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NMI Holdings, Inc. Reports First Quarter 2022 Financial Results; Announces $290 million Excess of Loss Reinsurance Agreement
Source: Nasdaq GlobeNewswire / 04 May 2022 16:01:01 America/New_York
EMERYVILLE, Calif., May 04, 2022 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $67.7 million, or $0.77 per diluted share, for the first quarter ended March 31, 2022, which compares to $60.5 million, or $0.69 per diluted share, in the fourth quarter ended December 31, 2021 and $52.9 million, or $0.61 per diluted share, in the first quarter ended March 31, 2021. Adjusted net income for the quarter was $67.5 million, or $0.77 per diluted share, which compares to $63.5 million, or $0.73 per diluted share, in the fourth quarter ended December 31, 2021 and $53.4 million, or $0.62 per diluted share, in the first quarter ended March 31, 2021. The non-GAAP financial measures adjusted net income, adjusted diluted earnings per share and adjusted return on equity are presented in this release to enhance the comparability of financial results between periods. See "Use of Non-GAAP Financial Measures" and our reconciliation of such measures to their most comparable GAAP measures, below.
The company also announced that it has entered into a $290 million excess of loss reinsurance agreement with a high-quality panel of third-party reinsurers, covering an existing portfolio of mortgage insurance policies written primarily from October 1, 2021 through March 31, 2022. The agreement provides National MI with protection for aggregate losses on subject loans beginning at a 2.00% cumulative claim rate threshold and continuing up through a 6.75% aggregate detachment level. National MI expects to receive full PMIERs credit for the transaction, subject to GSE approval.
Adam Pollitzer, President and Chief Executive Officer of National MI, said, “We delivered strong results in the first quarter, with significant new business production and improving persistency driving growth in our high-quality insured portfolio, and favorable credit performance driving significant profitability and strong mid-teen returns. We also began to execute under our recently announced common stock repurchase program and saw continued success in the reinsurance market, securing incremental PMIERs funding and valuable risk protection with our excess of loss agreement. Looking forward, National MI is well positioned to lead with impact, innovation and success, and to continue building franchise value, embedded portfolio value and shareholder value.”
Selected first quarter 2022 highlights include:
- Primary insurance-in-force at quarter end was $158.9 billion, up 4% from $152.3 billion in the fourth quarter and 28% compared to $123.8 billion in the first quarter of 2021
- Net premiums earned were $116.5 million, up 2% from $113.9 million in the fourth quarter and 10% compared to $105.9 million in the first quarter of 2021
- Underwriting and operating expenses were $32.9 million, down 15% from $38.8 million in the fourth quarter and 3% compared to $34.1 million in the first quarter of 2021
- Insurance claims and claim expenses was a benefit of $0.6 million, compared to a benefit of $0.5 million in the fourth quarter and an expense of $5.0 million in the first quarter of 2021
- Shareholders’ equity was $1.5 billion at quarter end and book value per share was $17.84. Book value per share excluding the impact of net unrealized gains and losses in the investment portfolio was $18.97, up 4% compared to $18.23 per share in the fourth quarter and 18% compared to $16.02 per share in the first quarter of 2021
- Annualized return on equity for the quarter was 17.5% and annualized adjusted return on equity was 17.4%
- At quarter-end, total PMIERs available assets were $2.1 billion and net risk-based required assets were $1.3 billion
Quarter Ended Quarter Ended Quarter Ended Change(1) Change(1) 3/31/2022 12/31/2021 3/31/2021 Q/Q Y/Y INSURANCE METRICS ($billions) Primary Insurance-in-Force $ 158.9 $ 152.3 $ 123.8 4 % 28 % New Insurance Written - NIW Monthly premium 13.1 17.0 23.8 (23 ) % (45 ) % Single premium 1.1 1.4 2.6 (22 ) % (59 ) % Total(2) 14.2 18.3 26.4 (23 ) % (46 ) % FINANCIAL HIGHLIGHTS (Unaudited, $millions, except per share amounts) Net Premiums Earned 116.5 113.9 105.9 2 % 10 % Insurance Claims and Claim (Benefits) Expenses (0.6 ) (0.5 ) 5.0 24 % (112 ) % Underwriting and Operating Expenses 32.9 38.8 34.1 (15 ) % (3 ) % Net Income 67.7 60.5 52.9 12 % 28 % Adjusted Net Income 67.5 63.5 53.4 6 % 26 % Book Value per Share (excluding net unrealized gains and losses)(3) 18.97 18.23 16.02 4 % 18 % Loss Ratio (0.5 ) % (0.4 ) % 4.7 % Expense Ratio 28.3 % 34.1 % 32.2 % (1) Percentages may not be replicated based on the rounded figures presented in the table.
(2) Total may not foot due to rounding.
(3) Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.Conference Call and Webcast Details
The company will hold a conference call, which will be webcast live today, May 4, 2022, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The conference call can also be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 internationally, and using Conference ID: 6698448 or by referencing NMI Holdings, Inc.About NMI Holdings, Inc.
NMI Holdings, Inc. (NASDAQ: NMIH), is the parent company of National Mortgage Insurance Corporation (National MI), a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the U.S. Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: uncertainty relating to the coronavirus (“COVID-19”) pandemic and the measures taken by governmental authorities and other third parties to contain the spread of COVID-19, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and our business, operations and personnel; changes in the charters, business practices, policy or priorities of Fannie Mae and Freddie Mac (collectively, the GSEs), which may include decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement generally, or with first time homebuyers or on very high loan-to-value mortgages; or changes in the direction of housing policy objectives of the Federal Housing Finance Agency (“FHFA”), such as the FHFA's priority to increase the accessibility to and affordability of homeownership for low-and-moderate income borrowers and minority communities; our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (“PMIERs”) and other requirements imposed by the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia (“D.C.”) and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including other private mortgage insurers and government mortgage insurers such as the Federal Housing Administration, the U.S. Department of Agriculture's Rural Housing Service and the U.S. Department of Veterans Affairs, and potential market entry by new competitors or consolidation of existing competitors; developments in the world's financial, capital and credit markets and our access to such markets, including reinsurance; adoption of new or changes to existing laws, rules and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including the implementation of the final rules defining and/or concerning "Qualified Mortgage" and "Qualified Residential Mortgage"; U.S. federal tax reform and other potential changes in tax law and their impact on us and our operations; legislative or regulatory changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance industry in particular; potential legal and regulatory claims, investigations, actions, audits or inquiries that could result in adverse judgements, settlements, fines or other reliefs that could require significant expenditures or have other negative effects on our business; changes in general economic, market and political conditions and policies (including rising interest rates and inflation) and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance; our ability to successfully execute and implement our capital plans, including our ability to access the capital, credit and reinsurance markets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry; our ability to attract and retain a diverse customer base, including the largest mortgage originators; failure of risk management or pricing or investment strategies; decrease in the length of time our insurance policies are in force; emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience; potential adverse impacts arising from natural disasters, including, with respect to affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; the inability of our counter-parties, including third party reinsurers, to meet their obligations to us; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; effectiveness and security of our information technology systems and digital products and services, including the risks these systems, products or services may fail to operate as expected or planned, or expose us to cybersecurity or third-party risks; and ability to recruit, train and retain key personnel. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.
Use of Non-GAAP Financial Measures
We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors. These non-GAAP financial measures align with the way the company's business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.
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.
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. 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. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the periods that non-vested shares are anti-dilutive under GAAP.
Adjusted return on equity is calculated by dividing adjusted net income on an annualized basis by the average shareholders' equity for the period.
Adjusted expense ratio is defined as GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions, divided by net premiums earned.
Adjusted combined ratio is defined as the total of GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions and insurance claims and claims expenses, divided by net premiums earned.
Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on investments, divided by shares outstanding.
Although adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio, adjusted combined ratio and book value per share (excluding net unrealized gains and losses) exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.
(1) Change in fair value of warrant liability. Outstanding warrants at the end of each reporting period are revalued, and any change in fair value is reported in the statement of operations in the period in which the change occurred. 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. We believe trends in our operating performance can be more clearly identified by excluding fluctuations related to the change in fair value of our warrant liability.
(2) Capital markets transaction costs. 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.
(3) Net realized investment gains and losses. 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.
(4) Other infrequent, unusual or non-operating items. Items that are the result of unforeseen or uncommon events, and are not expected to recur with frequency in the future. Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include infrequent, unusual or non-operating adjustments related to severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced in September 2021 and the effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are infrequent or non-recurring in nature, and are not indicative of the performance of, or ongoing trends in, our primary operating activities or business.
(5) Net unrealized gains and losses on investments. The recognition of the net unrealized gains or losses on investment can vary significantly across periods and is influenced by factors such as interest rate movement, overall market and economic conditions, and tax and capital profiles. These valuation adjustments may not necessarily result in economic gains or losses and not reflective of ongoing operations. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these unrealized gains or losses.
Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417Consolidated statements of operations and comprehensive (loss) income (unaudited) For the three months ended March 31, 2022 2021 Revenues (In Thousands, except for per share data) Net premiums earned $ 116,495 $ 105,879 Net investment income 10,199 8,814 Net realized investment gains 408 — Other revenues 339 501 Total revenues 127,441 115,194 Expenses Insurance claims and claim (benefits) expenses (619 ) 4,962 Underwriting and operating expenses 32,935 34,065 Service expenses 430 591 Interest expense 8,041 7,915 (Gain) loss from change in fair value of warrant liability (93 ) 205 Total expenses 40,694 47,738 Income before income taxes 86,747 67,456 Income tax expense 19,067 14,565 Net income $ 67,680 $ 52,891 Earnings per share Basic $ 0.79 $ 0.62 Diluted $ 0.77 $ 0.61 Weighted average common shares outstanding Basic 85,953 85,317 Diluted 87,310 86,487 Loss ratio(1) (0.5 ) % 4.7 % Expense ratio(2) 28.3 % 32.2 % Combined ratio(3) 27.7 % 36.9 % Net income $ 67,680 $ 52,891 Other comprehensive loss, net of tax: Unrealized losses in accumulated other comprehensive income, net of tax benefit of $26,176 and $11,997 for the quarters ended March 31, 2022 and 2021, respectively (98,471 ) (45,133 ) Reclassification adjustment for realized gains included in net income, net of tax expense $86 for the quarter ended March 31, 2022 (323 ) — Other comprehensive loss, net of tax (98,794 ) (45,133 ) Comprehensive (loss) income $ (31,114 ) $ 7,758 (1) Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(3) Combined ratio may not foot due to rounding.Consolidated balance sheets (unaudited) March 31, 2022 December 31, 2021 Assets (In Thousands, except for share data) Fixed maturities, available-for-sale, at fair value (amortized cost of $2,111,869 and $2,078,773 as of March 31, 2022 and December 31, 2021, respectively) $ 1,993,972 $ 2,085,931 Cash and cash equivalents (including restricted cash of $3,057 and $3,165 as of March 31, 2022 and December 31, 2021, respectively) 130,906 76,646 Premiums receivable 60,526 60,358 Accrued investment income 12,421 11,900 Prepaid expenses 5,477 3,530 Deferred policy acquisition costs, net 59,727 59,584 Software and equipment, net 32,386 32,047 Intangible assets and goodwill 3,634 3,634 Prepaid reinsurance premiums 2,011 2,393 Reinsurance recoverable 20,080 20,320 Other assets 102,804 94,238 Total assets $ 2,423,944 $ 2,450,581 Liabilities Debt $ 394,969 $ 394,623 Unearned premiums 138,393 139,237 Accounts payable and accrued expenses 76,923 72,000 Reserve for insurance claims and claim expenses 102,372 103,551 Reinsurance funds withheld 5,343 5,601 Warrant liability, at fair value 1,416 2,363 Deferred tax liability, net 156,966 164,175 Other liabilities 12,520 3,245 Total liabilities 888,902 884,795 Shareholders' equity Common stock - class A shares, $0.01 par value; 86,274,184 shares issued and 86,038,840 shares outstanding as of March 31, 2022 and 85,792,849 shares issued and outstanding as of December 31, 2021 (250,000,000 shares authorized) 863 858 Additional paid-in capital 960,667 955,302 Treasury Stock, at cost, 235,344 and 0 common shares as of March 31, 2022 and December 31, 2021, respectively (5,000 ) — Accumulated other comprehensive (loss) income, net of tax (97,309 ) 1,485 Retained earnings 675,821 608,141 Total shareholders' equity 1,535,042 1,565,786 Total liabilities and shareholders' equity $ 2,423,944 $ 2,450,581 Non-GAAP Financial Measure Reconciliations (unaudited) For the three months ended 3/31/2022 12/31/2021 3/31/2021 As Reported (In Thousands, except for per share data) Revenues Net premiums earned $ 116,495 $ 113,933 $ 105,879 Net investment income 10,199 10,045 8,814 Net realized investment gains 408 714 — Other revenues 339 380 501 Total revenues 127,441 125,072 115,194 Expenses Insurance claims and claim (benefits) expenses (619 ) (500 ) 4,962 Underwriting and operating expenses 32,935 38,843 34,065 Service expenses 430 650 591 Interest expense 8,041 8,029 7,915 (Gain) loss from change in fair value of warrant liability (93 ) (112 ) 205 Total expenses 40,694 46,910 47,738 Income before income taxes 86,747 78,162 67,456 Income tax expense 19,067 17,639 14,565 Net income $ 67,680 $ 60,523 $ 52,891 Adjustments: Net realized investment gains (408 ) (714 ) — (Gain) loss from change in fair value of warrant liability (93 ) (112 ) 205 Capital markets transaction costs 260 1,505 378 Other infrequent, unusual or non-operating items(1) — 2,540 — Adjusted income before taxes 86,506 81,381 68,039 Income tax expense on adjustments(2) (31 ) 251 79 Adjusted net income $ 67,470 $ 63,491 $ 53,395 Weighted average diluted shares outstanding 87,310 87,117 86,487 Diluted EPS(3) $ 0.77 $ 0.69 $ 0.61 Adjusted diluted EPS $ 0.77 $ 0.73 $ 0.62 Return-on-equity 17.5 % 15.7 % 15.4 % Adjusted return-on-equity 17.4 % 16.5 % 15.5 % Expense ratio(4) 28.3 % 34.1 % 32.2 % Adjusted expense ratio(5) 28.0 % 30.5 % 31.8 % Combined ratio(6) 27.7 % 33.7 % 36.9 % Adjusted combined ratio(7) 27.5 % 30.1 % 36.5 % Book value per share(8) $ 17.84 $ 18.25 $ 16.13 Book value per share (excluding net unrealized gains and losses)(9) $ 18.97 $ 18.23 $ 16.02 (1) Represents severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced on September 9, 2021.
(2) Marginal tax impact of non-GAAP adjustments is calculated based on our statutory U.S. federal corporate income tax rate of 21%, except for those items that are not eligible for an income tax deduction. Such non-deductible items include gains or losses from the change in the fair value of our warrant liability and certain costs incurred in connection with the CEO transition, which are limited under Section 162(m) of the Internal Revenue Code.
(3) Diluted net income for the quarter ended March 31, 2022 and December 31, 2021, excludes the impact of the warrant fair value change as it was dilutive. For the quarter ended March 31, 2021, diluted net income equals reported net income as the impact of the warrant fair value change was anti-dilutive.
(4) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
(5) Adjusted expense ratio is calculated by dividing adjusted underwriting and operating expense (underwriting and operating expenses excluding costs related to capital markets reinsurance transactions and infrequent or unusual non-operating items) by net premiums earned.
(6) Combined ratio is calculated by dividing the total of underwriting and operating expenses and insurance claims and claims expense by net premiums earned.
(7) Adjusted combined ratio is calculated by dividing the total of adjusted underwriting and operating expenses (underwriting and operating expenses excluding costs related to capital market reinsurance transaction and infrequent or unusual non-operating items) and insurance claims and claims expense by net premiums earned.
(8) Book value per share is calculated by dividing total shareholder's equity by shares outstanding.
(9) Book value per share (excluding net unrealized gains and losses) is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on our investment portfolio, divided by shares outstanding.Historical Quarterly Data 2022 2021 2020 March 31 December 31 September 30 June 30 March 31 December 31 Revenues (In Thousands, except for per share data) Net premiums earned $ 116,495 $ 113,933 $ 113,594 $ 110,888 $ 105,879 $ 100,709 Net investment income 10,199 10,045 9,831 9,382 8,814 8,386 Net realized investment gains 408 714 3 12 — 295 Other revenues 339 380 613 483 501 513 Total revenues 127,441 125,072 124,041 120,765 115,194 109,903 Expenses Insurance claims and claim (benefits) expenses (619 ) (500 ) 3,204 4,640 4,962 3,549 Underwriting and operating expenses 32,935 38,843 34,669 34,725 34,065 34,994 Service expenses 430 650 787 481 591 459 Interest expense 8,041 8,029 7,930 7,922 7,915 7,906 (Gain) loss from change in fair value of warrant liability (93 ) (112 ) — (658 ) 205 1,379 Total expenses 40,694 46,910 46,590 47,110 47,738 48,287 Income before income taxes 86,747 78,162 77,451 73,655 67,456 61,616 Income tax expense 19,067 17,639 17,258 16,133 14,565 13,348 Net income $ 67,680 $ 60,523 $ 60,193 $ 57,522 $ 52,891 $ 48,268 Earnings per share Basic $ 0.79 $ 0.71 $ 0.70 $ 0.67 $ 0.62 $ 0.57 Diluted $ 0.77 $ 0.69 $ 0.69 $ 0.65 $ 0.61 $ 0.56 Weighted average common shares outstanding Basic 85,953 85,757 85,721 85,647 85,317 84,956 Diluted 87,310 87,117 86,880 86,819 86,487 86,250 Other data Loss Ratio(1) (0.5 ) % (0.4 ) % 2.8 % 4.2 % 4.7 % 3.5 % Expense Ratio(2) 28.3 % 34.1 % 30.5 % 31.3 % 32.2 % 34.7 % Combined ratio(3) 27.7 % 33.7 % 33.3 % 35.5 % 36.9 % 38.3 % (1) Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
(2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
(3) Combined ratio may not foot due to rounding.Portfolio Statistics
The table below highlights trends in our primary portfolio as of the date and for the periods indicated.
Primary portfolio trends As of and for the three months ended March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 ($ Values In Millions, except as noted below) New insurance written $ 14,165 $ 18,342 $ 18,084 $ 22,751 $ 26,397 $ 19,782 New risk written 3,721 4,786 4,640 5,650 6,531 4,868 Insurance in force (IIF)(1) 158,877 152,343 143,618 136,598 123,777 111,252 Risk in force(1) 40,522 38,661 36,253 34,366 31,206 28,164 Policies in force (count)(1) 526,976 512,316 490,714 471,794 436,652 399,429 Average loan size($ value in thousands)(1) $ 301 $ 297 $ 293 $ 290 $ 283 $ 279 Coverage percentage(2) 25.5 % 25.4 % 25.2 % 25.2 % 25.2 % 25.3 % Loans in default (count)(1) 5,238 6,227 7,670 8,764 11,090 12,209 Default rate(1) 0.99 % 1.22 % 1.56 % 1.86 % 2.54 % 3.06 % Risk in force on defaulted loans(1) $ 362 $ 435 $ 546 $ 625 $ 785 $ 874 Net premium yield(3) 0.30 % 0.31 % 0.32 % 0.34 % 0.36 % 0.37 % Earnings from cancellations $ 2.9 $ 5.1 $ 7.7 $ 7.0 $ 9.9 $ 11.7 Annual persistency(4) 71.5 % 63.8 % 58.1 % 53.9 % 51.9 % 55.9 % Quarterly run-off(5) 5.0 % 6.7 % 8.1 % 8.0 % 12.5 % 12.5 % (1) Reported as of the end of the period.
(2) Calculated as end of period risk-in-force (RIF) divided by end of period IIF.
(3) Calculated as net premiums earned, divided by average primary IIF for the period, annualized.
(4) Defined as the percentage of IIF that remains on our books after a given twelve-month period.
(5) Defined as the percentage of IIF that is no longer on our books after a given three month period.New Insurance Written (NIW), Insurance in Force (IIF) and Premiums
The tables below present primary NIW and primary and pool IIF, as of the dates and for the periods indicated.
Primary NIW Three months ended March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 (In Millions) Monthly $ 13,094 $ 16,972 $ 16,861 $ 19,422 $ 23,764 $ 17,789 Single 1,071 1,370 1,223 3,329 2,633 1,993 Primary $ 14,165 $ 18,342 $ 18,084 $ 22,751 $ 26,397 $ 19,782 Primary and pool IIF As of March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 (In Millions) Monthly $ 139,156 $ 133,104 $ 124,767 $ 117,629 $ 106,920 $ 95,336 Single 19,721 19,239 18,851 18,969 16,857 15,916 Primary 158,877 152,343 143,618 136,598 123,777 111,252 Pool 1,162 1,229 1,339 1,460 1,642 1,855 Total $ 160,039 $ 153,572 $ 144,957 $ 138,058 $ 125,419 $ 113,107 The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction, 2018 QSR Transaction, 2020 QSR Transaction, 2021 QSR Transaction, and 2022 QSR Transaction, and collectively, the QSR Transactions), and Insurance-Linked Note transactions (the 2017 ILN Transaction, 2018 ILN Transaction, 2019 ILN Transaction, 2020-1 ILN Transaction, 2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN Transaction and collectively, the ILN Transactions) for the periods indicated.
For the three months ended March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 (In Thousands) The QSR Transactions Ceded risk-in-force $ 8,504,853 $ 8,194,604 $ 7,610,870 $ 7,113,707 $ 6,330,409 $ 5,543,969 Ceded premiums earned (29,005 ) (28,490 ) (28,366 ) (27,537 ) (25,747 ) (24,161 ) Ceded claims and claim expenses (159 ) 19 840 1, 194 1,180 601 Ceding commission earned 5,886 6,208 6,142 5,961 5,162 4,787 Profit commission 16,723 16,142 15,191 14,391 13,380 13,184 The ILN Transactions Ceded premiums $ (10,939 ) $ (11,344 ) $ (10,390 ) $ (10,169 ) $ (9,397 ) $ (9,422 ) Primary NIW by FICO For the three months ended March 31, 2022 December 31, 2021 March 31, 2021 ($ In Millions) >= 760 $ 6,372 $ 8,032 $ 12,914 740-759 2,388 3,115 5,312 720-739 1,937 2,833 3,963 700-719 1,639 2,196 2,358 680-699 1,244 1,653 1,360 <=679 585 514 490 Total $ 14,165 $ 18,342 $ 26,397 Weighted average FICO 748 748 755 Primary NIW by LTV For the three months ended March 31, 2022 December 31, 2021 March 31, 2021 (In Millions) 95.01% and above $ 1,366 $ 1,569 $ 2,451 90.01% to 95.00% 7,055 8,879 11,051 85.01% to 90.00% 3,868 5,583 7,848 85.00% and below 1,876 2,311 5,047 Total $ 14,165 $ 18,342 $ 26,397 Weighted average LTV 92.1 % 91.9 % 91.0 % Primary NIW by purchase/refinance mix For the three months ended March 31, 2022 December 31, 2021 March 31, 2021 (In Millions) Purchase $ 13,398 $ 17,097 $ 17,909 Refinance 767 1,245 8,488 Total $ 14,165 $ 18,342 $ 26,397 The table below presents a summary of our primary IIF and RIF by book year as of March 31, 2022.
Primary IIF and RIF As of March 31, 2022 IIF RIF (In Millions) March 31, 2022 $ 14,076 $ 3,699 2021 78,955 20,058 2020 41,311 10,431 2019 11,102 2,910 2018 4,411 1,127 2017 and before 9,022 2,297 Total $ 158,877 $ 40,522 The tables below present our total primary IIF and RIF by FICO and LTV and total primary RIF by loan type as of the dates indicated.
Primary IIF by FICO As of March 31, 2022 December 31, 2021 March 31, 2021 (In Millions) >= 760 $ 79,141 $ 76,449 $ 63,919 740-759 27,406 26,219 20,537 720-739 22,176 21,356 17,167 700-719 15,236 14,401 11,536 680-699 10,347 9,654 7,329 <=679 4,571 4,264 3,289 Total $ 158,877 $ 152,343 $ 123,777 Primary RIF by FICO As of March 31, 2022 December 31, 2021 March 31, 2021 (In Millions) >= 760 $ 19,883 $ 19,125 $ 15,920 740-759 7,054 6,707 5,214 720-739 5,735 5,497 4,378 700-719 4,010 3,771 2,981 680-699 2,706 2,511 1,896 <=679 1,134 1,050 817 Total $ 40,522 $ 38,661 $ 31,206 Primary IIF by LTV As of March 31, 2022 December 31, 2021 March 31, 2021 (In Millions) 95.01% and above $ 14,918 $ 14,058 $ 10,616 90.01% to 95.00% 72,381 68,537 54,832 85.01% to 90.00% 48,406 46,971 40,057 85.00% and below 23,172 22,777 18,272 Total $ 158,877 $ 152,343 $ 123,777 Primary RIF by LTV As of March 31, 2022 December 31, 2021 March 31, 2021 (In Millions) 95.01% and above $ 4,527 $ 4,230 $ 3,106 90.01% to 95.00% 21,358 20,210 16,139 85.01% to 90.00% 11,895 11,533 9,818 85.00% and below 2,742 2,688 2,143 Total $ 40,522 $ 38,661 $ 31,206 Primary RIF by Loan Type As of March 31, 2022 December 31, 2021 March 31, 2021 Fixed 99 % 99 % 99 % Adjustable rate mortgages: Less than five years — — — Five years and longer 1 1 1 Total 100 % 100 % 100 % The table below presents a summary of the change in total primary IIF during the periods indicated.
Primary IIF For the three months ended March 31, 2022 December 31, 2021 March 31, 2021 (In Millions) IIF, beginning of period $ 152,343 $ 143,618 $ 111,252 NIW 14,165 18,342 26,397 Cancellations, principal repayments and other reductions (7,631 ) (9,617 ) (13,872 ) IIF, end of period $ 158,877 $ 152,343 $ 123,777 Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the periods indicated.
Top 10 primary RIF by state As of March 31, 2022 December 31, 2021 March 31, 2021 California 10.8 % 10.4 % 10.8 % Texas 9.5 9.7 9.5 Florida 8.4 8.6 7.9 Virginia 4.5 4.7 5.0 Georgia 3.9 3.8 3.3 Illinois 3.8 3.6 3.7 Colorado 3.7 3.8 4.1 Washington 3.7 3.7 3.5 Maryland 3.6 3.7 3.8 Pennsylvania 3.3 3.3 3.3 Total 55.2 % 55.3 % 54.9 % The table below presents selected primary portfolio statistics, by book year, as of March 31, 2022.
As of March 31, 2022 Book year Original Insurance Written Remaining Insurance in Force % Remaining of Original Insurance Policies Ever in Force Number of Policies in Force Number of Loans in Default # of Claims Paid Incurred Loss Ratio (Inception to Date)(1) Cumulative Default Rate(2) Current default rate(3) ($ Values in Millions) 2013 $ 162 $ 6 3 % 655 40 1 1 0.5 % 0.3 % 2.5 % 2014 3,451 253 7 % 14,786 1,568 39 49 4.2 % 0.6 % 2.5 % 2015 12,422 1,555 13 % 52,548 8,564 218 119 3.3 % 0.6 % 2.5 % 2016 21,187 3,409 16 % 83,626 17,318 487 134 3.0 % 0.7 % 2.8 % 2017 21,582 3,799 18 % 85,897 19,700 783 106 4.3 % 1.0 % 4.0 % 2018 27,295 4,411 16 % 104,043 22,121 1,032 93 7.6 % 1.1 % 4.7 % 2019 45,141 11,102 25 % 148,423 45,603 1,118 23 10.1 % 0.8 % 2.5 % 2020 62,702 41,311 66 % 186,174 131,277 902 1 5.1 % 0.5 % 0.7 % 2021 85,574 78,955 92 % 257,972 242,014 658 — 2.8 % 0.3 % 0.3 % 2022 14,165 14,076 99 % 38,974 38,771 — — — % — % — % Total $ 293,681 $ 158,877 973,098 526,976 5,238 526 (1) Calculated as total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2) Calculated as the sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force.
(3) Calculated as the number of loans in default divided by number of policies in force.The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim (benefits) expenses:
For the three months ended March 31, 2022 March 31, 2021 (In Thousands) Beginning balance $ 103,551 $ 90,567 Less reinsurance recoverables(1) (20,320 ) (17,608 ) Beginning balance, net of reinsurance recoverables 83,231 72,959 Add claims incurred: Claims and claim (benefits) expenses incurred: Current year(2) 10,080 10,557 Prior years(3) (10,699 ) (5,595 ) Total claims and claim (benefits) expenses incurred (619 ) 4,962 Less claims paid: Claims and claim expenses paid: Current year(2) — 12 Prior years(3) 320 492 Total claims and claim expenses paid 320 504 Reserve at end of period, net of reinsurance recoverables 82,292 77,417 Add reinsurance recoverables(1) 20,080 18,686 Ending balance $ 102,372 $ 96,103 (1) Related to ceded losses recoverable under the QSR Transactions.
(2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the default would be included in the current year. Amounts are presented net of reinsurance and included $5.2 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022 and $5.3 million attributed to net case reserves and $5.3 million attributed to net IBNR reserves for the three months ended March 31, 2021.
(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance and included $5.8 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022 and $0.6 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for the three months ended March 31, 2021.The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.
For the three months ended March 31, 2022 March 31, 2021 Beginning default inventory 6,227 12,209 Plus: new defaults 1,163 1,767 Less: cures (2,132 ) (2,868 ) Less: claims paid (19 ) (16 ) Less: rescission and claims denied (1 ) (2 ) Ending default inventory 5,238 11,090 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 three months ended March 31, 2022 March 31, 2021 (In Thousands) Number of claims paid(1) 19 16 Total amount paid for claims $ 402 $ 606 Average amount paid per claim $ 21 $ 38 Severity(2) 39 % 61 % (1) Count includes six and one claims settled without payment during the three months ended March 31, 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.The following table shows our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the periods indicated.
Average reserve per default: As of March 31, 2022 As of March 31, 2021 (In Thousands) Case(1) $ 18.0 $ 7.9 IBNR(1)(2) 1.5 0.8 Total $ 19.5 $ 8.7 (1) Defined as the gross reserve per insured loan in default.
(2) Amount includes claims adjustment expenses.The following table provides a comparison of the PMIERs financial requirements as reported by NMIC as of the dates indicated.
As of March 31, 2022 December 31, 2021 March 31, 2021 (In Thousands) Available Assets $ 2,127,030 $ 2,041,193 $ 1,809,589 Risk-Based Required Assets 1,341,217 1,186,272 1,261,015 
- Primary insurance-in-force at quarter end was $158.9 billion, up 4% from $152.3 billion in the fourth quarter and 28% compared to $123.8 billion in the first quarter of 2021