NMI Holdings Inc.

11/05/2025 | Press release | Distributed by Public on 11/05/2025 05:00

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this report and our audited financial statements, notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2024 10-K, for a more complete understanding of our financial position and results of operations. In addition, investors should review the "Cautionary Note Regarding Forward-Looking Statements" above and the "Risk Factors" detailed in Part II, Item 1A of this report and in Part I, Item 1A of our 2024 10-K, as subsequently updated in other reports we file with the SEC, for a discussion of those risks and uncertainties that have the potential to affect our business, financial condition, results of operations, cash flows or prospects in a material and adverse manner. Our results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year or for any other period.
Overview
We provide private MI through our primary insurance subsidiary, NMIC. NMIC is wholly-owned, domiciled in Wisconsin and principally regulated by the Wisconsin OCI. NMIC is approved as an MI provider by the GSEs and is licensed to write coverage in all 50 states and D.C. Our subsidiary, NMIS, provides outsourced loan review services to mortgage loan originators and our subsidiary, Re One, historically provided reinsurance coverage to NMIC in accordance with certain statutory risk retention requirements. Such requirements have been repealed and the reinsurance coverage provided by Re One to NMIC has been commuted. Re One remains a wholly-owned, licensed insurance subsidiary; however, it does not currently have active insurance exposures.
MI protects lenders and investors from default-related losses on a portion of the unpaid principal balance of a covered mortgage. MI plays a critical role in the U.S. housing market by mitigating mortgage credit risk and facilitating the secondary market sale of high- loan-to-value (LTV) (i.e., above 80%) residential loans to the GSEs, who are otherwise restricted by their charters from purchasing or guaranteeing high-LTV mortgages that are not covered by certain credit protections. Such credit protection and secondary market sales allow lenders to increase their capacity for mortgage commitments and expand financing access to existing and prospective homeowners.
NMIH, a Delaware corporation, was incorporated in May 2011, and we began start-up operations in 2012 and wrote our first MI policy in 2013. Since formation, we have sought to establish customer relationships with a broad group of mortgage lenders and build a diversified, high-quality insured portfolio. As of September 30, 2025, we had issued master policies with 2,172 customers, including national and regional mortgage banks, money center banks, credit unions, community banks, builder-owned mortgage lenders, internet-sourced lenders and other non-bank lenders. As of September 30, 2025, we had $218.4 billion of primary insurance-in-force (IIF) and $58.5 billion of primary risk-in-force (RIF).
We believe that our success in acquiring a large and diverse group of lender customers and growing a portfolio of high-quality IIF traces to our founding principles, whereby we aim to help qualified individuals achieve their homeownership goals, ensure that we remain a strong and credible counter-party, deliver a high-quality customer service experience, establish a differentiated risk management approach that emphasizes the individual underwriting review or validation of the vast majority of the loans we insure, utilizing our proprietary Rate GPS®pricing platform to dynamically evaluate risk and price our policies, and foster a culture of collaboration and excellence that helps us attract and retain experienced industry leaders.
Our strategy is to continue to build on our position in the private MI market, expand our customer base and grow our insured portfolio of high-quality residential loans by focusing on long-term customer relationships, disciplined and proactive risk selection and pricing, fair and transparent claim payment practices, responsive customer service, and financial strength and profitability.
Our common stock trades on the Nasdaq under the symbol "NMIH." Our headquarters is located in Emeryville, California. As of September 30, 2025, we had 228 employees. Our corporate website is located at www.nationalmi.com. Our website and the information contained on or accessible through our website are not incorporated by reference into this report.
We discuss below our results of operations for the periods presented, as well as the conditions and trends that have impacted or are expected to impact our business, including new insurance writings, the composition of our insurance portfolio and other factors that we expect to impact our results.
Conditions and Trends Affecting Our Business
Macroeconomic Developments
Macroeconomic factors, including persistent inflation, elevated interest rates, flagging consumer confidence and increasing jobless claims could have a pronounced impact on the housing market, the mortgage insurance industry and our business in future periods. A marked decline in housing demand, a significant and protracted decrease in house prices or a sustained increase in unemployment could reduce the pace of new business activity in the private mortgage insurance market and negatively impact our future new insurance written (NIW) volume, or contribute to an increase in our future default and claim experience.
Key Factors Affecting Our Results
New Insurance Written, Insurance-In-Force and Risk-In-Force
NIW is the aggregate unpaid principal balance of mortgages underpinning new policies written during a given period. Our NIW is affected by the overall size of the mortgage origination market and the volume of high-LTV mortgage originations. Our NIW is also affected by the percentage of such high-LTV originations covered by private versus government MI or other alternative credit enhancement structures and our share of the private MI market. NIW, together with persistency, drives our IIF. IIF is the aggregate unpaid principal balance of the mortgages we insure, as reported to us by servicers at a given date, and represents the sum total of NIW from all prior periods less principal payments on insured mortgages and policy cancellations (including for prepayment, nonpayment of premiums, coverage rescission and claim payments). RIF is related to IIF and represents the aggregate amount of coverage we provide on all outstanding policies at a given date. RIF is calculated as the sum total of the coverage percentage of each individual policy in our portfolio applied to the unpaid principal balance of such insured mortgage. RIF is affected by IIF and the LTV profile of our insured mortgages, with lower LTV loans generally having a lower coverage percentage and higher LTV loans having a higher coverage percentage. Gross RIF represents RIF before consideration of reinsurance. Net RIF is gross RIF net of ceded reinsurance.
Net Premiums Written and Net Premiums Earned
We set our premium rates on individual policies based on the risk characteristics of the underlying mortgage loans and borrowers, and in accordance with our filed rates and applicable rating rules. We primarily price our policies through a proprietary risk-based pricing platform, which we refer to as Rate GPS®. Rate GPS®considers a broad range of individual variables, including property type, type of loan product, borrower credit characteristics, and lender and market factors, and provides us with the ability to set and charge premium rates commensurate with the underlying risk of each loan that we insure. While most of our new business is priced through Rate GPS®, we also offer a rate card pricing option to a limited number of lender customers who require a rate card for operational reasons. We believe that the utilization of Rate GPS®provides us with a more granular and analytical approach to evaluating and pricing risk, and that this approach enhances our ability to continue building a high-quality mortgage insurance portfolio and delivering attractive risk-adjusted returns.
Premiums are generally fixed for the duration of our coverage of the underlying loans. Net premiums written are equal to gross premiums written minus ceded premiums written under our reinsurance arrangements, less premium refunds and premium write-offs. As a result, net premiums written are generally influenced by:
•NIW;
•premium rates and the mix of premium payment type, which are either single, monthly or annual premiums, as described below;
•cancellation rates of our insurance policies, which are impacted by payments or prepayments on mortgages, refinancings (which are affected by prevailing mortgage interest rates as compared to interest rates on loans underpinning our in force policies), levels of claim payments and home prices; and
•cession of premiums under third-party reinsurance arrangements.
Premiums are paid either by the borrower (borrower-paid mortgage insurance or BPMI) or the lender (lender-paid mortgage insurance or LPMI) in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium). Our net premiums written will differ from our net premiums earned due to policy payment type. For single premiums, we receive a single premium payment at origination, which is earned over the estimated life of the policy. Substantially all of our single premium policies in force as of September 30, 2025 were non-refundable under most cancellation scenarios. If non-refundable single premium policies are canceled, we immediately recognize
the remaining unearned premium balances as earned premium revenue. Monthly premiums are recognized in the month billed and when the coverage is effective. Annual premiums are earned on a straight-line basis over the year of coverage. Substantially all of our policies provide for either single or monthly premiums.
The percentage of IIF that remains on our books after any twelve-month period is defined as our persistency rate. Because our insurance premiums are earned over the life of a policy, higher persistency rates can have a significant impact on our net premiums earned and profitability. Generally, faster speeds of mortgage prepayment lead to lower persistency. Prepayment speeds and the relative mix of business between single and monthly premium policies also impact our profitability. Our premium rates include certain assumptions regarding repayment or prepayment speeds of the mortgages underlying our policies. Because premiums are paid at origination on single premium policies and our single premium policies are generally non-refundable on cancellation, assuming all other factors remain constant, if single premium loans are prepaid earlier than expected, our profitability on these loans is likely to increase and, if loans are repaid slower than expected, our profitability on these loans is likely to decrease. By contrast, if monthly premium loans are repaid earlier than anticipated, we do not earn any more premium with respect to those loans and, unless we replace the repaid monthly premium loan with a new loan at the same premium rate or higher, our revenue is likely to decline.
Effect of Reinsurance on Our Results
We utilize third-party reinsurance to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements, and support the growth of our business. We currently have both quota share and excess-of-loss reinsurance agreements in place, which impact our results of operations and regulatory capital and PMIERs asset positions. Under a quota share reinsurance agreement, the reinsurer receives a premium in exchange for covering an agreed-upon portion of incurred losses. Such a quota share arrangement reduces premiums written and earned and also reduces RIF, providing capital relief to the ceding insurance company and reducing incurred claims in accordance with the terms of the reinsurance agreement. In addition, reinsurers typically pay ceding commissions as part of quota share transactions, which offset the ceding company's acquisition and underwriting expenses. Certain quota share agreements include profit commissions that are earned based on loss performance and serve to reduce ceded premiums. Under an excess-of-loss agreement, the ceding insurer is typically responsible for losses up to an agreed-upon threshold and the reinsurer then provides coverage in excess of such threshold up to a maximum agreed-upon limit. We expect to continue to evaluate reinsurance opportunities in the normal course of business.
See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance"for further discussion of these third-party reinsurance arrangements.
Portfolio Data
The following table presents NIW and primary IIF as of the dates and for the periods indicated. Unless otherwise noted, the tables below do not include the effects of our third-party reinsurance arrangements described above.
NIW and primary IIF
As of and for the three months ended For the nine months ended
September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024
NIW
IIF
NIW
IIF
NIW
(In Millions)
Monthly $ 12,727 $ 201,671 $ 11,978 $ 189,241 $ 33,990 $ 33,441
Single 285 16,705 240 18,297 707 678
Total
$ 13,012 $ 218,376 $ 12,218 $ 207,538 $ 34,697 $ 34,119
NIW increased 6% and 2%, respectively, during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024. NIW increased year-on-year primarily due to growth in our customer franchise and market presence tied to the increased penetration of existing customer accounts and new customer activations. Primary IIF increased 5% at September 30, 2025 compared to September 30, 2024, primarily due to the NIW generated between such measurement dates, partially offset by the run-off of in-force policies.
Our persistency rate was 83.9% at September 30, 2025 and 85.5% at September 30, 2024. Our persistency rate remains historically high due to a continued slowdown in the pace of mortgage refinancing activity tied to the prevailing interest and mortgage rate environment.
The following table presents net premiums written and earned for the periods indicated:
Net premiums written and earned
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
(In Thousands)
Net premiums written $ 146,960 $ 136,681 $ 434,399 $ 400,740
Net premiums earned 151,323 143,343 449,755 421,168
Net premiums written increased 8% during both the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024. Net premiums earned increased 6% and 7%, respectively, during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024. The growth in net premiums written and earned in each respective period was primarily driven by growth in our monthly IIF and monthly pay premium receipts.
Portfolio Statistics
Unless otherwise noted, the portfolio statistics tables presented below do not include the effects of our third-party reinsurance arrangements described above. The table below highlights trends in our primary portfolio as of the dates and for the periods indicated.
Primary portfolio trends As of and for the three months ended
September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024
($ Values In Millions, except as noted below)
New insurance written $ 13,012 $ 12,464 $ 9,221 $ 11,925 $ 12,218
Percentage of monthly premium 98 % 98 % 98 % 98 % 98 %
Percentage of single premium 2 % 2 % 2 % 2 % 2 %
New risk written $ 3,399 $ 3,260 $ 2,428 $ 3,134 $ 3,245
Insurance-in-force(1)
$ 218,376 $ 214,653 $ 211,308 $ 210,183 $ 207,538
Percentage of monthly premium 92 % 92 % 92 % 91 % 91 %
Percentage of single premium 8 % 8 % 8 % 9 % 9 %
Risk-in-force(1)
$ 58,538 $ 57,496 $ 56,515 $ 56,113 $ 55,253
Policies in force (count)(1)
677,010 668,638 661,490 659,567 654,374
Average loan size ($ value in thousands) (1)
$ 323 $ 321 $ 319 $ 319 $ 317
Coverage percentage (2)
26.8 % 26.8 % 26.7 % 26.7 % 26.6 %
Loans in default (count) (1)
7,093 6,709 6,859 6,642 5,712
Default rate (1)
1.05 % 1.00 % 1.04 % 1.01 % 0.87 %
Risk-in-force on defaulted loans (1)
$ 600 $ 569 $ 567 $ 545 $ 468
Average net premium yield (3)
0.28 % 0.28 % 0.28 % 0.27 % 0.28 %
Earnings from cancellations $ 0.7 $ 0.7 $ 0.6 $ 0.8 $ 0.8
Annual persistency(4)
83.9 % 84.1 % 84.3 % 84.6 % 85.5 %
Quarterly run-off(5)
4.3 % 4.3 % 3.9 % 4.5 % 4.0 %
(1) Reported as of the end of the period.
(2) Calculated as end of period 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.
The table below presents a summary of the change in total primary IIF for the dates and periods indicated.
Primary IIF As of and for the three months ended September 30, As of and for the nine months ended September 30,
2025 2024 2025 2024
(In Millions)
IIF, beginning of period $ 214,653 $ 203,501 $ 210,183 $ 197,029
NIW 13,012 12,218 34,697 34,119
Cancellations, principal repayments and other reductions (9,289) (8,181) (26,504) (23,610)
IIF, end of period $ 218,376 $ 207,538 $ 218,376 $ 207,538
We consider a "book" to be a collective pool of policies insured during a particular period, normally a calendar year. In general, the majority of underwriting profit, calculated as earned premium revenue minus claims and underwriting and operating expenses, generated by a particular book year emerges in the years immediately following origination. This pattern generally occurs because relatively few of the claims that a book will ultimately experience typically occur in the first few years following origination, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments), and by increasing losses.
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,
2025 2024
IIF RIF IIF RIF
Book year
(In Millions)
2025 $ 33,375 $ 8,739 $ - $ -
2024 39,821 10,576 32,892 8,743
2023 30,781 8,138 35,880 9,461
2022 43,051 11,563 49,130 13,086
2021 42,925 11,836 53,471 14,246
2020 and before 28,423 7,686 36,165 9,717
Total $ 218,376 $ 58,538 $ 207,538 $ 55,253
We utilize certain risk principles that form the basis of how we underwrite and originate NIW. We have established prudential underwriting standards and loan-level eligibility matrices which prescribe the maximum LTV, minimum borrower FICO score, maximum borrower debt-to-income (DTI) ratio, maximum loan size, property type, loan type, loan term and occupancy status of loans that we will insure and memorialized these standards and eligibility matrices in our Underwriting Guideline Manual that is publicly available on our website. Our underwriting standards and eligibility criteria are designed to limit the layering of risk in a single insurance policy. "Layered risk" refers to the accumulation of borrower, loan and property risk. For example, we have higher credit score and lower maximum allowed LTV requirements for investor-owned properties, compared to owner-occupied properties. We monitor the concentrations of various risk attributes in our insurance portfolio, which may change over time, in part, as a result of regional conditions or public policy shifts.
The tables below present our NIW by FICO, LTV and purchase/refinance mix for the periods indicated. We calculate the LTV of a loan as the percentage of the original loan amount to the original purchase value of the property securing the loan.
NIW by FICO
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
(In Millions)
>= 760 $ 6,789 $ 6,615 $ 18,283 $ 18,300
740-759 2,395 2,057 6,429 6,008
720-739 1,626 1,529 4,388 4,286
700-719 1,094 1,040 2,820 2,904
680-699 617 652 1,620 1,817
<=679 491 325 1,157 804
Total $ 13,012 $ 12,218 $ 34,697 $ 34,119
Weighted average FICO 756 757 756 757
NIW by LTV
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
(In Millions)
95.01% and above $ 1,566 $ 1,568 $ 4,257 $ 4,398
90.01% to 95.00% 5,809 5,720 15,569 15,779
85.01% to 90.00% 4,062 3,584 10,700 10,254
85.00% and below 1,575 1,346 4,171 3,688
Total $ 13,012 $ 12,218 $ 34,697 $ 34,119
Weighted average LTV 92.1 % 92.3 % 92.1 % 92.3 %
NIW by purchase/refinance mix
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
(In Millions)
Purchase $ 12,416 $ 11,708 $ 33,051 $ 33,122
Refinance
596 510 1,646 997
Total $ 13,012 $ 12,218 $ 34,697 $ 34,119
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,
2025 2024
($ Values In Millions)
>= 760 $ 109,470 50 % $ 103,764 50 %
740-759 39,273 18 36,830 18
720-739 30,275 14 28,930 14
700-719 20,355 9 19,654 10
680-699 13,447 6 13,326 6
<=679 5,556 3 5,034 2
Total $ 218,376 100 % $ 207,538 100 %
Primary RIF by FICO As of September 30,
2025 2024
($ Values In Millions)
>= 760 $ 29,084 50 % $ 27,396 50 %
740-759 10,589 18 9,850 18
720-739 8,211 14 7,788 14
700-719 5,575 10 5,337 10
680-699 3,662 6 3,590 6
<=679 1,417 2 1,292 2
Total $ 58,538 100 % $ 55,253 100 %
Primary IIF by LTV As of September 30,
2025 2024
($ Values In Millions)
95.01% and above $ 25,978 12 % $ 22,644 11 %
90.01% to 95.00% 107,914 49 101,872 49
85.01% to 90.00% 65,815 30 63,568 31
85.00% and below 18,669 9 19,454 9
Total $ 218,376 100 % $ 207,538 100 %
Primary RIF by LTV As of September 30,
2025 2024
($ Values In Millions)
95.01% and above $ 8,151 14 % $ 7,054 13 %
90.01% to 95.00% 31,850 54 30,100 54
85.01% to 90.00% 16,318 28 15,777 29
85.00% and below 2,219 4 2,322 4
Total $ 58,538 100 % $ 55,253 100 %
Primary RIF by Loan Type As of September 30,
2025 2024
Fixed 98 % 98 %
Adjustable rate mortgages:
Less than five years - -
Five years and longer 2 2
Total 100 % 100 %
The table below presents selected primary portfolio statistics, by book year, as of September 30, 2025.
As of September 30, 2025
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)
Current Default Rate (3)
($ Values In Millions)
2016 and prior $ 37,222 $ 1,877 5 % 151,615 10,098 221 406 2.1 % 0.4 % 2.2 %
2017 21,582 1,574 7 % 85,897 9,049 228 189 1.9 % 0.5 % 2.5 %
2018 27,295 2,065 8 % 104,043 11,334 342 205 2.4 % 0.5 % 3.0 %
2019 45,141 5,325 12 % 148,423 24,061 441 115 1.9 % 0.4 % 1.8 %
2020 62,702 17,582 28 % 186,174 63,301 534 65 1.3 % 0.3 % 0.8 %
2021 85,574 42,925 50 % 257,972 146,007 1,645 133 3.2 % 0.7 % 1.1 %
2022 58,734 43,051 73 % 163,281 127,661 2,021 185 16.4 % 1.4 % 1.6 %
2023 40,473 30,781 76 % 111,994 90,283 984 44 15.7 % 0.9 % 1.1 %
2024 46,044 39,821 86 % 120,747 108,356 633 2 12.7 % 0.5 % 0.6 %
2025 34,697 33,375 96 % 89,436 86,860 44 - 2.6 % - % 0.1 %
Total $ 459,464 $ 218,376 1,419,582 677,010 7,093 1,344
(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.
Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the dates indicated. The distribution of our primary RIF as of September 30, 2025 is not necessarily representative of the geographic distribution we expect in the future.
Top 10 primary RIF by state As of September 30,
2025 2024
California 10.1 % 10.1 %
Texas 8.3 8.7
Florida 7.2 7.4
Georgia 4.0 4.1
Illinois 4.0 3.9
Washington 3.7 3.9
Virginia 3.7 3.8
Pennsylvania 3.5 3.4
Ohio 3.4 3.2
New York 3.3 3.1
Total 51.2 % 51.6 %
Insurance Claims and Claim Expenses
Insurance claims and claim expenses incurred represent estimated future payments on newly defaulted insured loans and any change in our claim estimates for previously existing defaults. Claims incurred are generally affected by a variety of factors, including the macroeconomic environment, national and regional unemployment trends, changes in housing values, borrower risk characteristics, LTV ratios and other loan level risk attributes, the size and type of loans insured, the percentage of coverage on insured loans, and the level of reinsurance coverage maintained against insured exposures.
Reserves for claims and claim expenses are established for mortgage loans that are in default. A loan is considered to be in default as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments. We
establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, and additional loans that we estimate (based on actuarial review and other factors) to be in default that have not yet been reported to us by servicers, referred to as IBNR. We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees and other general expenses of administering the claim settlement process. Reserves are not established for future claims on insured loans which are not currently reported or which we estimate are not currently in default.
Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of the claim payment expected to be paid on each such loan in default, which is referred to as claim severity. Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, cure rates, size of the loan and estimated change in property value. Reserves are released the month in which a loan in default is brought current by the borrower, which is referred to as a cure. Adjustments to reserve estimates are reflected in the period in which the adjustment is made. Reserves are also ceded to reinsurers under the QSR Transactions, XOL Transactions and ILN Transactions as applicable under each treaty. We have not yet ceded reserves under any of the XOL Transactions or ILN Transactions as incurred claims and claim expenses on each respective reference pool remain within our retained coverage layer for each transaction.
Our reserve setting process considers the beneficial impact of forbearance, foreclosure moratorium and other assistance programs that may be made available to certain defaulted borrowers. The effectiveness of forbearance and other such assistance programs can be further enhanced by the availability of various repayment and loan modification options which typically allow borrowers to amortize or, in certain instances, outright defer payments otherwise missed during a period of dislocation over an extended length of time. We generally observe that forbearance, repayment and modification, and other assistance programs are an effective tool to bridge dislocated borrowers from a time of acute stress to a future date when they can resume timely payment of their mortgage obligations, and note higher cure rates on defaults benefitting from broad-based assistance programs than would otherwise be expected on similarly situated loans that did not benefit from such programs.
The actual claims we incur as our portfolio matures are difficult to predict and depend on the specific characteristics of our current in-force book (including the credit score and DTI ratio of the borrower, the LTV ratio of the mortgage and geographic concentrations, among others), as well as the risk profile of new business we write in the future. In addition, claims experience will be affected by macroeconomic factors such as housing prices, interest rates, unemployment rates and other events, such as natural disasters or global pandemics, and any federal, state or local governmental response thereto.
Macroeconomic factors, including persistent inflation, elevated interest rates, flagging consumer confidence and increasing jobless claims could have a pronounced impact on the housing market, the mortgage insurance industry and our business in future periods. A marked decline in housing demand, a significant and protracted decrease in house prices, or a sustained increase in unemployment could contribute to an increase in our future default and claims experience.
The following table provides a reconciliation of the beginning and ending gross reserve balances for insurance claims and claim expenses:
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
(In Thousands)
Beginning balance $ 163,033 $ 125,443 $ 152,071 $ 123,974
Less reinsurance recoverables (1)
(32,705) (27,336) (32,260) (27,514)
Beginning balance, net of reinsurance recoverables 130,328 98,107 119,811 96,460
Add claims incurred:
Claims and claim expenses incurred:
Current year (2)
27,228 21,160 88,584 71,532
Prior years(3)
(8,674) (10,839) (52,440) (57,241)
Total claims and claim expenses incurred (4)
18,554 10,321 36,144 14,291
Less claims paid:
Claims and claim expenses paid:
Current year (2)
170 180 280 180
Prior years(3)
4,138 1,942 12,607 4,265
Reinsurance terminations (5)
(458) - (1,964) -
Total claims and claim expenses paid 3,850 2,122 10,923 4,445
Reserve at end of period, net of reinsurance recoverables 145,032 106,306 145,032 106,306
Add reinsurance recoverables (1)
35,315 29,214 35,315 29,214
Ending balance $ 180,347 $ 135,520 $ 180,347 $ 135,520
(1) Related to ceded losses recoverable under the QSR Transactions. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance"for additional information.
(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 $77.2 million attributed to net case reserves and $9.8 million attributed to net IBNR reserves for the nine months ended September 30, 2025 and $63.2 million attributed to net case reserves and $7.0 million attributed to net IBNR reserves for the nine months ended September 30, 2024.
(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 $43.2 million attributed to net case reserves and $8.1 million attributed to net IBNR reserves for the nine months ended September 30, 2025 and $49.8 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the nine months ended September 30, 2024.
(4) Excludes aggregate termination fees of $0.3 million for the nine months ended September 30, 2025 incurred in connection with the termination of the 2016 QSR Transaction and amendment of the 2018 and 2021 QSR Transactions.
(5) Represents the settlement of reinsurance recoverables in conjunction with the termination of the 2016 QSR Transaction and amendment of the 2018 and 2021 QSR Transactions. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance"for additional information.
The "claims incurred"section of the table above shows claims and claim expenses incurred on defaults occurring in current and prior years, including IBNR reserves and is presented net of reinsurance. We may increase or decrease our claim estimates and reserves as we learn additional information about individual defaulted loans and continue to observe and analyze loss development trends in our portfolio. Gross reserves of $70.6 million related to prior year defaults remained as of September 30, 2025.
The following table provides a reconciliation of the beginning and ending count of loans in default:
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
Beginning default inventory 6,709 4,904 6,642 5,099
Plus: new defaults 2,529 2,411 7,119 6,015
Less: cures (2,044) (1,529) (6,353) (5,215)
Less: claims paid (93) (67) (281) (168)
Less: rescission and claims denied (8) (7) (34) (19)
Ending default inventory 7,093 5,712 7,093 5,712
Ending default inventory increased from September 30, 2024 to September 30, 2025, primarily due to the growth and seasoning of our insured portfolio, as well as the emergence of storm-related defaults on insured loans in areas declared by the Federal Emergency Management Agency to be individual disaster zones, partially offset by cure activity within our default population during the intervening period.
The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions for the periods indicated:
For the three months ended September 30, For the nine months ended September 30,
2025 2024 2025 2024
($ Values In Thousands)
Number of claims paid (1)
93 67 281 168
Total amount paid for claims $ 5,364 $ 2,692 $ 16,101 $ 5,714
Average amount paid per claim
$ 58 $ 40 $ 57 $ 34
Severity (2)
73 % 64 % 74 % 58 %
(1) Count includes 14 and 50 claims settled without payment during the three and nine months ended September 30, 2025, respectively, and 21 and 56 claims settled without payment during the three and nine months ended September 30, 2024, 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.
We paid 93 and 281 claims during the three and nine months ended September 30, 2025, respectively, and 67 and 168 claims during the three and nine months ended September 30, 2024, respectively. The number of claims paid in each period was modest relative to the size of our insured portfolio and we generally observe that the borrowers of the loans we insure are well-situated with strong credit profiles, stable 30-year fixed rate mortgages, manageable debt service obligations and significant appreciated equity in their homes. An increase in the value of the homes collateralizing the mortgages we insure provides defaulted borrowers with alternative paths and incentives to cure their loan prior to the development of a claim.
Our claims severity was 73% and 74% for the three and nine months ended September 30, 2025, respectively, compared to 64% and 58% for the three and nine months ended September 30, 2024. The increase in claims severity for the three and nine months ended September 30, 2025, was primarily due to a greater proportion of claims related to loans originated in recent years. These loans generally have less accumulated equity than loans from earlier vintages, which typically results in higher claims payments and an increase in claims severity. Our claims severity for each period was below long-term industry norms.
The number of claims paid and our severity experience in future periods may be impacted if developing economic cycles impose financial strain on borrowers, and each could increase if house price declines serve to limit the alternative paths and incentives to cure delinquencies that are available to defaulted borrowers or erode the equity value of the homes collateralizing the mortgages we insure.
The following table provides detail on our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the dates indicated:
Average reserve per default: As of September 30,
2025 2024
(In Thousands)
Case (1)
$ 23.3 $ 21.8
IBNR (1)(2)
2.1 1.9
Total $ 25.4 $ 23.7
(1) Defined as the gross reserve per insured loan in default.
(2) Amount includes claims adjustment expenses.
Average reserve per default increased from September 30, 2024 to September 30, 2025, due to changes in the composition of our default inventory as measured by the size, vintage and current estimated LTV of defaulted loans between the measurement dates. Average reserves per default were further impacted by changes in observed and forecasted housing market conditions and macroeconomic factors between the measurement dates.
GSE Oversight
As anapproved insurer, NMIC is subject to ongoing compliance with the PMIERs established by each of the GSEs (italicizedterms have the same meaning that such terms have in the PMIERs, as described below). The PMIERs establish operational, business, remedial and financial requirements applicable toapproved insurers. The PMIERs financial requirements prescribe a risk-based methodology whereby the amount of assets required to be held against each insured loan is determined based on certain loan-level risk characteristics, such as FICO, vintage (year of origination), performing vs. non-performing (i.e., current vs. delinquent), LTV ratio and other risk features. In general, higher quality loans carry lower asset charges.
Under the PMIERs,approved insurersmust maintainavailable assetsthat equal or exceedminimum required assets, which is an amount equal to the greater of (i) $400 million or (ii) a total risk-based required asset amount.
Available assets reflect the financial resources of a mortgage insurer available to pay claims, and includes the most readily liquid assets held, such as cash, investments and other items as stipulated in PMIERs Section 703. The credit provided for such liquid assets is further subject to adjustment based on several factors, including asset class, credit rating and portfolio concentration.
Therisk-based required asset amount is a function of the risk profile of anapproved insurer'sRIF, assessed on a loan-by-loan basis and considered against certain risk-based factors derived from tables set out in the PMIERs, which is then adjusted on an aggregate basis for reinsurance transactions approved by the GSEs, such as with respect to our ILN Transactions, XOL Transactions and QSR Transactions. Theaggregate gross risk-based required asset amount for performing, primary insurance is subject to a floor of 5.6% ofperforming primary adjusted RIF.
By April 15th of each year, NMIC must certify it met all PMIERs requirements as of December 31st of the prior year. We certified to the GSEs by April 15, 2025 that NMIC was in full compliance with the PMIERs as of December 31, 2024. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of a failure to meet one or more of the PMIERs requirements. We continuously monitor NMIC's compliance with the PMIERs.
The following table provides a comparison of the PMIERs available assetsand net risk-based required assetamount as reported by NMIC as of the dates indicated:
As of September 30,
2025 2024
(In Thousands)
Available assets $ 3,369,950 $ 3,006,892
Net risk-based required assets
2,003,410 1,735,790
Available assets were $3.4 billion at September 30, 2025, compared to $3.0 billion at September 30, 2024. The $363 million increase in available assetsbetween the dates presented was primarily driven by NMIC's positive cash flow from
operations during the intervening period, partially offset by the payment of an ordinary course dividend from NMIC to NMIH in June 2025.
Netrisk-based required assetswere $2.0 billion at September 30, 2025, compared to $1.7 billion at September 30, 2024. The $268 million increase in therisk-based required asset amount between the dates presented was primarily due to the growth in our gross RIF and aggregate gross risk-based required assetamount.
Consolidated Results of Operations
Consolidated statements of operations For the three months ended September 30,
$ Change
% Change
2025 2024
2025 vs. 2024
Revenues ($ In Thousands, except for per share data)
Net premiums earned $ 151,323 $ 143,343 $ 7,980 6 %
Net investment income 26,773 22,474 4,299 19 %
Net realized investment gains (losses) 321 (10) 331
NM (4)
Other revenues 262 285 (23) (8) %
Total revenues 178,679 166,092 12,587 8 %
Expenses
Insurance claims and claim expenses 18,554 10,321 8,233 80 %
Underwriting and operating expenses 29,156 29,160 (4) - %
Service expenses 162 208 (46) (22) %
Interest expense 7,124 7,076 48 1 %
Total expenses 54,996 46,765 8,231 18 %
Income before income taxes 123,683 119,327 4,356 4 %
Income tax expense 27,684 26,517 1,167 4 %
Net income $ 95,999 $ 92,810 $ 3,189 3 %
Earnings per share - Basic $ 1.24 $ 1.17 $ 0.07 6 %
Earnings per share - Diluted $ 1.22 $ 1.15 $ 0.07 6 %
Loss ratio (1)
12.3 % 7.2 %
Expense ratio (2)
19.3 % 20.3 %
Combined ratio (3)
31.5 % 27.5 %
For the three months ended September 30, $ Change % Change
Non-GAAP financial measures (5)
2025 2024 2025 vs. 2024
($ In Thousands, except for per share data)
Adjusted income before tax $ 123,362 $ 119,337 $ 4,025 3 %
Adjusted net income 95,745 92,818 2,927 3 %
Adjusted diluted EPS 1.21 1.15 0.06 5 %
Consolidated statements of operations For the nine months ended September 30,
$ Change
% Change
2025 2024
2025 vs. 2024
Revenues ($ In Thousands, except for per share data)
Net premiums earned $ 449,755 $ 421,168 $ 28,587 7 %
Net investment income 75,408 62,598 12,810 20 %
Net realized investment losses
(55) (10) (45) 450 %
Other revenues 596 711 (115) (16) %
Total revenues 525,704 484,467 41,237 9 %
Expenses
Insurance claims and claim expenses 36,477 14,291 22,186 155 %
Underwriting and operating expenses 88,839 87,305 1,534 2 %
Service expenses 388 539 (151) (28) %
Interest expense 21,345 29,794 (8,449) (28) %
Total expenses 147,049 131,929 15,120 11 %
Income before income taxes 378,655 352,538 26,117 7 %
Income tax expense 83,946 78,599 5,347 7 %
Net income $ 294,709 $ 273,939 $ 20,770 8 %
Earnings per share - Basic $ 3.78 $ 3.42 $ 0.36 11 %
Earnings per share - Diluted $ 3.72 $ 3.36 $ 0.36 11 %
Loss ratio (1)
8.1 % 3.4 %
Expense ratio (2)
19.8 % 20.7 %
Combined ratio
27.9 % 24.1 %
For the nine months ended September 30,
$ Change
% Change
Non-GAAP financial measures (5)
2025 2024
2025 vs. 2024
($ In Thousands, except for per share data)
Adjusted income before tax $ 378,710 $ 359,514 $ 19,196 5 %
Adjusted net income 294,752 279,450 15,302 5 %
Adjusted diluted EPS 3.72 3.43 0.29 8 %
(1) Loss ratio is calculated by dividing insurance claims and claim 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.
(4) Not meaningful.
(5) See "Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures,"below.
Revenues
Net premiums earned increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 primarily due to growth in our monthly IIF and monthly pay premium receipts.
Net investment income increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 primarily due to growth in the size of our total invested asset base, as well as an increase in the book yield of our investment portfolio tied to the deployment of new cash flows and reinvestment of rolling maturities at incrementally higher rates.
Other revenues represent underwriting fee revenue generated by our subsidiary, NMIS, which provides outsourced loan review services to mortgage loan originators. Changes in other revenues primarily reflect changes in NMIS' outsourced loan
review volume. Amounts recognized in other revenues generally correspond with amounts incurred as service expenses for outsourced loan review activities in the same periods.
Expenses
We recognize insurance claims and claim expenses in connection with the loss experience of our insured portfolio and incur other underwriting and operating expenses, including employee compensation and benefits, policy acquisition costs, and technology, professional services and facilities expenses, in connection with the development and operation of our business. We also incur service expenses in connection with NMIS' outsourced loan review activities.
Insurance claims and claim expenses increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 primarily due to an increase in the number of newly defaulted loans that emerged in the respective periods and the establishment of initial reserves against such loans, as well as an increase in the average case reserves held against previously defaulted loans that aged in their delinquency status, partially offset by the release of a portion of the reserves we established for anticipated claims payments in prior periods in connection with cure activity and the ongoing analysis of recent loss development trends.
Underwriting and operating expenses increased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to an increase in certain technology expenses and a decrease in ceding commissions received under our QSR Transactions.
Service expenses represent third-party costs incurred by NMIS in connection with the services it provides. Changes in service expenses primarily reflect changes in NMIS' outsourced loan review volume. Amounts incurred as service expenses generally correspond with amounts recognized in other revenues in the same periods.
Interest expense primarily reflects the carrying costs of our outstanding debt. Interest expense for the nine months ended September 30, 2024 includes $7.0 million of non-recurring costs related to the refinancing of the 2020 Notes and 2021 Revolving Credit Facility. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 4, Debt."
Income tax expense increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 primarily due to the growth in our pre-tax income. Our effective tax rate on pre-tax income was 22.4% and 22.2% for the three and nine months ended September 30, 2025, respectively, compared to 22.2% and 22.3% for the three and nine months ended September 30, 2024, respectively. As a U.S. taxpayer, we are subject to a statutory U.S. federal corporate income tax rate of 21%. Our provision for income taxes for interim periods is established based on our estimated annual effective tax rate for a given year and reflects the impact of discrete tax effects in the period in which they occur. Our effective tax rates for the three and nine months ended September 30, 2025 and 2024 include the discrete tax effects of the vesting of RSUs. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 9, Income Taxes."
Net Income
Net income and adjusted net income increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, primarily due to growth in our total revenues, partially offset by increases in our insurance claims and claim expenses and income tax expense. Adjusted net income for the nine months ended September 30, 2024 reflects a $7.0 million adjustment for non-recurring costs incurred in connection with the refinancing of the 2020 Notes and 2021 Revolving Credit Facility.
Diluted and adjusted diluted EPS increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 primarily due to growth in our net income, as well as a decline in the number of weighted average diluted shares outstanding tied to share repurchase activity.
The non-GAAP financial measures of adjusted income before tax, adjusted net income and adjusted diluted EPS are presented to enhance the comparability of financial results between periods.
Non-GAAP Financial Measure Reconciliations For the three months ended September 30,
$ Change
% Change
2025 2024
2025 vs. 2024
As reported ($ In Thousands, except for per share data)
Income before income taxes $ 123,683 $ 119,327 $ 4,356 4 %
Income tax expense 27,684 26,517 1,167 4 %
Net income $ 95,999 $ 92,810 $ 3,189 3 %
Adjustments
Net realized investment (gains) losses
(321) 10 (331)
NM (2)
Adjusted income before tax $ 123,362 $ 119,337 $ 4,025 3 %
Income tax (benefit) expense on adjustments(1)
(67) 2 (69)
NM (2)
Adjusted net income $ 95,745 $ 92,818 $ 2,927 3 %
Weighted average diluted shares outstanding 78,830 81,045 (2,215) (3) %
Adjusted diluted EPS $ 1.21 $ 1.15 $ 0.06 5 %
Non-GAAP Financial Measure Reconciliations For the nine months ended September 30,
$ Change
% Change
2025 2024
2025 vs. 2024
As reported ($ In Thousands, except for per share data)
Income before income taxes $ 378,655 $ 352,538 $ 26,117 7 %
Income tax expense 83,946 78,599 5,347 7 %
Net income $ 294,709 $ 273,939 $ 20,770 8 %
Adjustments
Net realized investment losses
55 10 45 450 %
Capital markets transaction costs
- 6,966 (6,966) (100) %
Adjusted income before tax $ 378,710 $ 359,514 $ 19,196 5 %
Income tax expense on adjustments(1)
12 1,465 (1,453) (99) %
Adjusted net income $ 294,752 $ 279,450 $ 15,302 5 %
Weighted average diluted shares outstanding 79,315 81,484 (2,169) (3) %
Adjusted diluted EPS $ 3.72 $ 3.43 $ 0.29 8 %
(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.
(2) Not meaningful.
Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures
We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income and adjusted diluted EPS 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 taxis defined as GAAP income before tax, excluding the pre-tax effects of net realized gains or losses from our investment portfolio, periodic costs incurred in connection with capital markets transactions, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.
Adjusted net incomeis defined as GAAP net income, excluding the after-tax effects of net realized gains or losses from our investment portfolio, periodic costs incurred in connection with capital markets transactions, 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 EPSis 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 years that non-vested shares are anti-dilutive under GAAP.
Although adjusted income before tax, adjusted net income and adjusted diluted EPS 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.
•Net realized investment gains and losses. The recognition of 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.
•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.
•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.
Consolidated balance sheets September 30, 2025 December 31, 2024
$ Change
% Change
(In Thousands)
Total investment portfolio $ 3,015,560 $ 2,723,541 $ 292,019 11 %
Cash and cash equivalents 130,439 54,308 76,131 140 %
Premiums receivable, net 85,733 82,804 2,929 4 %
Deferred policy acquisition costs, net 64,192 64,327 (135) -
Software and equipment, net 22,762 25,681 (2,919) (11) %
Reinsurance recoverable 35,315 32,260 3,055 9 %
Prepaid federal income taxes 322,175 322,175 - -
Other assets 51,017 44,877 6,140 14 %
Total assets $ 3,727,193 $ 3,349,973 $ 377,220 11 %
Debt $ 416,548 $ 415,146 $ 1,402 -
Unearned premiums 49,796 65,217 (15,421) (24) %
Accounts payable and accrued expenses 93,407 103,164 (9,757) (9) %
Reserve for insurance claims and claim expenses 180,347 152,071 28,276 19 %
Deferred tax liability, net 463,264 386,192 77,072 20 %
Other liabilities 8,960 10,751 (1,791) (17) %
Total liabilities 1,212,322 1,132,541 79,781 7 %
Total shareholders' equity 2,514,871 2,217,432 297,439 13 %
Total liabilities and shareholders' equity $ 3,727,193 $ 3,349,973 $ 377,220 11 %
Total cash and investments increased at September 30, 2025 compared to December 31, 2024 with the addition of incremental cash provided by operating activities and a decrease in the unrealized loss position of our fixed income portfolio primarily tied to changes in interest rates during the nine months ended September 30, 2025, partially offset by share repurchase activity during the period. Cash and investments at September 30, 2025 included $148.1 million held by NMIH.
Net premiums receivable represents premiums due on our mortgage insurance policies and may fluctuate based on changes in our monthly premium policies in force, where premiums are generally paid one month in arrears, and the pace of settlement of previously outstanding receivables.
Net deferred policy acquisition costs decreased at September 30, 2025 compared to December 31, 2024 primarily due to the recognition of previously deferred policy acquisition costs during the nine months ended September 30, 2025, partially offset by the deferral of certain costs associated with the origination of new policies during the period.
Net software and equipment decreased at September 30, 2025 compared to December 31, 2024 primarily due to the amortization of previously capitalized amounts during the nine months ended September 30, 2025.
Reinsurance recoverable increased at September 30, 2025 compared to December 31, 2024 due to an increase in ceded losses recoverable under the QSR Transactions tied to an increase in our gross reserve for insurance claims and claim expenses.
Prepaid federal income taxes represent tax and loss bonds purchased in connection with our claimed tax deduction for our statutory contingency reserve position. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 9, Income Taxes."
Other assets increased at September 30, 2025 compared to December 31, 2024 primarily due to an increase in current income taxes receivable and accrued investment income, partially offset by a reduction in our right-of-use assets tied to amortization of the operating lease for our corporate headquarters.
Unearned premiums decreased at September 30, 2025 compared to December 31, 2024 due to the amortization of existing unearned premiums through earnings in accordance with the expiration of risk on related single premium policies and the cancellations of other single premium policies during the nine months ended September 30, 2025, partially offset by single premium policy originations during the period.
Accounts payable and accrued expenses decreased at September 30, 2025 compared to December 31, 2024 primarily due to a reduction in accrued interest on the 2024 Notes, which is payable semi-annually in February and August, and the settlement of previously accrued compensation expenses during the nine months ended September 30, 2025, partially offset by an increase in unsettled trade payables related to the purchase of certain investment securities.
Reserve for insurance claims and claim expenses increased at September 30, 2025 compared to December 31, 2024 with the establishment of initial reserves on newly defaulted loans and an increase in the average case reserves held against previously defaulted loans that aged in their delinquent status during the nine months ended September 30, 2025. The increase was partially offset by the release of a portion of the reserves we established for anticipated claims payments in prior periods (in connection with cure activity and ongoing analysis of recent loss development trends), as well as the payment of previously reserved claims during the period. See "Insurance Claims and Claim Expenses," above for further details.
Net deferred tax liability increased at September 30, 2025 compared to December 31, 2024 due to an increase in the claimed deductibility of our statutory contingency reserve, as well as a decrease in the aggregate unrealized loss position of our fixed income portfolio recorded in other comprehensive income. For further information regarding income taxes and their impact on our results of operations and financial position, see Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 9, Income Taxes."
The following table summarizes our consolidated cash flows from operating, investing and financing activities:
Consolidated cash flows For the nine months ended September 30,
$ Change
2025 2024
2025 vs. 2024
Net cash provided by (used in): (In Thousands)
Operating activities $ 357,556 $ 357,783 $ (227)
Investing activities (198,810) (253,156) 54,346
Financing activities (82,615) (67,997) (14,618)
Net increase in cash and cash equivalents
$ 76,131 $ 36,630 $ 39,501
Net cash provided by operating activities decreased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to an increase in taxes paid, the semi-annual interest payments made on the 2024 Notes and net claim settlement costs, largely offset by an increase in our net premium receipts and growth in our investment income.
Cash used in investing activities for the nine months ended September 30, 2025 and 2024 reflects the purchase of fixed and short-term maturities with cash provided by operating activities, and the reinvestment of coupon payments, sales, maturities and redemption proceeds within our investment portfolio.
Cash used in financing activities primarily relates to the repurchase of common stock and taxes paid on the net share settlement of equity awards for certain employees. Cash used in financing activities for the nine months ended September 30, 2024 benefitted from the net impact of the issuance of the 2024 Notes and redemption of the 2020 Notes during the period.
Liquidity and Capital Resources
NMIH serves as the holding company for our insurance subsidiaries and does not have any significant operations of its own. NMIH's principal liquidity demands include funds for (i) payment of certain corporate expenses; (ii) payment of certain reimbursable expenses of its insurance subsidiaries; (iii) payment of the interest related to the 2024 Notes and 2024 Revolving Credit Facility; (iv) tax payments to the Internal Revenue Service; (v) capital support for its subsidiaries; (vi) repurchase of its common stock; and (vii) payment of dividends, if any, on its common stock. NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware law provides that dividends are only payable out of a corporation's surplus or recent net profits (subject to certain limitations).
As of September 30, 2025, NMIH had $148.1 million of cash and cash equivalents, and investments. NMIH's principal sources of net cash are dividends from its subsidiaries and investment income. NMIC paid a $98.4 million ordinary course dividend to NMIH on June 2, 2025, representing its full ordinary course dividend capacity payable under Wisconsin insurance laws for the twelve-month period ending December 31, 2025. NMIH also has access to $250 million of undrawn revolving credit capacity under the 2024 Revolving Credit Facility.
On July 31, 2023, our Board of Directors authorized a $200 million repurchase program (the 2023 Repurchase Program), effective through December 31, 2025. On February 5, 2025, our Board of Directors authorized a new $250 million repurchase program (the 2025 Repurchase Program), effective through December 31, 2027, and extended the effectiveness of the 2023 Repurchase Program through December 31, 2027 to align its remaining tenor with that of the 2025 Repurchase Program. The authorizations provide NMIH with the flexibility, based on market and business conditions, stock price and other factors, to repurchase stock from time to time through open market repurchases, privately negotiated transactions, or other means, including pursuant to Rule 10b5-1 trading plans.
During the nine months ended September 30, 2025, NMIH repurchased 2.0 million shares of common stock at a total cost of $73.7 million, excluding associated costs and applicable taxes. As of September 30, 2025, NMIH had $256.4 million of repurchase authority remaining.
NMIH has entered into tax and expense-sharing agreements with its subsidiaries which have been approved by the Wisconsin OCI, with such approvals subject to change or revocation at any time. Among such agreements, the Wisconsin OCI has approved the allocation of interest expense on the 2024 Notes and 2024 Revolving Credit Facility to NMIC, to the extent proceeds from such offering and facility are contributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.
The 2024 Notes mature on August 15, 2029 and bear interest at a rate of 6.00%, payable semi-annually on February 15 and August 15. The 2024 Revolving Credit Facility matures on May 21, 2029, and accrues interest at a variable rate equal to, at our discretion, (i) a Base Rate (as defined in the 2024 Revolving Credit Facility, subject to a floor of 1.00% per annum) plus a margin of 0.375% to 1.875% per annum, or (ii) the Adjusted Term SOFR Rate (as defined in the 2024 Revolving Credit Facility) plus a margin of 1.375% to 2.875% per annum, with the margin in each of (i) or (ii) based on our applicable corporate credit rating at the time. Borrowings under the 2024 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations.
Under the 2024 Revolving Credit Facility, NMIH is required to pay a quarterly commitment fee on the average daily undrawn amount of 0.175% to 0.525%, based on the applicable corporate credit rating at the time. As of September 30, 2025, the applicable commitment fee was 0.225%.
We are subject to certain covenants under the 2024 Revolving Credit Facility, including: a maximum debt-to-total capitalization ratio of 35%, a minimum consolidated net worth requirement (as defined therein), and a requirement to maintain compliance with the financial standards prescribed by the PMIERs (subject to any GSE approved waivers). We were in compliance with all covenants at September 30, 2025.
NMIC and Re One are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate and by the GSEs. Under Wisconsin insurance laws, NMIC and Re One may pay dividends up to specified levels (i.e.,"ordinary" dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts, or "extraordinary" dividends, are subject to the Wisconsin OCI's prior approval. Under Wisconsin insurance laws, an extraordinary dividend is defined as any payment or distribution that, together with other dividends and distributions made within the preceding twelve months, exceeds the lesser of (i) 10% of the insurer's statutory policyholders' surplus as of the preceding December 31 or (ii) adjusted statutory net income for the twelve-month period ending the preceding December 31.On June 2, 2025, NMIC paid a $98.4 million ordinary course dividend to NMIH, representing its full ordinary course dividend capacity payable under Wisconsin insurance laws for the twelve-month period ending December 31, 2025.
As an approved insurerunder PMIERs, NMIC would generally be subject to additional restrictions on its ability to pay dividends to NMIH if it failed to meet the financial requirements prescribed by PMIERs. Approved insurers that fail to meet the prescribed PMIERs financial requirements are not permitted to pay dividends without prior approval from the GSEs.
NMIH may require liquidity to fund the capital needs of its insurance subsidiaries. NMIC's capital needs depend on many factors including its ability to successfully write new business, establish premium rates at levels sufficient to cover claims and operating costs, access the reinsurance markets and meet minimum required assetthresholds under the PMIERs and minimum state capital requirements (respectively, as defined therein).
As an approved mortgage insurer and Wisconsin-domiciled carrier, NMIC is required to satisfy financial and/or capitalization requirements stipulated by each of the GSEs and the Wisconsin OCI. The financial requirements stipulated by the GSEs are outlined in the PMIERs. Under the PMIERs, NMIC must maintain available assetsthat are equal to or exceed a minimum risk-based required assetamount, subject to a minimum floor of $400 million.
Available assets reflect the financial resources of a mortgage insurer available to pay claims, and includes the most
readily liquid assets held, such as cash, investments and other items as stipulated in PMIERs Section 703. The credit provided for such liquid assets is further subject to adjustment based on several factors, including asset class, credit rating and portfolio concentration.
The risk-based required assetamount under PMIERs is determined at an individual policy-level based on the risk characteristics of each insured loan. Loans with higher risk factors, such as higher LTVs or lower borrower FICO scores, are assessed a higher charge. Non-performing loans that have missed two or more payments are generally assessed a significantly higher charge than performing loans, regardless of the underlying borrower or loan risk profile; however, special consideration is given under PMIERs to loans that are delinquent on homes located in an area declared by the Federal Emergency Management Agency to be a Major Disaster zone eligible for Individual Assistance.
NMIC's PMIERs minimum risk-based required assetamount is also adjusted for its reinsurance transactions (as approved by the GSEs). Under NMIC's quota share reinsurance treaties, it receives credit for the PMIERs risk-based required assetamount on ceded RIF. As its gross PMIERs risk-based required assetamount on ceded RIF increases, the PMIERs credit for ceded RIF automatically increases as well (in an unlimited amount). Under NMIC's ILN and XOL Transactions, it generally receives credit for the PMIERs risk-based required assetamount on ceded RIF to the extent such requirement is within the subordinated coverage (excess of loss detachment threshold) afforded by the transaction.
NMIC is also subject to state regulatory minimum capital requirements based on its RIF. Formulations of this minimum capital vary by state, however, the most common measure allows for a maximum ratio of RIF to statutory capital (commonly referred to as RTC) of 25:1. The RTC calculation does not assess a different charge or impose a different threshold RTC limit based on the underlying risk characteristics of the insured portfolio. Non-performing loans are treated the same as performing loans under the RTC framework. As such, the PMIERs generally imposes a stricter financial requirement than the state RTC standard.
As of September 30, 2025, NMIC had a RTC ratio of 13.1:1 with $41.3 billion of primary RIF, net of reinsurance, and $3.1 billion of total statutory capital, including contingency reserves. Re One has no risk in force remaining and no longer reports a RTC ratio.
NMIC's principal sources of liquidity include (i) premium receipts on its insured portfolio and new business production, (ii) interest income on its investment portfolio and principal repayments on maturities therein, and (iii) existing cash and cash equivalent holdings. At September 30, 2025, NMIC had $3.0 billion of cash and investments, including $88.2 million of cash and cash equivalents. NMIC's principal liquidity demands include funds for the payment of (i) reimbursable holding company expenses, (ii) premiums ceded under our reinsurance transactions (iii) claims payments, and (iv) taxes as due or otherwise deferred through the purchase of tax and loss bonds. NMIC's cash inflow is generally significantly in excess of its cash outflow in any given period. During the twelve-month period ended September 30, 2025, NMIC generated $388 million of cash flow from operations and received an additional $266 million of cash flow on the maturity and redemption of securities held in its investment portfolio. NMIC is not a party to any contracts (derivative or otherwise) that require it to post an increasing amount of collateral to any counterparty and NMIC's principal liquidity demands (other than claims payments) generally develop along a scheduled path (i.e., are of a contractually predetermined amount and due at a contractually predetermined date). NMIC's only use of cash with the potential to develop along an unscheduled path is claims payments. Given the relatively small size of our current population of defaulted policies, the generally extended duration of the default-to-foreclosure-to-claim cycle, and the potential availability of forbearance, foreclosure moratorium and other borrower assistance programs (which serve to further extend the default-to-foreclosure-to-claim cycle timeline), we do not expect NMIC to use a meaningful amount of cash to settle claims in the near-term.
Debt and Financial Strength Ratings
NMIC's financial strength is rated "A-" by Fitch Ratings (Fitch), "A3" by Moody's, and "A-" by S&P. NMIH's 2024 Notes are rated "BBB-" by Fitch and "Baa3" by Moody's. The outlook for all ratings provided by Fitch and Moody's is positive and the outlook for all ratings provided by S&P is stable.
Consolidated Investment Portfolio
The primary objectives of our investment activity are to generate investment income and preserve capital, while maintaining sufficient liquidity to cover our operating needs. We aim to achieve diversification by type, quality, maturity, and industry. We have adopted an investment policy that defines, among other things, eligible and ineligible investments; concentration limits for asset types, industry sectors, single issuers, and certain credit ratings; and benchmarks for asset duration.
Our investment portfolio is comprised entirely of fixed maturity instruments. As of September 30, 2025, the fair value of our investment portfolio was $3.0 billion and we held an additional $130.4 million of cash and cash equivalents. Pre-tax book yield on the investment portfolio for the nine months ended September 30, 2025 was 3.3%. Book yield is calculated as period-to-date net investment income divided by the average amortized cost of the investment portfolio. The yield on our investment portfolio is likely to change over time based on movements in interest rates, credit spreads, the duration or mix of our holdings and other factors.
The following tables present a breakdown of our investment portfolio and cash and cash equivalents by investment type and credit rating:
Percentage of portfolio's fair value September 30, 2025 December 31, 2024
Corporate debt securities 67 % 67 %
Municipal debt securities 20 23
Cash, cash equivalents, and short-term investments 8 5
U.S. treasury securities and obligations of U.S. government agencies
3 4
Asset-backed securities 2 1
Total 100 % 100 %
Investment portfolio ratings at fair value (1)
September 30, 2025 December 31, 2024
AAA (2)
9 % 8 %
AA (3)
31 35
A (3)
51 46
BBB (3)
9 11
BB (4)
- -
Total 100 % 100 %
(1) Excluding certain operating cash accounts.
(2) Includes short-term securities rated A-1+.
(3) Includes +/- ratings.
(4) We held one security with a BB rating at December 31, 2024, which is not identifiable in the table due to rounding.
All of our investments are rated by one or more nationally recognized statistical rating organizations. If three or more ratings are available, we assign the middle rating for classification purposes, otherwise we assign the lowest rating.
Investment Securities - Allowance for credit losses
We did not recognize an allowance for credit loss for any security in the investment portfolio as of September 30, 2025 or December 31, 2024, and we did not record any provision for credit loss for investment securities during the three and nine months ended September 30, 2025 or 2024.
As of September 30, 2025, the investment portfolio had gross unrealized losses of $95.5 million, of which $95.1 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer. As of December 31, 2024, the investment portfolio had gross unrealized losses of $158.6 million, of which $150.8 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer.
We evaluated the securities in an unrealized loss position as of September 30, 2025, assessing their credit ratings as well as any adverse conditions specifically related to the security. Based upon our assessment of the amount and timing of cash flows to be collected over the remaining life of each instrument, we believe the unrealized losses as of September 30, 2025 are not indicative of the ultimate collectability of the current amortized cost of the securities. Rather, the unrealized losses on securities held as of September 30, 2025 were primarily driven by fluctuations in interest rates, and to a lesser extent, movements in credit spreads following the purchase of those securities.
Critical Accounting Estimates
We use accounting principles and methods that conform to GAAP. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
We believe that the assumptions and estimates associated with revenue recognition, our investment portfolio, deferred policy acquisition costs, and reserves for insurance claims and claim expenses have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting estimates. There have not been any material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2024 10-K.
NMI Holdings Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 11:01 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]