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What changed in NMI Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NMI Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+410 added−505 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-15)

Top changes in NMI Holdings, Inc.'s 2024 10-K

410 paragraphs added · 505 removed · 352 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

85 edited+16 added−69 removed212 unchanged
Biggest changeIn connection with these services, NMIS reviews loan data and documentation and assesses whether individual loan applications comply with the originator's and/or GSEs' underwriting guidelines. We provide loan review services for mortgages that require MI and those that do not.
Biggest changeIn addition, some states impose their own MI notice and cancellation requirements on mortgage loan servicers. Loan Review Services We offer outsourced loan review services to mortgage originators through NMIS. In connection with these services, NMIS reviews loan data and documentation and assesses whether individual loan applications comply with the originator's and/or GSEs' underwriting guidelines.
Credit Market Risk We have implemented a complementary range of strategies to actively monitor and manage the credit performance of our insured portfolio, including: • establishing prudential underwriting standards and loan-level eligibility matrices which describe the maximum LTV, minimum FICO, maximum borrower DTI ratio, maximum loan size, property type and occupancy status of loans that we will insure, and memorializing these standards and eligibility matrices in our underwriting guidelines; • conducting diligence of our lender customers before and after we formally engage with them to ensure they have appropriate financial resources, operational capabilities, management experience and a track record of strong origination quality, and subjecting them to well-defined parameters regarding underwriting delegation status, credit guideline requirements and, on a more limited basis, variances; • implementing a quality control process to ensure ongoing adherence with our underwriting guidelines and eligibility criteria, under which our quality control group performs audits of insured loans identified on a random, high risk and targeted basis to measure the quality of the underwriting decision and loan closing process, and specifically assess the accuracy and adequacy of the information and documentation used to underwrite our MI; • setting concentration limits to regulate the aggregation of loan-level risks in our overall portfolio and manage our overall portfolio exposure to certain risk classes that typically experience greater volatility and loss during periods of economic and housing market downturns, such as higher LTV loans, loans with higher borrower DTIs, investor loans, cash-out refinances, certain state concentration levels and several other borrower or loan attributes; • individually underwriting the majority of the loans we insure through our non-delegated platform and DAR validation process, in order to evaluate borrower and loan-level risk characteristics on an individual policy level, and monitor and assess the manufacturing capabilities of our lender customers in order to provide them feedback to help enhance their own production and control processes; • designing, developing and deploying Rate GPS ® , our proprietary risk-based pricing platform, to dynamically consider a granular set of risk attributes in our policy pricing process and assign individualized premium rates based on the relative risk and anticipated performance of each loan we insure; • further utilizing Rate GPS ® to actively manage the flow of business into our portfolio and target loans with higher quality risk characteristics that typically experience lower volatility and loss across market cycles; and • securing reinsurance coverage under quota share and excess-of-loss transactions that are structured to absorb losses in periods of economic and/or housing market stress and, in doing so, mitigate the impact of credit volatility on our financial results.
Credit Market Risk We have implemented a complementary range of strategies to actively monitor and manage the credit performance of our insured portfolio, including: • establishing prudential underwriting standards and loan-level eligibility matrices which describe the maximum LTV, minimum FICO, maximum borrower DTI ratio, maximum loan size, property type and occupancy status of loans that we will insure, and memorializing these standards and eligibility matrices in our underwriting guidelines; • conducting diligence of our lender customers before and after we formally engage with them to ensure they have appropriate financial resources, operational capabilities, management experience and a track record of strong origination quality, and subjecting them to well-defined parameters regarding underwriting delegation status, credit guideline requirements and, on a more limited basis, variances; • implementing a quality control process to ensure ongoing adherence with our underwriting guidelines and eligibility criteria, under which our quality control group performs audits of insured loans identified on a random, 13 high risk and targeted basis to measure the quality of the underwriting decision and loan closing process, and specifically assess the accuracy and adequacy of the information and documentation used to underwrite our MI; • setting concentration limits to regulate the aggregation of loan-level risks in our overall portfolio and manage our overall portfolio exposure to certain risk classes that typically experience greater volatility and loss during periods of economic and housing market downturns, such as higher LTV loans, loans with higher borrower DTIs, investor loans, cash-out refinances, certain state concentration levels and several other borrower or loan attributes; • individually underwriting the majority of the loans we insure through our non-delegated platform and DAR validation process, in order to evaluate borrower and loan-level risk characteristics on an individual policy level, and monitor and assess the manufacturing capabilities of our lender customers in order to provide them feedback to help enhance their own production and control processes; • designing, developing and deploying Rate GPS ® , our proprietary risk-based pricing platform, to dynamically consider a granular set of risk attributes in our policy pricing process and assign individualized premium rates based on the relative risk and anticipated performance of each loan we insure; • further utilizing Rate GPS ® to actively manage the flow of business into our portfolio and target loans with higher quality risk characteristics that typically experience lower volatility and loss across market cycles; and • securing reinsurance coverage under quota share and excess-of-loss transactions that are structured to absorb losses in periods of economic and/or housing market stress and, in doing so, mitigate the impact of credit volatility on our financial results.
Since the initial development of AXIS, we have continued to upgrade and enhance our systems and technical capabilities, including: • deploying technology that enables our customers to transact business faster and easier, whether via a secure internet connection or through a secure system-to-system interface; • integrating our platform with third-party technology providers used by our customers in their loan origination process to price and order our MI and in their servicing processes for servicing and maintaining their MI policies; • implementing advanced document and business process management software that focuses on improving our underwriting productivity and that may also be used to improve our quality assurance and loss management functions; • launching our award-winning mobile applications, which enable customers to view and access information through mobile devices, including our premium rate calculators, guideline updates and other resources and information notices; and • designing, developing and deploying Rate GPS ® , our risk-based pricing platform, which allows us to dynamically consider a granular set of risk attributes in our policy pricing process and assign individualized rates based on the relative risk and anticipated performance of each loan we insure.
Since the initial development of AXIS, we have continued to upgrade and enhance our systems and technical capabilities, including: • deploying technology that enables our customers to transact business faster and easier, whether via a secure internet connection or through a secure system-to-system interface; • integrating our platform with third-party technology providers used by our customers in their loan origination process to price and order our MI and in their servicing processes for servicing and maintaining their MI policies; • implementing advanced document and business process management software that focuses on improving our underwriting productivity and that may also be used to improve our quality assurance and loss management functions; 14 • launching our award-winning mobile applications, which enable customers to view and access information through mobile devices, including our premium rate calculators, guideline updates and other resources and information notices; and • designing, developing and deploying Rate GPS ® , our risk-based pricing platform, which allows us to dynamically consider a granular set of risk attributes in our policy pricing process and assign individualized rates based on the relative risk and anticipated performance of each loan we insure.
When we approve a claim, our Master Policies give us the option to pay (i) the coverage percentage specified for a loan, with the insured retaining title to the underlying property and receiving all proceeds from an eventual sale of the property (the percentage option), (ii) the actual loss incurred by the insured upon sale of the property to a third party, if less than the percentage 12 option, (iii) the loss an insured is reasonably expected to experience upon a future sale of the property to a third-party, or (iv) the insured's claim amount (as calculated in the applicable Master Policy) in exchange for the insured's conveyance of good and marketable title to the property to us.
When we approve a claim, our Master Policies give us the option to pay (i) the coverage percentage specified for a loan, with the insured retaining title to the underlying property and receiving all proceeds from an eventual sale of the property (the percentage option), (ii) the actual loss incurred by the insured upon sale of the property to a third party, if less than the percentage option, (iii) the loss an insured is reasonably expected to experience upon a future sale of the property to a third-party, or (iv) the insured's claim amount (as calculated in the applicable Master Policy) in exchange for the insured's conveyance of good and marketable title to the property to us.
Under Wisconsin law, our insurance subsidiaries may pay "ordinary" stockholder dividends with 30 days' prior notice to the Wisconsin OCI. Ordinary dividends are defined as payments or distributions to stockholders in any twelve-month period that do not exceed the lesser of (i) 10% of statutory policyholders' surplus as of the preceding calendar year end or (ii) adjusted statutory net income.
Under Wisconsin law, our insurance subsidiaries may pay “ordinary” stockholder dividends with 30 days' prior notice to the Wisconsin OCI. Ordinary dividends are defined as payments or distributions to stockholders in any twelve-month period that do not exceed the lesser of (i) 10% of statutory policyholders' surplus as of the preceding calendar year end or (ii) adjusted statutory net income.
These state laws obligate us to protect social security numbers, maintain a comprehensive information security program, 28 submit annual compliance certifications regarding such programs (or an exemption thereto) and notify insurance regulators if a security breach results in a reasonable belief that unauthorized persons may have obtained access to consumer non-public personal information.
These state laws obligate us to protect social security numbers, maintain a comprehensive information security program, submit annual compliance certifications regarding such programs (or an exemption thereto) and notify insurance regulators if a security breach results in a reasonable belief that unauthorized persons may have obtained access to consumer non-public personal information.
In general, state insurance regulation of our business relates to: • licenses to transact business; • producer licensing; • policy forms; • premium rates; • insurable loans; • annual and quarterly financial reports prepared in accordance with statutory accounting principles; • determination of loss, unearned premium and contingency reserves; • minimum capital levels and adequacy ratios; • affiliate transactions; • reinsurance transactions and related requirements; • limitations on the types of investment instruments which may be held in an investment portfolio; • the size of risks and limits on coverage of individual risks which may be insured; • special deposits of securities; • stockholder dividends; 21 • insurance policy sales practices; • privacy and cybersecurity; • enterprise risk management; • advertising compliance; • restrictions on transactions that have the effect of inducing lenders to place business with NMIC; and • claims handling.
In general, state insurance regulation of our business relates to: • licenses to transact business; • producer licensing; • policy forms; • premium rates; • insurable loans; • annual and quarterly financial reports prepared in accordance with statutory accounting principles; • determination of loss, unearned premium and contingency reserves; • minimum capital levels and adequacy ratios; • affiliate transactions; • reinsurance transactions and related requirements; • limitations on the types of investment instruments which may be held in an investment portfolio; • the size of risks and limits on coverage of individual risks which may be insured; • special deposits of securities; • stockholder dividends; 18 • insurance policy sales practices; • privacy and cybersecurity; • enterprise risk management; • advertising compliance; • restrictions on transactions that have the effect of inducing lenders to place business with NMIC; and • claims handling.
As the largest participants in the secondary mortgage market, the GSEs are the principal purchasers of mortgages insured by mortgage insurers, including NMIC. As a result, the private MI industry in the U.S. is driven in large part by the GSEs' demand for high-LTV loans, mortgage insurance requirements and business practices. See " Business - U.S.
As the largest participants in the secondary mortgage market, the GSEs are the principal purchasers of mortgages insured by mortgage insurers, including NMIC. As a result, the private MI industry in the U.S. is driven in large part by the GSEs' demand for high-LTV loans, mortgage insurance requirements and business practices. See “ Business - U.S.
Great Place to Work ® is a global authority on workplace culture, employee experience and leadership, and partners with FORTUNE magazine to produce the annual FORTUNE "100 Best Companies to Work For” list. Available Information Our principal office is located at 2100 Powell Street, 12th floor, Emeryville, CA 94608.
Great Place to Work ® is a global authority on workplace culture, employee experience and leadership, and partners with FORTUNE magazine to produce the annual FORTUNE "100 Best Companies to Work For” list. 15 Available Information Our principal office is located at 2100 Powell Street, 12th floor, Emeryville, CA 94608.
We have adopted certain policies and procedures, and risk management and security practices designed to facilitate our compliance with these federal and state privacy and information security laws. Fair Credit Reporting Act FCRA imposes restrictions on the permissible use of credit report information. The CFPB and FTC each have authority to enforce FCRA.
We have adopted certain policies and procedures, and risk management and security practices designed to facilitate our compliance with these federal and state privacy and information security laws. 25 Fair Credit Reporting Act FCRA imposes restrictions on the permissible use of credit report information. The CFPB and FTC each have authority to enforce FCRA.
Rescission relief also limits our ability to initiate certain investigations or to request information from our insureds. 10 In September 2018, the GSEs issued revised RRPs that outline the rescission relief provisions that are generally required to be included in the master policies of GSE-approved mortgage insurers.
Rescission relief also limits our ability to initiate certain investigations or to request information from our insureds. In September 2018, the GSEs issued revised RRPs that outline the rescission relief provisions that are generally required to be included in the master policies of GSE-approved mortgage insurers.
See " Business - Defaults and Claims; Loss Mitigation - Defaults and Claims ," below for a description of our claim settlement processes. The terms of our primary mortgage insurance coverage are governed by the applicable Master Policy, which we issue to each approved lender with which we do business.
See “ Business - Defaults and Claims; Loss Mitigation - Defaults and Claims ,” below for a description of our claim settlement processes. The terms of our primary mortgage insurance coverage are governed by the applicable Master Policy, which we issue to each approved lender with which we do business.
We have discretion under our rates and rating rules to flex our premium rates to a limited degree, and we may choose to do so for lenders or programs that meet certain criteria. We generally cannot change premium rates on insured loans after coverage is established.
We have discretion under our rates and rating rules to flex our premium rates to a limited degree, and we may choose 7 to do so for lenders or programs that meet certain criteria. We generally cannot change premium rates on insured loans after coverage is established.
See " Business - Underwriting ," below for a description of our underwriting processes. Our MI coverage attaches at a loan level and remains in effect whether a mortgage is retained by the originating lender or sold, assigned or otherwise transferred in the secondary market.
See “ Business - Underwriting ,” below for a description of our underwriting processes. Our MI coverage attaches at a loan level and remains in effect whether a mortgage is retained by the originating lender or sold, assigned or otherwise transferred in the secondary market.
On September 9, 2022, the U.S. banking regulators announced their intent to revise U.S. regulatory capital requirements to align them with Basel IV. On July 27, 2023, the U.S. banking regulators jointly issued a proposed rule that would revise large bank capital requirements.
On September 9, 2022, the U.S. banking regulators announced their intent to revise U.S. 23 regulatory capital requirements to align them with Basel IV. On July 27, 2023, the U.S. banking regulators jointly issued a proposed rule that would revise large bank capital requirements.
Mortgage Insurance Regulation - GSE Oversight ," below. Mortgage Insurance MI protects lenders and investors from default-related losses on a portion of the unpaid principal balance of a covered mortgage and plays a central role in the U.S. housing market.
Mortgage Insurance Regulation - GSE Oversight ,” below. Mortgage Insurance MI protects lenders and investors from default-related losses on a portion of the unpaid principal balance of a covered mortgage and plays a central role in the U.S. housing market.
We refer to our independent validation of delegated loans as our "Delegated Assurance Review" or "DAR" process. Through DAR, we assess and validate the MI underwriting process and decisions made by our delegated customers on an individual loan level basis.
We refer to our independent validation of delegated loans as our "Delegated Assurance Review" or "DAR" process. Through DAR, we assess and validate the MI underwriting process and decisions made by our delegated customers on an 10 individual loan level basis.
Under the Trump administration, there was increased focus on the possibility of administrative reform that the White House and Treasury Department, in collaboration with the previous Director of the FHFA, may pursue independent of any legislative action.
Under the first Trump administration, there was increased focus on the possibility of administrative reform that the White House and Treasury Department, in collaboration with the previous Director of the FHFA, may pursue independent of any legislative action.
The Risk Committee of our Board of Directors (Board) has responsibility for 16 oversight and review of our enterprise risk management approach and is supported by a management enterprise risk committee comprised of senior members of our management team and led by our Head of Internal Audit and Enterprise Risk.
The Risk Committee of our Board of Directors (Board) has responsibility for oversight and review of our enterprise risk management approach and is supported by a management enterprise risk committee comprised of senior members of our management team and led by our Head of Internal Audit and Enterprise Risk.
An asset charge is calculated for each insured loan based on its risk profile. In general, higher quality loans carry lower charges. 20 Under the PMIERs, approved insurers must maintain available assets that equal or exceed minimum required assets , which is an amount equal to the greater of (i) $400 million or (ii) a total risk-based required asset amount.
An asset charge is calculated for each insured loan based on its risk profile. In general, higher quality loans carry lower charges. 17 Under the PMIERs, approved insurers must maintain available assets that equal or exceed minimum required assets , which is an amount equal to the greater of (i) $400 million or (ii) a total risk-based required asset amount.
For example, Wisconsin prohibits mortgage insurers from allowing any commission, fee, remuneration, or other compensation to be paid to, or received by, any insured lender, including any subsidiary 23 or affiliate, officer, director, or employee of any insured, any member of their immediate family, any corporation, partnership, trust, trade association in which any insured is a member, or other entity in which any insured or any such officer, director, or employee or any member of their immediate family has a financial interest.
For example, Wisconsin prohibits mortgage insurers from allowing any commission, fee, remuneration, or other compensation to be paid to, or received by, any insured lender, including any subsidiary 20 or affiliate, officer, director, or employee of any insured, any member of their immediate family, any corporation, partnership, trust, trade association in which any insured is a member, or other entity in which any insured or any such officer, director, or employee or any member of their immediate family has a financial interest.
Information contained or referenced on our website is not incorporated by reference into, and does not form a part of, this report. 19 U.S. MORTGAGE INSURANCE REGULATION As discussed below, private mortgage insurers operating in the U.S. are subject to comprehensive state and federal regulation and to significant oversight by the GSEs, the primary beneficiaries of our insurance coverage.
Information contained or referenced on our website is not incorporated by reference into, and does not form a part of, this report. 16 U.S. MORTGAGE INSURANCE REGULATION As discussed below, private mortgage insurers operating in the U.S. are subject to comprehensive state and federal regulation and to significant oversight by the GSEs, the primary beneficiaries of our insurance coverage.
We certified to the GSEs by April 15, 2023 that NMIC was in full compliance with the PMIERs as of December 31, 2022. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of a failure to meet one or more PMIERs requirements. We continuously monitor NMIC's compliance with the PMIERs.
We certified to the GSEs by April 15, 2024 that NMIC was in full compliance with the PMIERs as of December 31, 2023. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of a failure to meet one or more PMIERs requirements. We continuously monitor NMIC's compliance with the PMIERs.
Such disclaimer will become effective unless it is expressly "disapproved" by the Wisconsin OCI within 30 days of the date filed. In addition, the insurance regulations of certain states require prior notification to the state's insurance department before a person acquires control of an insurance company licensed in such state.
Such disclaimer will become effective unless it is expressly “disapproved” by the Wisconsin OCI within 30 days of the date filed. In addition, the insurance regulations of certain states require prior notification to the state's insurance department before a person acquires control of an insurance company licensed in such state.
Accordingly, as proposed, the revised standards would mean mortgage insurance would not lower the LTV ratio of residential loans for capital purposes for these large banks, and therefore may decrease their demand for mortgage insurance. These large banks may also retreat from high LTV lending if the proposal, as drafted, is passed.
Accordingly, as proposed, the revised standards would mean mortgage insurance would not lower the LTV ratio of residential loans for capital purposes for these large banks, and therefore may decrease their demand for mortgage insurance. These large banks may also retreat from high LTV lending if the proposal, as drafted, were passed.
These are typically referred to as "risk-to-capital (RTC) requirements." While formulations of minimum capital may vary in certain jurisdictions, the most common measure applied allows for a maximum permitted RTC ratio of 25:1. Wisconsin has formula-based limits that generally result in RTC limits slightly higher than the 25:1 ratio. We compute the RTC ratio for NMIC.
These are typically referred to as “risk-to-capital (RTC) requirements.” While formulations of minimum capital may vary in certain jurisdictions, the most common measure applied allows for a maximum permitted RTC ratio of 25:1. Wisconsin has formula-based limits that generally result in RTC limits slightly higher than the 25:1 ratio. We compute the RTC ratio for NMIC.
In general, we may not terminate MI coverage except when an insured fails to pay premium as due or for certain material violations of our Master Policies; although, as discussed below in " Business - Underwriting - Independent Validation and Rescission Relief ," the terms of our Master Policies restrict our ability to rescind coverage when certain criteria are met.
In general, we may not terminate MI coverage except when an insured fails to pay premiums as due or for certain material violations of our Master Policies; although, as discussed below in “ Business - Underwriting - Independent Validation and Rescission Relief ,” the terms of our Master Policies restrict our ability to rescind coverage when certain criteria are met.
Federal Reserve, the U.S. residential mortgage market is one of the largest in the world, with approximately $13 trillion of mortgage debt outstanding as of December 31, 2023, and includes both primary and secondary components.
Federal Reserve, the U.S. residential mortgage market is one of the largest in the world, with approximately $13 trillion of mortgage debt outstanding as of December 31, 2024, and includes both primary and secondary components.
Additionally, the proposed rule establishes revised criteria for determining whether new activity requires notice to the FHFA and for determining if that activity is a new product that merits public notice and comment.
The rule establishes revised criteria for determining whether new activity requires notice to the FHFA and for determining if that activity is a new product that merits public notice and comment.
We further define customers as "centralized" or "decentralized" based on how they manage their mortgage insurance purchasing decisions across each of their MI providers. Centralized lenders make decisions about the placement and choice of private mortgage insurance at a centralized, corporate level.
We further define customers as “centralized” or “decentralized” based on how they manage their mortgage insurance purchasing decisions across each of their MI providers. Centralized lenders make decisions about the placement and choice of private mortgage insurance at a centralized, corporate level.
The Fair Housing Act prohibits discrimination on the basis of race, gender and other prohibited bases in connection with housing-secured credit transactions. 29
The Fair Housing Act prohibits discrimination on the basis of race, gender and other prohibited bases in connection with housing-secured credit transactions. 26
Our common stock trades on the Nasdaq under the symbol "NMIH". Overview of Residential Mortgage Finance and the Role of the Private MI Industry in the Current Operating Environment U.S. Residential Mortgage Market According to statistics published by the U.S.
Our common stock trades on the Nasdaq under the symbol “NMIH.” Overview of Residential Mortgage Finance and the Role of the Private MI Industry in the Current Operating Environment U.S. Residential Mortgage Market According to statistics published by the U.S.
According to data reported by Inside Mortgage Finance, in 2007, government MIs accounted for 23% of the total insured mortgage origination market. By 2009, government MI share had peaked at approximately 82% of the total insured mortgage origination market. Government MI share has since declined and is estimated to have been 55% in 2023.
According to data reported by Inside Mortgage Finance, in 2007, government MIs accounted for 23% of the total insured mortgage origination market. By 2009, government MI share had peaked at approximately 82% of the total insured mortgage origination market. Government MI share has since declined and is estimated to have been 58% in 2024.
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 December 31, 2023, we had issued master policies with 1,974 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.
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 December 31, 2024, we had issued master policies with 2,086 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.
In addition, our insurance subsidiaries may make or 22 pay "extraordinary" stockholder dividends ( i.e. , amounts in excess of ordinary dividends) only with the prior approval of the Wisconsin OCI. In addition to Wisconsin, other states may limit or restrict our insurance subsidiaries' ability to pay stockholder dividends.
In addition, our insurance subsidiaries may make or 19 pay “extraordinary” stockholder dividends ( i.e. , amounts in excess of ordinary dividends) only with the prior approval of the Wisconsin OCI. In addition to Wisconsin, other states may limit or restrict our insurance subsidiaries' ability to pay stockholder dividends.
Any such changes that come to pass could have a significant impact on our business. In addition, while the GSEs remain in conservatorship, the current leadership of the FHFA may exercise their oversight authority over the GSEs differently than previous Directors and/or have different objectives with regard to the GSEs' operations.
In addition, while the GSEs remain in conservatorship, the current leadership of the FHFA may exercise their oversight authority over the GSEs differently than previous Directors and/or have different objectives with regard to the GSEs' operations. Any such changes in how the FHFA engages with and influences the GSEs could have a significant impact on our business.
Under Wisconsin law, all transactions involving us, or an affiliate, and an insurance subsidiary, must conform to certain standards, including that the transaction be "reasonable and fair" to the insurance subsidiary.
Under Wisconsin law, all transactions involving us, or an affiliate, and an insurance subsidiary, must conform to certain standards, including that the transaction be “reasonable and fair” to the insurance subsidiary.
We are also integrated directly with certain lender customers who manage their own servicing systems. These parties' servicing platforms are used by the majority of our larger servicing accounts to exchange billing, payment and certificate level information on a daily or monthly basis. Servicers may also use our own external facing servicing website to process their servicing transactions.
We are also integrated directly with certain lender customers who manage their own servicing systems. These parties' servicing platforms are used by the majority of our larger servicing accounts to exchange billing, payment and certificate level information on a daily or monthly basis.
We classify our customers into two primary categories, which we refer to as "National Accounts" and "Regional Accounts." We consider National Accounts to be the most significant residential mortgage originators as determined by the combined volume of their own "retail" originations and insured business they acquire from "correspondents," or other smaller mortgage originators.
We classify our customers into two primary categories, which we refer to as “National Accounts” and “Regional Accounts.” We consider National Accounts to be the most significant residential mortgage originators as determined by the combined volume of their own “retail” originations and insured business they acquire from “correspondents,” or other smaller mortgage originators.
There are, however, a number of National Account lenders who opt for a decentralized approach and a number of Regional Account lenders who opt for a centralized approach. The GSEs, as major purchasers of conventional mortgage loans in the U.S., are the primary beneficiaries of our mortgage insurance coverage. Revenues from our customers have been generated in the U.S. only.
There are, however, a number of National Account lenders who opt for a decentralized approach and a number of Regional Account lenders who opt for a centralized approach. 8 The GSEs, as major purchasers of conventional mortgage loans in the U.S., are the primary beneficiaries of our mortgage insurance coverage.
Wisconsin requires a mortgage insurer to maintain a "minimum policyholders' position" as calculated in accordance with the applicable regulations.
Wisconsin requires a mortgage insurer to maintain a “minimum policyholders' position” as calculated in accordance with the applicable regulations.
NMIS third parties have represented and warranted to NMIS that they comply with the requirements of the federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) in all applicable jurisdictions. See " Business - U.S. Mortgage Insurance Regulation - Other U.S.
NMIS utilizes third-party service providers to conduct individual loan reviews . NMIS third parties have represented and warranted to NMIS that they comply with the requirements of the federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) in all applicable jurisdictions. See “ Business - U.S. Mortgage Insurance Regulation - Other U.S. Regulation - SAFE Act ,” below.
We include a loan in our default population and establish claim reserves on such loan when we have received notice from the servicer that as of a particular payment date, the borrower has missed the preceding two or more consecutive monthly payments.
Generally, our Master Policies require our insureds to notify us after a loan is two payments in arrears. We include a loan in our default population and establish claim reserves on such loan when we have received notice from the servicer that as of a particular payment date, the borrower has missed the preceding two or more consecutive monthly payments.
A range of factors influence a lender's decision to choose private over government MI, including, among others, GSE demand, policies and loan delivery pricing, mortgage insurance premium rates and other charges, loan eligibility requirements, cancelability, loan size limits and the relative ease of use of private MI products compared to government MI alternatives. 6 Products and Services Mortgage Insurance Products We offer two principal types of MI coverage, primary and pool.
A range of factors influence a lender's decision to choose private over government MI, including, among others, GSE demand, policies and loan delivery pricing, mortgage insurance premium rates and other charges, loan eligibility requirements, cancelability, loan size limits and the relative ease of use of private MI products compared to government MI alternatives. 6 Products and Services Primary Mortgage Insurance We offer primary mortgage insurance, which provides default protection on individual mortgage loans at specified coverage percentages.
We establish our premium rates based on models that assess risk across a spectrum of variables, including coverage percentages, LTV ratios, loan and property attributes, borrower debt-to-income (DTI) and credit score profiles, and market and macroeconomic conditions.
Our premiums are based on statutory rating rules and rates that we file with various state insurance departments. We establish our premium rates based on models that assess risk across a spectrum of variables, including coverage percentages, LTV ratios, loan and property attributes, borrower debt-to-income (DTI) and credit score profiles, and market and macroeconomic conditions.
If BPMI coverage is not canceled at the borrower's request or by the automatic termination provision, the mortgage servicer must terminate such BPMI coverage by the first day of the month following the date that is the midpoint of the loan's amortization, assuming the borrower is current on the required mortgage payments.
If BPMI coverage is not canceled at the borrower's request or by the automatic termination provision, the mortgage servicer must terminate such BPMI coverage by the first day of the month following the date that is the midpoint of the loan's amortization, assuming the borrower is current on the required mortgage payments. 24 Section 8 of RESPA Section 8 of RESPA applies to most residential mortgages insured by us.
Customers exceeding 10% of consolidated revenues No individual customer accounted for greater than 10% of our consolidated revenues in 2023. Sales and Marketing Our sales and marketing efforts are designed to help us establish and maintain high-quality customer relationships.
Revenues from our customers have been generated in the U.S. only. Customers exceeding 10% of consolidated revenues No individual customer accounted for greater than 10% of our consolidated revenues in 2024. Sales and Marketing Our sales and marketing efforts are designed to help us establish and maintain high-quality customer relationships.
We prioritize our employees with the goal of attracting, retaining and developing a high-quality, diverse talent base and aim to foster an employee-driven, collaborative and productive work environment that emphasizes balance between organizational, community and personal goals.
We prioritize our employees with the goal of attracting, retaining and developing a high-quality talent base and aim to foster a high-performing, employee-driven and collaborative work environment that emphasizes both organizational and personal success.
For further discussion of the effect of reinsurance on our business, see Part II, Item 7, “ Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Factors Affecting Our Results - Effect of Reinsurance on Our Results. ” Enterprise Risk Management We have established enterprise wide policies, procedures and processes to allow us to identify, assess, monitor and manage credit market and operational risks in our business, as well as other risks discussed below in Item 1A, " Risk Factors ." Management of these risks is an interdepartmental endeavor including specific operational responsibilities and ongoing senior management and compliance personnel oversight.
For further information, see Part II, Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 6, Reinsurance. ” Enterprise Risk Management We have established enterprise wide policies, procedures and processes to allow us to identify, assess, monitor and manage credit market and operational risks in our business, as well as other risks discussed below in Item 1A, " Risk Factors ." Management of these risks is an interdepartmental endeavor including specific operational responsibilities and ongoing senior management and compliance personnel oversight.
Regulation - SAFE Act ," below. 8 Customers Since our inception, we have sought to establish customer relationships with a broad group of mortgage lenders. As of December 31, 2023, we had issued Master Policies with 1,974 customers.
Customers Since our inception, we have sought to establish customer relationships with a broad group of mortgage lenders. As of December 31, 2024, we had issued Master Policies with 2,086 customers.
Our Policy Servicing Department primarily interfaces with our insureds' mortgage loan servicers. Some insureds retain the servicing rights and responsibilities for their own loan originations, while others transfer such rights and responsibilities to third-party servicers.
Policy Servicing Our Policy Servicing Department is responsible for various servicing activities related to our Master Policies and certificate administration, premium billing and payment processing. Our Policy Servicing Department primarily interfaces with our insureds' mortgage loan servicers. Some insureds retain the servicing rights and responsibilities for their own loan originations, while others transfer such rights and responsibilities to third-party servicers.
Human Capital Management As of December 31, 2023, we had 238 full-time and part-time employees, and engaged third-party vendors to provide additional IT, underwriting and other support services. 18 Our ability to operate efficiently and profitably, to offer products and services that meet the expectations of our customers, and to maintain an effective risk management framework is highly dependent on the competence and integrity of our employees, as well as the employees of the third-party service providers, vendors and others whom we engage.
Our ability to operate efficiently and profitably, to offer products and services that meet the expectations of our customers, and to maintain an effective risk management framework is highly dependent on the competence and integrity of our employees, as well as the employees of the third-party service providers, vendors and others whom we engage.
Our underwriters are located remotely, providing us the ability to efficiently service our customers nationwide across different time zones. We also engage third-party underwriting service providers (USPs) who provide us with incremental underwriting capacity. We train and require our USPs to follow the same processes and underwriting guidelines that our own employees follow when rendering insurance decisions.
Our underwriters are located remotely, providing us the ability to efficiently service our customers nationwide across different time zones. We also engage third-party underwriting service providers (USPs) who provide us with incremental underwriting capacity.
As of December 31, 2023, we had $197.0 billion of primary insurance-in-force (IIF) and $51.8 billion of primary risk-in-force (RIF). For the year ended December 31, 2023, we generated new insurance written (NIW) of $40.5 billion. As of December 31, 2023, we had 238 full-time and part-time employees.
As of December 31, 2024, we had $210.2 billion of primary insurance-in-force (IIF) and $56.1 billion of primary risk-in-force (RIF). For the year ended December 31, 2024, we generated new insurance written (NIW) of $46.0 billion. As of December 31, 2024, we had 230 full-time and part-time employees.
We have processes in place to manage the risk associated with outsourcing a component of our underwriting function. In collaboration with our USPs' management teams, we monitor our USPs' day-to-day underwriting performance and MI decisioning.
We train and require our USPs to follow the same processes and underwriting guidelines that our own employees follow when rendering insurance decisions. 9 We have processes in place to manage the risk associated with outsourcing a component of our underwriting function. In collaboration with our USPs' management teams, we monitor our USPs' day-to-day underwriting performance and MI decisioning.
Under the terms of its loan review agreements, NMIS provides customers with limited indemnification against losses for certain material loan review errors. The indemnification may be in the form of monetary or other remedies, subject to per loan and annual limits. NMIS utilizes third-party service providers to conduct individual loan reviews .
We provide loan review services for mortgages that require MI and those that do not. Under the terms of its loan review agreements, NMIS provides customers with limited indemnification against losses for certain material loan review errors. The indemnification may be in the form of monetary or other remedies, subject to per loan and annual limits.
On March 16, 2022, the FHFA adopted the final rule (effective May 16, 2022) (2022 ERCF amendment) that amended the enterprise regulatory capital framework by refining the prescribed leverage buffer amount and credit risk transfer (CRT) securitization framework for the GSEs, which reduced the amount of capital the GSEs are required to hold, including by increasing the capital credit the GSEs receive for the credit risk that they distribute. 25 The passage and timing of comprehensive GSE reform or incremental change (whether legislative or administrative in nature) is uncertain, making the actual impact on us and our industry difficult to predict.
On March 16, 2022, the FHFA adopted the final rule (effective May 16, 2022) (2022 ERCF amendment) that amended the enterprise regulatory capital framework by refining the prescribed leverage buffer amount and credit risk transfer (CRT) securitization framework for the GSEs, which reduced the amount of capital the GSEs are required to hold, including by increasing the capital credit the GSEs receive for the credit risk that they distribute.
However, we do not have clarity on when we can expect the final proposal or how much time will be provided for banking organizations to implement the final rule once it has been issued.
The full Basel Committee has yet to finalize next steps on a future path forward. Accordingly, we do not have clarity on whether or when we can expect any revised or final proposal or how much time will be provided for banking organizations to implement any final rule once it has been issued.
We have entered into delegation agreements with the GSEs that provide them and their designated servicers the right to approve certain transactions on our behalf including pre-foreclosure sales, deeds-in-lieu and loan modifications for most GSE-owned loans that we insure.
We have entered into delegation agreements with the GSEs that provide them and their designated servicers the right to approve certain transactions on our behalf including pre-foreclosure sales, deeds-in-lieu and loan modifications for most GSE-owned loans that we insure. 12 Reinsurance Third-Party Reinsurance 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.
HOPA requires that lenders give borrowers certain notices with regard to the automatic termination or cancellation of BPMI. These provisions apply to BPMI for purchase money, refinance and construction loans secured by the borrower's principal dwelling. Loans insured by government MIs are not covered by HOPA.
These provisions apply to BPMI for purchase money, refinance and construction loans secured by the borrower's principal dwelling. Loans insured by government MIs are not covered by HOPA.
As to servicing of delinquent mortgage loans covered by our insurance policies, these rules could contribute to delays in and increased costs associated with foreclosure proceedings and have a negative impact on the cost and resolution of claims. 27 Homeowners Protection Act of 1998 (HOPA) HOPA provides for the automatic termination, or cancellation upon a borrower's request, of BPMI, as defined in HOPA, upon satisfaction of certain conditions.
As to servicing of delinquent mortgage loans covered by our insurance policies, these rules could contribute to delays in and increased costs associated with foreclosure proceedings and have a negative impact on the cost and resolution of claims.
The FHFA leadership change has added uncertainty to what role the GSEs, FHA and private capital, including private mortgage insurance, will play in the residential housing finance system in the future.
Subsequently, President Biden removed the FHFA Director and appointed a new Director to lead the FHFA. FHFA leadership changes add uncertainty to what role the GSEs, FHA and private capital, including private mortgage insurance, will play in the residential housing finance system in the future.
These efforts culminated in amendments to the Model Act, which were adopted by the NAIC Financial Condition and Executive Committees in 2023. I t is expected that states, including Wisconsin, will consider adoption of the revised Model Act.
These efforts culminated in amendments to the Model Act, which were adopted by the NAIC Financial Condition and Executive Committees in 2023. Wisconsin has begun the process of adopting the revised Model Act, and other states may also consider adoption as well.
The Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended certain provisions of TILA, RESPA and other statutes that have had a significant impact on our business and the residential mortgage market.
The passage of FHA reform legislation in either the House or Senate, and how differences in proposed reforms between the House and Senate might be resolved in any final legislation, remain uncertain. 22 The Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended certain provisions of TILA, RESPA and other statutes that have had a significant impact on our business and the residential mortgage market.
We gather extensive data, perform detailed loan-level risk analysis and continuously monitor and assess trends in key macroeconomic factors such as housing prices, interest rates and employment, to refine and adapt our underwriting guidelines and pricing assumptions within the context of the current risk environment. 9 We evaluate loans and issue policies through two underwriting platforms: • Non-Delegated : Customers submit loan information and documentation to us so that we may individually underwrite each application to reach a decision as to whether we will insure a loan.
We gather extensive data, perform detailed loan-level risk analysis and continuously monitor and assess trends in key macroeconomic factors such as housing prices, interest rates and employment, to refine and adapt our underwriting guidelines and pricing assumptions within the context of the current risk environment.
We seek to manage our operational exposures through a variety of standard risk management practices and procedures, such as purchasing hazard and cyber insurance coverage, maintaining oversight of third-party vendors, establishing IT system redundancy and security and disaster recovery practices, maintaining internal controls and ensuring appropriate segregation of duties. 17 Information Technology Systems and Intellectual Property We rely on information technology to directly engage with our lender customers, receive MI applications and supporting documentation, streamline our underwriting and validation processes, deliver binding policy certificates, and facilitate post-close MI policy servicing.
We seek to manage our operational exposures through a variety of standard risk management practices and procedures, such as purchasing hazard and cyber insurance coverage, maintaining oversight of third-party vendors, establishing IT system redundancy and security and disaster recovery practices, maintaining internal controls and ensuring appropriate segregation of duties.
Primary MI can also be written on an aggregated basis, whereby each mortgage in a given loan portfolio is individually insured in a single transaction after the point of origination. All of our primary insurance is written on first-lien mortgage loans, with nearly all secured by owner occupied single-family homes (defined as one-to-four family homes and condominiums).
All of our primary insurance is written on first-lien mortgage loans, with nearly all secured by owner occupied single-family homes (defined as one-to-four family homes and condominiums).
On September 14, 2021, the FHFA together with the Treasury Department announced the suspension of certain portions of the 2021 PSPA amendments, specifically those limiting certain GSE lending activities, and that would, among other things, reduce the amount of capital the GSEs are required to hold.
The amendments also imposed specific conditions required for the GSEs to exit conservatorship, including the resolution or settlement of all material litigation relating to the conservatorship, and each GSE achieving common equity tier 1 capital of at least 3% of its total assets. 21 On September 14, 2021, the FHFA together with the Treasury Department announced the suspension of certain portions of the 2021 PSPA amendments, specifically those limiting certain GSE lending activities, and that would, among other things, reduce the amount of capital the GSEs are required to hold.
We believe that Rate GPS ® provides us with a more granular and analytical approach to evaluating and pricing risk, and that it enhances our ability to continue building a high-quality mortgage insurance portfolio and delivering attractive risk-adjusted returns. 11 Policy Servicing Our Policy Servicing Department is responsible for various servicing activities related to our Master Policies and certificate administration, premium billing and payment processing.
Our pricing approach targets through-the-cycle returns that exceed our cost of capital. We believe that Rate GPS ® provides us with a more granular and analytical approach to evaluating and pricing risk, and that it enhances our ability to continue building a high-quality mortgage insurance portfolio and delivering attractive risk-adjusted returns.
In exchange for its investment, the Treasury Department received shares of the GSEs' senior preferred stock and warrants to purchase 79.9% of the GSEs' common stock.
In exchange for its investment, the Treasury Department received shares of the GSEs' senior preferred stock and warrants to purchase 79.9% of the GSEs' common stock. The PSPAs have also historically required the GSEs to, among other things, make quarterly dividend payments to the Treasury Department, and also provide the Treasury Department with a liquidation preference.
Treasury securities and obligations of U.S. government agencies, municipal debt securities, corporate debt securities, and asset-backed securities. We also held short-term investments, such as U.S. Treasury Bills and commercial paper.
We aim to achieve diversification as to type, quality, maturity, industry and issuer. At December 31, 2024, our investment portfolio was comprised of investment grade fixed maturity securities, including U.S. Treasury securities and obligations of U.S. government agencies, municipal debt securities, corporate debt securities, and asset-backed securities. We also held short-term investments, such as U.S. Treasury Bills and commercial paper.
We expect that most lenders will continue to be reluctant to make loans that do not qualify as QMs because, absent full compliance with the ATR rule, such loans will not be entitled to a "safe-harbor" presumption of compliance with the ability-to-pay requirements. 26 Basel Rules The Basel Committee on Banking Supervision (Basel Committee), which consists of a group of central banks and banking regulators including the United States, developed t he Basel Capital Accord in 1988 to set out international benchmarks for assessing banks' capital adequacy requirements.
Basel Rules The Basel Committee on Banking Supervision (Basel Committee), which consists of a group of central banks and banking regulators including the United States, developed t he Basel Capital Accord in 1988 to set out international benchmarks for assessing banks' capital adequacy requirements.
The proposed rule's requirements would also outline the process for the FHFA's review of any new activity and the timelines for approving a new product, including issuing a public notice and requesting public comment about a new product. The new enterprise products and activities final rule was announced on December 20, 2022 and was effective on April 28, 2023.
The rule also outlines the process for the FHFA's review of any new activity and the timelines for approving a new product, including issuing a public notice and requesting public comment about a new product.
Policies with premium payments made by the borrower are referred to as borrower-paid mortgage insurance (BPMI) and those with premium payments made by the lender are referred to as lender-paid mortgage insurance (LPMI).
Policies with premium payments made by the borrower are referred to as borrower-paid mortgage insurance (BPMI) and those with premium payments made by the lender are referred to as lender-paid mortgage insurance (LPMI). Lenders may structure loans to recover LPMI premiums from borrowers, including through increases in mortgage note rates or higher origination fees.
Primary Mortgage Insurance Primary MI provides default protection on individual mortgage loans at specified coverage percentages. Primary MI is typically written on a flow basis, whereby mortgages are insured on an individual, loan-by-loan basis at the time of origination.
Primary MI is typically written on a flow basis, whereby mortgages are insured on an individual, loan-by-loan basis at the time of origination. Primary MI can also be written on an aggregated basis, whereby each mortgage in a given loan portfolio is individually insured in a single transaction after the point of origination.
On February 22, 2023, FHA announced a rate reduction to the annual mortgage insurance premiums charged to homebuyers who obtain an FHA-insured mortgage. The FHA's role in the mortgage insurance industry is significantly dependent upon regulatory developments. Since 2012, there have been several legislative proposals intended to reform the FHA; however, no legislation has been enacted to date.
Previous FHA rate actions and product introductions continue to impact its market share and, by extension, the private MI market. On February 22, 2023, FHA announced a rate reduction to the annual mortgage insurance premiums charged to homebuyers who obtain an FHA-insured mortgage. The FHA's role in the mortgage insurance industry is significantly dependent upon regulatory developments.
Our engagement with TCS has enhanced our ability to provide innovative IT solutions for our internal and external constituents, while allowing us to realize cost efficiencies by leveraging TCS's global platform. In connection with the agreement, a majority of our IT employees at that time transitioned to TCS.
Our engagement with TCS has enhanced our ability to provide innovative IT solutions for our internal and external constituents, while allowing us to realize cost efficiencies by leveraging TCS's global platform. Investment Portfolio Our primary objectives with respect to our investment portfolio are to preserve capital and generate investment income, while maintaining sufficient liquidity to cover our operating needs.
Defaults and Claims; Loss Mitigation Defaults and Claims The MI claim cycle begins with the receipt of a default notice for an insured loan from a loan servicer. Generally, our Master Policies require our insureds to notify us after a loan is two payments in arrears.
Servicers may also use our own external facing servicing website to process their servicing transactions. 11 Defaults and Claims; Loss Mitigation Defaults and Claims The MI claim cycle begins with the receipt of a default notice for an insured loan from a loan servicer.
Additionally, the previous Director of the FHFA had also publicly stated as his priority to exit the GSEs from conservatorship. In December 2020, the FHFA finalized a rule establishing a new regulatory capital framework for the GSEs, noting that the rule was another step toward ending the conservatorships of the GSEs.
In December 2020, the FHFA finalized a rule establishing a new regulatory capital framework for the GSEs, noting that the rule was another step toward ending the conservatorships of the GSEs. On June 23, 2021, the U.S. Supreme Court ruled that the President could remove the FHFA Director other than for cause.
On October 19, 2020, the FHFA announced that it was seeking comments on a notice of proposed rulemaking that requires the GSEs to provide advance notice to the FHFA of new activities and obtain prior approval before launching new products.
On April 28, 2023, the FHFA’s rule requiring the GSEs to provide advance notice to the FHFA of new activities and obtain prior approval before launching new products became effective.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, if the Federal Reserve decides to resume its interest rate hikes in the future, there can be no guarantee it will raise rates at a gradual pace, nor can there be any assurance that markets will not adversely react to rate increases and that the rate hikes would not trigger an economic downturn.
Biggest changeThere can be no guarantee or assurance that markets will not adversely react to future interest rate decisions at the Federal Reserve or that such interest rate decisions will not trigger an economic downturn. Downturns in the domestic economy may result in more homeowners defaulting and our losses increasing, with a corresponding decrease in our returns.
Some other examples of potential GSE reforms or policy changes that could impact our business may also include, but are not limited by, the following: • Policies or requirements that may result in a reduction in the number of mortgages GSEs acquire; 45 • The national conforming loan limit for mortgages GSEs acquire; • The level of mortgage insurance required; • The terms on which mortgage insurance coverage may be canceled, including GSE requirements and programs that permit cancellation prior to reaching the cancellation thresholds and conditions established by law; • The terms required to be included in master policies for the mortgage insurance policies GSEs acquire; • The amount of loan level price adjustments or guarantee fees that the GSEs charge on loans that require mortgage insurance; and • The degree of influence that the GSEs have over a mortgage lender’s selection of the mortgage insurer providing coverage.
Some other examples of potential GSE reforms or policy changes that could impact our business may also include, but are not limited by, the following: • Policies or requirements that may result in a reduction in the number of mortgages GSEs acquire; • The national conforming loan limit for mortgages GSEs acquire; • The level of mortgage insurance required; • The terms on which mortgage insurance coverage may be canceled, including GSE requirements and programs that permit cancellation prior to reaching the cancellation thresholds and conditions established by law; • The terms required to be included in master policies for the mortgage insurance policies GSEs acquire; • The amount of loan level price adjustments or guarantee fees that the GSEs charge on loans that require mortgage insurance; and • The degree of influence that the GSEs have over a mortgage lender’s selection of the mortgage insurer providing coverage.
There are many factors that impact the market price of our common stock, including, without limitation: • general market conditions, including price levels and volume and changes in interest rates and rising inflation; • national, regional and local economic or business conditions; • the effects of, and changes in, trade, tax, monetary and fiscal policies, including the interest rate policies of the Federal Reserve; • changes in U.S. housing and housing finance policy, including changes to the GSEs and the role of government MIs; • our actual or projected financial condition, liquidity, operating results, cash flows and capital levels; • changes in, or failure to meet, our publicly disclosed expectations as to our future financial and operating performance; 50 • publication of research reports about us, our competitors or the financial services industry generally, or changes in, or failure to meet, securities analysts' estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; • market valuations, as well as the financial and operating performance and prospects, of similar companies; • future issuances or sales, or anticipated issuances or sales, of our common stock or other securities convertible into or exchangeable or exercisable for our common stock; • additional indebtedness we may incur in the future; • expenses incurred in connection with changes in our stock price, such as changes in the value of the liability reflected on our financial statements associated with outstanding warrants; • the potential failure to establish and maintain effective internal controls over financial reporting; • additions or departures of key personnel and management; • our failure to satisfy the continued listing requirements of the Nasdaq; and • our failure to comply with the Sarbanes-Oxley Act of 2002.
There are many factors that impact the market price of our common stock, including, without limitation: • general market conditions, including price levels and volume and changes in interest rates and rising inflation; • national, regional and local economic or business conditions; • the effects of, and changes in, trade, tax, monetary and fiscal policies, including the interest rate policies of the Federal Reserve; • changes in U.S. housing and housing finance policy, including changes to the GSEs and the role of government MIs; • our actual or projected financial condition, liquidity, operating results, cash flows and capital levels; 47 • changes in, or failure to meet, our publicly disclosed expectations as to our future financial and operating performance; • publication of research reports about us, our competitors or the financial services industry generally, or changes in, or failure to meet, securities analysts' estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; • market valuations, as well as the financial and operating performance and prospects, of similar companies; • future issuances or sales, or anticipated issuances or sales, of our common stock or other securities convertible into or exchangeable or exercisable for our common stock; • additional indebtedness we may incur in the future; • expenses incurred in connection with changes in our stock price, such as changes in the value of the liability reflected on our financial statements associated with outstanding warrants; • the potential failure to establish and maintain effective internal controls over financial reporting; • additions or departures of key personnel and management; • our failure to satisfy the continued listing requirements of the Nasdaq; and • our failure to comply with the Sarbanes-Oxley Act of 2002.
There is a risk that these transactions will not continue to provide the benefits we expected when we entered into them, including as a result of our counter-parties under the QSR Transactions and XOL Transactions (which are not fully collateralized like the ILN Transactions) not performing their obligations, the GSEs or the Wisconsin OCI not continuing to give us full capital credit as anticipated for the duration of the contracts, or if one or more reinsurers under any of the QSR Transactions or XOL Transactions experiences a downgrade or other adverse business event.
There is a risk that these transactions will not continue to provide the benefits we expected when we 37 entered into them, including as a result of our counter-parties under the QSR Transactions and XOL Transactions (which are not fully collateralized like the ILN Transactions) not performing their obligations, the GSEs or the Wisconsin OCI not continuing to give us full capital credit as anticipated for the duration of the contracts, or if one or more reinsurers under any of the QSR Transactions or XOL Transactions experiences a downgrade or other adverse business event.
Further, the GSEs may modify or change their interpretation of terms they require us to include in our mortgage insurance policies for loans purchased by them, requiring us to modify our terms of coverage or operational procedures to remain an approved insurer, and such changes could have a material adverse impact on our financial 44 position and operating results.
Further, the GSEs may modify or change their interpretation of terms they require us to include in our mortgage insurance policies for loans purchased by them, requiring us to modify our terms of coverage or operational procedures to remain an approved insurer, and such changes could have a material adverse impact on our financial position and operating results.
Our business, financial condition and operating results may be adversely impacted if we do not successfully establish and maintain these arrangements and relationships, or otherwise keep pace with the technological demands of customers. 42 The success of our business depends on our ability to timely and effectively resolve any significant issues that may arise with the operation of our technology platform.
Our business, financial condition and operating results may be adversely impacted if we do not successfully establish and maintain these arrangements and relationships, or otherwise keep pace with the technological demands of customers. The success of our business depends on our ability to timely and effectively resolve any significant issues that may arise with the operation of our technology platform.
It is difficult to predict the impact of any other current or potential alternative credit risk transfer products, if any, that are developed to meet the goals established by the FHFA. We are subject to comprehensive state insurance regulations and capital adequacy requirements, which we must satisfy to continue to operate our MI business. The U.S.
It is difficult to predict the impact of any other current or potential alternative credit risk transfer products, if any, that are developed to meet the goals established by the FHFA. 42 We are subject to comprehensive state insurance regulations and capital adequacy requirements, which we must satisfy to continue to operate our MI business. The U.S.
If payments to NMIH were curtailed or limited, there is a risk that NMIH would be unable to satisfy its financial obligations. NMIH's dividend income is limited to upstream dividend payments from our subsidiaries. With respect to our insurance subsidiaries, under Wisconsin law, dividends in excess of prescribed limits are deemed "extraordinary" and require approval of the Wisconsin OCI.
If payments to NMIH were curtailed or limited, there is a risk that NMIH would be unable to satisfy its financial obligations. 45 NMIH's dividend income is limited to upstream dividend payments from our subsidiaries. With respect to our insurance subsidiaries, under Wisconsin law, dividends in excess of prescribed limits are deemed "extraordinary" and require approval of the Wisconsin OCI.
It is possible that Wisconsin and other states that have dividend restrictions will adopt revised statutory provisions or 48 interpretations of existing statutory provisions that could be more restrictive than those currently in effect or will otherwise take actions that may further restrict the ability of our insurance subsidiaries to pay dividends or make distributions or returns of capital.
It is possible that Wisconsin and other states that have dividend restrictions will adopt revised statutory provisions or interpretations of existing statutory provisions that could be more restrictive than those currently in effect or will otherwise take actions that may further restrict the ability of our insurance subsidiaries to pay dividends or make distributions or returns of capital.
If our controls are not effective or not properly implemented, we could suffer financial or other loss, disruption of our business, regulatory sanctions or damage to our reputation. Losses resulting from these failures can vary significantly in size, scope and scale and may have a material adverse effect on our business, financial condition and operating results.
If our controls are not effective or not properly implemented, we could suffer financial or other loss, disruption of our business, 38 regulatory sanctions or damage to our reputation. Losses resulting from these failures can vary significantly in size, scope and scale and may have a material adverse effect on our business, financial condition and operating results.
The GSEs could be directed to make such changes by the FHFA, which was appointed as their conservator in September 2008 and has the authority to control and direct the operations of the GSEs. With the GSEs in a prolonged conservatorship, there has been ongoing debate over the future role and purpose of the GSEs in the U.S. housing market.
The GSEs could be directed to make such changes by the FHFA, which was appointed as their conservator in September 2008 and has the authority to control and direct the operations of the GSEs. 41 With the GSEs in a prolonged conservatorship, there has been ongoing debate over the future role and purpose of the GSEs in the U.S. housing market.
Risks Related to Our Holding Company and Capital Structure • Our holding company structure and certain regulatory and other constraints could affect our ability to satisfy our obligations and potentially require us to raise more capital. • Our substantial indebtedness could adversely affect our financial condition. • Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly. • Despite our substantial level of debt, we may incur more debt, which could exacerbate any or all of the risks described above. • Our current credit ratings may adversely affect our ability to access capital and the cost of such capital, which could have a material adverse effect on our business, financial condition and operating results. 31 General Risks Related to Ownership of Our Common Stock • We do not currently pay any dividends on our common stock and may not do so in the future, and payment of any declared dividends may be delayed. • The market price of our common stock may be volatile, which could cause the value of an investment in our common stock to decline. • The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale, and future issuances of our common stock may depress our share price and dilute the book value of our common stock. • Future issuance of debt or preferred stock, which would rank senior to our Class A common stock upon our liquidation, may adversely affect the market value of our common stock. • Provisions contained in our organizational documents, as well as provisions of Delaware law and Wisconsin insurance law, could delay or prevent a change of control of us, which could adversely affect the price of shares of our common stock.
Risks Related to Our Holding Company and Capital Structure • Our holding company structure and certain regulatory and other constraints could affect our ability to satisfy our obligations and potentially require us to raise more capital. • Our substantial indebtedness could adversely affect our financial condition. • Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly. • Despite our substantial level of debt, we may incur more debt, which could exacerbate any or all of the risks described above. • Our current credit ratings may adversely affect our ability to access capital and the cost of such capital, which could have a material adverse effect on our business, financial condition and operating results. 28 General Risks Related to Ownership of Our Common Stock • We do not currently pay any dividends on our common stock and may not do so in the future, and payment of any declared dividends may be delayed. • The market price of our common stock may be volatile, which could cause the value of an investment in our common stock to decline. • The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale, and future issuances of our common stock may depress our share price and dilute the book value of our common stock. • Future issuance of debt or preferred stock, which would rank senior to our common stock upon our liquidation, may adversely affect the market value of our common stock. • Provisions contained in our organizational documents, as well as provisions of Delaware law and Wisconsin insurance law, could delay or prevent a change of control of us, which could adversely affect the price of shares of our common stock.
In particular, in the current remote and hybrid working arrangements environment, our employees and vendors rely on the use of portable computers and mobile devices, which can be stolen, lost or misused, making information accessible through such devices more vulnerable to unauthorized access, including by employee malfeasance.
In particular, in the current remote and hybrid working arrangements environment, our employees and vendors rely on the use of portable computers and mobile devices, which can be 39 stolen, lost or misused, making information accessible through such devices more vulnerable to unauthorized access, including by employee malfeasance.
Future 41 sources of capital will depend on the cost, availability and terms and conditions that are acceptable to us, our regulators and the GSEs. We cannot be sure that we will be able to secure other sources of capital or substitute reductions in RIF in the amounts we require and on favorable terms, if at all.
Future sources of capital will depend on the cost, availability and terms and conditions that are acceptable to us, our regulators and the GSEs. We cannot be sure that we will be able to secure other sources of capital or substitute reductions in RIF in the amounts we require and on favorable terms, if at all.
The success of our 43 investment activity is affected by general economic conditions, which may adversely affect the markets for credit and interest-rate-sensitive securities, including the extent and timing of investor participation in these markets, the level and volatility of interest rates and, consequently, the value of fixed income securities.
The success of our investment activity is affected by general economic conditions, which may adversely affect the markets for credit and interest-rate-sensitive securities, including the extent and timing of investor participation in these markets, the level and volatility of interest rates and, consequently, the value of fixed income securities.
For example, a natural disaster event could lead to unexpected changes in persistency rates as policyholders and borrowers who are affected by the disaster may be unable to meet their contractual obligations, such as mortgage payments on loans we insure.
For example, a 36 natural disaster event could lead to unexpected changes in persistency rates as policyholders and borrowers who are affected by the disaster may be unable to meet their contractual obligations, such as mortgage payments on loans we insure.
However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of any such matters in the future could have an unanticipated material adverse effect on our liquidity, financial position and operating results.
However, the outcome of litigation and other legal 43 and regulatory matters is inherently uncertain, and it is possible that one or more of any such matters in the future could have an unanticipated material adverse effect on our liquidity, financial position and operating results.
Any of these actions could have a material adverse effect on our business, financial condition and operating results. 49 Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.
Any of these actions could have a material adverse effect on our business, financial condition and operating results. Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.
In addition, the 46 private MI industry, including NMIC, may be affected by changes in the laws and regulations to which we are subject or the way they are interpreted or applied. See " Item 1 - Business - U.S.
In addition, the private MI industry, including NMIC, may be affected by changes in the laws and regulations to which we are subject or the way they are interpreted or applied. See " Item 1 - Business - U.S.
Starting in 2022, in an attempt to curb rising inflation, the Federal Reserve repeatedly and rapidly increased the federal funds rate which, in 36 July 2023, hit its highest levels in 22 years, and led to rising interest rates and mortgage interest rates in 2022 and 2023.
Starting in 2022, in an attempt to curb rising inflation, the Federal Reserve repeatedly and rapidly increased the federal funds rate which, in July 2023, hit its highest levels in 22 years, and led to rising interest rates and mortgage interest rates in 2022 and 2023.
As a result of the higher mortgage interest rates in 2022 and 2023, we observed lower refinancing activities in the mortgage market compared to what we had observed in recent years prior to 2022, and therefore decreased turnover in our IIF.
As a result of the higher mortgage interest rates in 2022 and 2023, we observed lower refinancing activities in the mortgage market compared to what we had 33 observed in recent years prior to 2022, and therefore decreased turnover in our IIF.
Any provision of our certificate of incorporation or bylaws or Delaware law or under the Wisconsin insurance regulations that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of common stock, and could also affect the price that some investors are willing to pay for shares of our common stock. 52 Item 1B.
Any provision of our certificate of incorporation or bylaws or Delaware law or under the Wisconsin insurance regulations that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of common stock, and could also affect the price that some investors are willing to pay for shares of our common stock. 49 Item 1B.
If these USPs fail to adequately perform their underwriting services or place our coverage on loans we would deem ineligible, we could experience increased claims on loans underwritten by them, and our customer relationships could be negatively impacted. • Our Master Policies contain restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics. • The mix of business we write affects our revenue stream and the likelihood of losses occurring. • We expect our claims to increase as our insured loan portfolio grows and matures. • Our business depends, in part, on effective and reliable loan servicing. • If the estimates we use in establishing claims reserves are incorrect, the actual claim payments we make may materially exceed the amount of our corresponding claims reserves, resulting in unexpected charges to income, which could be material and adversely affect our results of operations. 30 • The COVID-19 virus may continue to impact our financial results and may also continue to affect our business, liquidity and financial condition. • The occurrence of natural or man-made disasters or pandemics could adversely affect our business, financial condition and operating results. • Climate change and efforts to manage or regulate climate risk by government agencies could affect our business and operations. • We are exposed to certain risks associated with our third-party reinsurance transactions, including the possibility that our reinsurers will fail to perform their obligations or that we will lose the capital credit we expected to receive when we entered into the transactions as a result of future GSE or Wisconsin OCI action or if any of our reinsurers experiences a downgrade or other adverse business event. • Our operating results depend in large part on our ability to manage the risks related to the growth of our business and on maintaining and enhancing effective operating procedures and internal controls. • We are exposed to operational risk from fraud, malfeasance or error by borrowers, employees and third-party service providers, and any such fraud, malfeasance or error could materially and adversely affect us. • If we do not maintain connectivity with or otherwise meet the technological demands of our customers or are unable to develop, enhance and maintain our proprietary technology platform, our business and financial performance could be adversely affected. • We may not be able to prevent the unauthorized disclosure or misuse of confidential, personal or proprietary information. • Adverse investment performance may affect our financial results and ability to conduct business. • We face regulatory and litigation risks associated with offering loan review services.
If these USPs fail to adequately perform their underwriting services or place our coverage on loans we would deem ineligible, we could experience increased claims on loans underwritten by them, and our customer relationships could be negatively impacted. • Our Master Policies contain restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics. • The mix of business we write affects our revenue stream and the likelihood of losses occurring. • We expect our claims to increase as our insured loan portfolio grows and matures. • Our business depends, in part, on effective and reliable loan servicing. • If the estimates we use in establishing claims reserves are incorrect, the actual claim payments we make may materially exceed the amount of our corresponding claims reserves, resulting in unexpected charges to income, which could be material and adversely affect our results of operations. 27 • The occurrence of natural or man-made disasters or pandemics could adversely affect our business, financial condition and operating results. • Climate change and efforts to manage or regulate climate risk by government agencies could affect our business and operations. • We are exposed to certain risks associated with our third-party reinsurance transactions, including the possibility that our reinsurers will fail to perform their obligations or that we will lose the capital credit we expected to receive when we entered into the transactions as a result of future GSE or Wisconsin OCI action or if any of our reinsurers experiences a downgrade or other adverse business event. • Our operating results depend in large part on our ability to manage the risks related to the growth of our business and on maintaining and enhancing effective operating procedures and internal controls. • We are exposed to operational risk from fraud, malfeasance or error by borrowers, employees and third-party service providers, and any such fraud, malfeasance or error could materially and adversely affect us. • If we do not maintain connectivity with or otherwise meet the technological demands of our customers or are unable to develop, enhance and maintain our proprietary technology platform, our business and financial performance could be adversely affected. • We may not be able to prevent the unauthorized disclosure or misuse of confidential, personal or proprietary information. • Adverse investment performance may affect our financial results and ability to conduct business. • We face regulatory and litigation risks associated with offering loan review services.
Holders of our common stock bear the risk of such future issuances of debt or preferred stock reducing the market value of our common stock. 51 Provisions contained in our organizational documents, as well as provisions of Delaware law and Wisconsin insurance law, could delay or prevent a change of control of us, which could adversely affect the price of shares of our common stock.
Holders of our common stock bear the risk of such future issuances of debt or preferred stock reducing the market value of our common stock. 48 Provisions contained in our organizational documents, as well as provisions of Delaware law and Wisconsin insurance law, could delay or prevent a change of control of us, which could adversely affect the price of shares of our common stock.
In addition, our senior secured credit facilities and the indenture governing our senior secured notes contain certain restrictive covenants that, among other things, limit our ability to incur additional indebtedness, make investments, incur liens, transfer or dispose of assets, merge with or acquire other companies and pay dividends.
In addition, our senior unsecured credit facilities and the indenture governing our senior unsecured notes contain certain restrictive covenants that, among other things, limit our ability to incur additional indebtedness, make investments, incur liens, transfer or dispose of assets, merge with or acquire other companies and pay dividends.
A failure to comply with covenants or the other terms of our senior secured credit facilities and the indenture governing our senior secured notes could result in an event of default under such indebtedness, which, if not remedied, may trigger an event of default under certain other indebtedness.
A failure to comply with covenants or the other terms of our senior unsecured credit facilities and the indenture governing our senior unsecured notes could result in an event of default under such indebtedness, which, if not remedied, may trigger an event of default under certain other indebtedness.
Accordingly, if we were liquidated, holders of our debt securities and preferred stock and lenders with respect to our 2021 Revolving Credit Facility or other future borrowings, if any, would receive a distribution of our available assets prior to the holders of shares of our common stock.
Accordingly, if we were liquidated, holders of our debt securities and preferred stock and lenders with respect to our 2024 Revolving Credit Facility or other future borrowings, if any, would receive a distribution of our available assets prior to the holders of shares of our common stock.
Our business prospects and operating results could be adversely impacted if, and to the extent that, the QM regulations or the CFPB's actions negatively impact the size of the origination market. 47 The implementation of the Basel rules may discourage the use of mortgage insurance.
Our business prospects and operating results could be adversely impacted if, and to the extent that, the QM regulations or the CFPB's actions negatively impact the size of the origination market. 44 The implementation of the Basel rules may discourage the use of mortgage insurance.
If the lenders under our senior secured credit facilities terminate their commitments or we are unable to satisfy certain covenants or representations, we may not have access to funding in a timely manner, or at all, when we require it.
If the lenders under our senior unsecured credit facilities terminate their commitments or we are unable to satisfy certain covenants or representations, we may not have access to funding in a timely manner, or at all, when we require it.
Among others, alternatives to private MI include, but are not limited to: 32 • lenders using government mortgage insurance programs, including those of the FHA, USDA and VA, and state-supported mortgage insurance funds in several states, including Massachusetts and California; • lenders and other investors holding mortgages in their portfolios and self-insuring; • GSEs and other investors using credit enhancements other than MI (including alternative forms of credit risk transfer such as the suspended IMAGIN and EPMI programs that could be relaunched in the future), using other credit enhancements in conjunction with reduced levels of MI coverage, or accepting credit risk without credit enhancement; • lenders originating mortgages using "piggy-back" or other structures to avoid MI, such as a first mortgage with an 80% LTV and a second mortgage with a 10%, 15% or 20% LTV (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather than a first mortgage with an LTV above 80% that has MI; • lender retention program; and • borrowers paying cash or making large down payments versus securing mortgage financing.
Among others, alternatives to private MI include, but are not limited to: 29 • lenders using government mortgage insurance programs, including those of the FHA, USDA and VA, and state-supported mortgage insurance funds in several states, including Massachusetts and California; • lenders and other investors holding mortgages in their portfolios and self-insuring; • GSEs and other investors using credit enhancements other than MI (including alternative forms of credit risk transfer such as the suspended IMAGIN and EPMI programs that could be relaunched in the future), using other credit enhancements in conjunction with reduced levels of MI coverage, or accepting credit risk without credit enhancement; • lenders originating mortgages using “piggy-back” or other structures to avoid MI, such as a first mortgage with an 80% LTV and a second mortgage with a 10%, 15% or 20% LTV (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather than a first mortgage with an LTV above 80% that has MI; • lender retention program; and • borrowers paying cash or making large down payments versus securing mortgage financing.
NMIH also has access to $250 million of undrawn revolving credit capacity under the senior secured credit facilities. In addition, NMIH currently receives cash from our insurance subsidiaries, consisting of payments made under our tax and expense-sharing arrangements.
NMIH also has access to $250 million of undrawn revolving credit capacity under the senior unsecured credit facilities. In addition, NMIH currently receives cash from our insurance subsidiaries, consisting of payments made under our tax and expense-sharing arrangements.
We certified to the GSEs by April 15, 2023 that NMIC was in full compliance with the PMIERs as of December 31, 2022. There can be no assurance, however, that NMIC will continue to comply with the PMIERs financial requirements.
We certified to the GSEs by April 15, 2024 that NMIC was in full compliance with the PMIERs as of December 31, 2023. There can be no assurance, however, that NMIC will continue to comply with the PMIERs financial requirements.
Future issuance of debt or preferred stock, which would rank senior to our Class A common stock upon our liquidation, may adversely affect the market value of our common stock. Shares of our common stock are equity interests and do not constitute indebtedness of NMIH.
Future issuance of debt or preferred stock, which would rank senior to our common stock upon our liquidation, may adversely affect the market value of our common stock. Shares of our common stock are equity interests and do not constitute indebtedness of NMIH.
In addition, the value of the assets in our investment portfolio could be adversely affected if such an event affects companies' ability to pay us principal or interest on their securities. We insure mortgages for homes in areas that have been impacted by natural disasters, including from hurricanes and wildfires.
In addition, the value of the assets in our investment portfolio could be adversely affected if such an event affects companies' ability to pay us principal or interest on their securities. We insure mortgages for homes in areas that have been impacted by natural disasters, including from earthquakes, wildfires, hurricanes, floods and tornadoes.
If any indebtedness under the senior secured credit facilities or our senior notes is accelerated, we cannot assure you that our assets would be sufficient to repay such amounts in full, and the lenders and/or noteholders could foreclose on the collateral securing the obligations under the senior secured credit facilities and the senior notes, including, subject to regulatory approval, the stock of NMIC and Re One.
If any indebtedness under the senior unsecured credit facilities or our senior notes is accelerated, we cannot assure you that our assets would be sufficient to repay such amounts in full, and the lenders and/or noteholders could foreclose on the collateral securing the obligations under the senior unsecured credit facilities and the senior 46 notes, including, subject to regulatory approval, the stock of NMIC and Re One.
Our operating results depend in large part on our ability to manage the risks related to the growth of our business and on maintaining and enhancing effective operating procedures and internal controls. Our mortgage insurance business has been quickly growing since 2013.
Our operating results depend in large part on our ability to manage the risks related to the growth of our business and on maintaining and enhancing effective operating procedures and internal controls. Our mortgage insurance business has been growing quickly.
Our actual results could differ materially and adversely from those anticipated in these forward-looking statements, including any such statements made in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." Risk Factors Summary The following is a summary of the principal risks that could materially adversely affect our business operations, industry, and financial results.
Our actual results could differ materially and adversely from those anticipated in these forward-looking statements, including any such statements made in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” Risk Factors Summary The following is a summary of the principal risks that could materially adversely affect our business operations, industry, and financial results.
If funding is not available under the senior secured credit facilities when we require it, our ability to continue our business practices or pursue our current strategy could be limited.
If funding is not available under the senior unsecured credit facilities when we require it, our ability to continue our business practices or pursue our current strategy could be limited.
NMIH's principal source of operating cash is investment income, and could in the future include dividends from NMIC and Re One, which currently does not have active insurance exposure. NMIC has the capacity to pay aggregate ordinary dividends of $96.3 million to NMIH during the twelve-month period ending December 31, 2024, without prior approval from the Wisconsin OCI.
NMIH's principal source of operating cash is investment income, and could in the future include dividends from NMIC and Re One, which currently does not have active insurance exposure. NMIC has the capacity to pay aggregate ordinary dividends of $98.4 million to NMIH during the twelve-month period ending December 31, 2024, without prior approval from the Wisconsin OCI.
Any indebtedness we may incur under our senior secured credit facilities and our future indebtedness may be subject to variable rates of interest, exposing us to interest rate risk.
Any indebtedness we may incur under our senior unsecured credit facilities and our future indebtedness may be subject to variable rates of interest, exposing us to interest rate risk.
In addition, our 2021 Revolving Credit Facility and indenture does not prevent us from incurring certain obligations that do not constitute "indebtedness" as defined therein.
In addition, our 2024 Revolving Credit Facility and indenture does not prevent us from incurring certain obligations that do not constitute "indebtedness" as defined therein.
A lower level of persistency could reduce our future revenues from our monthly-paid premium products, which constituted about 90% of our primary IIF at year-end 2023. Higher than expected persistency rates could negatively impact our future profitability on monthly premium policies if market and economic conditions change significantly from those we expected when we established the premium rates.
A lower level of persistency could reduce our future revenues from our monthly-paid premium products, which constituted about 91% of our primary IIF at year-end 2024. Higher than expected persistency rates could negatively impact our future profitability on monthly premium policies if market and economic conditions change significantly from those we expected when we established the premium rates.
We may incur substantial additional debt in the future, including up to $250 million in borrowings we may choose to make under our 2021 Revolving Credit Facility.
We may incur substantial additional debt in the future, including up to $250 million in borrowings we may choose to make under our 2024 Revolving Credit Facility.
Factors that could cause government MIs to remain significant include, among others: • change to federal housing policy and/or priorities, including government MIs reducing their premiums, which may be more likely under the current Presidential administration, or loosening their underwriting guidelines; • increase in premium rates or tightening of underwriting guidelines by private mortgage insurers; • capital constraints in the private MI industry; • increase in capital requirements imposed on private mortgage insurers by the GSEs or states; • continuation of increases to or imposition of new GSE loan delivery fees on loans that require MI, which may result in higher borrower costs for MI loans compared to loans insured by government MIs; • loans insured under federal government-supported mortgage insurance programs are eligible for securitization in Ginnie Mae securities, which may be viewed by investors as more desirable than GSE securities due to the explicit backing of Ginnie Mae securities by the full faith and credit of the U.S. federal government; • difference in the spread between GSE mortgage-backed securities and Ginnie Mae mortgage-backed securities; • increase in government MIs' loan limits above GSE loan limits; • change in GSEs' demand to participate in the high-LTV or first-time homebuyer origination market; and • perceived operational ease of using insurance from government MIs compared to private MI. 33 The degree to which lenders or borrowers may select these alternatives now, or in the future, is difficult to predict.
Factors that could cause government MIs to remain significant include, among others: • change to federal housing policy and/or priorities, including government MIs reducing their premiums, which may be more likely under the current Presidential administration, or loosening their underwriting guidelines; • increase in premium rates or tightening of underwriting guidelines by private mortgage insurers; • capital constraints in the private MI industry; • increase in capital requirements imposed on private mortgage insurers by the GSEs or states; • continuation of increases to or imposition of new GSE loan delivery fees on loans that require MI, which may result in higher borrower costs for MI loans compared to loans insured by government MIs; • loans insured under federal government-supported mortgage insurance programs are eligible for securitization in Ginnie Mae securities, which may be viewed by investors as more desirable than GSE securities due to the explicit backing of Ginnie Mae securities by the full faith and credit of the U.S. federal government; • difference in the spread between GSE mortgage-backed securities and Ginnie Mae mortgage-backed securities; • increase in government MIs' loan limits above GSE loan limits; • change in GSEs' demand to participate in the high-LTV or first-time homebuyer origination market; and • perceived operational ease of using insurance from government MIs compared to private MI.
Although the credit agreement governing our 2021 Revolving Credit Facility and the indenture governing our senior secured notes each limit our ability and the ability of certain of our subsidiaries to incur additional debt, these restrictions are subject to a number of qualifications and exceptions, and, under certain circumstances, we may incur additional debt in compliance with these restrictions.
Although the credit agreement governing our 2024 Revolving Credit Facility and the indenture governing our senior unsecured notes each limit our ability and the ability of certain of our subsidiaries to incur additional debt, these restrictions are subject to a number of qualifications and exceptions, and, under certain circumstances, we may incur additional debt in compliance with these restrictions.
Therefore, the ultimate impact that higher inflation rates will have on the mortgage origination and mortgage insurance markets, and our loan delinquencies, is unknown, and changes in inflation, interest rates and mortgage interest rates may have an adverse impact on our business, future revenue and financial condition.
Therefore, the ultimate impact that higher inflation rates and the Federal Reserve's reaction thereto will have on the mortgage origination and mortgage insurance markets, and our loan delinquencies, is unknown, and changes in inflation, interest rates and mortgage interest rates may have an adverse impact on our business, future revenue and financial condition.
Our senior secured credit facilities require us to comply with certain financial and other maintenance covenants.
Our senior unsecured credit facilities require us to comply with certain financial and other maintenance covenants.
The former director of FHFA leadership was more focused on preparing the GSEs to exit from conservatorship by increasing the GSEs’ overall capital levels and reducing their credit risk profile.
The former director of FHFA leadership under the first Trump administration was more focused on preparing the GSEs to exit from conservatorship by increasing the GSEs’ overall capital levels and reducing their credit risk profile.
If we cannot obtain adequate capital, our business, financial condition and operating results could be adversely affected. Our substantial indebtedness could adversely affect our financial condition. We currently have and will continue to have a substantial amount of indebtedness. As of December 31, 2023 our debt totaled approximately $397.6 million.
If we cannot obtain adequate capital, our business, financial condition and operating results could be adversely affected. Our substantial indebtedness could adversely affect our financial condition. We currently have and will continue to have a substantial amount of indebtedness. As of December 31, 2024 our debt totaled approximately $415.1 million.
Higher interest rates may increase the potential housing costs for consumers hoping to purchase homes, which may have the effect of reducing the pool of potential borrowers available to purchase homes; • restrictions on mortgage credit due to more stringent underwriting standards, more restrictive regulatory and capital requirements and lender liquidity issues; • the health of the real estate industry and the national economy and conditions in regional and local economies, which may be impacted by inflation and the related Federal Reserve measures, which may cause potential economic downturn; • housing affordability; • housing supply; • population trends, including the rate of household formation, preferences of potential mortgage borrowers and cultural shifts; • the rate and anticipated path of home price appreciation, which in times of heavy refinancing can affect whether refinance loans have LTVs that require MI; • deductibility of mortgage interest or other changes in tax policy, including the TCJA of 2017, which may have an effect on the residential housing market; • U.S. government housing policy encouraging loans to first-time homebuyers; • GSEs' demand to participate in the high-LTV or first-time homebuyer origination market; • the extent to which the GSEs' guaranty and other fees, credit underwriting guidelines and other business terms affect lenders' willingness to extend credit for high-LTV mortgages; and • COVID-19 and any related imposed containment measures. 34 A decline in the volume of high-LTV loan originations could decrease demand for MI, decrease our NIW and therefore reduce our revenues and have a material adverse effect on our operating results.
Higher interest rates may increase the potential housing costs for consumers hoping to purchase homes, which may have the effect of reducing the pool of potential borrowers available to purchase homes; • restrictions on mortgage credit due to more stringent underwriting standards, more restrictive regulatory and capital requirements and lender liquidity issues; • the health of the real estate industry and the national economy and conditions in regional and local economies, which may be impacted by inflation and the related Federal Reserve measures, which may cause potential economic downturn; • housing affordability; • housing supply; • population trends, including the rate of household formation, preferences of potential mortgage borrowers and cultural shifts; • the rate and anticipated path of home price appreciation, which in times of heavy refinancing can affect whether refinance loans have LTVs that require MI; • deductibility of mortgage interest or other changes in tax policy, which may have an effect on the residential housing market; • U.S. government housing policy encouraging loans to first-time homebuyers; • GSEs' demand to participate in the high-LTV or first-time homebuyer origination market; and • the extent to which the GSEs' guaranty and other fees, credit underwriting guidelines and other business terms affect lenders' willingness to extend credit for high-LTV mortgages.
Any deterioration in housing prices, housing markets or economic conditions in regions in which we have a significant concentration of IIF and which adversely affects the ability of borrowers to make payments 35 on their insured loans may increase the likelihood and severity of our losses, which could have a material adverse effect on our financial condition and operating results.
Any deterioration in housing prices, housing markets or economic conditions in regions in which we have a significant concentration of IIF and which adversely affects the ability of borrowers to make payments on their insured loans may increase the likelihood and severity of our losses, which could have a material adverse effect on our financial condition and operating results. 32 The premiums we charge may be insufficient to cover claim payments and our operating costs.
In addition, our claims experience is affected by macroeconomic factors such as housing prices, inflation, interest rates, mortgage rates, unemployment rates and other events, such as natural disasters or global pandemics, and any federal, state or local governmental response thereto.
In addition, our claims experience is affected by macroeconomic factors such as housing prices, inflation, interest rates, mortgage rates, unemployment rates and other events, such as natural disasters, including earthquakes, wildfires, hurricanes, floods and tornadoes or pandemics, and any federal, state or local governmental response thereto.
Among such agreements, the Wisconsin OCI has approved the allocation of interest expense on our $400 million aggregate principal amount of senior secured notes that mature on June 1, 2025 (the Notes) and senior secured credit facilities to NMIC to the extent proceeds from the Notes offering and facility are distributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.
Among such agreements, the Wisconsin OCI has approved the allocation of interest expense on our $425 million aggregate principal amount of senior unsecured notes that mature on August 15, 2029 (the 2024 Notes) and senior unsecured credit facilities to NMIC to the extent proceeds from the 2024 Notes offering and facility are distributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.
Higher inflation also puts a strain on consumer spending. As general costs for goods and services increase for consumers, their housing and mortgage affordability decrease. Inflation's adverse impact on housing and mortgage affordability may therefore lower overall housing demand, result in lower NIW volume and negatively impact our business, future revenue and financial condition.
As general costs for goods and services increase for consumers, their housing and mortgage affordability decrease. Inflation's adverse impact on housing and mortgage affordability may therefore lower overall housing demand, result in lower NIW volume and negatively impact our business, future revenue and financial condition.
These risks may also be impacted by developments relating to the COVID-19 virus in the future. To the extent that certain risks are unforeseen, or if we have underestimated the frequency and/or severity of loss of certain risks, our underwriting and credit risk management policies and practices may not be sufficient to mitigate the effects of these risks.
To the extent that certain risks are unforeseen, or if we have underestimated the frequency and/or severity of loss of certain risks, our underwriting and credit risk management policies and practices may not be sufficient to mitigate the effects of these risks.
Higher rates have an adverse impact on the refinancing origination market because higher mortgage interest rates lower the opportunity to refinance an existing loan at a lower mortgage interest rate. Higher rates also have an adverse impact on the purchase origination market because higher mortgage interest rates lower housing and mortgage affordability, and thus consumers' demand for homes.
Higher interest rates and mortgage rates may have an adverse impact on the refinancing origination market and purchase origination market. Higher rates have an adverse impact on the refinancing origination market because higher mortgage interest rates lower the opportunity to refinance an existing loan at a lower mortgage interest rate.
See "Cautionary Note Regarding Forward-Looking Statements" on page 3 of this report.
See “Cautionary Note Regarding Forward-Looking Statements” on page 3 of this report.
Risks Related to Regulation of the Mortgage Insurance Industry There can be no assurance that the GSEs will continue to treat us as an approved insurer in the future, and changes to, or our failure to maintain compliance with the GSEs' PMIERs, could adversely impact our business, financial condition and operating results.
See " The private MI industry is, and as a participant we are, subject to litigation and regulatory enforcement risk generally ," below. 40 Risks Related to Regulation of the Mortgage Insurance Industry There can be no assurance that the GSEs will continue to treat us as an approved insurer in the future, and changes to, or our failure to maintain compliance with the GSEs' PMIERs, could adversely impact our business, financial condition and operating results.
Changes in inflation, interest rates and mortgage interest rates may have an adverse impact on our business, future revenue and financial condition. Since 2021, inflation has increased dramatically. Rising inflation may negatively impact our expense base by increasing the costs (including for services) we have to pay contractors, employees, service providers and vendors.
Changes in inflation, interest rates and mortgage interest rates may have an adverse impact on our business, future revenue and financial condition. Periods of rising inflation may negatively impact our expense base by increasing the costs (including for services) we have to pay contractors, employees, service providers and vendors. Higher inflation also puts a strain on consumer spending.
As of December 31, 2023, we had 87,334,138 shares of our common stock issued and 80,881,280 shares outstanding. Sales of substantial amounts of our common stock in the public market in the future, or the perception that these sales could occur, could cause the market price of our common stock to decline.
As of December 31, 2024, we had 87,902,626 shares of our common stock issued and 78,600,726 shares outstanding. Sales of substantial amounts of our common stock in the public market in the future, or the perception that these sales could occur, could cause the market price of our common stock to decline.
With six private MI companies actively competing for business from the same residential mortgage originators, it is important that we continue to differentiate ourselves from the other mortgage insurers, each of which sells substantially similar products to ours.
With six private MI companies actively competing for business from the same residential mortgage originators, it is important that we continue to differentiate ourselves from the other mortgage insurers, each of which sells substantially similar products to ours. We may experience increased competition due to consolidation among our existing competitors or the emergence of new private MI companies.
We have delegated the authority to implement certain loss mitigation options on loans we insure ( e.g. , modifications, short sales and deeds-in-lieu) to the GSEs, who have in turn delegated such authority to most of their approved servicers, pursuant to the delegation agreements.
If servicers of our insured loans fail to adhere to applicable requirements, procedures and standards, our losses may unexpectedly increase. 35 We have delegated the authority to implement certain loss mitigation options on loans we insure ( e.g. , modifications, short sales and deeds-in-lieu) to the GSEs, who have in turn delegated such authority to most of their approved servicers, pursuant to the delegation agreements.
These events also could disrupt public and private infrastructure, including communications and financial services, which could disrupt normal business operations. 40 Since 2020, the FHFA has been increasingly vocal about climate and natural disasters and their impact on the GSEs and the Federal Home Loan Banks (together, the regulated entities) and the national housing market, and has designated climate change as a priority concern and instructed the GSEs to actively consider its effects in their decision making.
Since 2020, the FHFA has been increasingly vocal about climate and natural disasters and their impact on the GSEs and the Federal Home Loan Banks (together, the regulated entities) and the national housing market, and has designated climate change as a priority concern and instructed the GSEs to actively consider its effects in their decision making.
These consequences could, among other things, result in a decline in new business and increased claims from those areas, and adverse effects on home prices in those areas, which could result in unexpected loss experience in our business.
These consequences could, among other things, result in a decline in new business and increased claims from those areas, and adverse effects on home prices in those areas, which could result in unexpected loss experience in our business. These events also could disrupt public and private infrastructure, including communications and financial services, which could disrupt normal business operations.
However, we do not have clarity on when we can expect the final proposal or how much time will be provided for banking organizations to implement the final rule once it has been issued.
The full Basel Committee has yet to finalize next steps on a future path forward. Accordingly, we do not have clarity on when we can expect the final proposal or how much time will be provided for banking organizations to implement the final rule once it has been issued.
The premiums we charge may be insufficient to cover claim payments and our operating costs. Our mortgage insurance premiums may not be adequate to cover our future claim payments. We set premiums at the time a policy is issued based on our expectations regarding likely performance over the term of the policy.
Our mortgage insurance premiums may not be adequate to cover our future claim payments. We set premiums at the time a policy is issued based on our expectations regarding likely performance over the term of the policy. Our premium rates are developed based on certain expectations that may ultimately prove to be inaccurate.
Mortgage interest rates tend to follow the 10-year Treasury yield, which rises and falls based on expectations for the benchmark rate set by the Federal Reserve.
Mortgage interest rates tend to follow the 10-year Treasury yield, which rises and falls based on several factors, including but not limited to expectations for the benchmark rate set by the Federal Reserve, inflation trends, economic conditions and investor sentiment.
Our remote or hybrid working arrangements may exacerbate these risks. Our employees, contractors, customers or other users of our systems are from time-to-time subject to fraudulent inducements by parties attempting to gain access to our data or that of our customers.
Further, the sophistication, availability and use of artificial intelligence by threat actors may present an increased level of risk. Our remote or hybrid working arrangements may exacerbate these risks. Our employees, contractors, customers or other users of our systems are from time-to-time subject to fraudulent inducements by parties attempting to gain access to our data or that of our customers.
Our Master Policies contain restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics.
If these USPs fail to perform their services as expected, we could experience increased claims on loans underwritten by them, and our customer relationships could be negatively impacted, which would have an adverse impact on our business, financial condition and operating results. 34 Our Master Policies contain restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics.
An increase in the capital required to be held by us under PMIERs could make our products more expensive and could have a material adverse impact on our financial condition and future business prospects.
Further changes to the ERCF, the PSPAs, or the business practices of the GSEs, including any that increase the capital required to be held by us under PMIERs, could make our products less desirable or more expensive and could have a material adverse impact on our financial condition and future business prospects.
Servicers are required to comply with a multitude of legal, regulatory and GSE requirements, procedures and standards for 38 servicing residential mortgage loans. If servicers of our insured loans fail to adhere to applicable requirements, procedures and standards, our losses may unexpectedly increase.
Servicers are required to comply with a multitude of legal, regulatory and GSE requirements, procedures and standards for servicing residential mortgage loans.
The presence of multiple higher-risk characteristics ( i.e., layered risk) in a loan materially increases the likelihood of a default on such a loan unless, and to the extent, there are other characteristics to mitigate the layered risk.
These factors include, among others, borrower and loan-level risk characteristics, lender origination practices and macroeconomic variables that influence the housing market. The presence of multiple higher-risk characteristics ( i.e., layered risk) in a loan materially increases the likelihood of a default on such a loan unless, and to the extent, there are other characteristics to mitigate the layered risk.
An increase in the number or size of claims, compared to what we anticipate, could adversely affect our operating results and financial condition. Our business depends, in part, on effective and reliable loan servicing. We depend on reliable, consistent third-party servicing of the loans that we insure.
Even if our default rate remains the same, the total number of claims that we incur will increase as our portfolio continues to grow. An increase in the number or size of claims, compared to what we anticipate, could adversely affect our operating results and financial condition. Our business depends, in part, on effective and reliable loan servicing.
" To the extent these and any other current or potential credit risk products that may evolve in a manner that displace primary MI coverage, the amount of insurance we write may be reduced.
In recent years, the FHFA has set goals for the GSEs to transfer significant portions of the GSEs' mortgage credit risk to the private sector. To the extent any other current or potential credit risk products that may evolve in a manner that displace primary MI coverage, the amount of insurance we write may be reduced.
To that end, the FHFA announced a new Conservatorship Scorecard which would hold the GSEs accountable for ensuring resiliency to climate risks, and also enhanced its monitoring and supervision of climate change issues. The FHFA has also established eight agency-wide internal working groups and a steering committee to assess the progress of the regulated entities in managing climate risk.
To that end, the FHFA established a new Conservatorship Scorecard which would hold the GSEs accountable for ensuring resiliency to climate and disaster risks, and also enhanced its monitoring and supervision of climate change issues.
Generally, we will not be able to cancel the MI coverage or adjust renewal premiums during the life of an MI policy to mitigate adverse development.
Our premiums are subject to approval by certain state insurance regulators, which can delay or limit our ability to increase our premiums. Generally, we will not be able to cancel the MI coverage or adjust renewal premiums during the life of an MI policy to mitigate adverse development.
As in the years leading up to 2022, if we experience a lower interest rate environment in the future, we expect that to drive higher levels of refinancing in the mortgage market, including with respect to loans we insure which may have interest rates ( i.e. , such as those written in 2022 and 2023 in a higher interest rate environment) that are higher than the future prevailing rates.
However, if mortgage interest rates decline in the future, we expect any such decline to drive higher levels of refinancing in the mortgage market, including with respect to loans we insure which may have interest rates that are higher than the future prevailing rates.
As a result, future losses on loans that are not currently in default may have a material impact on future results if, and when, such losses emerge. 39 The COVID-19 virus may continue to impact our financial results and may also continue to affect our business, liquidity and financial condition.
As a result, future losses on loans that are not currently in default may have a material impact on future results if, and when, such losses emerge. The occurrence of natural or man-made disasters or pandemics could adversely affect our business, financial condition and operating results.
Falling home prices may also result in an increase in our default losses as borrowers' equity in their homes declines and thus decreases our future revenues and returns.
Falling housing demand may result in fewer mortgage originations and a lower price per transaction, reducing the overall size of the MI market. Falling home prices may also result in an increase in our default losses as borrowers' equity in their homes declines and thus decreases our future revenues and returns.
If we are unable to continue to attract and retain the most significant mortgage originators as customers, our ability to achieve our business goals could be negatively impacted.
The loss of business in general or the specific loss of more profitable business could have a material adverse effect on our financial position and operating results. If we are unable to continue to attract and retain the most significant mortgage originators as customers, our ability to achieve our business goals could be negatively impacted.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease approximately 36,983 square feet of office space in Emeryville, California pursuant to an office facility lease that we initially entered into in 2012 (as amended, the Lease). The term of the Lease extends through March 2030. 53
Biggest changeItem 2. Properties We lease approximately 36,983 square feet of office space in Emeryville, California pursuant to an office facility lease that we initially entered into in 2012 (as amended, the Lease). The term of the Lease extends through March 2030. 50

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 54 PART II
Biggest changeMine Safety Disclosures Not applicable. 51 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor information on our ability to pay dividends, see Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources " and Item 8, " Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 16, Regulatory Information - Dividend Restrictions.
Biggest changeFor information on our ability to pay dividends, see Item 7, “ Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” and Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 17, Regulatory Information - Dividend Restrictions.” Issuer Purchases of Equity Securities The following table provides information about purchases of NMI Holdings, Inc. common stock by us during the three months ended December 31, 2024.
On July 31, 2023, our Board of Directors approved an extension of the $125 million repurchase program through December 31, 2025. The Board also approved a new $200 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2025.
On July 31, 2023, our Board of Directors approved an extension of the $125 million repurchase program through December 31, 2025, and also approved a $200 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2025.
As of December 31, 2023, no repurchase authority remained available under the February 2022 share repurchase program and $176.9 million repurchase authority remained under the July 2023 share repurchase program.
As of December 31, 2024, no repurchase authority remained available under the February 2022 share repurchase program and $80.1 million repurchase authority remained under the July 2023 share repurchase program.
See Item 8, " Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 15, Common Stock, " for additional information. 55 Common Stock Performance Graph The following graph compares the cumulative total stockholder return on our Class A common stock from December 31, 2018 until December 31, 2023, with the cumulative total stockholder return on the Russell 2000 Index, S&P Small Cap 600 Index and an index of selected mortgage insurance companies (Peer Index).
See Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 16, Common Stock,” and “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 18, Subsequent Events,” for additional information. 52 Common Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock from December 31, 2019 until December 31, 2024, with the cumulative total stockholder return on the Russell 2000 Index, S&P Small Cap 600 Index and an index of selected mortgage insurance companies (Peer Index).
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq stock exchange under the symbol "NMIH." On February 9, 2024, there were 80,879,843 shares of our Class A common stock outstanding and approximately twelve holders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq stock exchange under the symbol “NMIH.” On February 10, 2025, there were 78,452,097 shares of our common stock outstanding and approximately ten holders of record.
There are no shares of our Class B common stock outstanding. The closing price of our common stock on Nasdaq on February 9, 2024 was $30.19. No dividends on our common stock have previously been declared or paid, and we may not declare or pay dividends in the future.
The closing price of our common stock on Nasdaq on February 10, 2025 was $36.48. No dividends on our common stock have previously been declared or paid, and we may not declare or pay dividends in the future.
(In Thousands, except for per share data) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Plans or Program (1) Period: 10/1/2023 to 10/31/2023 549,758 $ 27.11 549,758 $ 193,582 11/1/2023 to 11/30/2023 321,094 27.80 321,094 184,655 12/1/2023 to 12/31/2023 271,998 28.36 271,998 176,940 Total 1,142,850 $ 27.60 1,142,850 (1) On February 10, 2022, our Board of Directors approved a $125 million share repurchase program effective through December 31, 2023, excluding associated costs and applicable taxes.
($ In Thousands, except for per share data) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Plans or Program (1) Period: 10/1/2024 to 10/31/2024 209,301 $ 40.36 209,301 $ 99,609 11/1/2024 to 11/30/2024 210,716 38.03 210,716 91,596 12/1/2024 to 12/31/2024 301,521 38.06 301,521 80,120 Total 721,538 721,538 (1) On February 10, 2022, our Board of Directors approved a $125 million share repurchase program effective through December 31, 2023, excluding associated costs and applicable taxes.
Information contained or referenced in the stock performance graph below is being furnished with this report and will not be deemed "filed" for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 NMI Holdings, Inc. $ 100 $ 186 $ 127 $ 122 $ 117 $ 166 Russell 2000 Index 100 126 151 173 138 161 S&P Small Cap 600 100 123 137 173 145 169 Peer Index (ESNT, MTG, RDN) 100 154 132 140 123 171 Item 6. [Reserved] 56
Information contained or referenced in the stock performance graph below is being furnished with this report and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 NMI Holdings, Inc. $ 100 $ 68 $ 66 $ 63 $ 89 $ 111 Russell 2000 Index 100 120 138 110 128 143 S&P Small Cap 600 100 111 141 118 137 149 Peer Index (ESNT, MTG, RDN) 100 86 91 80 112 120 Item 6. [Reserved] 53
Removed
" Issuer Purchases of Equity Securities The following table provides information about purchases of NMI Holdings, Inc. common stock by us during the three months ended December 31, 2023.
Added
On February 5, 2025, our Board of Directors authorized a new $250 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2027 and an extension of our existing share repurchase programs through December 31, 2027 to align its remaining tenor with that of the new $250 million program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe impact of the transition from LIBOR to SOFR did not have a material impact on our operations or financial results. 73 Consolidated Results of Operations Consolidated statements of operations For the years ended December 31, 2023 2022 2021 Revenues ($ In Thousands, except for per share data) Net premiums earned $ 510,768 $ 475,266 $ 444,294 Net investment income 67,512 46,406 38,072 Net realized investment (losses) gains (33) 481 729 Other revenues 756 1,192 1,977 Total revenues 579,003 523,345 485,072 Expenses Insurance claims and claim expenses (benefits) 22,618 (3,594) 12,305 Underwriting and operating expenses 110,699 117,490 142,303 Service expenses 771 1,094 2,509 Interest expense 32,212 32,163 31,796 Gain from change in fair value of warrant liability — (1,113) (566) Total expenses 166,300 146,040 188,347 Income before income taxes 412,703 377,305 296,725 Income tax expense 90,593 84,403 65,595 Net income $ 322,110 $ 292,902 $ 231,130 Earnings per share - Basic $ 3.91 $ 3.45 $ 2.70 Earnings per share - Diluted $ 3.84 $ 3.39 $ 2.65 Loss ratio (1) 4.4 % (0.8) % 2.8 % Expense ratio (2) 21.7 % 24.7 % 32.0 % Combined ratio (3) 26.1 % 24.0 % 34.8 % Non-GAAP financial measures (4) 2023 2022 2021 ($ In Thousands, except for per share data) Adjusted income before tax $ 412,736 $ 375,916 $ 303,238 Adjusted net income 322,136 291,571 236,837 Adjusted diluted EPS 3.84 3.39 2.73 (1) Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) by net premiums earned.
Biggest changeFor further information, see Part I, Item 1C, “ Cybersecurity. ” 69 Consolidated Results of Operations Consolidated statements of operations For the years ended December 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Revenues ($ In Thousands, except for per share data) Net premiums earned $ 564,688 $ 510,768 $ 475,266 $ 53,920 11 % $ 35,502 7 % Net investment income 85,316 67,512 46,406 17,804 26 21,106 45 Net realized investment gains (losses) 23 (33) 481 56 (170) (514) (107) Other revenues 944 756 1,192 188 25 (436) (37) Total revenues 650,971 579,003 523,345 71,968 12 55,658 11 Expenses Insurance claims and claim expenses (benefits) 31,544 22,618 (3,594) 8,926 39 26,212 (729) Underwriting and operating expenses 118,397 110,699 117,490 7,698 7 (6,791) (6) Service expenses 723 771 1,094 (48) (6) (323) (30) Interest expense 36,896 32,212 32,163 4,684 15 49 — Gain from change in fair value of warrant liability — — (1,113) — NM (4) 1,113 NM (4) Total expenses 187,560 166,300 146,040 21,260 13 20,260 14 Income before income taxes 463,411 412,703 377,305 50,708 12 35,398 9 Income tax expense 103,305 90,593 84,403 12,712 14 6,190 7 Net income $ 360,106 $ 322,110 $ 292,902 $ 37,996 12 % $ 29,208 10 % Earnings per share - Basic $ 4.51 $ 3.91 $ 3.45 $ 0.60 15 % $ 0.46 13 % Earnings per share - Diluted $ 4.43 $ 3.84 $ 3.39 $ 0.59 15 % $ 0.45 13 % Loss ratio (1) 5.6 % 4.4 % (0.8) % Expense ratio (2) 21.0 % 21.7 % 24.7 % Combined ratio (3) 26.6 % 26.1 % 24.0 % For the years ended December 31, $ Change % Change $ Change % Change Non-GAAP financial measures (5) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 ($ In Thousands, except for per share data) Adjusted income before tax $ 470,354 $ 412,736 $ 375,916 $ 57,618 14 % $ 36,820 10 % Adjusted net income 365,591 322,136 291,571 43,455 13 30,565 10 Adjusted diluted EPS 4.50 3.84 3.39 0.66 17 0.45 13 (1) Loss ratio is calculated by dividing insurance claims and claim expenses (benefits) by net premiums earned.
(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.
(2) Approximately 1% of the production covered by the 2021-1 ILN Transaction has coverage reporting dates between July 1, 2019 and September 30, 2020. (3) Approximately 2% of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021.
If a sale is intended or likely to be required, we write down the amortized cost basis of the security to fair value and recognize the full amount of the impairment through the consolidated statements of operations and comprehensive income as a "Realized Investment Loss." For securities in an unrealized loss position where a sale is not intended or likely to be required, we further assess if the decline in fair value below amortized cost is driven by a credit related impairment, considering several items including, but not limited to: • the severity of the decline in fair value; • the financial condition of the issuer; • the failure of the issuer to make scheduled interest or principal payments; • recent rating downgrades of the applicable security or issuer by one or more nationally recognized statistical ratings organization; and • other adverse conditions related to or impacting the security or issuer.
If a sale is intended or likely to be required, we write down the amortized cost basis of the security to fair value and recognize the full amount of the impairment through the consolidated statements of operations and comprehensive income as a “ Realized Investment Loss.” For securities in an unrealized loss position where a sale is not intended or likely to be required, we further assess if the decline in fair value below amortized cost is driven by a credit related impairment, considering several items including, but not limited to: • the severity of the decline in fair value; • the financial condition of the issuer; • the failure of the issuer to make scheduled interest or principal payments; • recent rating downgrades of the applicable security or issuer by one or more nationally recognized statistical ratings organization; and • other adverse conditions related to or impacting the security or issuer.
We have not yet ceded reserves under any of the ILN Transactions or XOL Transactions as incurred claims and claim expenses on each respective reference pool remain within our retained coverage layer of each transaction. Our reserve setting process considers the beneficial impact of forbearance, foreclosure moratorium and other assistance programs that may be made available to certain defaulted borrowers.
We have not yet ceded reserves under any of the ILN Transactions or XOL Transactions as incurred claims and claim expenses on each respective reference pool remain within our retained coverage layer for each transaction. Our reserve setting process considers the beneficial impact of forbearance, foreclosure moratorium and other assistance programs that may be made available to certain defaulted borrowers.
NMIC's principal liquidity demands include funds for the payment of (i) reimbursable holding company expenses, (ii) premiums ceded under our reinsurance transactions (iii) claims payments, and (iv) taxes as due or otherwise deferred through the purchase of tax and loss bonds. NMIC's cash inflow is generally significantly in excess of its cash outflow in any given period.
NMIC's principal liquidity demands include funds for the payment of (i) reimbursable holding company expenses, (ii) premiums ceded under our reinsurance transactions (iii) claims payments, and (iv) taxes as due or otherwise 77 deferred through the purchase of tax and loss bonds. NMIC’s cash inflow is generally significantly in excess of its cash outflow in any given period.
(4) Excludes a $0.7 million termination fee for the year ended December 31, 2023 incurred in connection with the amendment of the 2020 QSR Transaction. The “claims incurred” section of the table above shows claims and claim expenses (benefits) incurred on defaults occurring in current and prior years, including IBNR reserves and is presented net of reinsurance.
(4) Excludes a $0.7 million termination fee for the year ended December 31, 2023 incurred in connection with the amendment of the 2020 QSR Transaction. 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.
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 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 58 expenses on covered policies, a 20% ceding commission, and a profit commission of up to 62% that varies directly and inversely with ceded claims.
The actual claims we incur as our portfolio matures are difficult to predict and depend on the specific characteristics of our current in-force book (including the credit score and DTI ratio of the borrower, the LTV ratio of the mortgage and geographic concentrations, among others), as well as the risk profile of new business we write in the future.
The actual claims we incur as our portfolio matures are difficult to predict and depend on the specific characteristics of our current in-force book (including the credit score and DTI ratio of the borrower, the LTV ratio of the mortgage and geographic 65 concentrations, among others), as well as the risk profile of new business we write in the future.
Re One has no risk in force remaining and no longer reports a RTC ratio. 81 NMIC's principal sources of liquidity include (i) premium receipts on its insured portfolio and new business production, (ii) interest income on its investment portfolio and principal repayments on maturities therein, and (iii) existing cash and cash equivalent holdings.
Re One has no risk in force remaining and no longer reports a RTC ratio. NMIC’s principal sources of liquidity include (i) premium receipts on its insured portfolio and new business production, (ii) interest income on its investment portfolio and principal repayments on maturities therein, and (iii) existing cash and cash equivalent holdings.
See Item 8, " Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 6, Reinsurance ," for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year.
See Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 6, Reinsurance ” for additional information. (2) Related to insured loans with their most recent defaults occurring in the current year.
Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods. Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding.
Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods. 72 Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding.
This pattern generally occurs because relatively few of the claims that a book will ultimately experience typically occur in the first few years following origination, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments), and by increasing losses. 64 The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.
This pattern generally occurs because relatively few of the claims that a book will ultimately experience typically occur in the first few years following origination, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments), and by increasing losses. 61 The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.
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; 58 • 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.
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; 55 • 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.
Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred. 76 Adjusted net income is defined as GAAP net income, excluding the after-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.
Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of net realized gains or losses from our investment portfolio, the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.
Under the terms of the 2016 QSR Transaction, NMIC cedes premiums written related to 25% 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.
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.
NMIH's principal liquidity demands include funds for (i) payment of certain corporate expenses; (ii) payment of certain reimbursable expenses of its insurance subsidiaries; (iii) payment of the interest related to the Notes and 2021 Revolving Credit Facility; (iv) tax payments to the Internal Revenue Service; (v) capital support for its subsidiaries; (vi) repurchase of its common stock; and (vii) payment of dividends, if any, on its common stock.
NMIH's principal liquidity demands include funds for (i) payment of certain corporate expenses; (ii) payment of certain reimbursable expenses of its insurance subsidiaries; (iii) payment of the interest related to the 2024 Notes and 2024 Revolving Credit Facility; (iv) tax payments to the Internal Revenue Service; (v) capital support for its subsidiaries; (vi) repurchase of its common stock; and (vii) payment of dividends, if any, on its common stock.
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 December 31, 2023 were non-refundable under most cancellation scenarios. If non-refundable single premium policies are canceled, we immediately recognize the remaining unearned premium balances as earned premium revenue.
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 December 31, 2024 were non-refundable under most cancellation scenarios. If non-refundable single premium policies are canceled, we immediately recognize the remaining unearned premium balances as earned premium revenue.
Rather, the unrealized losses on securities held as of December 31, 2023 were primarily driven by fluctuations in interest rates, and to a lesser extent, movements in credit spreads following the purchase of those securities. Taxes We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 21%.
Rather, the unrealized losses on securities held as of December 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. Taxes We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 21%.
Investments We have designated our investment portfolio as available-for-sale and report our invested assets at fair value. Unrealized gains and losses in the portfolio, net of related tax expense or benefit, are recognized as a component of accumulated other comprehensive income (AOCI) in shareholders' equity.
Investments - Credit losses and Other Impairments We have designated our investment portfolio as available-for-sale and report our invested assets at fair value. Unrealized gains and losses in the portfolio, net of related tax expense or benefit, are recognized as a component of accumulated other comprehensive income (AOCI) in shareholders' equity.
The credit agreement for 2021 Revolving Credit Facility also prohibits, restricts or limits, among other things, NMIH's and its subsidiaries' ability to (i) 80 incur additional indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions, (iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate and (vii) enter into transactions with affiliates, in each case subject to certain limitations, exceptions and qualifications as set forth in the credit agreement for 2021 Revolving Credit Facility.
The credit agreement for 2024 Revolving Credit Facility also prohibits, restricts or limits, among other things, NMIH's and its subsidiaries' ability to (i) incur additional indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions, (iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate and (vii) enter into transactions with affiliates, in each case subject to certain limitations, exceptions and qualifications as set forth in the credit agreement for 2024 Revolving Credit Facility.
We certified to the GSEs by April 15, 2023 that NMIC was in full compliance with the PMIERs as of December 31, 2022. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of a failure to meet one or more of the PMIERs requirements.
We certified to the GSEs by April 15, 2024 that NMIC was in full compliance with the PMIERs as of December 31, 2023. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of a failure to meet one or more of the PMIERs requirements.
(2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned. (3) Combined ratio may not foot due to rounding. (4) See “ Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures, ” below.
(2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned. (3) Combined ratio may not foot due to rounding. (4) Not meaningful (5) See “ Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures, ” below.
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 December 31, 2023 are not indicative of the ultimate collectability of the current amortized cost of the securities.
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 December 31, 2024 are not indicative of the ultimate collectability of the current amortized cost of the securities.
Our ability to utilize our remaining federal net operating loss carryforward is restricted by Section 382 of the Internal Revenue Code (IRC), which imposes annual limitations if there is an "ownership change." As a result of the acquisition of our insurance subsidiaries in 2012, $7.3 million of federal net operating losses were subject to annual limitations of $0.8 million through 2016, $0.5 million in 2017 and $0.3 million, thereafter, through 2028.
Our ability to utilize our remaining federal net operating loss carryforward is restricted by Section 382 of the Internal Revenue Code (IRC), which imposes annual limitations if there is an “ownership change.” As a result of the acquisition of our insurance subsidiaries in 2012, $7.3 million of federal net operating losses were subject to annual limitations of $0.8 million through 2016, $0.5 million in 2017 and $0.3 million, thereafter, through 2028.
If three or more ratings are available, we assign the middle rating for classification purposes, otherwise we assign the lowest rating.
If three or more 78 ratings are available, we assign the middle rating for classification purposes, otherwise we assign the lowest rating.
The authorization provides NMIH the flexibility, based on market and business conditions, stock price and other factors, to repurchase stock from time to time through open market repurchases, privately negotiated transactions, or other means, including pursuant to Rule 10b5-1 trading plans.
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 repurchases, privately negotiated transactions, or other means, including pursuant to Rule 10b5-1 trading plans.
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 December 31, 2023.
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 December 31, 2024.
We continue to evaluate the realizability of our state net deferred tax asset position, and our examination of results through December 31, 2023 and review of future expectations support the continued application of a valuation allowance against such state net deferred tax assets.
We continue to evaluate the realizability of our state net deferred tax asset position, and our examination of results through December 31, 2024 and review of future expectations support the continued application of a valuation allowance against such state net deferred tax assets.
Macroeconomic factors, including resurgent 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.
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.
To the extent we determine that a security impairment is credit-related, an impairment loss is recognized through the statement of operations as a provision for credit loss expense, and presented as a "Realized Investment Loss." We recognize an allowance for credit losses for the difference between the amortized cost and present value of future expected cash flows, limited by the amount the fair value of the security is below its amortized cost.
To the extent we determine that a security impairment is credit-related, an impairment loss is recognized through the statement of operations as a provision for credit loss expense, and presented as a “Realized Investment Loss.” We recognize an allowance for credit losses for the difference between the amortized cost and present value of future expected cash flows, limited by the amount the fair value of the security is below its amortized cost.
Investment Securities - Allowance for credit losses We did not recognize an allowance for credit loss for any security in the investment portfolio as of December 31, 2023 or 2022, and we did not record any provision for credit loss for investment securities during the years ended December 31, 2023 or 2022.
Investment Securities - Allowance for credit losses We did not recognize an allowance for credit loss for any security in the investment portfolio as of December 31, 2024 or 2023, and we did not record any provision for credit loss for investment securities during the years ended December 31, 2024 or 2023.
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. 57 Conditions and Trends Affecting Our Business Macroeconomic Developments Macroeconomic factors, including resurgent 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.
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. 54 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.
Among such agreements, the Wisconsin OCI has approved the allocation of interest expense on the Notes and the 2021 Revolving Credit Facility to NMIC to the extent proceeds from such offering and facility are distributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.
Among such agreements, the Wisconsin OCI has approved the allocation of interest expense on the 2024 Notes and 2024 Revolving Credit Facility to NMIC, to the extent proceeds from such offering and facility are contributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.
Subsequent changes (favorable and unfavorable) in credit losses are recognized through the statement of operations as a provision for or a reversal of credit loss expense, and presented as a "Realized Investment Gain or Loss." The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes.
Subsequent changes (favorable and unfavorable) in credit losses are recognized through the statement of operations as a provision for or a reversal of credit loss expense, and presented as a “Realized Investment Gain or Loss.” The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes.
We evaluated the securities in an unrealized loss position as of December 31, 2023, assessing their credit ratings as well as any adverse conditions specifically related to the security.
We evaluated the securities in an unrealized loss position as of December 31, 2024, assessing their credit ratings as well as any adverse conditions specifically related to the security.
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.
Borrowings under the 2024 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations.
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.
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.
Traditional Reinsurance NMIC is party to five 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, and the 2023-2 XOL Transaction, effective July 1, 2023 – which we refer to collectively as the XOL Transactions.
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.
In addition, investors should review the " Cautionary Note Regarding Forward-Looking Statements " above. 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.
In addition, investors should review the “Cautionary Note Regarding Forward-Looking Statements” above. 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.
See Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 6, Reinsurance ” for further discussion of these third-party reinsurance arrangements. Portfolio Data The following table presents primary and pool IIF and NIW as of the dates and for the periods indicated.
See Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 6, Reinsurance ” for further discussion of these third-party reinsurance arrangements. 59 Portfolio Data The following table presents NIW and IIF as of the dates and for the periods indicated.
We consider an activation to be the point at which we have signed a Master Policy, established IT connectivity and generated a first application or first dollar of NIW from a customer. During the year ended December 31, 2023, we activated 70 lenders, compared to 120 and 122 for the years ended December 31, 2022 and 2021, respectively.
We consider an activation to be the point at which we have signed a Master Policy, established IT connectivity and generated a first application or first dollar of NIW from a customer. During the year ended December 31, 2024, we activated 118 lenders, compared to 70 and 120 for the years ended December 31, 2023 and 2022, respectively.
Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income and adjusted diluted EPS enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors.
(2) Not meaningful. Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income and adjusted diluted EPS enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors.
We were in compliance with all covenants at December 31, 2023. NMIC and Re One are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate and the GSEs.
We were in compliance with all covenants at December 31, 2024. NMIC and Re One are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which 76 they are authorized to operate and by the GSEs.
A summary of the accounting policies that management believes are critical to the preparation of our consolidated financial statements is set forth below.
A summary of the accounting estimates that management believes are critical to the preparation of our consolidated financial statements is set forth below.
(2) Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment. We paid 199, 81 and 82 claims during the years ended December 31, 2023, 2022 and 2021, respectively.
(2) Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment. We paid 276, 199 and 81 claims during the years ended December 31, 2024, 2023 and 2022, respectively.
Our holding company files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries. Our effective income tax rate on pre-tax income was 22.0%, 22.4% and 22.1% for the years ended December 31, 2023, 2022 and 2021, respectively.
Our holding company files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries. Our effective income tax rate on pre-tax income was 22.3%, 22.0% and 22.4% for the years ended December 31, 2024, 2023 and 2022, respectively.
Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21% of the risk on eligible policies written from April 1, 2020 through December 31, 2020, in exchange for reimbursement of ceded claims and claim expenses on covered po licies, a 20% ceding commission, and a profit commission of up to 50% 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 po licies, a 36% ceding commission, and a profit commission of up to 50% that varies directly and inversely with ceded claims.
Quota Share Reinsurance NMIC is party to seven quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016, the 2018 QSR Transaction, effective January 1, 2018, the 2020 QSR Transaction, effective April 1, 2020 (and amended effective 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 and the 2023 QSR Transaction, effective January 1, 2023 – which we refer to collectively as the QSR Transactions.
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.
Cash used in investing activities for the years ended December 31, 2023, 2022 and 2021 reflects the purchase of fixed and short-term maturities with cash provided by operating activities, and the reinvestment of coupon payments, maturities and sale proceeds within our investment portfolio.
Cash used in investing activities for the years ended December 31, 2024, 2023 and 2022 reflects the purchase of fixed and short-term maturities with cash provided by operating activities, and the reinvestment of coupon payments, maturities and redemption proceeds within our investment portfolio.
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 December 31, 2023, we had issued master policies with 1,974 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.
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 December 31, 2024, we had issued master policies with 2,086 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.
The change in fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors that do not impact or reflect our current period operating results. Furthermore, all unexercised warrants expired in April 2022 and, as such, no change in fair value will be recognized in future reporting periods thereafter.
The change in fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors that do not impact or reflect our current period operating results. Furthermore, all unexercised warrants expired in April 2022 and, as such, no change in fair value has been recognized in any reporting periods thereafter.
The number of claims paid and our severity experience in future periods may be impacted by developing economic cycles and each could increase if house price declines serve to limit the alternative paths and incentives to cure delinquencies that are available to defaulted borrowers or erode the equity value of the homes collateralizing the mortgages we insure. 71 The following table provides detail on our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the dates indicated: Average reserve per default: As of December 31, 2023 2022 2021 (In Thousands) Case (1) $ 22.4 $ 20.8 $ 15.3 IBNR (1) (2) 1.9 1.6 1.3 Total $ 24.3 $ 22.4 $ 16.6 (1) Defined as the gross reserve per insured loan in default.
The number of claims paid and our severity experience in future periods may be impacted if developing economic cycles impose financial strain on borrowers, and each could increase if house price declines serve to limit the alternative paths and incentives to cure delinquencies that are available to defaulted borrowers or erode the equity value of the homes collateralizing the mortgages we insure. 67 The following table provides detail on our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the dates indicated: Average reserve per default: As of December 31, 2024 2023 2022 (In Thousands) Case (1) $ 21.0 $ 22.4 $ 20.8 IBNR (1) (2) 1.9 1.9 1.6 Total $ 22.9 $ 24.3 $ 22.4 (1) Defined as the gross reserve per insured loan in default.
During the year ended December 31, 2023, NMIC paid a $98.0 million ordinary course dividend to NMIH. NMIC has the capacity to pay aggregate ordinary dividends of $96.3 million to NMIH during the twelve-month period ending December 31, 2024.
During the year ended December 31, 2024, NMIC paid a $96.3 million ordinary course dividend to NMIH. NMIC has the capacity to pay aggregate ordinary dividends of $98.4 million to NMIH during the twelve-month period ending December 31, 2025.
(4) The 2023-2 XOL Transaction provides coverage for production generated between July 1, 2023 and December 31, 2023. The current reinsurance coverage and current first layer retained loss will decrease in future periods to the extent the PMIERs minimum required assets of the covered pool declines.
(4) The 2024 XOL Transaction provides coverage for production generated between January 1, 2024 and December 31, 2024. The current reinsurance coverage and current first layer retained loss will decrease in future periods to the extent the PMIERs minimum required assets of the covered pool declines.
Under the terms of the 2023 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written from January 1, 2023 to December 31, 2023, in exchange for reimbursement of ceded claims and 61 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 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.
NMIH's principal sources of net cash are dividends from its subsidiaries and investment income. NMIC has the capacity to pay aggregate ordinary dividends of $96.3 million to NMIH during the twelve-month period ending December 31, 2024. NMIH also has access to $250 million of undrawn revolving credit capacity under the 2021 Revolving Credit Facility.
NMIH's principal sources of net cash are dividends from its subsidiaries and investment income. NMIC has the capacity to pay aggregate ordinary dividends of $98.4 million to NMIH during the twelve-month period ending December 31, 2025. NMIH also has access to $250 million of undrawn revolving credit capacity under the 2024 Revolving Credit Facility.
At December 31, 2023, we had issued 1,974 Master Policies and established 1,503 active customer relationships, compared to 1,875 and 1,434, respectively, as of December 31, 2022 and 1,732 and 1,316, respectively, as of December 31, 2021. 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.
At December 31, 2024, we had issued 2,086 Master Policies and established 1,621 active customer relationships, compared to 1,974 and 1,503, respectively, as of December 31, 2023 and 1,875 and 1,434, respectively, as of December 31, 2022. 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.
NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware law provides that dividends are only payable out of a corporation's surplus or recent net profits (subject to certain limitations). As of December 31, 2023, NMIH had $113.7 million of cash and investments.
NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware law provides that dividends are only payable out of a corporation's surplus or recent net profits (subject to certain limitations). 75 As of December 31, 2024, NMIH had $132.2 million of cash and investments.
Our common stock trades on the Nasdaq under the symbol "NMIH." Our headquarters is located in Emeryville, California. As of December 31, 2023, we had 238 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.
Our common stock trades on the Nasdaq under the symbol “NMIH.” Our headquarters is located in Emeryville, California. As of December 31, 2024, we had 230 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.
Amounts are presented net of reinsurance and included $50.9 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the year ended December 31, 2023, $42.5 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the year ended December 31, 2022, and $6.3 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for the year ended December 31, 2021.
Amounts are presented net of reinsurance and included $54.1 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the year ended December 31, 2024, $50.9 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the year ended December 31, 2023, and $42.5 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the year ended December 31, 2022.
In addition, NMIC must remain at all times in compliance with all applicable "financial requirements" imposed pursuant to the PMIERs, subject to any allowed transition period or forbearance thereunder.
In addition, NMIC must remain at all times in compliance with all applicable “financial requirements” imposed pursuant to the PMIERs, subject to any allowed transition period or forbearance thereunder.
Our effective income tax rate on pre-tax income was 22.0%, 22.4% and 22.1% for the years ended December 31, 2023, 2022 and 2021, respectively.
Our effective income tax rate on pre-tax income was 22.3%, 22.0% and 22.4% for the years ended December 31, 2024, 2023 and 2022, respectively.
The decline in underwriting and operating expenses for the year ended December 31, 2023 primarily reflects a decrease in the amortization of deferred acquisition costs tied to the increased persistency of our IIF during the period, a full-year impact of ceding commissions received in connection with the 2022 Seasoned QSR Transaction (which was in effect for only a portion of the year ended December 31, 2022), and a step-down in technology costs related to our agreement with TCS, partially offset by an increase in employee compensation costs and miscellaneous IT expenses.
The decline in underwriting and operating expenses for the year ended December 31, 2023 primarily reflected a decrease in the amortization of deferred acquisition costs tied to the increased persistency of our IIF during the period and a full-year impact of ceding commissions received in connection with the 2022 Seasoned QSR Transaction (which was in effect for only a portion of the year ended December 31, 2022), partially offset by an increase in employee compensation costs.
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 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 originated between January 1, 2013 to December 31, 2016 and July 1, 2019 to March 31, 2020, 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.
Amounts are presented net of reinsurance and included $70.6 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the year ended December 31, 2023, $39.9 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the year ended December 31, 2022, and $18.1 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the year ended December 31, 2021.
Amounts are presented net of reinsurance and included $83.5 million attributed to net case reserves and $8.1 million attributed to net IBNR reserves for the year ended December 31, 2024, $70.6 million attributed to net case reserves and $6.3 million attributed to net IBNR reserves for the year ended December 31, 2023, and $39.9 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the year ended December 31, 2022.
The following tables present a breakdown of our investment portfolio and cash and cash equivalents by investment type and credit rating: Percentage of portfolio's fair value December 31, 2023 December 31, 2022 Corporate debt securities 61 % 60 % Municipal debt securities 25 23 U.S. treasury securities and obligations of U.S. government agencies 7 4 Cash, cash equivalents, and short-term investments 5 10 Asset-backed securities 2 3 Total 100 % 100 % 82 Investment portfolio ratings at fair value (1) December 31, 2023 December 31, 2022 AAA (2) 9 % 19 % AA (3) 34 25 A (3) 44 41 BBB (3) 13 15 BB (4) — — Total 100 % 100 % (1) Excluding certain operating cash accounts.
The following tables present a breakdown of our investment portfolio and cash and cash equivalents by investment type and credit rating: Percentage of portfolio's fair value December 31, 2024 December 31, 2023 Corporate debt securities 67 % 61 % Municipal debt securities 23 25 Cash, cash equivalents, and short-term investments 5 5 U.S. treasury securities and obligations of U.S. government agencies 4 7 Asset-backed securities 1 2 Total 100 % 100 % Investment portfolio ratings at fair value (1) December 31, 2024 December 31, 2023 AAA (2) 8 % 9 % AA (3) 35 34 A (3) 46 44 BBB (3) 11 13 BB (4) — — Total 100 % 100 % (1) Excluding certain operating cash accounts.
During the twelve-month period ended December 31, 2023, NMIC generated $333 million of cash flow from operations and received an additional $333 million of cash flow on the maturity, sale and redemption of securities held in its investment portfolio.
During the twelve-month period ended December 31, 2024, NMIC generated $366 million of cash flow from operations and received an additional $229 million of cash flow on the maturity and redemption of securities held in its investment portfolio.
The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions for the periods indicated: For the years ended December 31, 2023 2022 2021 ($ Values In Thousands) Number of claims paid (1) 199 81 82 Total amount paid for claims $ 5,192 $ 1,741 $ 2,554 Average amount paid per claim $ 26 $ 21 $ 31 Severity (2) 55 % 49 % 59 % (1) Count includes 70, 30 and 15 claims settled without payment during the years ended December 31, 2023, 2022 and 2021, respectively.
The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions for the periods indicated: For the years ended December 31, 2024 2023 2022 ($ Values In Thousands) Number of claims paid (1) 276 199 81 Total amount paid for claims $ 10,491 $ 5,192 $ 1,741 Average amount paid per claim $ 38 $ 26 $ 21 Severity (2) 61 % 55 % 49 % (1) Count includes 88, 70 and 30 claims settled without payment during the years ended December 31, 2024, 2023 and 2022, respectively.
Top 10 primary RIF by state As of December 31, 2023 2022 2021 California 10.2 % 10.6 % 10.4 % Texas 8.7 8.7 9.7 Florida 7.6 8.2 8.6 Georgia 4.1 4.1 3.8 Washington 4.0 3.9 3.7 Illinois 4.0 3.9 3.6 Virginia 3.9 4.1 4.7 Pennsylvania 3.4 3.4 3.3 Maryland 3.3 3.4 3.7 Colorado 3.2 3.5 3.8 Total 52.4 % 53.8 % 55.3 % Insurance Claims and Claim Expenses Insurance claims and claim expenses incurred represent estimated future payments on newly defaulted insured loans and any change in our claim estimates for previously existing defaults.
Top 10 primary RIF by state As of December 31, 2024 2023 2022 California 10.1 % 10.2 % 10.6 % Texas 8.6 8.7 8.7 Florida 7.3 7.6 8.2 Georgia 4.1 4.1 4.1 Washington 3.9 4.0 3.9 Illinois 3.8 4.0 3.9 Virginia 3.7 3.9 4.1 Pennsylvania 3.4 3.4 3.4 Ohio 3.3 3.0 2.7 North Carolina 3.2 3.0 3.0 Total 51.4 % 51.9 % 52.6 % 64 Insurance Claims and Claim Expenses Insurance claims and claim expenses incurred represent estimated future payments on newly defaulted insured loans and any change in our claim estimates for previously existing defaults.
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 new $200 million program.
Concurrent with the new authorization, our Board of Directors also approved an extension of our existing share repurchase programs through December 31, 2027 to align its remaining tenor with that of the new $250 million program.
At December 31, 2023, assuming all other estimates remain constant, a one percentage point increase/decrease in our average claim severity factor would cause approximately a +/- $0.9 million change in our reserve position, and a one percentage point increase/decrease in our average claim frequency factor cause approximately a +/- $3.4 million change in our reserve position.
At December 31, 2024, assuming all other estimates remain constant, a one percentage point increase/decrease in our average claim severity factor would cause approximately a +/- $1.4 million change in our reserve position, and a one percentage point increase/decrease in our average claim frequency factor cause approximately a +/- $4.8 million change in our reserve position.
Under Wisconsin law, NMIC and Re One may pay dividends up to specified levels (i.e., "ordinary" dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts, or "extraordinary" dividends, are subject to the Wisconsin OCI's prior approval.
Under Wisconsin insurance laws, NMIC and Re One may pay dividends up to specified levels (i.e., “ordinary” dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts, or “extraordinary” dividends, are subject to the Wisconsin OCI's prior approval.
Under NMIC's ILN and XOL Transactions, it generally receives credit for the PMIERs risk-based required asset amount on ceded RIF to the extent such requirement is within the subordinated coverage (excess of loss detachment threshold) afforded by the transaction. NMIC is also subject to state regulatory minimum capital requirements based on its RIF.
Under NMIC’s ILN and XOL Transactions, it generally receives credit for the PMIERs risk-based required asset amount on ceded RIF to the extent such requirement is within the subordinated coverage (excess of loss detachment threshold) afforded by the transaction.
At December 31, 2023, we had a federal net operating loss carryforward of $1.2 million, which expire in varying amounts in 2030 and 2031, and state net operating loss carryforwards of $136.5 million, which begin to expire in varying amounts in 2031.
At December 31, 2024, we had a federal net operating loss carryforward of $1.0 million, which expire in varying amounts in 2030 and 2031, and state net operating loss carryforwards of $135.2 million, which begin to expire in varying amounts in 2032.
As of December 31, 2023, the fair value of our investment portfolio was $2.4 billion and we held an additional $96.7 million of cash and cash equivalents. Pre-tax book yield on the investment portfolio for the year ended December 31, 2023 was 2.6%.
As of December 31, 2024, the fair value of our investment portfolio was $2.7 billion and we held an additional $54.3 million of cash and cash equivalents. Pre-tax book yield on the investment portfolio for the year ended December 31, 2024 was 3.0%.
(4) We held one security with a BB+ rating at December 31, 2023 and 2022, which is not identifiable in the table due to rounding. All of our investments are rated by one or more nationally recognized statistical rating organizations.
(2) Includes short-term securities rated A-1+. (3) Includes +/– ratings. (4) We held one security with a BB+ rating at December 31, 2024 and 2023, which is not identifiable in the table due to rounding. All of our investments are rated by one or more nationally recognized statistical rating organizations.
The increase in insurance claims and claim expenses for the year ended December 31, 2023 was primarily driven by the establishment of initial reserves on newly defaulted loans, as well as an increase in the average case reserve held against previously defaulted loans that aged in their delinquency status, partially offset by the release of a portion of the reserves we established for anticipated claims payments in prior periods in connection with cure activity and ongoing analysis of loss development trends.
Insurance claims and claim expenses increased during each successive year, primarily driven by an increase in the number of newly defaulted loans that emerged in each successive period and the establishment of initial reserves against such loans, as well as an increase in the average case reserve held against previously defaulted loans that aged in their delinquency status through the periods, and was partially offset by the release of a portion of the reserves we established for anticipated claims payments in prior periods in connection with cure activity and ongoing analysis of recent loss development trends.
The recognition of the net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results. • Other infrequent, unusual or non-operating items .
The recognition of net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results. • Change in fair value of warrant liability .
Non-performing loans are treated the same as performing loans under the RTC framework. As such, the PMIERs generally imposes a stricter financial requirement than the state RTC standard. As of December 31, 2023, NMIC had a RTC ratio of 11.4:1 with $29.0 billion of performing primary RIF, net of reinsurance, and $2.5 billion of total statutory capital, including contingency reserves.
Non-performing loans are treated the same as performing loans under the RTC framework. As such, the PMIERs generally imposes a stricter financial requirement than the state RTC standard. As of December 31, 2024, NMIC had a RTC ratio of 12.7:1 with $36.6 billion of performing primary RIF, net of reinsurance, and $2.9 billion of total statutory capital, including contingency reserves.
Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles. • Net realized investment gains and losses .
Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles. • Other infrequent, unusual or non-operating items .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe carrying value of our investment portfolio as of December 31, 2023 and 2022 was $2.4 billion and $2.1 billion, respectively, of which 100% was invested in fixed maturity securities. The primary market risk to our investment portfolio is interest rate risk associated with investments in fixed maturity securities.
Biggest changeThe carrying value of our investment portfolio as of December 31, 2024 and 2023 was $2.7 billion and $2.4 billion, respectively, of which 100% was invested in fixed maturity securities. The primary market risk to our investment portfolio is interest rate risk associated with investments in fixed maturity securities.
Excluding cash, our fixed income portfolio duration was 3.97 years, which means that an instantaneous parallel shift (movement up or down) in the yield curve of 100 basis points would result in a change of 3.97% in fair value of our fixed income portfolio.
Excluding cash, our fixed income portfolio duration was 3.57 years, which means that an instantaneous parallel shift (movement up or down) in the yield curve of 100 basis points would result in a change of 3.57% in fair value of our fixed income portfolio.
Although we expect the two rates to move in tandem, to the extent they do not, it could increase or decrease the risk premium payments that otherwise would be due. 87
Although we expect the two rates to move in tandem, to the extent they do not, it could increase or decrease the risk premium payments that otherwise would be due. 82
As of December 31, 2023, the duration of our fixed income portfolio, including cash and cash equivalents, was 3.96 years, which means that an instantaneous parallel shift (movement up or down) in the yield curve of 100 basis points would result in a change of 3.96% in fair value of our fixed income portfolio.
As of December 31, 2024, the duration of our fixed income portfolio, including cash and cash equivalents, was 3.57 years, which means that an instantaneous parallel shift (movement up or down) in the yield curve of 100 basis points would result in a change of 3.57% in fair value of our fixed income portfolio.
We are also subject to market risk related to the 2021 Revolving Credit Facility and the ILN Transactions.
We are also subject to market risk related to the 2024 Revolving Credit Facility and the ILN Transactions.
As discussed in Item 8, " Financial Statements - Notes to Consolidated Financial Statements - Note 5, Debt " the 2021 Revolving Credit Facility bears interest at a variable rate and, as a result, increases in market interest rates would generally result in increased interest expense on our outstanding drawn balance.
As discussed in Item 8, “ Financial Statements - Notes to Consolidated Financial Statements - Note 5, Debt” the 2024 Revolving Credit Facility bears interest at a variable rate and, as a result, increases in market interest rates would generally result in increased interest expense on our outstanding drawn balance.

Other NMIH 10-K year-over-year comparisons