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NMI Holdings, Inc. (NMIH)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered record total revenue of $173.8M and adjusted diluted EPS of $1.22, with NIW of $12.5B and primary IIF reaching a record $214.7B . Versus estimates, the company modestly beat both EPS (+$0.03) and revenue (+$0.8M).*
  • Operating efficiency improved with a record-low expense ratio of 19.8%, though the loss ratio rose to 9.0% (from 3.0% in Q1) as claims normalized and current-year default activity was partially offset by prior-year releases .
  • Management reiterated disciplined capital return, indicating an ongoing buyback cadence around ~$25M per quarter and $281M of remaining authorization, alongside strong PMIERs excess capital ($1.3B) .
  • Embedded positives: robust credit quality, strong persistency (84.1%), rising core yield (34.2 bps), and fully-placed quota share and XOL reinsurance for 2025–2026 with partial 2027, positioning the firm to navigate macro differences across geographies .
  • Likely stock catalysts: sustained top-line strength, record operating leverage, buyback consistency, and confirmation of reinsurance coverage; offset by higher loss ratio and regional housing normalization commentary .

What Went Well and What Went Wrong

What Went Well

  • Record total revenue ($173.8M), with net investment income rising to $24.9M and net premiums earned holding steady; expense ratio reached a record low 19.8%, highlighting operating leverage . “Our expense ratio was a record low, 19.8%...highlighting the significant operating leverage embedded in our business” — CFO Aurora Swithenbank .
  • Strong production and portfolio growth: NIW $12.5B, IIF $214.7B (+2% QoQ, +5% YoY), persistency 84.1% supporting embedded value gains . “We generated $12.5 billion of NIW volume and ended the period with a record $214.7 billion…We had a terrific quarter” — CEO Adam Pollitzer .
  • Capital strength and returns: PMIERs excess available assets ~$1.3B; repurchased $23.2M of stock in Q2 with $281M authorization remaining . “We’ve been fairly consistent… buying back roughly $25 million a quarter” — CEO Adam Pollitzer .

What Went Wrong

  • Loss ratio increased to 9.0% (vs. 3.0% in Q1 and 0.2% in Q2’24) as claims expense rose to $13.4M; claims paid severity reached 82% in Q2 .
  • GAAP diluted EPS declined QoQ to $1.21 (from $1.28 in Q1) and adjusted diluted EPS to $1.22 (from $1.28 in Q1) amid higher claims despite top-line strength .
  • Regional pressures persist (parts of FL/TX/Sun Belt/Mountain West) and macro normalization in home price appreciation, necessitating continued disciplined pricing and risk selection .

Financial Results

MetricQ4 2024Q1 2025Q2 2025Q2 2025 ConsensusVs. Est.
Total Revenue ($M)$166.5 $173.2 $173.8 $172.98*+$0.82M*
GAAP Diluted EPS ($)$1.07 $1.28 $1.21 ——
Adjusted Diluted EPS ($)$1.07 $1.28 $1.22 $1.19*+$0.03*
Net Premiums Earned ($M)$143.5 $149.4 $149.1 ——
Net Investment Income ($M)$22.7 $23.7 $24.9 ——
Loss Ratio (%)12.0% 3.0% 9.0% ——
Expense Ratio (%)21.7% 20.2% 19.8% ——
NIW ($B)$11.9 $9.2 $12.5 ——
Primary IIF ($B)$210.2 $211.3 $214.7 ——

Values retrieved from S&P Global for consensus estimates.*

Segment/Revenue Components

Component ($M)Q4 2024Q1 2025Q2 2025
Net Premiums Earned$143.5 $149.4 $149.1
Net Investment Income$22.7 $23.7 $24.9
Other Revenues$0.23 $0.17 $0.16
Total Revenue$166.5 $173.2 $173.8

Key KPIs

KPIQ4 2024Q1 2025Q2 2025
Annual Persistency (%)84.6 84.3 84.1
Default Rate (%)1.01 1.04 1.00
Loans in Default (count)6,642 6,859 6,709
ROE (Annualized, %)15.6 18.1 16.2
PMIERs Available Assets ($M)—$3,230.7 $3,244.5
PMIERs Required Assets ($M)—$1,867.4 $1,926.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Share RepurchasesOngoing (2025)~$25M/quarter implied cadence (Q1) Management suggests continuing ~$25M/quarter cadence Maintained
Authorization RemainingAs of Q2 2025$304M remaining (Q1) $281M remaining Decrease due to Q2 repurchases
Reinsurance Coverage (QSR/XOL)2025–2027Fully placed for 2025 and 2026; partial 2027 (as of prior disclosure cadence) Confirmed fully placed for 2025–2026, partial 2027; routine forward flow expected later in year Maintained
Tax Rate / OpEx / Margin2025No formal quantitative guidanceNo formal quantitative guidance—

Management did not provide explicit revenue/EPS margin guidance; commentary focused on disciplined operations, capital return pacing, and reinsurance program placement .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Capital ReturnQ1: $25.9M buyback; $304M capacity Q2: $23.2M buyback; $281M capacity; cadence ~$25M/quarter Consistent execution
Operating EfficiencyQ4: Expense ratio 21.7% ; Q1: 20.2% Q2: Record-low 19.8% expense ratio Improving
Credit PerformanceQ4: Loss ratio 12.0% ; Q1: 3.0% with seasonal cures Q2: Loss ratio 9.0%; defaults declined QoQ; catastrophe NODs curing Normalizing; mixed by region
Macro/HousingQ1: Cautious on tariffs; embed conservatism in pricing Q2: Market resilient; regional pressure in FL/TX/Sun Belt/Mountain West; expect HPA normalization Balanced, vigilant
Reinsurance StrategyQ1: Routine program; disciplined purchasing Q2: Fully placed for 2025–2026; partial 2027; opportunistic tweaks possible Stable coverage
Technology/OperationsQ1: Extended TCS agreement to 2032 Q2: Focus on Rate GPS, 950 MSAs for pricing mix management Continued discipline

Management Commentary

  • “Total revenue in the second quarter was a record $173.8 million, and we delivered adjusted net income of $96.5 million, or $1.22 per diluted share, and a 16.3% adjusted return on equity.” — CEO Adam Pollitzer .
  • “Our expense ratio was a record low, 19.8% in the quarter, highlighting the significant operating leverage embedded in our business.” — CFO Aurora Swithenbank .
  • “We’ve been fairly consistent thus far, buying back roughly $25 million a quarter…that’s really a good assumption for where we’ll be.” — CEO Adam Pollitzer on repurchases .
  • “Parts of Florida, Texas, the Sun Belt, and Mountain West remain under pressure…we actively price through Rate GPS and manage our mix across 950 different MSAs.” — CEO Adam Pollitzer .
  • “We’ve already secured last fall both quota share and XOL coverage for all of our 2025 production and all of our 2026 production and a partial placement of our 2027 production year.” — CFO Aurora Swithenbank .

Q&A Highlights

  • Capital return cadence: Management indicated ~$25M per quarter buybacks remain a good assumption, with flexibility to be opportunistic or slow based on risk, performance, and valuation .
  • Housing normalization: Expect national HPA to normalize and continued regional differences; company using Rate GPS to manage across 950 MSAs; constructive industry pricing observed .
  • Catastrophe-related defaults: Hurricane-related NODs declined from 625 in Q1 to 421 in Q2; these tend to cure at higher-than-normal rates; minimal wildfire exposure in Southern California .
  • Regulatory: Elimination of FHFA Equitable Housing Finance Plans not expected to impact MI footprint; MI tax deduction renewal benefits some itemizers but limited breadth given standard deduction usage .

Estimates Context

MetricQ2 2024Q1 2025Q2 2025
EPS Consensus ($)1.05*1.12*1.19*
EPS Actual ($)1.20 1.28 1.22
Revenue Consensus ($M)158.97*169.13*172.98*
Revenue Actual ($M)162.12 173.25 173.78
# EPS Estimates9*7*6*
# Revenue Estimates6*5*4*

Values retrieved from S&P Global.*

  • Q2 2025: EPS beat by $0.03 (actual $1.22 vs. $1.19 consensus); revenue beat by ~$$0.82M (actual $173.78M vs. $172.98M). Bolded beats in Executive Summary.*
  • EPS FY 2025 consensus: $4.90*; FY 2026: $5.08*. Revenue FY 2025 consensus: $706.3M*; FY 2026: $741.1M*. Values retrieved from S&P Global.*

Guidance Changes — Additional Details

Non-GAAP reconciliation: Adjusted net income ($96.5M) excludes $0.4M net realized investment losses; the after-tax adjustment was ~$0.08M, resulting in a small uplift vs GAAP ($96.2M) . No changes to tax rate guidance were provided; operational commentary continues to emphasize expense discipline and credit selection .

Key Takeaways for Investors

  • Operating leverage is a core differentiator: record-low 19.8% expense ratio supports earnings durability even as claims normalize .
  • Credit metrics are normalizing: higher loss ratio reflects current-year default activity; seasonal cures and catastrophe-related default cures remain supportive, with defaults declining QoQ .
  • Portfolio momentum remains strong: NIW rebounded to $12.5B; IIF climbed to $214.7B; persistency in the mid-80s sustains embedded value .
  • Capital return discipline: consistent buybacks with ~$25M/quarter cadence and robust PMIERs excess ($1.3B) give flexibility across cycles .
  • Reinsurance coverage secured: fully placed quota share and XOL for 2025–2026 and partial 2027, limiting earnings volatility from adverse credit scenarios .
  • Regional housing normalization: management is proactively pricing/mixing exposure via Rate GPS across 950 MSAs; constructive industry pricing persists .
  • Near-term trading setup: modest beats on EPS and revenue, record operating efficiency, and clear buyback cadence could be supportive; watch the trajectory of loss ratio and regional housing dynamics for potential sentiment swings.*

Appendix: Additional Press Releases in Q2 2025

  • Earnings date announcement (July 14, 2025) .
  • Workplace recognition (June 24, 2025): “Great Place To Work; Decade of Great” and Fortune Best Workplaces Bay Area ranking .