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NMI Holdings, Inc. (NMIH)·Q4 2024 Earnings Summary

Executive Summary

  • Record total revenue of $166.5M and net premiums earned of $143.5M; diluted EPS was $1.07, down sequentially from $1.15 in Q3 as the loss ratio rose to 12.0% on seasonal credit normalization and storm-related defaults .
  • Primary insurance-in-force reached $210.2B (+7% YoY), with NIW of $11.9B; persistency remained strong at 84.6% .
  • Announced an additional $250M share repurchase authorization through Dec 31, 2027, adding to capital return capacity; Q4 buybacks were $27.9M at an average price of $38.72 .
  • PMIERs excess capital remained robust: available assets $3.108B vs net required assets $1.829B (excess ≈$1.28B); management reiterated confidence in balanced capital deployment (repurchases, reinsurance, debt) .
  • Estimates context: S&P Global consensus data for Q4 2024 could not be retrieved; beats/misses versus Street estimates are not assessed in this report due to data unavailability (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

  • Record Q4 total revenue ($166.5M) and record net premiums earned ($143.5M), supported by stable net premium yield and strong investment income ($22.7M) .
  • Insured portfolio growth and quality: IIF reached $210.2B; policies in force ~660K; default rate remained low at ~1.01% despite seasonal uptick .
  • Strategic capital actions: incremental $250M buyback authorization; management focused on balanced capital deployment to optimize EPS/ROE outcomes (“we do see a lot of value in the repurchase program… supports future EPS and ROE outcomes”) .

What Went Wrong

  • Loss ratio increased to 12.0% from 7.2% in Q3 and 6.2% in Q4 2023, reflecting seasonality, portfolio seasoning (notably 2022 book year), and ~$1.5M storm-related claims expense (Helene and Milton) .
  • Underwriting and operating expenses rose to $31.1M (expense ratio 21.7%) vs $29.2M in Q3 (20.3%), modestly pressuring operating efficiency sequentially .
  • Sequential NIW moderated to $11.9B from $12.2B in Q3, though still up 34% YoY; management highlighted normalization and persistent strength rather than acceleration .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$151.4 $162.1 $166.1 $166.5
Net Premiums Earned ($USD Millions)$132.9 $141.2 $143.3 $143.5
Net Investment Income ($USD Millions)$18.2 $20.7 $22.5 $22.7
Net Income ($USD Millions)$83.4 $92.1 $92.8 $86.2
Diluted EPS ($)$1.01 $1.13 $1.15 $1.07
Loss Ratio (%)6.2% 0.2% 7.2% 12.0%
Expense Ratio (%)22.4% 20.1% 20.3% 21.7%
Combined Ratio (%)28.5% 20.3% 27.5% 33.7%

Revenue components

MetricQ4 2023Q3 2024Q4 2024
Net Premiums Earned ($USD Millions)$132.9 $143.3 $143.5
Net Investment Income ($USD Millions)$18.2 $22.5 $22.7
Other Revenues ($USD Millions)$0.19 $0.29 $0.23

Key KPIs

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Primary IIF ($USD Billions)$197.0 $203.5 $207.5 $210.2
NIW ($USD Billions)$8.9 $12.5 $12.2 $11.9
Policies in Force (Count)629,690 645,276 654,374 659,567
Default Rate (%)0.81% 0.76% 0.87% 1.01%
Average Net Premium Yield (%)0.27% 0.28% 0.28% 0.27%
Annual Persistency (%)86.1% 85.4% 85.5% 84.6%
PMIERs Available Assets ($USD Millions)2,717.8 2,827.7 3,006.9 3,108.2
PMIERs Net Required Assets ($USD Millions)1,516.1 1,651.6 1,735.8 1,828.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Share Repurchase AuthorizationThrough Dec 31, 2027$80M remaining under existing program at Q4-end Additional $250M authorized; significant incremental capacity Raised
Expense Ratio (target, not formal guidance)OngoingLow-to-mid 20s articulated target Reiterated; Q4 at 21.7% Maintained
Dividend Policy2025+Focus on buybacks; dividend considered longer term No dividend; repurchases remain primary focus Maintained
Risk Transfer Coverage2025–2027Prior treaties in placeNew quota share and XOL agreements covering 2025–2027 forward flow Enhanced
Revenue/EPS GuidanceQ1’25/QFYNone providedNone providedN/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current PeriodTrend
MI demand/NIW volumeQ2: $12.5B NIW; Q3: $12.2B NIW Q4: $11.9B NIW; resilient demand despite rates Strong, modest sequential moderation
Credit performance & loss ratioQ2: 0.2% loss ratio; Q3: 7.2% Q4: 12.0% loss ratio; storm-related ~$1.5M claims; normalization of 2022 book Normalizing upward from benign levels
Expense efficiencyQ2: 20.1%; Q3: 20.3% Q4: 21.7%; CFO targets low-20s and explains ratio dynamics Slightly higher; target unchanged
PMIERs capital & excessQ2: Avail $2.828B/Req $1.652B; Q3: $3.007B/$1.736B Q4: $3.108B/$1.829B; excess ~$1.28B Rising available assets; strong excess
Pricing environmentBalanced/constructive industry backdrop (ongoing) Balanced and constructive; “we never say no… yes at a price appropriate to risk” Stable, disciplined
Regional watchInventory/HPA pressure in TX/FL flagged earlier in 2024 No fundamental shifts; continued monitoring of select markets Steady monitoring
Reinsurance mechanicsProfit commission/net yield dynamics (context building) Clarified that higher claims shift benefits from profit commission to claims reimbursement, neutral to bottom line Better understanding for investors

Management Commentary

  • “We delivered significant new business production, consistent growth in our insured portfolio and strong financial results… $166.5M total revenue… adjusted net income $86.1M… 15.6% adjusted ROE” — CEO Adam Pollitzer .
  • “We have a strong customer franchise… exceptionally high-quality book covered by a comprehensive set of risk transfer solutions… robust balance sheet… well-positioned to continue delivering differentiated growth, returns and value” — CEO .
  • “Default rate was 1% at year-end… claims expense $17.3M vs $10.3M in Q3… book value per share excluding AOCI $29.80 up 4% QoQ and 17% YoY” — CFO Aurora Swithenbank .
  • “There is bipartisan recognition of the unique and valuable role that the private mortgage insurance industry plays… looking forward to working with the new administration” — Executive Chairman Bradley Shuster .

Q&A Highlights

  • Capital returns cadence: Management will maintain consistent buyback pace but remain opportunistic; added authorization provides >$300M runway combining existing and new capacity .
  • Credit reserves and cures: Prior-year reserve release of $4.4M; total cures in Q4 would be $16.3M if bifurcated; cure rate ~29% vs 31% in Q3 .
  • Claims trend drivers: Seasonality and 2022 book seasoning; storm-related defaults added ~$1.5M claims expense; underlying new notices ex-storm fell ~4% QoQ vs +17% prior-year seasonal pattern .
  • Premium yield stability: Core yield stable at 34 bps; net yield varies with claims due to quota-share profit commission mechanics; bottom line impact neutral via claims reimbursements .
  • Dividend outlook: Focus on repurchases near-term given valuation and capital structure optimization; dividend may be considered as holding company dividend stream grows .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to data access limits. As a result, this report does not assess beats/misses versus Wall Street consensus. Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

  • Portfolio quality remains a differentiator: IIF rose to $210.2B (+7% YoY), with default rate ~1.01% despite seasonal pressure; underwriting discipline and reinsurance coverage underpin resilience .
  • Sequential margin headwind: Loss ratio normalization (12.0%) and higher OpEx (21.7% expense ratio) weighed on EPS ($1.07 vs $1.15 in Q3); monitor claims trajectory into Q1 as seasonal effects abate .
  • Capital returns are a near-term catalyst: New $250M authorization expands buyback capacity; Q4 repurchases of $27.9M highlight active capital deployment .
  • Strong capital position: PMIERs excess (~$1.28B) supports flexibility to fund growth and distributions while maintaining robust protection .
  • Pricing environment constructive: Management emphasizes balanced pricing and disciplined credit aperture; supports sustainable returns through cycle .
  • Reinsurance mechanics matter: Profit commission/claims reimbursement dynamics shift with credit, but are broadly neutral to bottom-line; helps interpret net premium yield variability .
  • Watch 2022 vintage seasoning and storm impacts: Expect continued normalization; underlying new notices ex-storm declined QoQ—a positive data signal .