NMI Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
NMIH$39.03-11.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001547903-24-000139
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001547903-24-000159
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 201 previous paragraphs and 200 current paragraphs.
147 unchanged; 50 reworded; 3 added; 2 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 29 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
On August 21, 2024, the GSEs and FHFA updated PMIERs to revise the Available Asset credit mortgage insurers will receive for certain assets based on several factors, including asset class and credit rating. The updated PMIERs will take effect on a phased basis beginning March 31, 2025 and will be fully implemented on September 30, 2026. We do not expect the updated PMIERs to have a material impact on ouravailable assetsand risk-based required assets, and we expect to remain in full compliance with the existing and updated PMIERs, as applicable, prior to, on and after March 31, 2025.
Current report
Other assets were $44.5 million as of September 30, 2024, compared to $40.4 million as of December 31, 2023. The increase was primarily driven by an increase in accrued investment income and prepaid expenses, as well as the capitalization of deferred debt issuance costs incurred in connection with the establishment of the 2024 Revolving Credit Facility, partially offset by a reduction in our right-of-use assets tied to the amortization of the operating lease for our corporate headquarters.
Current report
On August 21, 2024, the GSEs and FHFA updated PMIERs to revise the Available Asset credit mortgage insurers will receive for certain assets based on several factors, including asset class and credit rating. The updated PMIERs will take effect on a phased basis beginning March 31, 2025 and will be fully implemented on September 30, 2026. We do not expect the updated PMIERs to have a material impact on ouravailable assets andrisk-based required assets, and we expect to remain in full compliance with the existing and updated PMIERs, as applicable, prior to, on and after March 31, 2025.
Removed paragraphs (2)
Previous report
(3) Combined ratio may not foot due to rounding.
Previous report
Other assets were $87.1 million as of June 30, 2024, compared to $40.4 million as of December 31, 2023. The increase was primarily driven by a $43.0 million increase in unsettled trade receivables due on the maturity of certain investments at June 30, 2024.
Reworded paragraphs (50)
Previous wording
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 June 30, 2024, we had issued master policies with 2,022 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 June 30, 2024, we had $203.5 billion of primary insurance-in-force (IIF) and $54.0 billion of primary risk-in-force (RIF).
Current wording
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, 2024, we had issued master policies with 2,062 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, 2024, we had $207.5 billion of primary insurance-in-force (IIF) and $55.3 billion of primary risk-in-force (RIF).
Previous wording
Our common stock trades on the Nasdaq under the symbol “NMIH.” Our headquarters is located in Emeryville, California. As of June 30, 2024, we had 228 employees. Our corporate website is located atwww.nationalmi.com. Our website and the information contained on or accessible through our website are not incorporated by reference into this report.
Current wording
Our common stock trades on the Nasdaq under the symbol “NMIH.” Our headquarters is located in Emeryville, California. As of September 30, 2024, we had 229 employees. Our corporate website is located atwww.nationalmi.com. Our website and the information contained on or accessible through our website are not incorporated by reference into this report.
Previous wording
The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease (over a ten-year period in the case of Oaktown Re III Ltd. and Oaktown Re V Ltd. and 12.5-year period in the case of Oaktown Re VI Ltd. and Oaktown Re VII Ltd.) as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled. As the reinsurance coverage decreases, a prescribed amount of collateral held in trust by the Oaktown Re Vehicles is distributed to ILN Transaction noteholders as amortization of the outstanding insurance-linked note principal balances. The outstanding reinsurance coverage amounts stop amortizing, and the distribution of collateral assets to ILN Transaction noteholders and amortization of insurance-linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event).
Current wording
The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease (over a ten-year period in the case of Oaktown Re V Ltd. and 12.5-year period in the case of Oaktown Re VI Ltd. and Oaktown Re VII Ltd.) as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled. As the reinsurance coverage decreases, a prescribed amount of collateral held in trust by the Oaktown Re Vehicles is distributed to ILN Transaction noteholders as amortization of the outstanding insurance-linked note principal balances. The outstanding reinsurance coverage amounts stop amortizing, and the distribution of collateral assets to ILN Transaction noteholders and amortization of insurance-linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event).
Previous wording
Effective July 25, 2024, NMIC exercised its optional call to terminate the 2019 ILN Transaction. In connection with the termination of the transaction, NMIC’s excess of loss reinsurance agreement with Oaktown Re III Ltd. was commuted and the insurance-linked notes issued by Oaktown Re III Ltd. were redeemed in full with a distribution of remaining collateral assets.
Current wording
Effective July 25, 2024, NMIC exercised its optional call to terminate a reinsurance agreement with and the associated insurance-linked notes issued by Oaktown Re III Ltd. In connection with the termination, NMIC’s excess of loss reinsurance agreement with Oaktown Re III Ltd. was commuted and the insurance-linked notes issued by Oaktown Re III Ltd. were redeemed in full with a distribution of remaining collateral assets.
Previous wording
The following table presents NIW and primary and pool 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.
Current wording
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.
Previous wording
NIW for the three and six months ended June 30, 2024 was $12.5 billion and $21.9 billion, respectively, compared to $11.5 billion and $20.2 billion for the three and six months ended June 30, 2023, respectively. 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.
Current wording
NIW for the three and nine months ended September 30, 2024 was $12.2 billion and $34.1 billion, respectively, compared to $11.3 billion and $31.5 billion for the three and nine months ended September 30, 2023, respectively. 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.
Previous wording
Primary IIF increased 6% at June 30, 2024 compared to June 30, 2023, primarily due to the NIW generated between such measurement dates, partially offset by the run-off of in-force policies. Our persistency rate was 85.4% at June 30, 2024 and 86.0% at June 30, 2023. 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.
Current wording
Primary IIF increased 7% at September 30, 2024 compared to September 30, 2023, primarily due to the NIW generated between such measurement dates, partially offset by the run-off of in-force policies. Our persistency rate was 85.5% at September 30, 2024 and 86.2% at September 30, 2023. 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.
Previous wording
Net premiums written increased 14% and 15%, respectively, and net premiums earned increased 12%, consecutively, during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, primarily driven by growth in our monthly IIF and monthly pay premium receipts, as well as a decline in the total premiums ceded under our reinsurance treaties.
Current wording
Net premiums written increased 11% and 13%, respectively, and net premiums earned increased 10% and 11%, respectively, during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, primarily driven by growth in our monthly IIF and monthly pay premium receipts, as well as a decline in the total premiums ceded under our reinsurance treaties.
Previous wording
(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 $43.1 million attributed to net case reserves and $6.4 million attributed to net IBNR reserves for the six months ended June 30, 2024 and $39.1 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for the six months ended June 30, 2023.
Current wording
(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 $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 and $54.4 million attributed to net case reserves and $5.8 million attributed to net IBNR reserves for the nine months ended September 30, 2023.
Previous wording
(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 $39.2 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the six months ended June 30, 2024 and $30.3 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the six months ended June 30, 2023.
Current wording
(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 $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 and $41.1 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the nine months ended September 30, 2023.
Previous wording
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 $61.4 million related to prior year defaults remained as of June 30, 2024.
Current wording
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 $45.1 million related to prior year defaults remained as of September 30, 2024.
Previous wording
Ending default inventory increased from June 30, 2023 to June 30, 2024, primarily due to the growth and natural seasoning of our insured portfolio, largely offset by cure activity within our default population during the intervening period.
Current wording
Ending default inventory increased from September 30, 2023 to September 30, 2024, primarily due to the growth and seasoning of our insured portfolio, partially offset by cure activity within our default population during the intervening period.
Previous wording
(1) Count includes 19 and 35 claims settled without payment during the three and six months ended June 30, 2024, respectively, and 17 and 24 claims settled without payment during the three and six months ended June 30, 2023, respectively.
Current wording
(1) Count includes 21 and 56 claims settled without payment during the three and nine months ended September 30, 2024, respectively, and 23 and 47 claims settled without payment during the three and nine months ended September 30, 2023, respectively.
Previous wording
We paid 59 and 101 claims during the three and six months ended June 30, 2024, respectively, and 46 and 67 claims during the three and six months ended June 30, 2023, 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.
Current wording
We paid 67 and 168 claims during the three and nine months ended September 30, 2024, respectively, and 62 and 129 claims during the three and nine months ended September 30, 2023, 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.
Previous wording
Our claims severity was 54% for both the three and six months ended June 30, 2024 compared to 62% and 56% for the three and six months ended June 30, 2023, respectively. Our claims severity for each period was below long-term industry norms and benefited from the same broad national house price appreciation that supported our claims paid experience. An increase in the value of the homes collateralizing the mortgages we insure provides additional equity support to our risk exposure and raises the prospect of a third-party sale of a foreclosed property, which can mitigate the severity of our settled claims.
Current wording
Our claims severity was 64% and 58% for the three and nine months ended September 30, 2024, respectively, compared to 46% and 51% for the three and nine months ended September 30, 2023, respectively. Our claims severity for each period was below long-term industry norms and benefited from the same broad national house price appreciation that supported our claims paid experience. An increase in the value of the homes collateralizing the mortgages we insure provides additional equity support to our risk exposure and raises the prospect of a third-party sale of a foreclosed property, which can mitigate the severity of our settled claims.
Previous wording
Average reserve per default increased modestly from June 30, 2023 to June 30, 2024, primarily due to changes in the composition of our default inventory as measured by the size, vintage and current estimated LTV of defaulted loans. Average reserves per default were further impacted by changes in observed and forecasted housing market conditions and macroeconomic factors between the measurement dates.
Current wording
Average reserve per default decreased from September 30, 2023 to September 30, 2024, primarily due to changes in observed and forecasted housing market conditions and macroeconomic factors, as well as 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.
Previous wording
Available assets were $2.8 billion at June 30, 2024, compared to $2.5 billion at June 30, 2023. The $336 million increase inavailable assets between 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 May 2024. Available assetsat June 30, 2024 excludes $43 million of unsettled trade receivables due on the maturity of certain investments.
Current wording
Available assets were $3.0 billion at September 30, 2024, compared to $2.6 billion at September 30, 2023. The $404 million increase inavailable assets between 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 May 2024.
Previous wording
Net risk-based required assets were $1.7 billion at June 30, 2024, compared to $1.3 billion at June 30, 2023. The $334 million increase in the risk-based required asset amount between the dates presented was primarily due to the growth in our gross RIF and aggregate gross risk-based required asset amount.
Current wording
Net risk-based required assets were $1.7 billion at September 30, 2024, compared to $1.4 billion at September 30, 2023. The $322 million increase in the risk-based required asset amount between the dates presented was primarily due to the growth in our gross RIF and aggregate gross risk-based required asset amount.
Previous wording
Net premiums earned were $141.2 million and $277.8 million for the three and six months ended June 30, 2024, respectively, compared to $126.0 million and $247.7 million for the three and six months ended June 30, 2023, respectively. The year-on-year increase in net premiums earned in each respective period was primarily driven by growth in our monthly IIF and monthly pay premium receipts, as well as a decline in the total premiums ceded under our reinsurance treaties.
Current wording
Net premiums earned were $143.3 million and $421.2 million for the three and nine months ended September 30, 2024, respectively, compared to $130.1 million and $377.8 million for the three and nine months ended September 30, 2023, respectively. The year-on-year increase in net premiums earned in each respective period was primarily driven by growth in our monthly IIF and monthly pay premium receipts, as well as a decline in the total premiums ceded under our reinsurance treaties.
Previous wording
Net investment income was $20.7 million and $40.1 million for the three and six months ended June 30, 2024, respectively, compared to $16.5 million and $31.4 million for the three and six months ended June 30, 2023, respectively. The year-on-year increase in net investment income in each respective period was primarily driven by 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, as well as growth in the size of our total invested asset base.
Current wording
Net investment income was $22.5 million and $62.6 million for the three and nine months ended September 30, 2024, respectively, compared to $17.9 million and $49.3 million for the three and nine months ended September 30, 2023, respectively. The year-on-year increase in net investment income in each respective period was primarily driven by 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, as well as growth in the size of our total invested asset base.
Previous wording
Other revenues were $0.3 million and $0.4 million for the three and six months ended June 30, 2024, respectively, compared to $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively. 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.
Current wording
Other revenues were $0.3 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, compared to $0.2 million and $0.6 million for the three and nine months ended September 30, 2023, respectively. 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.
Previous wording
Insurance claims and claim expenses were $0.3 million and $4.0 million for the three and six months ended June 30, 2024, respectively, compared to $2.9 million and $9.6 million for the three and six months ended June 30, 2023, respectively. The decrease in insurance claims and claim expenses in each respective period was primarily driven 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 loss development trends), partially offset by the establishment of initial reserves on newly defaulted loans during the periods, as well as an increase in the average case reserve held against previously defaulted loans that aged in their delinquent status.
Current wording
Insurance claims and claim expenses were $10.3 million and $14.3 million for the three and nine months ended September 30, 2024, respectively, compared to $4.8 million and $14.4 million for the three and nine months ended September 30, 2023, respectively. The increase in insurance claims and claim expenses for the three months ended September 30, 2024 was primarily driven by the establishment of initial reserves on newly defaulted loans, as well as an increase in the average case reserve held against previously defaulted loans that have aged in their delinquency status, and 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.
Previous wording
Underwriting and operating expenses were $28.3 million and $58.1 million for the three and six months ended June 30, 2024, respectively, compared to $27.4 million and $53.2 million for the three and six months ended June 30, 2023, respectively. The increase in underwriting and operating expenses in each respective period primarily reflects an adjustment to the pace of amortization of certain deferred policy acquisition costs, as well as an increase in employee compensation costs, partially offset by an increase in ceding commissions received under our QSR Transactions and a decline in certain technology expenses.
Current wording
Underwriting and operating expenses were $29.2 million and $87.3 million for the three and nine months ended September 30, 2024, respectively, compared to $27.7 million and $81.0 million for the three and nine months ended September 30, 2023, respectively. The increase in underwriting and operating expenses in each respective period primarily reflects an increase in employee compensation costs and an adjustment to the pace of amortization of certain deferred policy acquisition costs, partially offset by an increase in ceding commissions received under our QSR Transactions and a decline in certain technology expenses.
Previous wording
Service expenses were $0.2 million and $0.3 million for the three and six months ended June 30, 2024, respectively, compared to $0.3 million for both the three and six months ended June 30, 2023. 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.
Current wording
Service expenses were $0.2 million and $0.5 million for the three and nine months ended September 30, 2024, respectively, compared to $0.2 million and $0.6 million for the three and nine months ended September 30, 2023, respectively. 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.
Previous wording
Interest expense was $14.7 million and $22.7 million for the three and six months ended June 30, 2024, respectively, compared to $8.0 million and $16.1 million for the three and six months ended June 30, 2023, respectively. Interest expense for the three and six months ended June 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.”
Current wording
Interest expense was $7.1 million and $29.8 million for the three and nine months ended September 30, 2024, respectively, compared to $8.1 million and $24.1 million for the three and nine months ended September 30, 2023, respectively. Interest expense for the three months ended September 30, 2024 reflects the lower interest rate achieved on the 2024 Notes as compared to the 2020 Notes they refinanced. 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.”
Previous wording
Income tax expense was $26.6 million and $52.1 million for the three and six months ended June 30, 2024, respectively, compared to $23.8 million and $45.5 million for the three and six months ended June 30, 2023, respectively. The increase in income tax expense in each respective period was primarily driven by growth in our pre-tax income. Our effective tax rate on pre-tax income was 22.4% and 22.3% for the three and six months ended June 30, 2024, respectively, compared to 22.8% and 22.7% for the three and six months ended June 30, 2023, 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 six months ended June 30, 2024 and 2023 reflect the discrete tax effects of the vesting of RSUs and exercise of options. See Item 1, “Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 8, Income Taxes.”
Current wording
Income tax expense was $26.5 million and $78.6 million for the three and nine months ended September 30, 2024, respectively, compared to $23.3 million and $68.8 million for the three and nine months ended September 30, 2023, respectively. The increase in income tax expense in each respective period was primarily driven by growth in our pre-tax income. Our effective tax rate on pre-tax income was 22.2% and 22.3% for the three and nine months ended September 30, 2024, respectively, compared to 21.8% and 22.4% for the three and nine months ended September 30, 2023, 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, 2024 and 2023 reflect the discrete tax effects of the vesting of RSUs and exercise of options. See Item 1, “Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 8, Income Taxes.”
Previous wording
Net income was $92.1 million and $181.1 million for the three and six months ended June 30, 2024, respectively, compared to $80.3 million and $154.7 million for the three and six months ended June 30, 2023, respectively. Adjusted net income was $97.6 million and $186.6 million for the three and six months ended June 30, 2024, respectively, compared to $80.3 million and $154.8 million for the three and six months ended June 30, 2023, respectively. The increase in net income and adjusted net income in each respective period were primarily driven by growth in our total revenues, as well as a decline in our insurance claims and claim expenses, partially offset by increases in income tax expense and underwriting and operating expenses. The increase in net income in each respective period was further offset by an increase in our interest expense related to non-recurring costs incurred in connection with the refinancing of the 2020 Notes and 2021 Revolving Credit Facility. Such amounts are excluded from the calculation of adjusted net income.
Current wording
Net income was $92.8 million and $273.9 million for the three and nine months ended September 30, 2024, respectively, compared to $84.0 million and $238.7 million for the three and nine months ended September 30, 2023, respectively. Adjusted net income was $92.8 million and $279.5 million for the three and nine months ended September 30, 2024, respectively, compared to $84.0 million and $238.7 million for the three and nine months ended September 30, 2023, respectively. Net income and adjusted net income increased in each respective period primarily due to growth in our total revenues, partially offset by increases in our income tax expense and underwriting and operating expenses. Net income for the nine months ended September 30, 2024 includes non-recurring costs incurred in connection with the refinancing of the 2020 Notes and 2021 Revolving Credit Facility; such amounts are excluded from the calculation of adjusted net income.
Previous wording
Diluted EPS was $1.13 and $2.22 for the three and six months ended June 30, 2024, respectively, compared to $0.95 and $1.83 for the three and six months ended June 30, 2023, respectively. Adjusted diluted EPS was $1.20 and $2.28 for the three and six months ended June 30, 2024, respectively, compared to $0.95 and $1.83 for the three and six months ended June 30, 2023, respectively. Diluted and adjusted diluted EPS increased in each respective period primarily due to growth in our net income and adjusted net income, as well as a decline in the number of weighted average diluted shares outstanding tied to share repurchase activity.
Current wording
Diluted EPS was $1.15 and $3.36 for the three and nine months ended September 30, 2024, respectively, compared to $1.00 and $2.83 for the three and nine months ended September 30, 2023, respectively. Adjusted diluted EPS was $1.15 and $3.43 for the three and nine months ended September 30, 2024, respectively, compared to $1.00 and $2.83 for the three and nine months ended September 30, 2023, respectively. Diluted and adjusted diluted EPS increased in each respective period primarily due to growth in our net income and adjusted net income, as well as a decline in the number of weighted average diluted shares outstanding tied to share repurchase activity.
Previous wording
Total cash and investments were $2.6 billion as of June 30, 2024, compared to $2.5 billion as of December 31, 2023. Cash and investments at June 30, 2024 included $149.2 million held by NMIH. The increase in total cash and investments reflects the addition of incremental cash provided by operating activities, partially offset by share repurchase activity and an increase in the unrealized loss position of our fixed income portfolio primarily tied to changes in interest rates during the six months ended June 30, 2024.
Current wording
Total cash and investments were $2.8 billion as of September 30, 2024, compared to $2.5 billion as of December 31, 2023. Cash and investments at September 30, 2024 included $148.3 million held by NMIH. The increase in total cash and investments reflects 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, partially offset by share repurchase activity during the nine months ended September 30, 2024.
Previous wording
Premiums receivable was $76.5 million as of both June 30, 2024 and December 31, 2023. 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 in a given period.
Current wording
Premiums receivable was $78.5 million as of September 30, 2024, compared to $76.5 million as of December 31, 2023. 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.
Previous wording
Net deferred policy acquisition costs were $63.2 million as of June 30, 2024, compared to $62.9 million as of December 31, 2023. The increase was primarily driven by the deferral of certain costs associated with the origination of new policies between the respective balance sheet dates, and was partially offset by the recognition of previously deferred policy acquisition costs.
Current wording
Net deferred policy acquisition costs were $63.8 million as of September 30, 2024, compared to $62.9 million as of December 31, 2023. The increase was primarily driven by the deferral of certain costs associated with the origination of new policies between the respective balance sheet dates, and was partially offset by the recognition of previously deferred policy acquisition costs.
Previous wording
Reinsurance recoverable was $27.3 million as of June 30, 2024, compared to $27.5 million as of December 31, 2023. The decrease was driven by a decline in ceded losses recoverable under our QSR Transactions.
Current wording
Reinsurance recoverable was $29.2 million as of September 30, 2024, compared to $27.5 million as of December 31, 2023. The increase was driven by an increase in ceded losses recoverable under our QSR Transactions.
Previous wording
Debt was $414.2 million as of June 30, 2024, compared to $397.6 million as of December 31, 2023. Debt as of June 30, 2024 represented the carrying value of the $425 million aggregate principal amount 2024 Notes which issued in May 2024. Debt at December 31, 2023 represented the carrying value of the $400 million aggregate principal amount 2020 Notes, which were redeemed in full upon the completion of the 2024 Notes offering. For more information see Item 1, “Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 4, Debt.”
Current wording
Debt was $414.7 million as of September 30, 2024, compared to $397.6 million as of December 31, 2023. Debt as of September 30, 2024 represented the carrying value of the $425 million aggregate principal amount 2024 Notes which issued in May 2024. Debt at December 31, 2023 represented the carrying value of the $400 million aggregate principal amount 2020 Notes, which were redeemed in full upon the completion of the 2024 Notes offering. For more information see Item 1, “Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 4, Debt.”
Previous wording
Unearned premiums were $78.3 million as of June 30, 2024, compared to $92.3 million as of December 31, 2023. The decrease was driven by 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, partially offset by single premium policy originations during the six months ended June 30, 2024.
Current wording
Unearned premiums were $71.6 million as of September 30, 2024, compared to $92.3 million as of December 31, 2023. The decrease was driven by 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, partially offset by single premium policy originations during the nine months ended September 30, 2024.
Previous wording
Accounts payable and accrued expenses were $77.9 million as of June 30, 2024, compared to $86.2 million as of December 31, 2023. The decrease was primarily driven by the settlement of previously accrued compensation expenses and certain vendor payables, partially offset by an increase in current tax and reinsurance premium payables.
Current wording
Accounts payable and accrued expenses were $111.0 million as of September 30, 2024, compared to $86.2 million as of December 31, 2023. The increase was primarily driven by an increase in unsettled trade payables related to the purchase of certain investment securities at September 30, 2024, as well as accrued and unpaid interest on the 2024 Notes, which is payable semi-annually beginning in February 2025, and was partially offset by the settlement of certain contractual payables and accrued expenses during the nine months ended September 30, 2024.
Previous wording
Reserve for insurance claims and claim expenses was $125.4 million as of June 30, 2024, compared to $124.0 million as of December 31, 2023. The increase was primarily driven by the establishment of initial reserves on newly defaulted loans during the six months ended June 30, 2024, as well as an increase in the average case reserve held against previously defaulted loans that aged in their delinquent status. The increase in the reserves for insurance claims and claim expenses 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.
Current wording
Reserve for insurance claims and claim expenses was $135.5 million as of September 30, 2024, compared to $124.0 million as of December 31, 2023. The increase was primarily driven by the establishment of initial reserves on newly defaulted loans during the nine months ended September 30, 2024, as well as an increase in the average case reserve held against previously defaulted loans that aged in their delinquent status. The increase in the reserves for insurance claims and claim expenses 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.
Previous wording
Net deferred tax liability was $348.3 million as of June 30, 2024, compared to $301.6 million as of December 31, 2023. The increase was primarily due to an increase in the claimed deductibility of our statutory contingency reserve, partially offset by the increase in unrealized losses 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 8, Income Taxes.”
Current wording
Net deferred tax liability was $380.9 million as of September 30, 2024, compared to $301.6 million as of December 31, 2023. The increase was primarily due to an increase in the claimed deductibility of our statutory contingency reserve, as well as the decrease in unrealized losses 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 8, Income Taxes.”
Previous wording
Net cash provided by operating activities was $229.4 million for the six months ended June 30, 2024, compared to $191.7 million for the six months ended June 30, 2023. Cash provided by operating activities increased during the six months ended June 30, 2024, primarily due to an increase in our net premium receipts, growth in our investment income and a reduction in technology service costs paid under our long-term IT services agreement with Tata Consultancy Services, partially offset by an increase in short-term employee incentive payments, premium taxes paid and net claim settlement costs.
Current wording
Net cash provided by operating activities was $357.8 million for the nine months ended September 30, 2024, compared to $312.6 million for the nine months ended September 30, 2023. Cash provided by operating activities increased during the nine months ended September 30, 2024, primarily due to an increase in our net premium receipts, growth in our investment income and a reduction in technology service costs paid under our long-term IT services agreement with Tata Consultancy Services, partially offset by an increase in taxes paid, short-term employee incentive payments and net claim settlement costs.
Previous wording
Cash used in investing activities for the six months ended June 30, 2024 and 2023 reflects the purchase of fixed and short-term maturities with cash provided by operating activities, and the reinvestment of coupon payments, maturities and sale proceeds within our investment portfolio.
Current wording
Cash used in investing activities for the nine months ended September 30, 2024 and 2023 reflects the purchase of fixed and short-term maturities with cash provided by operating activities, and the reinvestment of coupon payments, maturities and sale proceeds within our investment portfolio.
Previous wording
Cash used in financing activities was $51.1 million for the six months ended June 30, 2024, compared to $43.4 million for the six months ended June 30, 2023. 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 six months ended June 30, 2024 further reflects the net impact of the redemption of the 2020 Notes and issuance of the 2024 Notes during the period.
Current wording
Cash used in financing activities was $68.0 million for the nine months ended September 30, 2024, compared to $62.6 million for the nine months ended September 30, 2023. 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 further reflects the net impact of the redemption of the 2020 Notes and issuance of the 2024 Notes during the period.
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Previous report — wording carried elsewhere
COVID-19 pandemic and 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.
Previous report — wording carried elsewhere
December 31, 2023, the investment portfolio had gross unrealized losses of $184.3 million, of which $183.1 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer.