages show higher incurred loss ratios compared to pre-pandemic ones, primarily due to differences in equity levels. However, the borrower profiles remain consistent, and we expect normalization as the portfolio seasons. Overall, performance is satisfactory with no major concerns.

Q: What is the average equity in your defaulted loans? A: (Aurora Swithenbank, CFO) The average mark-to-market equity on our defaulted population is 73.2%.

Q: Regarding the TCS renewal, will there be any impact on your operating expenses for this year? A: (Adam Pollitzer, CEO) We are pleased to extend our partnership with TCS, which has been beneficial for innovation and efficiency. The renewal terms are favorable, and we expect our expenses to remain roughly the same as the current run rate, with minimal changes.

Q: Have you adjusted pricing or credit loss expectations due to economic uncertainties like tariffs? A: (Adam Pollitzer, CEO) We continuously adjust our pricing to reflect emerging risks, but our approach already embeds conservatism to account for potential downturns. While we refine our strategies in response to macroeconomic concerns, there is no wholesale change in our market engagement.

Q: What was the provision for new notices in Q1 compared to Q4? A: (Aurora Swithenbank, CFO) We reserved $13,500 for new notices, excluding hurricane-related ones, which is roughly equivalent to the previous quarter. In total, we posted under $26 million of reserves against new notices in Q1, consistent with Q4 when normalized for certain factors.

Q: Did you provide details on the buyback during the quarter? A: (Aurora Swithenbank, CFO) Yes, we repurchased $25.9 million worth of common stock, retiring 718,000 shares.

Q: Is there concern about adverse selection related to PMI extinguishment in strong vintage portfolios? A: (Adam Pollitzer, CEO) We are not seeing adverse selection. The rate environment primarily drives refinancing opportunities. While automatic cancellations may occur more in lower LTV loans, borrower behavior remains consistent across vintages.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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