NMI Holdings, Inc.

You should carefully consider the following risk factors, as well as all other information contained in this report, including our consolidated financial statements and the related notes thereto, before deciding to invest in our common stock. The occurrence of any of the following risks could materially and adversely affect our business, prospects, financial condition, operating results and cash flow. In such case, the trading price of our common stock could decline and you could lose some or all of your investment.

This report contains forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” on page 3 of this report. Our actual results could differ materially and adversely from those anticipated in these forward-looking statements, including any such statements made in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Risk Factors Summary

The following is a summary of the principal risks that could materially adversely affect our business operations, industry, and financial results. You should read this summary together with the more detailed description of each risk factor that immediately follows this summary.

Risk Related to Our Business Operations

•We face intense competition for business in our industry, and if we are unable to compete effectively, we may not be able to achieve our business goals, which would adversely affect our business, financial condition and operating results.

•Our NIW volumes could be adversely affected if lenders and investors select alternatives to private MI.

•If we are unable to continue to attract and retain the most significant mortgage originators as customers, our ability to achieve our business goals could be negatively impacted.

•If the volume of high-LTV loan originations declines, our NIW volume could decline, which would reduce our revenues.

•Our underwriting and credit risk management policies and practices may not anticipate all risks and/or the magnitude of potential for loss as the result of unforeseen risks.

•Unexpected material increases in borrower defaults could cause our actual losses to materially exceed our expected loss rates, including in certain geographic regions in which our business may be concentrated and more susceptible to downturns.

•The premiums we charge may be insufficient to cover claim payments and our operating costs.

•Changes in factors that impact the length of time that our policies remain in force may adversely affect our future revenues and claims experience.

•Changes in inflation, interest rates and mortgage interest rates may have an adverse impact on our business, future revenue and financial condition.

•We outsource the underwriting of our mortgage insurance on certain loans to third-party USPs. If these USPs fail to adequately perform their underwriting services or place our coverage on loans we would deem ineligible, we could experience increased claims on loans underwritten by them, and our customer relationships could be negatively impacted.

•Our Master Policies contain restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics.

•The mix of business we write affects our revenue stream and the likelihood of losses occurring.

•We expect our claims to increase as our insured loan portfolio grows and matures.

•Our business depends, in part, on effective and reliable loan servicing.

•If the estimates we use in establishing claims reserves are incorrect, the actual claim payments we make may materially exceed the amount of our corresponding claims reserves, resulting in unexpected charges to income, which could be material and adversely affect our results of operations.

•The occurrence of natural or man-made disasters or pandemics could adversely affect our business, financial condition and operating results.

•Climate risk and efforts to manage or regulate climate risk by government agencies could affect our business and operations.

•We are exposed to certain risks associated with our third-party reinsurance transactions, including the possibility that our reinsurers will fail to perform their obligations or that we will lose the capital credit we expected to receive when we entered into the transactions as a result of future GSE or Wisconsin OCI action or if any of our reinsurers experiences a downgrade or other adverse business event.

•Our operating results depend in large part on our ability to manage the risks related to the growth of our business and on maintaining and enhancing effective operating procedures and internal controls.

•We are exposed to operational risk from fraud, malfeasance or error by borrowers, employees and third-party service providers, and any such fraud, malfeasance or error could materially and adversely affect us.

•If we do not maintain connectivity with or otherwise meet the technological demands of our customers or are unable to develop, enhance and maintain our proprietary technology platform, our business and financial performance could be adversely affected.

•We may not be able to prevent the unauthorized disclosure or misuse of confidential, personal or proprietary information.

•Adverse investment performance may affect our financial results and ability to conduct business.

•We face regulatory and litigation risks associated with offering loan review services.

Risk Related to Regulation of the Mortgage Insurance Industry

•There can be no assurance that the GSEs will continue to treat us as an approved insurer in the future, and changes to, or our failure to maintain compliance with, the GSEs' PMIERs, could adversely impact our business, financial condition and operating results.

•Changes in the business practices of the GSEs, including a decision to decrease or discontinue the use of private MI, or changes in the terms on which mortgage insurance coverage may be canceled, federal legislation that changes their charters or a restructuring of the GSEs or changes in loan delivery pricing imposed by the GSEs could reduce the private MI market opportunity, reduce our revenues or increase our losses.

•We are subject to comprehensive state insurance regulations and capital adequacy requirements, which we must satisfy to continue to operate our MI business.

•The private MI industry is, and as a participant we are, subject to litigation and regulatory enforcement risk generally.

•Our business prospects and operating results could be adversely impacted if, and to the extent that, the Consumer Financial Protection Bureau's ATR Rules defining a QM negatively impact the size of the origination market.

•The implementation of the Basel rules may discourage the use of mortgage insurance.

Risks Related to Our Holding Company and Capital Structure

•Our holding company structure and certain regulatory and other constraints could affect our ability to satisfy our obligations and potentially require us to raise more capital.

•Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

•Despite our substantial level of debt, we may incur more debt, which could exacerbate any or all of the risks described above.

•Our current credit ratings may adversely affect our ability to access capital and the cost of such capital, which could have a material adverse effect on our business, financial condition and operating results.

General Risks Related to Ownership of Our Common Stock

•We do not currently pay any dividends on our common stock and may not do so in the future, and payment of any declared dividends may be delayed.

•The market price of our common stock may be volatile, which could cause the value of an investment in our common stock to decline.

•The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale, and future issuances of our common stock may depress our share price and dilute the book value of our common stock.

•Future issuance of debt or preferred stock, which would rank senior to our common stock upon our liquidation, may adversely affect the market value of our common stock.

•Provisions contained in our organizational documents, as well as provisions of Delaware law and Wisconsin insurance law, could delay or prevent a change of control of us, which could adversely affect the price of shares of our common stock.