Company Quick10K Filing
NMI Holdings
Price26.95 EPS2
Shares70 P/E12
MCap1,890 P/FCF14
Net Debt102 EBIT211
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-05
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8-K 2018-01-08

NMIH 10Q Quarterly Report

Part I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-10.20 ex1020q32020joinderagreeme.htm
EX-31.1 ex311q12021.htm
EX-31.2 ex312q12021.htm
EX-32.1 ex321q12021.htm

NMI Holdings Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin



(Mark One)
For the quarterly period endedMarch 31, 2021
For the transition period from ______ to ______
Commission file number 001-36174
NMI Holdings, Inc.
(Exact name of registrant as specified in its charter)

Delaware 45-4914248
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2100 Powell StreetEmeryville,CA 94608
(Address of principal executive offices)(Zip Code)

(855) 530-6642
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01NMIHNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
The number of shares of common stock, $0.01 par value per share, of the registrant outstanding on April 30, 2021 was 85,599,908 shares.

Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 6.


    This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward looking. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "potential," "should," "will," "estimate," "perceive," "plan," "project," "continuing," "ongoing," "expect," "intend" or words of similar meaning and include, but are not limited to, statements regarding the outlook for our future business and financial performance. All forward looking statements are necessarily only estimates of future results, and actual results may differ materially from expectations. You are, therefore, cautioned not to place undue reliance on such statements which should be read in conjunction with the other cautionary statements that are included elsewhere in this report. Further, any forward looking statement speaks only as of the date on which it is made and we undertake no obligation to update or revise any forward looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. We have based these forward looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy and financial needs. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward looking statements including, but not limited to:
uncertainty relating to the coronavirus (COVID-19) pandemic and the measures taken by governmental authorities and other third parties to combat it, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and our business, operations and personnel;
changes in the business practices of Fannie Mae and Freddie Mac (collectively, the GSEs), including decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement generally, or with first time homebuyers or on very high loan-to-value mortgages;
our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (PMIERs) and other requirements imposed by the GSEs, which they may change at any time;
retention of our existing certificates of authority in each state and the District of Columbia (D.C.) and our ability to remain a mortgage insurer in good standing in each state and D.C.;
our future profitability, liquidity and capital resources;
actions of existing competitors, including other private mortgage insurers and government mortgage insurers such as the Federal Housing Administration (FHA), the U.S. Department of Agriculture's Rural Housing Service (USDA) and the U.S. Department of Veterans Affairs (VA) (collectively, government MIs), and potential market entry by new competitors or consolidation of existing competitors;
developments in the world's financial and capital markets and our access to such markets, including reinsurance;
adoption of new or changes to existing laws and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including the timing and eventual implementation of the final rules concerning "Qualified Mortgage" and "Qualified Residential Mortgage" definitions and the expiration of the "QM Patch" under the Dodd-Frank Act Ability to Repay/Qualified Mortgage rule;
legislative or regulatory changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular;
potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries;
changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance;
our ability to successfully execute and implement our capital plans, including our ability to access the capital, credit and reinsurance markets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators;

our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry;
our ability to attract and retain a diverse customer base, including the largest mortgage originators;
failure of risk management or pricing or investment strategies;
emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience;
potential adverse impacts arising from natural disasters, including, with respect to affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages;
the inability of our counter-parties, including third party reinsurers, to meet their obligations to us;
failure to maintain, improve and continue to develop necessary information technology (IT) systems or the failure of technology providers to perform; and
ability to recruit, train and retain key personnel.
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report on Form 10-Q, including the exhibits hereto. In addition, for additional 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, you should review the Risk Factors in Part II, Item 1A of this Report and in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2020 (2020 10-K), as subsequently updated in other reports we file from time to time with the U.S. Securities and Exchange Commission (SEC).
Unless expressly indicated or the context requires otherwise, the terms "we," "our," "us" and the "Company" in this document refer to NMI Holdings, Inc., a Delaware corporation, and its wholly-owned subsidiaries on a consolidated basis.


Item 1. Financial Statements


Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020
Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2021 and 2020 (Unaudited)
Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2021 and 2020 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)



March 31, 2021December 31, 2020
Assets(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,815,190 and $1,730,835 as of March 31, 2021 and December 31, 2020, respectively)$1,831,511 $1,804,286 
Cash and cash equivalents (including restricted cash of $4,868 and $5,555 as of March 31, 2021 and December 31, 2020, respectively)115,517 126,937 
Premiums receivable52,206 49,779 
Accrued investment income10,495 9,862 
Prepaid expenses4,999 3,292 
Deferred policy acquisition costs, net62,294 62,225 
Software and equipment, net31,298 29,665 
Intangible assets and goodwill3,634 3,634 
Prepaid reinsurance premiums4,842 6,190 
Reinsurance recoverable 18,686 17,608 
Other assets 52,349 53,188 
Total assets$2,187,831 $2,166,666 
Debt$393,622 $393,301 
Unearned premiums127,407 118,817 
Accounts payable and accrued expenses57,139 61,716 
Reserve for insurance claims and claim expenses96,103 90,567 
Reinsurance funds withheld7,569 8,653 
Warrant liability, at fair value4,239 4,409 
Deferred tax liability, net115,150 112,586 
Other liabilities 6,294 7,026 
Total liabilities807,523 797,075 
Commitments and contingencies
Shareholders' equity
Common stock - class A shares, $0.01 par value; 85,599,908 and 85,163,039 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively (250,000,000 shares authorized)856 852 
Additional paid-in capital940,827 937,872 
Accumulated other comprehensive income, net of tax8,723 53,856 
Retained earnings 429,902 377,011 
Total shareholders' equity1,380,308 1,369,591 
Total liabilities and shareholders' equity$2,187,831 $2,166,666 

See accompanying notes to condensed consolidated financial statements (unaudited).


For the three months ended March 31,
Revenues(In Thousands, except for per share data)
Net premiums earned$105,879 $98,717 
Net investment income8,814 8,104 
Net realized investment losses (72)
Other revenues501 900 
Total revenues115,194 107,649 
Insurance claims and claim expenses4,962 5,697 
Underwriting and operating expenses34,065 32,277 
Service expenses591 734 
Interest expense7,915 2,744 
Loss (gain) from change in fair value of warrant liability205 (5,959)
Total expenses47,738 35,493 
Income before income taxes67,456 72,156 
Income tax expense 14,565 13,885 
Net income $52,891 $58,271 
Earnings per share
Basic$0.62 $0.85 
Diluted$0.61 $0.74 
Weighted average common shares outstanding
Basic85,317 68,563 
Diluted86,487 70,401 
Net income $52,891 $58,271 
Other comprehensive loss, net of tax:
Unrealized losses in accumulated other comprehensive loss, net of tax benefit of $11,997 and $3,424 for the quarters ended March 31, 2021 and 2020, respectively(45,133)(12,881)
Reclassification adjustment for realized losses included in net income, net of tax benefit of $15 for the quarter ended March 31, 2020 57 
Other comprehensive loss, net of tax(45,133)(12,824)
Comprehensive income $7,758 $45,447 

See accompanying notes to condensed consolidated financial statements (unaudited).


Common Stock - Class AAdditional
Paid-in Capital
Accumulated Other Comprehensive IncomeRetained EarningsTotal
(In Thousands)
Balances, December 31, 202085,163 $852 $937,872 $53,856 $377,011 $1,369,591 
Common stock: class A shares issued related to warrant exercises24 *557 — — 557 
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes413 (624)— — (620)
Share-based compensation expense— — 3,022 — — 3,022 
Change in unrealized investment gains/losses, net of tax benefit of $11,997— — — (45,133)— (45,133)
Net income— — — — 52,891 52,891 
Balances, March 31, 202185,600 $856 $940,827 $8,723 $429,902 $1,380,308 

*    During the three months ended March 31, 2021, we issued 23,750 common shares with a par value of $0.01 in connection with the exercise of warrants, which is not identifiable in this schedule due to rounding.
Common Stock - Class AAdditional
Paid-in Capital
Accumulated Other Comprehensive IncomeRetained Earnings Total
(In Thousands)
Balances, December 31, 201968,358 $684 $707,003 $17,288 $205,445 $930,420 
Common stock: class A shares issued related to warrant exercises6 *221 — — 221 
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes510 5 (3,755)— — (3,750)
Share-based compensation expense— — 2,552 — — 2,552 
Change in unrealized investment gains/losses, net of tax benefit of $3,409— — — (12,824)— (12,824)
Net income— — — — 58,271 58,271 
Balances, March 31, 202068,874 $689 $706,021 $4,464 $263,716 $974,890 

*    During the three months ended March 31, 2020, we issued 6,474 common shares with a par value of $0.01 in connection with the exercise of warrants, which is not identifiable in this schedule due to rounding.
See accompanying notes to condensed consolidated financial statements (unaudited).



For the three months ended March 31,
Cash flows from operating activities(In Thousands)
Net income $52,891 $58,271 
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment losses 72 
Loss (gain) from change in fair value of warrant liability205 (5,959)
Depreciation and amortization2,675 2,441 
Net amortization of premium on investment securities1,636 318 
Amortization of debt discount and debt issuance costs443 258 
Deferred income taxes14,561 13,880 
Share-based compensation expense3,022 2,552 
Changes in operating assets and liabilities:
Premiums receivable(2,427)(787)
Accrued investment income(633)(361)
Prepaid expenses(1,707)(1,238)
Deferred policy acquisition costs, net(69)(2,662)
Other assets 148 (157)
Unearned premiums8,590 (9,734)
Reserve for insurance claims and claim expenses5,536 5,727 
Reinsurance recoverable (1)
Reinsurance balances, net (1)
101 562 
Accounts payable and accrued expenses1,570 (14,078)
Net cash provided by operating activities85,464 47,852 
Cash flows from investing activities
Purchase of short-term investments (41,872)
Purchase of fixed-maturity investments, available-for-sale(109,933)(58,427)
Proceeds from maturity of short-term investments 81,207 
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale15,942 46,368 
Software and equipment(2,456)(1,493)
Net cash (used in) provided by investing activities(96,447)25,783 
Cash flows from financing activities
Proceeds from issuance of common stock related to employee equity plans3,886 3,367 
Proceeds from issuance of common stock related to warrants182  
Taxes paid related to net share settlement of equity awards(4,505)(7,117)
Repayments of term loan (375)
Payments of debt issuance/modification costs (778)
Net cash (used in) financing activities(437)(4,903)
Net (decrease) increase in cash, cash equivalents and restricted cash(11,420)68,732 
Cash, cash equivalents and restricted cash, beginning of period126,937 41,089 
Cash, cash equivalents and restricted cash, end of period$115,517 $109,821 
Supplemental disclosures of cash flow information
Interest paid$ $2,403 
Income taxes refunded$206 $ 
(1)    Reinsurance recoverable have been reclassified from "Reinsurance balance, net" in the prior period.
See accompanying notes to condensed consolidated financial statements (unaudited).


1. Organization, Basis of Presentation and Summary of Accounting Principles
NMI Holdings, Inc. (NMIH) is a Delaware corporation, incorporated in May 2011, to provide private mortgage guaranty insurance (which we refer to as mortgage insurance or MI) through its wholly-owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One). Our common stock is listed on the NASDAQ exchange under the ticker symbol "NMIH."
NMIC, our primary insurance subsidiary, issued its first mortgage insurance policy in April 2013. NMIC is licensed to write mortgage insurance in all 50 states and DC. In August 2015, NMIH capitalized a wholly-owned subsidiary, NMI Services, Inc. (NMIS), through which we offer outsourced loan review services to mortgage loan originators.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly-owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2020, included in our 2020 10-K. All intercompany transactions have been eliminated. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. Certain reclassifications to previously reported financial information have been made to conform to current period presentation. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2021.
COVID-19 Developments
On January 30, 2020, the World Health Organization (WHO) declared the outbreak of COVID-19 a global health emergency and subsequently characterized the outbreak as a global pandemic on March 11, 2020. In an effort to stem contagion and control the COVID-19 pandemic, the population at large severely curtailed day-to-day activity and local, state and federal regulators imposed a broad set of restrictions on personal and business conduct nationwide. The COVID-19 pandemic, along with the widespread public and regulatory response, caused a dramatic slowdown in U.S. and global economic activity and a record number of Americans were furloughed or laid-off in the ensuing downturn.
The global dislocation caused by COVID-19 was unprecedented. In response to the COVID-19 outbreak and uncertainty that it introduced, we activated our disaster continuity program to ensure our employees were safe and able to manage our business without interruption. We pursued a broad series of capital and reinsurance transactions to bolster our balance sheet and expand our ability to serve our customers and their borrowers, and we updated our underwriting guidelines and policy pricing in consideration for the increased level of macroeconomic volatility.
While there is increased optimism that the acute health risk posed by and economic impact of COVID-19 has begun to recede, the pandemic continues to affect communities across the U.S. and poses significant risk globally. The path and pace of global economic recovery will depend, in large part, on the course of the virus, which itself remains unknown and subject to risk. Given this uncertainty, we are not able to fully assess or estimate the ultimate impact COVID-19 will have on the mortgage insurance market, our business performance or our financial position including our new business production, default and claims experience, and investment portfolio results at this time.
Significant Accounting Principles
There have been no changes to our significant accounting principles as described in Item 8, "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Summary of Accounting Principles" of our 2020 10-K, except as noted in "Recent Accounting Pronouncements - Adopted" below.
Recent Accounting Pronouncements - Adopted
In December 2019, the Financial Accounting Standards Board (the FASB) issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The update eliminates certain exceptions for recognizing deferred taxes for investments, performing intra-period allocations and calculating income taxes in interim periods. The ASU also includes guidance to reduce complexity in certain income tax areas, including recognizing deferred taxes for tax goodwill and allocating

taxes to members of a consolidated group. We adopted this ASU on January 1, 2021 and determined it did not have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements - Not Yet Adopted
In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). The update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The FASB subsequently issued ASU 2019-09 in November 2019 and ASU 2020-11 in November 2020, which amended the effective date for this standard and provided transition relief to facilitate early application for long duration contracts. These standards will now take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. We are currently evaluating the impact the adoption of these ASUs will have, if any, on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The update provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. Reference rate reform refers to the global transition away from referencing the London Interbank Offered Rate (LIBOR) in financial contracts, which is expected to be discontinued beginning in 2021 through 2023. The ASU includes optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This standard may be elected and applied prospectively over time from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. The adoption of, and future elections under, this ASU are not expected to have a material impact on our consolidated financial statements as the ASU will ease, if warranted, the requirements for accounting for the future effects of the rate reform. We continue to monitor the impact the discontinuance of LIBOR or another reference rate will have on our contracts and other transactions.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity's Own Equity (Subtopic 815-40). This update simplifies the accounting for convertible instruments and contracts on an entity's own equity, including warrants, eliminating certain triggers for derivative accounting. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. We have evaluated the impact the adoption of this ASU and we do not expect it to have a material impact on our consolidated financial statements, including our warrant liability.

2. Investments
We hold all investments on an available-for-sale basis and evaluate each position quarterly for impairment. We recognize an impairment on a security through the statement of operations if (i) we intend to sell the impaired security; or (ii) it is more likely than not that we will be required to sell the impaired security prior to recovery of its amortized cost basis. If a sale is intended or likely to be required, we write down the amortized cost basis of the security to fair value and recognize the full amount of the impairment through the statement of operations as a "Net Realized Investment Loss." To the extent we determine that a security impairment is credit-related, an impairment loss is recognized through the statement of operations as a provision for credit loss expense. The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes.
Fair Values and Gross Unrealized Gains and Losses on Investments
Gross UnrealizedFair
As of March 31, 2021(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$29,419 $1,570 $ $30,989 
Municipal debt securities470,470 7,148 (6,508)471,110 
Corporate debt securities1,184,374 31,181 (18,843)1,196,712 
Asset-backed securities130,557 1,922 (149)132,330 
Total bonds1,814,820 41,821 (25,500)1,831,141 
Short-term investments370   370 
Total investments$1,815,190 $41,821 $(25,500)$1,831,511 


Gross UnrealizedFair
As of December 31, 2020(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$29,412 $2,186 $ $31,598 
Municipal debt securities407,323 14,027 (2)421,348 
Corporate debt securities1,165,260 55,014 (483)1,219,791 
Asset-backed securities128,471 2,736 (27)131,180 
Total bonds1,730,466 73,963 (512)1,803,917 
Short-term investments369   369 
Total investments$1,730,835 $73,963 $(512)$1,804,286 
We did not own any mortgage-backed securities in our asset-backed securities portfolio at March 31, 2021 or December 31, 2020.
The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of March 31, 2021 and December 31, 2020:
March 31, 2021December 31, 2020
Financial36 %37 %
Consumer24 23 
Utilities11 11 
Communications11 10 
Technology 10 10 
Industrial8 9 
Total100 %100 %
As of March 31, 2021 and December 31, 2020, approximately $5.7 million of our cash and investments were held in the form of U.S. Treasury securities on deposit with various state insurance departments to satisfy regulatory requirements.
Scheduled Maturities
The amortized cost and fair value of available-for-sale securities as of March 31, 2021 and December 31, 2020, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category.
As of March 31, 2021Amortized
(In Thousands)
Due in one year or less$60,399 $60,995 
Due after one through five years541,790 564,386 
Due after five through ten years1,031,646 1,024,333 
Due after ten years50,798 49,467 
Asset-backed securities130,557 132,330 
Total investments$1,815,190 $1,831,511 


As of December 31, 2020Amortized
(In Thousands)
Due in one year or less$57,429 $57,949 
Due after one through five years507,444 536,520 
Due after five through ten years1,016,230 1,056,098 
Due after ten years21,261 22,539 
Asset-backed securities128,471 131,180 
Total investments$1,730,835 $1,804,286 
Aging of Unrealized Losses
As of March 31, 2021, the investment portfolio had gross unrealized losses of $25.5 million, none of which had been in an unrealized loss position for a period of twelve months or longer. As of December 31, 2020, the investment portfolio had gross unrealized losses of $0.5 million, of which $8 thousand had been in an unrealized loss position for a period of twelve months or longer. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:
Less Than 12 Months12 Months or GreaterTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of March 31, 2021(Dollars in Thousands)
Municipal debt securities132 $259,994 $(6,508) $ $ 132 $259,994 $(6,508)
Corporate debt securities98 591,836 (18,843)   98 591,836 (18,843)
Asset-backed securities4 7,988 (149)   4 7,988 (149)
Total 234 $859,818 $(25,500) $ $ 234 $859,818 $(25,500)

Less Than 12 Months12 Months or GreaterTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of December 31, 2020(Dollars in Thousands)
Municipal debt securities4 3,548 (2)   4 3,548 (2)
Corporate debt securities9 40,081 (483)1 33  10 40,114 (483)
Asset-backed securities2 5,191 (19)1 2,495 (8)3 7,686 (27)
Total15 $48,820 $(504)2 $2,528 $(8)17 $51,348 $(512)
Allowance for credit losses
As of March 31, 2021, we did not recognize an allowance for credit loss for any security in the investment portfolio and we did not record any provision for credit loss for investment securities during the three months ended March 31, 2021, and March 31, 2020.
The increase in the number of securities in and the aggregate size of the unrealized loss position as of March 31, 2021, was primarily driven by interest rate movements following the purchase date of certain securities. Based on current facts and circumstances, we believe the unrealized losses as of March 31, 2021 are not indicative of the ultimate collectability of the current amortized cost of the securities.


Net Investment Income
The following table presents the components of net investment income:
For the three months ended March 31,
(In Thousands)
Investment income$9,225 $8,349 
Investment expenses(411)(245)
Net investment income$8,814 $8,104 

The following table presents the components of net realized investment losses:
For the three months ended March 31,
(In Thousands)
Gross realized investment gains$ $540 
Gross realized investment losses (612)
Net realized investment losses$ $(72)

3. Fair Value of Financial Instruments
The following describes the valuation techniques used by us to determine the fair value of our financial instruments:
We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this standard are described below:
Level 1 - Fair value measurements based on quoted prices in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments.
Level 2 - Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 - Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions, which require significant management judgment or estimation about the inputs a hypothetical market participant would use to value that asset or liability.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Assets classified as Level 1 and Level 2
To determine the fair value of securities available-for-sale in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded.

A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including data published in market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. This model combines all inputs to arrive at a value assigned to each security. We have not made any adjustments to the prices obtained from the independent pricing sources.
Liabilities classified as Level 3
We calculate the fair value of outstanding warrants utilizing Level 3 inputs, including a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. Variables in the model include the risk-free rate of return, dividend yield, expected life and expected volatility of our stock price.
The following tables present the level within the fair value hierarchy at which our financial instruments were measured:
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
(Level 3)
Fair Value
As of March 31, 2021(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$30,989 $ $ $30,989 
Municipal debt securities 471,110  471,110 
Corporate debt securities 1,196,712  1,196,712 
Asset-backed securities 132,330  132,330 
Cash, cash equivalents and short-term investments115,887   115,887 
Total assets$146,876 $1,800,152 $ $1,947,028 
Warrant liability  4,239 4,239 
Total liabilities$ $ $4,239 $4,239 

Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
(Level 3)
Fair Value
As of December 31, 2020(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$31,598 $ $ $31,598 
Municipal debt securities 421,348  421,348 
Corporate debt securities 1,219,791  1,219,791 
Asset-backed securities 131,180  131,180 
Cash, cash equivalents and short-term investments127,306   127,306 
Total assets$158,904 $1,772,319 $ $1,931,223 
Warrant liability  4,409 4,409 
Total liabilities$ $ $4,409 $4,409 
There were no transfers between Level 2 and Level 3 of the fair value hierarchy during the three months ended March 31, 2021, or the year ended December 31, 2020.

The following table provides a roll-forward of Level 3 liabilities measured at fair value:
For the three months ended March 31,
Warrant Liability20212020
(In Thousands)
Balance, January 1$4,409 $7,641 
Change in fair value of warrant liability included in earnings205 (5,959)
Issuance of common stock on warrant exercise(375)(221)
Balance, March 31$4,239 $1,461 
The following table outlines the key inputs and assumptions used to calculate the fair value of the warrant liability in the Black-Scholes option-pricing model as of the dates indicated.
As of March 31,
Common stock price$23.64 $11.61 
Risk free interest rate0.08 %0.23 %
Expected life1.06 years2.06 years
Expected volatility89.4 %61.4 %
Dividend yield0 %0 %
The changes in fair value of the warrant liability for the three months ended March 31, 2021 and 2020 were driven by changes in the price of our common stock, exercise of outstanding warrants and changes in other Black-Scholes model inputs during the respective periods.
Financial Instruments not Measured at Fair Value
On June 19, 2020, we issued $400.0 million aggregate principal amount of senior secured notes that mature on June 1, 2025 (the Notes) and used a portion of the proceeds from the Notes offering to repay the outstanding amount due under our $150 million term loan (2018 Term Loan). At March 31, 2021, the Notes were carried at a cost of $393.6 million, net of unamortized debt issuance costs of $6.4 million, and had a fair value of $461.7 million as assessed under our Level 2 hierarchy. At December 31, 2020, the Notes were carried at a cost of $393.3 million, net of unamortized debt issuance costs of $6.7 million, and had a fair value of $447.1 million.
4. Debt
Senior Secured Notes
At March 31, 2021, we had $400.0 million aggregate principal amount of senior secured notes outstanding. The Notes were issued pursuant to an indenture dated June 19, 2020 (the Indenture) and bear interest at a rate of 7.375%, payable semi-annually on June 1 and December 1. $244.4 million of proceeds from the Notes offering were contributed to our lead operating subsidiary, NMIC and remaining proceeds were used to repay the outstanding amount due under the 2018 Term Loan due on May 24, 2023 and to pay underwriting fees incurred connection with the offering.
The Notes mature on June 1, 2025. At any time, or from time to time, prior to March 1, 2025, we may elect to redeem the Notes in whole or in part at a price based on 100% of the aggregate principal amount of any Notes redeemed plus the "Applicable Premium," plus accrued and unpaid interest thereon. Applicable Premium is defined as the greater of (1) 1.0% of the principal amount of the Notes, or (2) the principal value of the Notes plus the present value of all future interest payments. At any time on or after March 1, 2025, we may elect to redeem the Notes in whole or in part at a price equal to 100% of the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon. From time to time prior to June 1, 2022, we may also elect to use proceeds raised from one or more equity offerings to redeem up to 40% of the aggregate principal amount of the Notes at a price equal to 107.375% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, subject to certain exceptions.

Interest expense for the Notes includes interest and the amortization of capitalized debt issuance costs. In connection with the Notes offering, we recorded capitalized debt issuance costs of $7.4 million. Such amounts will be amortized over the contractual life of the Notes using the effective interest method. At March 31, 2021, $6.4 million of unamortized debt issuance costs remained.
At March 31, 2021 and December 31, 2020, $9.8 million and $2.5 million, respectively, of accrued and unpaid interest on the Notes was included in "Accounts Payable and Accrued Expenses" on our condensed consolidated balance sheet.
    2020 Revolving Credit Facility
On March 20, 2020, we amended our $85 million three-year secured revolving credit facility (the 2018 Revolving Credit Facility), increasing borrowing capacity under the facility to $100 million, extending its maturity date from May 24, 2021 to February 22, 2023, and reducing the interest cost related to both undrawn commitments and drawn borrowings under the facility (as amended, the 2020 Revolving Credit Facility). Borrowings under the 2020 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations, and accrue interest at a variable rate equal to, at our discretion, (i) a base rate (as defined in our existing credit agreement (the Credit Agreement), subject to a floor of 1.00% per annum) plus a margin of 0.375% to 1.875% per annum or (ii) the Eurodollar Rate plus a margin of 1.375% to 2.875% per annum, based on the applicable corporate credit rating at the time.
On October 30, 2020, we entered into a Joinder Agreement to the Credit Agreement, increasing the aggregate principal amount of commitments under the 2020 Revolving Credit Facility from $100 million to $110 million. All other terms remained unchanged. As of March 31, 2021, no amounts were drawn under the 2020 Revolving Credit Facility.
Under the 2020 Revolving Credit Facility, we are 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 March 31, 2021, the applicable commitment fee was 0.35%. For the three months ended March 31, 2021, we recorded $0.1 million of commitment fees in interest expense.
We incurred debt issuance costs of $0.8 million in connection with the 2020 Revolving Credit Facility and had $0.6