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NMI Holdings, Inc. (NMIH)·Q1 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $173.25M and diluted EPS $1.28, with ROE 18.1%; both top line and EPS beat consensus (EPS +14.4% vs $1.12*, revenue +2.4% vs $169.13M*) on stronger net premium yield and lower loss ratio .
  • Credit outperformed: loss ratio fell to 3.0% from 12.0% in Q4; claims expense declined to $4.5M from $17.3M, aided by normal seasonal cures and portfolio seasoning .
  • IIF rose to $211.3B (+1% QoQ; +6% YoY); NIW $9.22B (seasonally softer, -23% QoQ), persistency remained elevated at 84.3% supporting embedded value growth .
  • Capital strength and return: PMIERs excess ~$1.36B (available $3.23B vs req. $1.87B) and $304M buyback capacity remaining after repurchasing $25.9M in Q1; management reiterated cost discipline and extended TCS IT partnership on favorable terms (no material OpEx change expected) .

What Went Well and What Went Wrong

What Went Well

  • Operating leverage and pricing discipline: net premiums earned hit a record $149.37M (+4% QoQ), net yield rose to ~28.4 bps from 27.5 bps in Q4; management emphasized “standout operating performance… and record financial results” .
  • Credit normalization favorable in Q1: loss ratio dropped to 3.0% (vs 12.0% in Q4) with lower claims expense ($4.5M vs $17.3M Q4) as seasonal cures offset portfolio seasoning .
  • Balance sheet/capital: ROE 18.1%, book value/share ex-AOCI $30.85 (+4% QoQ), and PMIERs excess ~$1.36B support continued buybacks; CEO: “robust balance sheet supported by the significant earnings power of our platform” .

What Went Wrong

  • Production seasonality: NIW of $9.22B fell 23% QoQ (seasonal Q1 slowdown), though YoY broadly stable (-2%) .
  • Default inventory edged higher: loans in default increased to 6,859 from 6,642 in Q4 as seasoning progresses; avg mark-to-market LTV on defaults ~73%, implying less embedded equity than earlier vintages .
  • Tariff/macro uncertainty: management acknowledged headlines and potential macro headwinds, noting ongoing pricing/mix adjustments but no wholesale posture change .

Financial Results

Headline P&L and Ratios (USD Millions except per-share; periods oldest→newest)

MetricQ3 2024Q4 2024Q1 2025
Total Revenue$166.09 $166.50 $173.25
Net Premiums Earned$143.34 $143.52 $149.37
Net Investment Income$22.47 $22.72 $23.69
Diluted EPS$1.15 $1.07 $1.28
Loss Ratio7.2% 12.0% 3.0%
Expense Ratio20.3% 21.7% 20.2%
Combined Ratio27.5% 33.7% 23.2%
ROE (Annualized)17.5% 15.6% 18.1%

Q1 2025 vs S&P Global Consensus

MetricActual Q1 2025Consensus Q1 2025Surprise
Revenue$173.25M $169.13M*+2.4%
Diluted EPS$1.28 $1.12*+14.4%

Values marked with * retrieved from S&P Global.

Segment Breakdown

  • NMIH reports as a single mortgage insurance platform; no separate operating segments disclosed in the release/8-K .

KPIs and Balance Sheet (periods oldest→newest)

KPIQ3 2024Q4 2024Q1 2025
Insurance-in-Force (IIF)$207.54B $210.18B $211.31B
New Insurance Written (NIW)$12.22B $11.93B $9.22B
Annual Persistency85.5% 84.6% 84.3%
Default Rate0.87% 1.01% 1.04%
Book Value/Share ex-AOCI$28.71 $29.80 $30.85
Average Net Premium Yield0.28% 0.27% 0.28%
PMIERs Available Assets$3,006.9M $3,108.2M $3,230.7M
PMIERs Net Required$1,735.8M $1,828.8M $1,867.4M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue/EPS2025None providedNone provided—
OpEx/Expense Outlook2025 run-rateNot quantifiedTCS extension on “favorable terms” with expenses “roughly the same” as current run-rate; no notable change expected Maintained
Capital ReturnOngoing$80M remaining (as of Q4) plus new $250M authorization $304M remaining repurchase capacity as of Q1; repurchased $25.9M in Q1 Capacity increased vs pre-Q1

No formal quantitative revenue/EPS guidance was issued this quarter .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Credit normalization & vintagesSeasonality/seasoning lifted defaults; peak loss incurrence typically years 3–6; 2022/2023 vintages expected to have higher cumulative claims vs 2020–2021 due to less embedded equity Loss ratio fell to 3.0% as seasonal cures supported credit; defaults include FEMA storm-impacted NODs; avg default LTV ~73% Normalization continues, but Q1 credit outcome favorable
Pricing discipline & competitionIndustry pricing “balanced and constructive”; ongoing rate/mix tweaks by geography (e.g., FL/TX) Continue frequent but targeted pricing/mix updates; already embed conservatism for potential downturn Stable discipline
Reinsurance & profit commissionNew multi-year quota share/XOL with high profit commissions; noted net yield sensitivity to claims via profit commission mechanics Reinsurance programs remain comprehensive; profit commission vs claims reimbursement dynamic reiterated Structural tailwind; stable
Capital & PMIERsS&P upgrade; PMIERs excess ~$1.3B; buybacks ongoing PMIERs excess ~$1.36B; $304M repurchase capacity remaining Steady capacity for buybacks
Macro/tariffsWatching localized HPA/inventory dynamics; cautious but constructive Tariff/macro risk on radar; embedded conservatism; no wholesale stance change Cautious but unchanged
Technology/ops—TCS IT partnership extended to 2032; OpEx run-rate unchanged Efficiency/operational continuity

Management Commentary

  • CEO Adam Pollitzer: “We again delivered standout operating performance… and record financial results… an exceptionally high-quality book… and a robust balance sheet supported by the significant earnings power of our platform” .
  • CFO Aurora Swithenbank on credit: “Claims expense in the first quarter was $4.5M… credit performance… benefited from normal seasonal cure activity… balanced partially by the natural growth and seasoning of our portfolio” .
  • CEO on macro/pricing: “Headlines… around tariffs… factor into our thinking… we’re already embedding conservatism… we can make sure that we’re always showing up for our customers… it’s not a wholesale shift” .
  • CEO on IT cost outlook: “We’ve extended our long-term IT engagement with TCS… going forward, our expenses under the extended agreement will be roughly the same… nothing of note” .

Q&A Highlights

  • Credit reserves and storm NODs: Average reserve per new notice ~$13.5k, excluding hurricane-related NODs; ~$26M posted against new notices in Q1 .
  • Defaulted loan equity: Avg mark-to-market LTV on defaults ~73.2% (implies substantial borrower equity cushions) .
  • Net yield mechanics: When claims rise, profit commission declines but reinsurer reimbursements offset—bottom-line neutrality highlighted .
  • Buybacks: Repurchased $25.9M (718k shares) in Q1; $304M authorization remaining .
  • Expense outlook: TCS extension through 2032; OpEx run-rate roughly unchanged .

Estimates Context

  • Q1 2025 delivered beats: Revenue $173.25M vs $169.13M*; EPS $1.28 vs $1.12*—driven by higher net premiums, stronger investment income, and a sharply lower loss ratio .
  • Forward setup: With persistency elevated (84.3%) and IIF growing, Street models for mid-2025 may drift up modestly absent macro shocks; watch NIW seasonality and credit normalization trajectory .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality-led compounding: Elevated persistency and +6% YoY IIF growth underpin consistent NPE growth and embedded value compounding .
  • Credit normalization benign in Q1: Loss ratio reset to 3.0% from 12.0% in Q4, aided by seasonal cures and strong borrower equity; watch seasoning of 2022–2023 vintages .
  • Operating efficiency intact: Expense ratio improved to 20.2% (from 21.7%); TCS extension supports stable OpEx trajectory .
  • Capital optionality: PMIERs excess ~$1.36B and $304M buyback capacity provide continued support to EPS/ROE .
  • Trading setup: Beat-and-raise narrative anchored by revenue/EPS upside and credit improvement; near-term stock reactions likely tied to NIW cadence and macro/tariff headlines .
  • Watch items: Default inventory drift higher with seasoning, localized HPA/affordability pockets (e.g., FL/TX), and reinsurance profit commission sensitivity to claims .
  • Medium-term thesis: Through-the-cycle discipline, portfolio quality, and efficient risk transfer should sustain mid-teens+ ROE with ongoing capital returns .

Notes:

  • Core financials and KPIs sourced from Q1 2025 press release and 8-K, and Q4/Q3 prior-period materials .
  • Management commentary and detailed dynamics from Q1 2025 earnings call transcript .
  • Consensus figures marked with * are Values retrieved from S&P Global.