10-Q 1 nmih-20240331.htm 10-Q nmih-20240331
000154790312-312024Q1false00015479032024-01-012024-03-3100015479032024-04-26xbrli:shares00015479032024-03-31iso4217:USD00015479032023-12-31iso4217:USDxbrli:shares00015479032023-01-012023-03-310001547903us-gaap:CommonStockMember2023-12-310001547903us-gaap:AdditionalPaidInCapitalMember2023-12-310001547903us-gaap:TreasuryStockCommonMember2023-12-310001547903us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001547903us-gaap:RetainedEarningsMember2023-12-310001547903us-gaap:CommonStockMember2024-01-012024-03-310001547903us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001547903us-gaap:TreasuryStockCommonMember2024-01-012024-03-310001547903us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001547903us-gaap:RetainedEarningsMember2024-01-012024-03-310001547903us-gaap:CommonStockMember2024-03-310001547903us-gaap:AdditionalPaidInCapitalMember2024-03-310001547903us-gaap:TreasuryStockCommonMember2024-03-310001547903us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001547903us-gaap:RetainedEarningsMember2024-03-310001547903us-gaap:CommonStockMember2022-12-310001547903us-gaap:AdditionalPaidInCapitalMember2022-12-310001547903us-gaap:TreasuryStockCommonMember2022-12-310001547903us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001547903us-gaap:RetainedEarningsMember2022-12-3100015479032022-12-310001547903us-gaap:CommonStockMember2023-01-012023-03-310001547903us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001547903us-gaap:TreasuryStockCommonMember2023-01-012023-03-310001547903us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001547903us-gaap:RetainedEarningsMember2023-01-012023-03-310001547903us-gaap:CommonStockMember2023-03-310001547903us-gaap:AdditionalPaidInCapitalMember2023-03-310001547903us-gaap:TreasuryStockCommonMember2023-03-310001547903us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001547903us-gaap:RetainedEarningsMember2023-03-3100015479032023-03-31nmih:state0001547903us-gaap:USTreasuryAndGovernmentMember2024-03-310001547903us-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-310001547903us-gaap:CorporateDebtSecuritiesMember2024-03-310001547903us-gaap:AssetBackedSecuritiesMember2024-03-310001547903us-gaap:BondsMember2024-03-310001547903us-gaap:ShortTermInvestmentsMember2024-03-310001547903us-gaap:USTreasuryAndGovernmentMember2023-12-310001547903us-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-310001547903us-gaap:CorporateDebtSecuritiesMember2023-12-310001547903us-gaap:AssetBackedSecuritiesMember2023-12-310001547903us-gaap:BondsMember2023-12-310001547903us-gaap:ShortTermInvestmentsMember2023-12-310001547903nmih:FinancialIndustryGroupMember2024-03-31xbrli:pure0001547903nmih:FinancialIndustryGroupMember2023-12-310001547903nmih:ConsumerIndustryGroupMember2024-03-310001547903nmih:ConsumerIndustryGroupMember2023-12-310001547903nmih:UtilitiesIndustryGroupMember2024-03-310001547903nmih:UtilitiesIndustryGroupMember2023-12-310001547903nmih:TechnologyIndustryGroupMember2024-03-310001547903nmih:TechnologyIndustryGroupMember2023-12-310001547903nmih:IndustrialIndustryGroupMember2024-03-310001547903nmih:IndustrialIndustryGroupMember2023-12-310001547903nmih:CommunicationsIndustryGroupMember2024-03-310001547903nmih:CommunicationsIndustryGroupMember2023-12-31nmih:security0001547903us-gaap:CashAndCashEquivalentsMember2024-01-012024-03-310001547903us-gaap:CashAndCashEquivalentsMember2023-01-012023-03-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel3Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2024-03-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel3Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2024-03-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2024-03-310001547903us-gaap:FairValueMeasurementsRecurringMember2024-03-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel3Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2023-12-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel3Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310001547903us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-12-310001547903us-gaap:FairValueMeasurementsRecurringMember2023-12-310001547903us-gaap:SecuredDebtMember2020-06-190001547903nmih:SeniorSecuredTermLoanMemberus-gaap:SecuredDebtMember2020-06-190001547903us-gaap:SecuredDebtMember2024-03-310001547903us-gaap:FairValueInputsLevel2Memberus-gaap:SecuredDebtMember2024-03-310001547903us-gaap:SecuredDebtMember2023-12-310001547903us-gaap:FairValueInputsLevel2Memberus-gaap:SecuredDebtMember2023-12-310001547903us-gaap:SecuredDebtMembernmih:PriorToMarch12025Member2020-06-192020-06-190001547903us-gaap:SecuredDebtMembernmih:AfterMarch12025Member2020-06-192020-06-190001547903us-gaap:SeniorNotesMember2024-03-310001547903us-gaap:SecuredDebtMembernmih:SeniorSecuredTermLoan2018Member2024-03-310001547903us-gaap:SecuredDebtMembernmih:SeniorSecuredTermLoan2018Member2023-12-310001547903nmih:SecuredRevolvingCreditFacility2020Memberus-gaap:RevolvingCreditFacilityMember2021-11-290001547903us-gaap:RevolvingCreditFacilityMembernmih:SecuredRevolvingCreditFacility2021Member2021-11-290001547903us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembernmih:SecuredRevolvingCreditFacility2021Member2021-11-292021-11-290001547903us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembersrt:MinimumMembernmih:SecuredRevolvingCreditFacility2021Member2021-11-292021-11-290001547903us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembernmih:SecuredRevolvingCreditFacility2021Membersrt:MaximumMember2021-11-292021-11-290001547903us-gaap:RevolvingCreditFacilityMembersrt:MinimumMembernmih:SecuredRevolvingCreditFacility2021Membernmih:SecuredOvernightFinanceRateMember2021-11-292021-11-290001547903us-gaap:RevolvingCreditFacilityMembernmih:SecuredRevolvingCreditFacility2021Membersrt:MaximumMembernmih:SecuredOvernightFinanceRateMember2021-11-292021-11-290001547903us-gaap:RevolvingCreditFacilityMembernmih:SecuredRevolvingCreditFacility2021Member2024-03-310001547903us-gaap:RevolvingCreditFacilityMembernmih:SecuredRevolvingCreditFacility2021Member2023-12-310001547903us-gaap:RevolvingCreditFacilityMembersrt:MinimumMembernmih:SecuredRevolvingCreditFacility2021Member2021-11-292021-11-290001547903us-gaap:RevolvingCreditFacilityMembernmih:SecuredRevolvingCreditFacility2021Membersrt:MaximumMember2021-11-292021-11-290001547903us-gaap:RevolvingCreditFacilityMembersrt:MinimumMembernmih:SecuredRevolvingCreditFacility2021Member2024-01-012024-03-310001547903us-gaap:RevolvingCreditFacilityMember2024-01-012024-03-310001547903nmih:SecuredRevolvingCreditFacility2021Member2021-11-290001547903nmih:SecuredRevolvingCreditFacility2020Member2021-11-290001547903nmih:SecuredRevolvingCreditFacility2020Memberus-gaap:RevolvingCreditFacilityMember2024-03-310001547903nmih:SecuredRevolvingCreditFacility2020Memberus-gaap:RevolvingCreditFacilityMember2023-12-310001547903us-gaap:RevolvingCreditFacilityMembernmih:SecuredRevolvingCreditFacility2021Member2024-01-012024-03-310001547903nmih:ThirdPartyReinsurersMembersrt:MaximumMemberOaktown Re Vehicles2024-01-012024-03-310001547903nmih:ThirdPartyReinsurersMemberOaktown Re Vehicles2024-01-012024-03-310001547903nmih:ThirdPartyReinsurersMemberOaktown Re Vehicles2023-01-012023-03-310001547903Oaktown Re Vehicles2024-01-012024-03-310001547903srt:MaximumMemberOaktown Re Vehicles2024-01-012024-03-3100015479032019 ILN Transaction2019-07-3000015479032019 ILN Transaction2024-03-3100015479032020-2 ILN transaction2020-10-2900015479032020-2 ILN transaction2024-03-3100015479032021-1 ILN Transaction2021-04-2700015479032021-1 ILN Transaction2024-03-3100015479032021-2 ILN Transaction2021-10-2600015479032021-2 ILN Transaction2024-03-3100015479032020-2 ILN2024-03-3100015479032021-1 ILN2024-03-3100015479032021-2 ILN2024-03-31nmih:reinsuranceAgreement0001547903srt:MinimumMember2024-01-012024-03-3100015479032022-1 XOL Transaction2024-03-3100015479032022-2 XOL Transaction2024-03-3100015479032022-3 XOL Transaction2024-03-3100015479032023-1 XOL Transaction2024-03-3100015479032023-2 XOL Transaction2024-03-3100015479032024 XOL Transaction2024-03-31nmih:quota_share_agreement00015479032016 QSR Transaction, Eligible Primary Policiesnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032016 QSR Transaction, Pool Agreement with Fannie Maenmih:ThirdPartyReinsurersMember2024-01-012024-03-310001547903nmih:ThirdPartyReinsurersMember2018 QSR Transaction2024-01-012024-03-3100015479032019 QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032020 QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032021 QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032022 QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032022 Seasoned QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032023 QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032024 Seasoned QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-310001547903nmih:ThirdPartyReinsurersMember2024-01-012024-03-310001547903nmih:ThirdPartyReinsurersMember2023-01-012023-03-310001547903 QSR Transactionsnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032020 Seasoned QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032016 QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032020 Amended QSR Transactionnmih:ThirdPartyReinsurersMember2024-01-012024-03-3100015479032016 QSR Transactionnmih:ThirdPartyReinsurersMember2024-03-3100015479032016 QSR Transactionnmih:ThirdPartyReinsurersMember2023-12-310001547903QSR Transactions2024-03-310001547903QSR Transactions2023-12-31nmih:claim0001547903QSR Transactions2024-01-012024-03-31nmih:loannmih:policy00015479032022-02-100001547903nmih:July2023ShareRepurchaseProgramMember2023-07-310001547903nmih:A2022ExtendedShareRepurchaseProgramMember2023-07-3100015479032023-01-012023-12-31utr:D0001547903nmih:NMICAndReOneCombinedMember2024-01-012024-03-310001547903nmih:NMICAndReOneCombinedMember2023-01-012023-03-310001547903nmih:NMICAndReOneCombinedMember2024-03-310001547903nmih:NMICAndReOneCombinedMember2023-12-310001547903nmih:ReOneMember2024-03-310001547903nmih:ReOneMember2023-12-310001547903us-gaap:RevolvingCreditFacilityMemberus-gaap:SubsequentEventMembernmih:A2024RevolvingCreditFacilityMember2024-04-290001547903us-gaap:RevolvingCreditFacilityMemberus-gaap:SubsequentEventMembernmih:A2024RevolvingCreditFacilityMember2024-04-292024-04-29

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMarch 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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 (§232.405 of this chapter) 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 26, 2024 was 80,275,167 shares.
1



2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
    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, outlook, 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,” “assume,” “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:
changes in general economic, market and political conditions and policies (including changes in interest rates and inflation) and investment results or other conditions that affect the U.S. housing market or the U.S. markets for home mortgages, mortgage insurance, reinsurance and credit risk transfer markets, including the risk related to geopolitical instability, inflation, an economic downturn (including any decline in home prices) or recession, and their impacts on our business, operations and personnel;
changes in the charters, business practices, policy, pricing or priorities of Fannie Mae and Freddie Mac (collectively, the GSEs), which may include 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 (LTV) mortgages; or changes in the direction of housing policy objectives of the Federal Housing Finance Agency (FHFA), such as the FHFA's priority to increase the accessibility to and affordability of homeownership for low-and-moderate income borrowers and underrepresented communities;
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, the U.S. Department of Agriculture's Rural Housing Service and the U.S. Department of Veterans Affairs (collectively, government MIs), and potential market entry by new competitors or consolidation of existing competitors;
adoption of new or changes to existing laws, rules 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 implementation of the final rules defining and/or concerning “Qualified Mortgage” and “Qualified Residential Mortgage”;
U.S. federal tax reform and other potential changes in tax law and their impact on us and our operations;
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 industry in particular;
potential legal and regulatory claims, investigations, actions, audits or inquiries that could result in adverse judgements, settlements, fines or other reliefs that could require significant expenditures or have other negative effects on our business;
3


uncertainty relating to the coronavirus (COVID-19) virus and its variants, 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;
our ability to successfully execute and implement our capital plans, including our ability to access the equity, 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;
lenders, the GSEs, or other market participants seeking alternatives to private mortgage insurance;
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;
decrease in the length of time our insurance policies are in force;
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;
climate risk and efforts to manage or regulate climate risk by government agencies could affect our business and operations;
potential adverse impacts arising from the occurrence of any man-made disasters or public health emergencies, including pandemics;
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;
effectiveness and security of our information technology systems and digital products and services, including the risks these systems, products or services may fail to operate as expected or planned, or expose us to cybersecurity or third-party risks (including exposure of our confidential customer and other information); 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 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, 2023 (2023 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,” “Company” and “NMI” in this document refer to NMI Holdings, Inc., a Delaware corporation, and its wholly-owned subsidiaries on a consolidated basis.

4


PART I
Item 1. Financial Statements



INDEX TO FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023
Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2024 and 2023 (Unaudited)
Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2024 and 2023 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)

5

NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, 2024December 31, 2023
Assets(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $2,577,990 and $2,542,862 as of March 31, 2024 and December 31, 2023, respectively)
$2,393,525 $2,371,021 
Cash and cash equivalents (including restricted cash of $1,137 and $1,338 as of March 31, 2024 and December 31, 2023, respectively)
139,726 96,689 
Premiums receivable75,362 76,456 
Accrued investment income19,860 19,785 
Deferred policy acquisition costs, net62,801 62,905 
Software and equipment, net30,308 30,252 
Intangible assets and goodwill3,634 3,634 
Reinsurance recoverable 27,880 27,514 
Prepaid federal income taxes235,286 235,286 
Other assets17,730 16,965 
Total assets$3,006,112 $2,940,507 
Liabilities
Debt$398,001 $397,595 
Unearned premiums85,784 92,295 
Accounts payable and accrued expenses81,831 86,189 
Reserve for insurance claims and claim expenses127,182 123,974 
Deferred tax liability, net322,651 301,573 
Other liabilities (1)
12,282 12,877 
Total liabilities1,027,731 1,014,503 
Commitments and contingencies
Shareholders' equity
Common stock - class A shares, $0.01 par value; 87,838,602 shares issued and 80,545,535 shares outstanding as of March 31, 2024 and 87,334,138 shares issued and 80,881,280 shares outstanding as of December 31, 2023 (250,000,000 shares authorized)
878 873 
Additional paid-in capital989,349 990,816 
Treasury Stock, at cost: 7,293,067 and 6,452,858 common shares as of March 31, 2024 and December 31, 2023, respectively
(174,227)(148,921)
Accumulated other comprehensive loss, net of tax(149,822)(139,917)
Retained earnings 1,312,203 1,223,153 
Total shareholders' equity1,978,381 1,926,004 
Total liabilities and shareholders' equity$3,006,112 $2,940,507 
(1)    “Reinsurance funds withheld has been reclassified as “Other liabilities in the prior period.






See accompanying notes to condensed consolidated financial statements (unaudited).
6

NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
For the three months ended March 31,
20242023
(In Thousands, except for per share data)
Revenues
Net premiums earned$136,657 $121,754 
Net investment income19,436 14,894 
Net realized investment losses (33)
Other revenues160 164 
Total revenues156,253 136,779 
Expenses
Insurance claims and claim expenses3,694 6,701 
Underwriting and operating expenses29,815 25,786 
Service expenses137 80 
Interest expense8,040 8,039 
Total expenses41,686 40,606 
Income before income taxes114,567 96,173 
Income tax expense 25,517 21,715 
Net income $89,050 $74,458 
Earnings per share
Basic$1.10 $0.89 
Diluted$1.08 $0.88 
Weighted average common shares outstanding
Basic80,726 83,600 
Diluted82,099 84,840 
Net income $89,050 $74,458 
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains in accumulated other comprehensive income, net of tax (benefit) expense of $(2,729) and $8,633 for the quarters ended March 31, 2024 and 2023, respectively
(9,905)32,476 
Reclassification adjustment for realized losses included in net income, net of tax benefit of $7 for the quarter ended March 31, 2023
 26 
Other comprehensive (loss) income, net of tax(9,905)32,502 
Comprehensive income$79,145 $106,960 






See accompanying notes to condensed consolidated financial statements (unaudited).
7

NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)



Common Stock - Class AAdditional
Paid-in Capital
Treasury Stock, At CostAccumulated Other Comprehensive LossRetained EarningsTotal
SharesAmount
(In Thousands)
Balances, December 31, 202380,881 $873 $990,816 $(148,921)$(139,917)$1,223,153 $1,926,004 
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes505 5 (5,584)— — — (5,579)
Repurchase of common stock(840)— — (25,306)— — (25,306)
Share-based compensation expense— — 4,117 — — — 4,117 
Change in unrealized investment gains/losses, net of tax benefit of $2,729
— — — — (9,905)(9,905)
Net income— — — — — 89,050 89,050 
Balances, March 31, 202480,546 $878 $989,349 $(174,227)$(149,822)$1,312,203 $1,978,381 



Common Stock - Class AAdditional
Paid-in Capital
Treasury Stock, At CostAccumulated Other Comprehensive LossRetained EarningsTotal
SharesAmount
(In Thousands)
Balances, December 31, 202283,550 $865 $972,717 $(56,575)$(204,323)$901,043 $1,613,727 
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes396 4 (2,610)— — — (2,606)
Repurchase of common stock(666)— — (14,862)— — (14,862)
Share-based compensation expense— — 3,492 — — — 3,492 
Change in unrealized investment gains/losses, net of tax expense of $8,640
— — — — 32,502 — 32,502 
Net income— — — — — 74,458 74,458 
Balances, March 31, 202383,280 $869 $973,599 $(71,437)$(171,821)$975,501 $1,706,711 











See accompanying notes to condensed consolidated financial statements (unaudited).
8

NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31,
20242023
Cash flows from operating activities(In Thousands)
Net income $89,050 $74,458 
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment loss 33 
Depreciation and amortization2,996 2,798 
Net amortization of premium on investment securities437 966 
Amortization of debt discount and debt issuance costs510 480 
Deferred income taxes23,808 20,869 
Share-based compensation expense4,117 3,492 
Changes in operating assets and liabilities:
Premiums receivable1,094 (518)
Accrued investment income(75)(1,558)
Deferred policy acquisition costs, net104 (1,357)
Reinsurance recoverable(366)(1,892)
Other assets(1,352)(1,612)
Unearned premiums(6,511)(8,971)
Reserve for insurance claims and claim expenses3,208 8,321 
Reinsurance balances, net(123)(196)
Accounts payable and accrued expenses(5,323)(5,478)
Net cash provided by operating activities111,574 89,835 
Cash flows from investing activities
Purchase of short-term investments(14,811)(106,614)
Purchase of fixed-maturity investments, available-for-sale(81,162)(133,971)
Proceeds from maturities of short-term investments15,300 179,297 
Proceeds from maturities and redemptions of fixed-maturity investments, available-for-sale45,107 29,054 
Additions to software and equipment(2,186)(1,517)
Net cash used in investing activities(37,752)(33,751)
Cash flows from financing activities
Proceeds from issuance of common stock related to employee equity plans4,221 2,657 
Taxes paid related to net share settlement of equity awards(9,800)(5,263)
Repurchases of common stock(25,206)(14,800)
Net cash used in financing activities(30,785)(17,406)
Net increase in cash, cash equivalents and restricted cash43,037 38,678 
Cash, cash equivalents and restricted cash, beginning of period96,689 44,426 
Cash, cash equivalents and restricted cash, end of period$139,726 $83,104 





See accompanying notes to condensed consolidated financial statements (unaudited).
9

NMI HOLDINGS, INC.
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 the District of Columbia (D.C.). Re One historically provided reinsurance coverage to NMIC in accordance with certain statutory risk retention requirements. Such requirements have been repealed and the reinsurance coverage provided by Re One to NMIC has been commuted. Re One remains a wholly-owned, licensed insurance subsidiary; however, it does not currently have active insurance exposures. 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. We operate as a single segment for the purposes of assessing performance and making operating decisions.
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, 2023, included in our 2023 10-K. All intercompany transactions have been eliminated. Certain reclassifications to previously reported financial information have been made to conform to our current period presentation. 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. 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, 2024.
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 2023 10-K.
Recent Accounting Pronouncements – Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The update expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The standard will take effect for all public business entities, including those that have only a single reportable segment for fiscal years beginning after December 15, 2023, and interim periods beginning after December 31, 2024. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The update enhances the disclosure requirements related to tax rate reconciliations and income taxes paid. The standard will take effect for public business entities for fiscal years beginning after December 15, 2025. Early adoption is permitted. We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements.
10

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
2. Investments
We hold all investments on an available-for-sale basis at fair value on our condensed consolidated balance sheets 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 recognize an impairment loss equivalent to the difference of the amortized cost basis of the security and its fair value through the condensed consolidated statements of operations and comprehensive income as a “Net Realized Investment Loss. In the event of an impairment of a security that we intend to and have the ability to hold to maturity, we evaluate the drivers of the impairment to determine the portion that is credit related and the portion that is non-credit related. The portion of impairment loss that is attributed to credit related factors is recognized through the statement of operations as a provision for credit loss and the portion that is attributed to non-credit related factors is recognized in other comprehensive income, net of taxes.
Fair Values and Gross Unrealized Gains and Losses on Investments
Amortized
Cost
Gross UnrealizedFair
Value
GainsLosses
As of March 31, 2024(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$164,294 $1,721 $(1,092)$164,923 
Municipal debt securities683,482 808 (58,064)626,226 
Corporate debt securities1,657,085 3,250 (127,538)1,532,797 
Asset-backed securities49,473  (3,549)45,924 
Total bonds2,554,334 5,779 (190,243)2,369,870 
Short-term investments23,656  (1)23,655 
Total investments$2,577,990 $5,779 $(190,244)$2,393,525 
Amortized
Cost
Gross UnrealizedFair
Value
GainsLosses
As of December 31, 2023(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$164,278 $3,374 $(1,264)$166,388 
Municipal debt securities678,339 1,253 (58,462)621,130 
Corporate debt securities1,624,187 7,868 (120,576)1,511,479 
Asset-backed securities52,242 1 (4,032)48,211 
Total bonds2,519,046 12,496 (184,334)2,347,208 
Short-term investments23,816 2 (5)23,813 
Total investments$2,542,862 $12,498 $(184,339)$2,371,021 
We did not own any mortgage-backed securities in our asset-backed securities portfolio at March 31, 2024 or December 31, 2023.
11

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of March 31, 2024 and December 31, 2023:
March 31, 2024December 31, 2023
Financial35 %35 %
Consumer27 26 
Utilities12 13 
Technology9 8 
Industrial9 9 
Communications8 9 
Total100 %100 %
As of March 31, 2024 and December 31, 2023, approximately $5.2 million and $5.3 million, respectively, 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, 2024 and December 31, 2023, 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, 2024Amortized
Cost
Fair
Value
(In Thousands)
Due in one year or less$184,107 $182,728 
Due after one through five years1,275,951 1,194,092 
Due after five through ten years1,024,068 926,490 
Due after ten years44,391 44,291 
Asset-backed securities49,473 45,924 
Total investments$2,577,990 $2,393,525 
As of December 31, 2023Amortized
Cost
Fair
Value
(In Thousands)
Due in one year or less$191,375 $189,729 
Due after one through five years1,237,192 1,162,259 
Due after five through ten years1,050,989 959,633 
Due after ten years11,064 11,189 
Asset-backed securities52,242 48,211 
Total investments$2,542,862 $2,371,021 
Aging of Unrealized Losses
As of March 31, 2024, the investment portfolio had gross unrealized losses of $190.2 million, of which $187.5 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer. As of December 31, 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. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:
12

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Less Than Twelve MonthsTwelve Months or GreaterTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of March 31, 2024($ In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies9 $5,051 $(144)15 $71,851 $(948)24 $76,902 $(1,092)
Municipal debt securities16 95,082 (855)221 474,250 (57,209)237 569,332 (58,064)
Corporate debt securities32 170,627 (1,782)252 1,130,096 (125,756)284 1,300,723 (127,538)
Asset-backed securities1 677 (1)23 45,247 (3,548)24 45,924 (3,549)
Short-term investments3 22,289 (1)   3 22,289 (1)
Total 61 $293,726 $(2,783)511 $1,721,444 $(187,461)572 $2,015,170 $(190,244)
Less Than Twelve MonthsTwelve Months or GreaterTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of December 31, 2023($ In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies8 $5,022 $(62)17 $72,003 $(1,202)25 $77,025 $(1,264)
Municipal debt securities14 56,280 (502)217 467,098 (57,960)231 523,378 (58,462)
Corporate debt securities13 56,039 (705)266 1,150,662 (119,871)279 1,206,701 (120,576)
Asset-backed securities   23 47,426 (4,032)23 47,426 (4,032)
Short-term investments1 9,925 (5)   1 9,925 (5)
Total36 $127,266 $(1,274)523 $1,737,189 $(183,065)559 $1,864,455 $(184,339)
Allowance for Credit Losses
As of March 31, 2024 and December 31, 2023, 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, 2024 or 2023.
We evaluated the securities in an unrealized loss position as of March 31, 2024, assessing their credit ratings as well as any adverse conditions specifically related to the security. Based upon our assessment of the amount and timing of cash flows to be collected over the remaining life of each instrument, we believe the unrealized losses as of March 31, 2024 are not indicative of the ultimate collectability of the current amortized cost of the securities. Rather, the unrealized losses on securities held as of March 31, 2024 were primarily driven by fluctuations in interest rates, and to a lesser extent, movements in credit spreads following the purchase of those securities.
Net Investment Income
The following table presents the components of net investment income:
For the three months ended March 31,
20242023
(In Thousands)
Investment income (1)
$19,697 $15,174 
Investment expenses(261)(280)
Net investment income$19,436 $14,894 
(1)    Includes interest income recognized on cash and cash equivalents of $1.1 million and $0.2 million during the three months ended March 31, 2024 and 2023, respectively.

13

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents the components of net realized investment losses:
For the three months ended March 31,
20242023
(In Thousands)
Gross realized investment gains$ $ 
Gross realized investment losses (33)
Net realized investment losses
$ $(33)
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.
14

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
As of March 31, 2024(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$164,923 $ $ $164,923 
Municipal debt securities 626,226  626,226 
Corporate debt securities 1,532,797  1,532,797 
Asset-backed securities 45,924  45,924 
Cash, cash equivalents and short-term investments163,381   163,381 
Total assets$328,304 $2,204,947 $ $2,533,251 
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
As of December 31, 2023(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$166,388 $ $ $166,388 
Municipal debt securities 621,130  621,130 
Corporate debt securities 1,511,479  1,511,479 
Asset-backed securities 48,211  48,211 
Cash, cash equivalents and short-term investments120,502   120,502 
Total assets$286,890 $2,180,820 $ $2,467,710 
There were no transfers between Level 2 and Level 3 of the fair value hierarchy during the three months ended March 31, 2024, or the year ended December 31, 2023.
Financial Instruments Not Measured at Fair Value
On June 19, 2020, we issued $400 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 amounts due under our then outstanding $150 million term loan. At March 31, 2024, the Notes were carried at a cost of $398.0 million, net of unamortized debt issuance costs of $2.0 million, and had a fair value of $404.3 million as assessed under our Level 2 hierarchy. At December 31, 2023, the Notes were carried at a cost of $397.6 million, net of unamortized debt issuance costs of $2.4 million, and had a fair value of $401.9 million.
4. Debt
Senior Secured Notes
At March 31, 2024, we had $400 million aggregate principal amount of senior secured notes outstanding. The Notes were issued pursuant to an indenture dated June 19, 2020 and bear interest at a rate of 7.375%, payable semi-annually on June 1 and December 1.
The Notes mature on June 1, 2025. We may elect to redeem the Notes in whole or in part at any time prior to March 1, 2025 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 excess of the present value of the principal value of the Notes plus all future interest payments over the principal
15

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
amount. We may elect to redeem the Notes in whole or in part at any time on or after March 1, 2025 at a price equal to 100% of the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon.
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. The effective interest rate on the Notes is 7.825%. At March 31, 2024 and December 31, 2023, approximately $2.0 million and $2.4 million, respectively, of unamortized debt issuance costs remained.
At March 31, 2024 and December 31, 2023, $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 the condensed consolidated balance sheets.
    2021 Revolving Credit Facility
On November 29, 2021, we amended our $110 million senior secured revolving credit facility (the 2020 Revolving Credit Facility and as amended, the 2021 Revolving Credit Facility), expanding the lender group, increasing the revolving capacity to $250 million, and extending the maturity from February 22, 2023 to the earlier of (x) November 29, 2025, or (y) if any existing senior secured notes remain outstanding on such date, February 28, 2025. Borrowings under the 2021 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 the 2021 Revolving Credit Facility) subject to a floor of 1.00% per annum plus a margin of 0.375% to 1.875% per annum, or (ii) the Adjusted Term Secured Overnight Financing Rate (SOFR) (as defined in the 2021 Revolving Credit Facility) plus a margin of 1.375% to 2.875% per annum, with the margin in each of (i) or (ii) based on our applicable corporate credit rating at the time. As of March 31, 2024 and December 31, 2023, no amounts were drawn under the 2021 Revolving Credit Facility.
Under the 2021 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, 2024, the applicable commitment fee was 0.225%. For the three months ended March 31, 2024, we recorded $0.2 million of commitment fees in interest expense.
We incurred debt issuance costs of $1.1 million in connection with the 2021 Revolving Credit Facility and had $0.6 million of unamortized debt issuance costs associated with the 2020 Revolving Credit Facility remaining at the time of its amendment and replacement. Combined unamortized debt issuance costs are amortized through interest expense on a straight-line basis over the contractual life of the 2021 Revolving Credit Facility. At March 31, 2024 and December 31, 2023, remaining unamortized deferred debt issuance costs were $0.7 million and $0.8 million, respectively, in “Other Assets” on our condensed consolidated balance sheets.
We are subject to certain covenants under the 2021 Revolving Credit Facility, including, but not limited to, the following: a maximum debt-to-total capitalization ratio of 35%, compliance with the private mortgage insurer eligibility requirements (PMIERs) financial requirements (subject to any GSE approved waivers), and minimum consolidated net worth and statutory capital requirements (respectively, as defined therein). We were in compliance with all covenants at March 31, 2024.

5. Reinsurance
We enter into third-party reinsurance transactions to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements, (respectively, as defined therein), and support the growth of our business. The Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) has approved and the GSEs have indicated their non-objection to all such transactions (subject to certain conditions and ongoing review).
16

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The effect of our reinsurance agreements on premiums written and earned is as follows:
For the three months ended March 31,
20242023
(In Thousands)
Net premiums written
Direct$163,207 $148,932 
Ceded (1)
(32,962)(35,956)
Net premiums written$130,245 $112,976 
Net premiums earned
Direct$169,718 $157,904 
Ceded (1)
(33,061)(36,150)
Net premiums earned$136,657 $121,754 
(1)    Net of profit commission.
Excess-of-loss Reinsurance
Insurance-Linked Notes
NMIC is a party to reinsurance agreements with Oaktown Re III Ltd., Oaktown Re V Ltd., Oaktown Re VI Ltd., and Oaktown Re VII Ltd. (special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective July 30, 2019, October 29, 2020, April 27, 2021, and October 26, 2021, respectively. Each agreement provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the respective Oaktown Re Vehicle then provides second layer loss protection up to a defined reinsurance coverage amount. NMIC then retains losses in excess of the respective reinsurance coverage amounts.
NMIC makes risk premium payments to the Oaktown Re Vehicles for the applicable outstanding reinsurance coverage amount and pays an additional amount for anticipated operating expenses (capped at $250 thousand per year). NMIC ceded aggregate premiums to the Oaktown Re Vehicles of $6.0 million and $9.1 million during the three months ended March 31, 2024 and 2023, respectively.
NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure under each excess-of-loss agreement. NMIC did not cede any incurred losses on covered policies to the Oaktown Re Vehicles during the three months ended March 31, 2024 and 2023, as the aggregate first layer risk retention for each applicable agreement was not exhausted during such periods.
Under the terms of each excess-of-loss reinsurance agreement, the Oaktown Re Vehicles are required to fully collateralize their outstanding reinsurance coverage amount to NMIC with funds deposited into segregated reinsurance trusts. Such trust funds are required to be invested in short-term U.S. Treasury money market funds at all times. Each Oaktown Re Vehicle financed its respective collateral requirement through the issuance of mortgage insurance-linked notes to unaffiliated investors. Such insurance-linked notes mature ten years (in the case of the notes issued by Oaktown Re III Ltd. and Oaktown Re V Ltd.) and 12.5 years (in the case of the notes issued by Oaktown Re VI Ltd. and Oaktown Re VII Ltd.) from the inception date of their associated reinsurance agreement. We refer to NMIC’s reinsurance agreements with and the insurance-linked note issuances by Oaktown Re Vehicles individually as the 2019 ILN Transaction, 2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN Transaction, and collectively as the ILN Transactions.
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
17

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
agreement, are triggered (each, a Lock-Out Event). Effective March 31, 2024, a previously triggered Lock-Out Event for the 2019 ILN Transaction was deemed to have cleared and amortization of the associated reinsurance coverage, and distribution of collateral assets and amortization of the associated insurance-linked notes resumed.
NMIC holds optional termination rights under each ILN Transaction, including, among others, an optional call feature which provides NMIC the discretion to terminate the transaction on or after a prescribed date, and a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment afforded to NMIC under a given agreement. In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC's failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others.
The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding ILN Transaction. Current amounts are presented as of March 31, 2024.
($ values in thousands)
Inception DateCovered ProductionInitial Reinsurance Coverage Current Reinsurance CoverageInitial First Layer Retained Loss
Current First Layer Retained Loss (1)
2019 ILN TransactionJuly 30, 20196/1/2018 – 6/30/2019$326,905 $155,552 $123,424 $121,702 
2020-2 ILN TransactionOctober 29, 2020
4/1/2020 – 9/30/2020 (2)
242,351 47,502 121,777 121,177 
2021-1 ILN Transaction April 27, 2021
10/1/2020 – 3/31/2021 (3)
367,238 199,639 163,708 163,394 
2021-2 ILN TransactionOctober 26, 2021
4/1/2021 – 9/30/2021 (4)
363,596 293,619 146,229 145,715 

(1)    NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable ILN Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.
(2)    Approximately 1% of the production covered by the 2020-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2020.
(3)    Approximately 1% of the production covered by the 2021-1 ILN Transaction has coverage reporting dates between July 1, 2019 and September 30, 2020.
(4)    Approximately 2% of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021.

Under the terms of our ILN Transactions, we are required to maintain a certain level of restricted funds in premium deposit accounts with Bank of New York Mellon until the respective notes have been redeemed in full. “Cash and Cash Equivalents” on our condensed consolidated balance sheets includes restricted amounts of $1.1 million and $1.3 million as of March 31, 2024 and December 31, 2023, respectively. The restricted balances required under these transactions will decline over time as the outstanding principal balance of the respective insurance-linked notes are amortized.
Traditional Reinsurance
NMIC is party to six excess-of-loss reinsurance agreements with broad panels of third-party reinsurers – the 2022-1 XOL Transaction, effective April 1, 2022, the 2022-2 XOL Transaction, effective July 1, 2022, the 2022-3 XOL Transaction, effective October 1, 2022, the 2023-1 XOL Transaction, effective January 1, 2023, the 2023-2 XOL Transaction, effective July 1, 2023, and the 2024 XOL Transaction, effective January 1, 2024 – which we refer to collectively as the XOL Transactions. Each XOL Transaction provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the reinsurers then provide second layer loss protection up to a defined reinsurance coverage amount. The reinsurance coverage amount of each XOL Transaction is set to approximate the PMIERs minimum required assets of its reference pool and decreases from its peak over a ten-year period in the event the PMIERs minimum required assets of the pool declines. NMIC retains losses in excess of the outstanding reinsurance coverage amount.
Under the terms of the XOL Transactions, NMIC makes risk premium payments to its third-party reinsurance providers for the outstanding reinsurance coverage amount and ceded aggregate premiums of $9.2 million and $7.2 million during the three months ended March 31, 2024 and 2023, respectively. NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure under each agreement. NMIC did not cede any incurred losses on covered policies under the XOL Transactions during the three months ended March 31, 2024 and 2023, as the aggregate first layer risk retention for each agreement was not exhausted during such periods.
NMIC holds optional termination rights which provide it the discretion to terminate each XOL Transaction on or after a specified date. NMIC may also elect to terminate the XOL Transactions at any point if the outstanding reinsurance coverage
18

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
amount amortizes to 10% or less of the reinsurance coverage amount provided at inception, or if it determines that it will no longer be able to take full PMIERs asset credit for the coverage. Additionally, under the terms of the treaties, NMIC may selectively terminate its engagement with individual reinsurers under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold, and/or a reinsurer breaches (and fails to cure) its collateral posting obligation.
Each of the third-party reinsurance providers that is party to the XOL Transactions has an insurer financial strength rating of A- or better by S&P Global Ratings (S&P), A.M. Best Company Inc. (A.M. Best) or both.
The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding XOL Transaction. Current amounts are presented as of March 31, 2024.
($ values in thousands)Inception DateCovered Production
Initial Reinsurance Coverage
Current Reinsurance CoverageInitial First Layer Retained Loss
Current First Layer Retained Loss (1)
2022-1 XOL TransactionApril 1, 2022
10/1/2021 – 3/31/2022 (2)
$289,741 $227,863 $133,366 $133,007 
2022-2 XOL TransactionJuly 1, 2022
4/1/2022 – 6/30/2022 (3)
154,306 152,347 78,906 78,735 
2022-3 XOL TransactionOctober 1, 20227/1/2022 – 9/30/202296,779 96,197 106,265 106,023 
2023-1 XOL Transaction
January 1, 202310/1/2022 – 6/30/202389,864 88,351 146,513 146,348 
2023-2 XOL Transaction (4)
July 1, 2023
7/1/2023 – 12/31/2023
100,777 100,777 136,875 136,875 
2024 XOL Transaction (5)
January 1, 2024
1/1/2024 – 12/31/2024
37,404 37,404 65,217 65,217 
(1)    NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable XOL Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.
(2)    Approximately 1% of the production covered by the 2022-1 XOL Transaction has coverage reporting dates between October 21, 2019 and September 30, 2021.
(3)    Approximately 1% of the production covered by the 2022-2 XOL Transaction has coverage reporting dates between January 4, 2021 and March 31, 2022.
(4)    Effective January 1, 2024, the initial reinsurance coverage and initial first layer retained loss amounts increased due to revised contractual terms.
(5)    The initial reinsurance coverage, current reinsurance coverage, initial first layer retained loss and current first layer retained loss for the 2024 XOL Transaction will increase as incremental covered production is ceded under the transaction through December 31, 2024.

Quota Share Reinsurance
NMIC is party to eight quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016 and as modified April 1, 2019, the 2018 QSR Transaction, effective January 1, 2018, the 2020 QSR Transaction, effective April 1, 2020 and as amended January 1, 2024, the 2021 QSR Transaction, effective January 1, 2021, the 2022 QSR Transaction, effective October 1, 2021, the 2022 Seasoned QSR Transaction, effective July 1, 2022, the 2023 QSR Transaction, effective January 1, 2023 and the 2024 QSR Transaction, effective January 1, 2024 – which we refer to collectively as the QSR Transactions. Under each of the QSR Transactions, NMIC cedes a proportional share of its risk on eligible policies to panels of third-party reinsurance providers. Each of the third-party reinsurance providers that is party to the QSR Transactions has an insurer financial strength rating of A- or better by S&P, A.M. Best or both.
Under the terms of the 2016 QSR Transaction, NMIC cedes premiums written related to 20.5% of the risk on eligible primary policies written for all periods through December 31, 2017 and 100% of the risk under our pool agreement with Fannie Mae. The 2016 QSR Transaction is scheduled to terminate on December 31, 2027, except with respect to the ceded pool risk, which expired on August 31, 2023. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2020, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.
Under the terms of the 2018 QSR Transaction, NMIC cedes premiums earned related to 25% of the risk on eligible policies written in 2018 and 20% of the risk on eligible policies written in 2019. The 2018 QSR Transaction is scheduled to terminate on December 31, 2029. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2022, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.
19

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21% of the risk on eligible policies written between April 1, 2020 and December 31, 2020. The 2020 QSR Transaction is scheduled to terminate on December 31, 2030. NMIC had the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2025, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.
Under the terms of the 2021 QSR Transaction, NMIC cedes premiums earned related to 22.5% of the risk on eligible policies written from January 1, 2021 to October 30, 2021. The 2021 QSR Transaction is scheduled to terminate on December 31, 2031. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2024, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.
Under the terms of the 2022 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written primarily between October 30, 2021 and December 31, 2022. The 2022 QSR Transaction is scheduled to terminate on December 31, 2032. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2024 or semi-annually thereafter, which could result in NMIC recapturing the related risk.
Under the terms of the 2022 Seasoned QSR Transaction, NMIC cedes premiums earned related to 95% of the net risk on eligible policies primarily for a seasoned pool of mortgage insurance policies that had previously been covered under the retired Oaktown Re Ltd. and Oaktown Re IV Ltd. reinsurance transactions, after the consideration of coverage provided by other QSR Transactions. The 2022 Seasoned QSR Transaction is scheduled to terminate on June 30, 2032. NMIC has the option, based on certain conditions, to terminate the agreement as of June 30, 2025 or quarterly thereafter through December 31, 2027 with the payment of a termination fee, and as of March 31, 2028 or quarterly thereafter without the payment of a termination fee. Such termination could result in NMIC recapturing the related risk.
Under the terms of the 2023 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written in 2023. The 2023 QSR Transaction is scheduled to terminate on December 31, 2033. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2025 or semi-annually thereafter, which could result in NMIC recapturing the related risk.
Under the terms of the 2024 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written in 2024. The 2024 QSR Transaction is scheduled to terminate on December 31, 2034. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2027, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.
NMIC may terminate any or all of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the risk-in-force (RIF) ceded under the respective agreements. Additionally, under the terms of the QSR Transactions, NMIC may elect to selectively terminate its engagement with individual reinsurers on a run-off basis (i.e., reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis (i.e., the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement.
The following table shows amounts related to the QSR Transactions:
As of and for the three months ended
March 31, 2024March 31, 2023
(In Thousands)
Ceded risk-in-force$12,669,207 $12,635,442 
Ceded premiums earned(41,269)(42,096)
Ceded claims and claim expenses
659 1,965 
Ceding commission earned10,292 9,965 
Profit commission23,407 22,279 
20

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Ceded premiums written under the 2016 QSR Transaction are recorded as prepaid reinsurance premiums in “Other Assets” on our consolidated balance sheets and amortized to ceded premiums earned in a manner consistent with the recognition of revenue on direct premiums. Under all other QSR Transactions, premiums are ceded on an earned basis as defined in the agreement. NMIC receives a 20% ceding commission for premiums ceded under the QSR Transactions, except with respect to the 2022 Seasoned QSR Transaction under which it receives a 35% ceding commission and the 2020 QSR Transaction under which it receives a 36% ceding commission. NMIC also receives a profit commission under each of the QSR Transactions, provided that the loss ratios on loans covered under the 2016, 2018, 2020, 2021, 2022, 2022 Seasoned, 2023 and 2024 QSR Transactions, generally remain below 60%, 61%, 50%, 57.5%, 62%, 55%, 62% and 56%, respectively, as measured annually. Ceded claims and claim expenses under each of the QSR Transactions reduce the respective profit commission received by NMIC on a dollar-for-dollar basis.
In accordance with the terms of the 2016 QSR Transaction, rather than making a cash payment or transferring investments for ceded premiums written, NMIC established a funds withheld liability, which also includes amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC are realized from this account until exhausted. NMIC’s reinsurance recoverable balance is further supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The reinsurance recoverable on loss reserves related to the 2016 QSR Transaction was $1.6 million and $1.7 million as of March 31, 2024 and December 31, 2023, respectively.
In accordance with the terms of the 2018, 2020, 2021, 2022, 2022 Seasoned, 2023 and 2024 QSR Transactions, cash payments for ceded premiums earned are settled on a quarterly basis, offset by amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC are also recognized quarterly. NMIC's reinsurance recoverable balance is supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The aggregate reinsurance recoverable on loss reserves related to the 2018, 2020, 2021, 2022, 2022 Seasoned, 2023, and 2024 QSR Transactions was $26.3 million and $25.8 million as of March 31, 2024 and December 31, 2023, respectively.
We remain directly liable for all claim payments if we are unable to collect the recoverables due from our reinsurers and, as such, we actively monitor and manage our counterparty credit exposure to our reinsurance providers. We establish an allowance for expected credit loss against our reinsurance recoverable if we do not expect to recover amounts due from one or more of our reinsurance counterparties, and report our reinsurance recoverable net of such allowance, if any. We actively monitor the counterparty credit profiles of our reinsurers and each is required to partially collateralize its obligations under the terms of the QSR Transactions. The allowance for credit loss established against our reinsurance recoverable was deemed immaterial as of March 31, 2024 and December 31, 2023.
6. Reserves for Insurance Claims and Claim Expenses
We hold gross reserves in an amount equal to the estimated liability for insurance claims and claim expenses related to defaults on insured mortgage loans. A loan is considered to be in “default” as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments. We establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, and additional loans that we estimate (based on actuarial review and other factors) to be in default that have not yet been reported to us by servicers, referred to as incurred but not reported (IBNR) reserves. We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claim settlement process. As of March 31, 2024, we held gross reserves for insurance claims and claim expenses of $127.2 million. During the three months ended March 31, 2024, we paid 42 claims totaling $1.1 million, including 41 claims covered under the QSR Transactions representing $0.3 million of ceded claims and claim expenses.
We had 5,109 loans in default in our primary insured portfolio as of March 31, 2024, which represented a 0.80% default rate against 635,662 total policies in-force and 5,099 loans in default in our primary portfolio as of December 31, 2023, which represented a 0.81% default rate against 629,690 total policies in-force. The size of the reserve we establish for each defaulted loan (and by extension our aggregate reserve for claims and claim expenses) reflects our best estimate of the future claim payment to be made for each individual loan in default. Our future claims exposure is a function of the number of defaulted loans that progress to claim payment (which we refer to as frequency) and the amount to be paid to settle such claims (which we refer to as severity). Our estimates of claims frequency and severity are not formulaic, rather they are broadly synthesized based on historical observed experience for similarly situated loans and assumptions about future macroeconomic factors.
21

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table provides a reconciliation of the beginning and ending gross reserve balances for primary insurance claims and claim expenses:
For the three months ended March 31,
20242023
(In Thousands)
Beginning balance$123,974 $99,836 
Less reinsurance recoverables (1)
(27,514)(21,587)
Beginning balance, net of reinsurance recoverables96,460 78,249 
Add claims incurred:
Claims and claim expenses incurred:
Current year (2)
32,976 27,608 
Prior years (3)
(29,282)(20,907)
Total claims and claim expenses incurred3,694 6,701 
Less claims paid:
Claims and claim expenses paid:
Current year (2)
  
Prior years (3)
852 272 
Total claims and claim expenses paid852 272 
Reserve at end of period, net of reinsurance recoverables99,302 84,678 
Add reinsurance recoverables (1)
27,880 23,479 
Ending balance$127,182 $108,157 
(1)    Related to ceded losses recoverable under the QSR Transactions. See Note 5, “Reinsurance” for additional information.
(2)    Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the default would be included in the current year. Amounts are presented net of reinsurance and included $25.9 million attributed to net case reserves and $6.6 million attributed to net IBNR reserves for the three months ended March 31, 2024 and $22.3 million attributed to net case reserves and $4.9 million attributed to net IBNR reserves for the three months ended March 31, 2023.
(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 $22.4 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the three months ended March 31, 2024 and $16.2 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the three months ended March 31, 2023.

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. The amount of claims incurred relating to current year defaults increased during the three months ended March 31, 2024, compared to the same period in the prior year, primarily due to an increase in the total number of new delinquencies emerging during the period tied to the growth and natural seasoning of our portfolio, partially offset by a decrease in the average case reserve established against newly defaulted loans. Our provision for claims and claim expenses during both the three months ended March 31, 2024 and 2023 benefited from favorable development on prior year defaults. We recognized $29.3 million and $20.9 million of favorable prior year development during the three months ended March 31, 2024 and 2023, respectively, primarily due to cure activity and ongoing analysis of recent loss development trends. 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 $85.1 million related to prior year defaults remained as of March 31, 2024.
7. Earnings per Share (EPS)
Basic EPS is based on the weighted average number of shares of common stock outstanding. Diluted EPS is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the vesting of service-based and performance and service-based restricted stock units (RSUs), and the exercise of vested and unvested stock options.
22

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted EPS of common stock:
For the three months ended March 31,
20242023
(In Thousands, except for per share data)
Net income – basic and diluted$89,050 $74,458 
Basic weighted average shares outstanding
80,726 83,600 
Dilutive effect of issuable shares1,373 1,240 
Diluted weighted average shares outstanding
82,099 84,840 
Earnings per share
Basic
$1.10 $0.89 
Diluted
$1.08 $0.88 
8. Income Taxes
We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 21%. Taxable income is reported on our consolidated U.S. federal and various state income tax returns, filed by NMIH on behalf of itself and its subsidiaries. Our effective tax rate on our pre-tax income was 22.3% and 22.6% for the three months ended March 31, 2024 and 2023, respectively. Our provision for income taxes for interim reporting periods is established based on our estimated annual effective tax rate for a given year. Our effective tax rate may fluctuate between interim periods due to the impact of discrete items not included in our estimated annual effective tax rate, including the tax effects associated with the vesting of RSUs and exercise of options. Such items are treated on a discrete basis in the reporting period in which they occur.
As a mortgage guaranty insurance company, we are eligible to claim a tax deduction for our statutory contingency reserve balance, subject to certain limitations outlined under IRC Section 832(e), and only to the extent we acquire tax and loss bonds in an amount equal to the tax benefit derived from the claimed deduction, which is our intent. As a result, our interim provision for income taxes for the three months ended March 31, 2024 primarily represents a change in our net deferred tax liability. As of March 31, 2024 and December 31, 2023, we held $235.3 million of tax and loss bonds in “Prepaid Federal Income Taxes” on our condensed consolidated balance sheets.

9. Stockholders' Equity
On February 10, 2022, our Board of Directors authorized a $125 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2023. On July 31, 2023, our Board of Directors authorized a new $200 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2025. Concurrent with the new authorization, our Board of Directors also approved an extension of our existing $125 million share repurchase program through December 31, 2025 to align its remaining tenor with that of the $200 million program. The authorization provides us the flexibility, based on market and business conditions, stock price and other factors, to repurchase stock from time to time through open market purchases, privately negotiated transactions, or other means, including pursuant to Rule 10b5-1 trading plans.

During the three months ended March 31, 2024, we repurchased 0.8 million shares at an average price of $29.98 per share (excluding associated costs and applicable taxes). During the year ended December 31, 2023, we repurchased 3.5 million shares at an average price of $25.93 per share (excluding associated costs and applicable taxes). As of March 31, 2024, we had $151.8 million of repurchase authority remaining under our current program.
10. Litigation
We record a litigation liability when we determine that it is probable a litigation loss will be incurred and the amount of such anticipated loss can be reasonably estimated. In the event we determine that a litigation loss is reasonably possible (though not probable), we disclose an estimate of the possible loss if such estimate can be reasonably established or disclose the matter with no estimate if such estimate cannot be reasonably made. We evaluate litigation and other legal developments that could affect our accrual for probable losses or our estimated disclosure of possible losses and make ongoing adjustments to our accruals
23

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
and disclosures as appropriate. Significant judgment is required to determine both the likelihood and the estimated amount of potential losses related to such matters.
We are currently named as a defendant in a litigation proceeding pertaining to the refund of certain mortgage insurance premiums under the Homeowners Protection Act. The case was dismissed in September 2023 and is currently pending appeal. We do not currently expect that we will incur a material loss in connection with the case and have not recorded a litigation liability for this matter.
11. Premiums Receivable

Premiums receivable consists of premiums due on our mortgage insurance policies. If a mortgage insurance premium is unpaid for more than 120 days, the associated receivable is written off against earned premium and the related insurance policy is canceled. Premiums receivable may be written off prior to 120 days in the ordinary course of business for non-credit events including, but not limited to, the modification or refinancing of an underlying insured loan. We established a $2.3 million and $2.7 million reserve for premium write-offs at March 31, 2024 and December 31, 2023, respectively.
We separately recognize an allowance for credit losses for premiums receivable based on credit losses expected to arise over the life of the receivable. Due to the nature of our insurance policies (a necessary precondition for access to mortgage credit for covered borrowers) and the short duration of the related receivables, we do not typically experience credit losses against our premium receivables and the allowance for credit loss established on premium receivable was deemed immaterial at March 31, 2024 and December 31, 2023.
12. Regulatory Information
    Statutory Requirements
Our insurance subsidiaries, NMIC and Re One, file financial statements in conformity with statutory accounting principles (SAP) prescribed or permitted by the Wisconsin OCI, NMIC's principal regulator. Prescribed SAP includes state laws, regulations and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC). The Wisconsin OCI recognizes only statutory accounting practices prescribed or permitted by the state of Wisconsin for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under Wisconsin insurance laws.
NMIC and Re One generated combined statutory net income of $34.7 million and $21.8 million for the three months ended March 31, 2024 and 2023, respectively.
The Wisconsin OCI has imposed a prescribed accounting practice for the treatment of statutory contingency reserves that differs from the treatment promulgated by the NAIC. Under Wisconsin OCI's prescribed practice mortgage guaranty insurers are required to reflect changes in their contingency reserves through statutory income. Such approach contrasts with the NAIC's treatment, which records changes to contingency reserves directly to unassigned funds. As a Wisconsin-domiciled insurer, NMIC's statutory net income reflects an expense associated with the change in its contingency reserve. While such treatment impacts NMIC's statutory net income, it does not have an effect on NMIC's statutory capital position.
The following table presents NMIC's statutory surplus, contingency reserve, statutory capital and risk-to-capital (RTC) ratio as of March 31, 2024 and December 31, 2023.
March 31, 2024December 31, 2023
(In Thousands)
Statutory surplus$992,923 $963,085 
Contingency reserve1,654,279 1,573,360 
Statutory capital (1)
$2,647,202 $2,536,445 
Risk-to-capital
11.7:1
11.4:1
(1)    Represents the total of the statutory surplus and contingency reserve.
Re One had $2.1 million and $2.0 million of statutory capital at March 31, 2024 and December 31, 2023, respectively.
NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations
24

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
that are incorporated in Delaware. Delaware law provides that dividends are only payable out of a corporation's capital surplus or, subject to certain limitations, recent net profits.
NMIC and Re One are subject to certain rules and regulations prescribed by jurisdictions in which they are authorized to operate and the GSEs that may restrict their ability to pay dividends to NMIH. NMIC has the capacity to pay $96.3 million of aggregate ordinary dividends to NMIH during the twelve-month period ending December 31, 2024.

13. Subsequent Events
On April 29, 2024, we entered into a new $250 million five-year unsecured revolving credit facility (the 2024 Revolving Credit Facility) to replace, upon close, our existing 2021 (secured) Revolving Credit Facility. Borrowings under the 2024 Revolving Credit Facility may be used for general corporate purposes, including to support growth, new business production and operations, and will accrue interest and carry undrawn commitment fees identical to those incurred under the 2021 Revolving Credit Facility. Under the 2024 Revolving Credit Facility we will be subject to certain covenants, including a maximum debt-to-total capitalization ratio of 35%, compliance with the PMIERs financial requirements (subject to any GSE approved waivers), and a minimum consolidated net worth requirement (as defined therein). We will no longer be subject to a minimum statutory capital covenant. Closing of the 2024 Revolving Credit Facility is subject to the satisfaction of certain terms and conditions contained therein.
25


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
    The following analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this report and our audited financial statements, notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 10-K, for a more complete understanding of our financial position and results of operations. In addition, investors should review the “Cautionary Note Regarding Forward-Looking Statements” above and the “Risk Factors” detailed in Part II, Item 1A of this report and in Part I, Item 1A of our 2023 10-K, as subsequently updated in other reports we file with the SEC, for a discussion of those risks and uncertainties that have the potential to affect our business, financial condition, results of operations, cash flows or prospects in a material and adverse manner. Our results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year or for any other period.
Overview
We provide private MI through our primary insurance subsidiary, NMIC. NMIC is wholly-owned, domiciled in Wisconsin and principally regulated by the Wisconsin OCI. NMIC is approved as an MI provider by the GSEs and is licensed to write coverage in all 50 states and D.C. Our subsidiary, NMIS, provides outsourced loan review services to mortgage loan originators and our subsidiary, Re One, historically provided reinsurance coverage to NMIC in accordance with certain statutory risk retention requirements. Such requirements have been repealed and the reinsurance coverage provided by Re One to NMIC has been commuted. Re One remains a wholly-owned, licensed insurance subsidiary; however, it does not currently have active insurance exposures.
MI protects lenders and investors from default-related losses on a portion of the unpaid principal balance of a covered mortgage. MI plays a critical role in the U.S. housing market by mitigating mortgage credit risk and facilitating the secondary market sale of high- loan-to-value (LTV) (i.e., above 80%) residential loans to the GSEs, who are otherwise restricted by their charters from purchasing or guaranteeing high-LTV mortgages that are not covered by certain credit protections. Such credit protection and secondary market sales allow lenders to increase their capacity for mortgage commitments and expand financing access to existing and prospective homeowners.
NMIH, a Delaware corporation, was incorporated in May 2011, and we began start-up operations in 2012 and wrote our first MI policy in 2013. Since formation, we have sought to establish customer relationships with a broad group of mortgage lenders and build a diversified, high-quality insured portfolio. As of March 31, 2024, we had issued master policies with 1,984 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 March 31, 2024, we had $199.4 billion of primary insurance-in-force (IIF) and $52.6 billion of primary risk-in-force (RIF).
We believe that our success in acquiring a large and diverse group of lender customers and growing a portfolio of high-quality IIF traces to our founding principles, whereby we aim to help qualified individuals achieve their homeownership goals, ensure that we remain a strong and credible counter-party, deliver a high-quality customer service experience, establish a differentiated risk management approach that emphasizes the individual underwriting review or validation of the vast majority of the loans we insure, utilizing our proprietary Rate GPS® pricing platform to dynamically evaluate risk and price our policies, and foster a culture of collaboration and excellence that helps us attract and retain experienced industry leaders.
Our strategy is to continue to build on our position in the private MI market, expand our customer base and grow our insured portfolio of high-quality residential loans by focusing on long-term customer relationships, disciplined and proactive risk selection and pricing, fair and transparent claim payment practices, responsive customer service, and financial strength and profitability.
Our common stock trades on the Nasdaq under the symbol “NMIH.” Our headquarters is located in Emeryville, California. As of March 31, 2024, we had 234 employees. Our corporate website is located at www.nationalmi.com. Our website and the information contained on or accessible through our website are not incorporated by reference into this report.
We discuss below our results of operations for the periods presented, as well as the conditions and trends that have impacted or are expected to impact our business, including new insurance writings, the composition of our insurance portfolio and other factors that we expect to impact our results.
26


Conditions and Trends Affecting Our Business
Macroeconomic Developments
Macroeconomic factors, including persistent inflation, elevated interest rates, flagging consumer confidence and increasing jobless claims could have a pronounced impact on the housing market, the mortgage insurance industry and our business in future periods. A marked decline in housing demand, a significant and protracted decrease in house prices or a sustained increase in unemployment could reduce the pace of new business activity in the private mortgage insurance market and negatively impact our future new insurance written (NIW) volume, or contribute to an increase in our future default and claim experience.
Key Factors Affecting Our Results
New Insurance Written, Insurance-In-Force and Risk-In-Force
NIW is the aggregate unpaid principal balance of mortgages underpinning new policies written during a given period. Our NIW is affected by the overall size of the mortgage origination market and the volume of high-LTV mortgage originations. Our NIW is also affected by the percentage of such high-LTV originations covered by private versus government MI or other alternative credit enhancement structures and our share of the private MI market. NIW, together with persistency, drives our IIF. IIF is the aggregate unpaid principal balance of the mortgages we insure, as reported to us by servicers at a given date, and represents the sum total of NIW from all prior periods less principal payments on insured mortgages and policy cancellations (including for prepayment, nonpayment of premiums, coverage rescission and claim payments). RIF is related to IIF and represents the aggregate amount of coverage we provide on all outstanding policies at a given date. RIF is calculated as the sum total of the coverage percentage of each individual policy in our portfolio applied to the unpaid principal balance of such insured mortgage. RIF is affected by IIF and the LTV profile of our insured mortgages, with lower LTV loans generally having a lower coverage percentage and higher LTV loans having a higher coverage percentage. Gross RIF represents RIF before consideration of reinsurance. Net RIF is gross RIF net of ceded reinsurance.
Net Premiums Written and Net Premiums Earned
We set our premium rates on individual policies based on the risk characteristics of the underlying mortgage loans and borrowers, and in accordance with our filed rates and applicable rating rules. On June 4, 2018, we introduced a proprietary risk-based pricing platform, which we refer to as Rate GPS®. Rate GPS® considers a broad range of individual variables, including property type, type of loan product, borrower credit characteristics, and lender and market factors, and provides us with the ability to set and charge premium rates commensurate with the underlying risk of each loan that we insure. We introduced Rate GPS® in June 2018 to replace our previous rate card pricing system. While most of our new business is priced through Rate GPS®, we also continue to offer a rate card pricing option to a limited number of lender customers who require a rate card for operational reasons. We believe the introduction and utilization of Rate GPS® provides us with a more granular and analytical approach to evaluating and pricing risk, and that this approach enhances our ability to continue building a high-quality mortgage insurance portfolio and delivering attractive risk-adjusted returns.
Premiums are generally fixed for the duration of our coverage of the underlying loans. Net premiums written are equal to gross premiums written minus ceded premiums written under our reinsurance arrangements, less premium refunds and premium write-offs. As a result, net premiums written are generally influenced by:
NIW;
premium rates and the mix of premium payment type, which are either single, monthly or annual premiums, as described below;
cancellation rates of our insurance policies, which are impacted by payments or prepayments on mortgages, refinancings (which are affected by prevailing mortgage interest rates as compared to interest rates on loans underpinning our in force policies), levels of claim payments and home prices; and
cession of premiums under third-party reinsurance arrangements.
Premiums are paid either by the borrower (borrower-paid mortgage insurance or BPMI) or the lender (lender-paid mortgage insurance or LPMI) in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium). Our net premiums written will differ from our net premiums earned due to policy payment type. For single premiums, we receive a single premium payment at origination, which is earned over the estimated life of the policy. Substantially all of our single premium policies in force as of March 31, 2024 were non-
27


refundable under most cancellation scenarios. If non-refundable single premium policies are canceled, we immediately recognize the remaining unearned premium balances as earned premium revenue. Monthly premiums are recognized in the month billed and when the coverage is effective. Annual premiums are earned on a straight-line basis over the year of coverage. Substantially all of our policies provide for either single or monthly premiums.
The percentage of IIF that remains on our books after any twelve-month period is defined as our persistency rate. Because our insurance premiums are earned over the life of a policy, higher persistency rates can have a significant impact on our net premiums earned and profitability. Generally, faster speeds of mortgage prepayment lead to lower persistency. Prepayment speeds and the relative mix of business between single and monthly premium policies also impact our profitability. Our premium rates include certain assumptions regarding repayment or prepayment speeds of the mortgages underlying our policies. Because premiums are paid at origination on single premium policies and our single premium policies are generally non-refundable on cancellation, assuming all other factors remain constant, if single premium loans are prepaid earlier than expected, our profitability on these loans is likely to increase and, if loans are repaid slower than expected, our profitability on these loans is likely to decrease. By contrast, if monthly premium loans are repaid earlier than anticipated, we do not earn any more premium with respect to those loans and, unless we replace the repaid monthly premium loan with a new loan at the same premium rate or higher, our revenue is likely to decline.

Effect of Reinsurance on Our Results
We utilize third-party reinsurance to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements, and support the growth of our business. We currently have both quota share and excess-of-loss reinsurance agreements in place, which impact our results of operations and regulatory capital and PMIERs asset positions. Under a quota share reinsurance agreement, the reinsurer receives a premium in exchange for covering an agreed-upon portion of incurred losses. Such a quota share arrangement reduces premiums written and earned and also reduces RIF, providing capital relief to the ceding insurance company and reducing incurred claims in accordance with the terms of the reinsurance agreement. In addition, reinsurers typically pay ceding commissions as part of quota share transactions, which offset the ceding company's acquisition and underwriting expenses. Certain quota share agreements include profit commissions that are earned based on loss performance and serve to reduce ceded premiums. Under an excess-of-loss agreement, the ceding insurer is typically responsible for losses up to an agreed-upon threshold and the reinsurer then provides coverage in excess of such threshold up to a maximum agreed-upon limit. We expect to continue to evaluate reinsurance opportunities in the normal course of business.
Excess-of-Loss Reinsurance
Insurance-Linked Notes
NMIC is party to reinsurance agreements with the Oaktown Re Vehicles that provide it with aggregate excess-of-loss reinsurance coverage on defined portfolios of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the respective Oaktown Re Vehicle then provides second layer loss protection up to a defined reinsurance coverage amount. NMIC then retains losses in excess of the respective reinsurance coverage amounts.
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). Effective March 31, 2024, a previously triggered Lock-Out Event for the 2019 ILN Transaction was deemed to have cleared and amortization of the associated reinsurance coverage, and distribution of collateral assets and amortization of the associated insurance-linked notes resumed.
NMIC holds optional termination rights under each ILN Transaction, including, among others, an optional call feature which provides NMIC the discretion to terminate the transaction on or after a prescribed date, and a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment afforded to NMIC under a given agreement. In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC's failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others.
28


The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding ILN Transaction. Current amounts are presented as of March 31, 2024.
($ values in thousands)
Inception DateCovered ProductionInitial Reinsurance Coverage Current Reinsurance CoverageInitial First Layer Retained Loss
Current First Layer Retained Loss (1)
2019 ILN TransactionJuly 30, 20196/1/2018 – 6/30/2019$326,905 $155,552 $123,424 $121,702 
2020-2 ILN TransactionOctober 29, 2020
4/1/2020 – 9/30/2020 (2)
242,351 47,502 121,777 121,177 
2021-1 ILN Transaction April 27, 2021
10/1/2020 – 3/31/2021 (3)
367,238 199,639 163,708 163,394 
2021-2 ILN TransactionOctober 26, 2021
4/1/2021 – 9/30/2021 (4)
363,596 293,619 146,229 145,715 

(1)    NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable ILN Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.
(2)    Approximately 1% of the production covered by the 2020-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2020.
(3)    Approximately 1% of the production covered by the 2021-1 ILN Transaction has coverage reporting dates between July 1, 2019 and September 30, 2020.
(4)    Approximately 2% of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021.
Traditional Reinsurance
NMIC is party to six excess-of-loss reinsurance agreements with broad panels of third-party reinsurers – the 2022-1 XOL Transaction, effective April 1, 2022, the 2022-2 XOL Transaction, effective July 1, 2022, the 2022-3 XOL Transaction, effective October 1, 2022, the 2023-1 XOL Transaction, effective January 1, 2023, the 2023-2 XOL Transaction, effective July 1, 2023, and the 2024 XOL Transaction, effective January 1, 2024 – which we refer to collectively as the XOL Transactions. Each XOL Transaction provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the reinsurers then provide second layer loss protection up to a defined reinsurance coverage amount. The reinsurance coverage amount of each XOL Transaction is set to approximate the PMIERs minimum required assets of its reference pool and decreases from its peak over a ten-year period in the event the PMIERs minimum required assets of the pool declines. NMIC retains losses in excess of the outstanding reinsurance coverage amount.
NMIC holds optional termination rights which provide it the discretion to terminate each XOL Transaction on or after a specified date. NMIC may also elect to terminate the XOL Transactions at any point if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount provided at inception, or if it determines that it will no longer be able to take full PMIERs asset credit for the coverage. Additionally, under the terms of the treaties, NMIC may selectively terminate its engagement with individual reinsurers under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold, and/or a reinsurer breaches (and fails to cure) its collateral posting obligation.
Each of the third-party reinsurance providers that is party to the XOL Transactions has an insurer financial strength rating of A- or better by S&P, A.M. Best or both.
The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding XOL Transaction. Current amounts are presented as of March 31, 2024.
($ values in thousands)Inception DateCovered ProductionInitial Reinsurance Coverage Current Reinsurance CoverageInitial First Layer Retained Loss
Current First Layer Retained Loss (1)
2022-1 XOL TransactionApril 1, 2022
10/1/2021 – 3/31/2022 (2)
$289,741 $227,863 $133,366 $133,007 
2022-2 XOL TransactionJuly 1, 2022
4/1/2022 – 6/30/2022 (3)
154,306 152,347 78,906 78,735 
2022-3 XOL TransactionOctober 1, 20227/1/2022 – 9/30/202296,779 96,197 106,265 106,023 
2023-1 XOL TransactionJanuary 1, 202310/1/2022 – 6/30/202389,864 88,351 146,513 146,348 
2023-2 XOL Transaction (4)
July 1, 20237/1/2023 – 12/31/2023100,777 100,777 136,875 136,875 
2024 XOL Transaction (5)
January 1, 2024
1/1/2024 – 12/31/2024
37,404 37,404 65,217 65,217 
29


(1)    NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable XOL Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.
(2)    Approximately 1% of the production covered by the 2022-1 XOL Transaction has coverage reporting dates between October 21, 2019 and September 30, 2021.
(3)    Approximately 1% of the production covered by the 2022-2 XOL Transaction has coverage reporting dates between January 4, 2021 and March 31, 2022.
(4)    Effective January 1, 2024, the initial reinsurance coverage and initial first layer retained loss amounts increased due to revised contractual terms.
(5)    The initial reinsurance coverage, current reinsurance coverage, initial first layer retained loss and current first layer retained loss for the 2024 XOL Transaction will increase as incremental covered production is ceded under the transaction through December 31, 2024.

Quota Share Reinsurance
NMIC is party to eight quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016 and as modified April 1, 2019, the 2018 QSR Transaction, effective January 1, 2018, the 2020 QSR Transaction, effective April 1, 2020 and as amended January 1, 2024, the 2021 QSR Transaction, effective January 1, 2021, the 2022 QSR Transaction, effective October 1, 2021, the 2022 Seasoned QSR Transaction, effective July 1, 2022, the 2023 QSR Transaction, effective January 1, 2023 and the 2024 QSR Transaction, effective January 1, 2024 – which we refer to collectively as the QSR Transactions. Under each of the QSR Transactions, NMIC cedes a proportional share of its risk on eligible policies to panels of third-party reinsurance providers. Each of the third-party reinsurance providers that is party to the QSR Transactions has an insurer financial strength rating of A- or better by S&P, A.M. Best or both.
Under the terms of the 2016 QSR Transaction, NMIC cedes premiums written related to 20.5% of the risk on eligible primary policies written for all periods through December 31, 2017 in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 60% that varies directly and inversely with ceded claims. NMIC previously ceded 100% of the risk under its pool agreement with Fannie Mae; however, such agreement expired on August 31, 2023 and NMIC no longer cedes pool risk under the 2016 QSR Transaction.
Under the terms of the 2018 QSR Transaction, NMIC cedes premiums earned related to 25% of the risk on eligible policies written in 2018 and 20% of the risk on eligible policies written in 2019, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 61% that varies directly and inversely with ceded claims.
Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21% of the risk on eligible policies written between April 1, 2020 and December 31, 2020, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 36% ceding commission, and a profit commission of up to 50% that varies directly and inversely with ceded claims.
Under the terms of the 2021 QSR Transaction, NMIC cedes premiums earned related to 22.5% of the risk on eligible policies written in 2021 (subject to an aggregate risk written limit which was exhausted on October 30, 2021), in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 57.5% that varies directly and inversely with ceded claims.
Under the terms of the 2022 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written between October 30, 2021 and December 31, 2022, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 62% that varies directly and inversely with ceded claims.
Under the terms of the 2022 Seasoned QSR Transaction, NMIC cedes premiums earned related to 95% of the net risk on eligible policies primarily for a seasoned pool of mortgage insurance policies that had previously been covered under the retired Oaktown Re Ltd. and Oaktown Re IV Ltd. reinsurance transactions, after the consideration of coverage provided by other QSR Transactions, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 35% ceding commission, and a profit commission of up to 55% that varies directly and inversely with ceded claims.
Under the terms of the 2023 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written in 2023, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 62% that varies directly and inversely with ceded claims.
Under the terms of the 2024 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written in 2024, in exchange or reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 56% that varies directly and inversely with ceded claims.
30


NMIC may terminate any or all of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the RIF ceded under the respective agreements. Additionally, under the terms of the QSR Transactions, NMIC may elect to selectively terminate its engagement with individual reinsurers on a run-off basis (i.e., reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis (i.e., the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement.
See Item 1, “Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance” for further discussion of these third-party reinsurance arrangements.
Portfolio Data
The following table presents NIW and primary 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.
NIW and primary and pool IIF
As of and for the three months ended
March 31, 2024March 31, 2023
NIW
IIF
NIW
IIF
(In Millions)
Monthly$9,175 $180,343 $8,550 $166,924 
Single223 19,030 184 19,800 
Primary9,398 199,373 8,734 186,724 
Pool— — — 1,025 
Total$9,398 $199,373 $8,734 $187,749 
NIW increased 8% to $9.4 billion for the three months ended March 31, 2024 compared to $8.7 billion for the three months ended March 31, 2023, primarily due to the growth in our customer franchise and market presence tied to the increased penetration of existing customer accounts and new customer activations.

Primary IIF increased 7% at March 31, 2024 compared to March 31, 2023, primarily due to the NIW generated between such measurement dates, partially offset by the run-off of in-force policies. Our persistency rate improved to 85.8% at March 31, 2024 from 85.1% at March 31, 2023, and remains historically high due to a continued slowdown in the pace of mortgage refinancing activity tied to the prevailing interest and mortgage rate environment.

The following table presents net premiums written and earned for the periods indicated:
Primary premiums written and earned
For the three months ended March 31,
20242023
(In Thousands)
Net premiums written$130,245 $112,976 
Net premiums earned136,657 121,754 
Net premiums written and earned increased 15% and 12%, respectively, during the three months ended March 31, 2024 compared to the three months ended March 31, 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. The growth in net premiums earned was partially offset by a decline in the contribution from single premium policy cancellations.
31


Portfolio Statistics
Unless otherwise noted, the portfolio statistics tables presented below do not include the effects of our third-party reinsurance arrangements described above. The table below highlights trends in our primary portfolio as of the dates and for the periods indicated.
Primary portfolio trendsAs of and for the three months ended
March 31, 2024December 31, 2023September 30, 2023June 30, 2023March 31, 2023
($ Values In Millions, except as noted below)
New insurance written $9,398 $8,927 $11,334 $11,478 $8,734 
Percentage of monthly premium98 %96 %97 %98 %98 %
Percentage of single premium%%%%%
New risk written$2,486 $2,354 $3,027 $3,022 $2,258 
Insurance-in-force (1)
$199,373 $197,029 $194,781 $191,306 $186,724 
Percentage of monthly premium90 %90 %90 %90 %89 %
Percentage of single premium10 %10 %10 %10 %11 %
Risk-in-force (1)
$52,610 $51,796 $51,011 $49,875 $48,494 
Policies in force (count) (1)
635,662 629,690 622,993 611,441 600,294 
Average loan size ($ value in thousands) (1)
$314 $313 $313 $313 $311 
Coverage percentage (2)
26.4 %26.3 %26.2 %26.1 %26.0 %
Loans in default (count) (1)
5,109 5,099 4,594 4,349 4,475 
Default rate (1)
0.80 %0.81 %0.74 %0.71 %0.75 %
Risk-in-force on defaulted loans (1)
$414 $408 $359 $335 $337 
Average net premium yield (3)
0.28 %0.27 %0.27 %0.27 %0.26 %
Earnings from cancellations$0.6 $1.0 $0.9 $1.1 </