NMIH - Earnings call transcript Q1 2021

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Operator

Good day and welcome to the NMI Holdings, Inc.

First Quarter 2021 Earnings Conference Call. [Operator Instructions] And I’d like to turn the conference over to your host, Mr. John Swenson. Please go ahead, sir.

John Swenson

Angela. you, Thank welcome for and XXXX Quarter First Good MI. to call National Conference afternoon our I’m President Swenson, John Vice and Treasury. of Investor Relations

tab. us under released Pollitzer, be website today Claudia Joining Controller. release Financial and call may Shuster, the our the close the Chairman, quarter located today. for Executive press were Julie are Norberg, NMI’s Merkle, the Chief at accessed our Brad Adam Investors on results nationalmi.com Financial after Officer, CEO, on The

course call, future. about results those this the our expectations statements. could from comments During may make forward-looking of we materially these for Actual contained the in differ

Additional information obligation future company website makes our to not regulatory those cause from discussed the results about on SEC. do undertake subsequent the any filings the extent those with in in or light or through the update be could If developments. our actual on measures. trends will release such we Further, measures this call and the on note we forward-looking that on most of to on materially the GAAP. factors any the we statements differ certain at can to of statements, to that a this provided fact rely press of other time comparable time under that the should is to current reconciliation of call. the statements call guidance In Also website, the today’s measures refer non-GAAP found one no and than our these

Brad. over I’ll Now, turn call to the

Brad Shuster

performance, insured volume, significant Thank report strong quarter pleased MI that NIW to you, in and everyone. financial first And our National portfolio. I’m in John. the delivered growth afternoon, good record

billion with recede activity, nationwide The I’m greatly stress environment we resiliency this resumption foundational job business begun spurring pandemic the continued has stimulus strength. to And The economic remarkable has backdrop, of force. vaccination the the funding As and stabilized ended achieved in broad rollout $XX.X the and NIW high-quality of has the billion and market the of a with of demonstrate insurance and and we personal talk growth. with COVID of effort. encouraged. today, $XXX.X creation record Against housing quarter to

refinancing leadership for an all Washington their in early of lives on with need to a in as the appropriately We borrowers the access to assist and our market there all-time a have January. recovery their holds an immediacy which core and extension before their recent environment. Mortgage a others be our providing performance priority. new turnover manner additional equitable while resume congressional gain important note attention are creation allowing committed More rates housing many an resiliency direction. underlying in-force to at to have and are borrowers Biden of existing the increasingly And The sustained to has broadly, environment not portfolio it recedes as wealth in limited an benefits regulators, certain our believe the and even, once in Credit possible to the highly many set remain home garnered the access ownership trend homeowners, the and of that recognition hard systemic retain by the to will the broadly to against homes impacted that borrowers Expanding approximately to who worked our me in current as the are continued the in guards the administration let positioned those for foreclosure safe the private to period of rates by and a also significant accelerating, focus prospect signaled crisis. to in slowing identity, be applaud housing more remain goals GSEs high-quality as Washington portfolio, establish in to the of provides, a to and strengthening is ability effort, access support. COVID taxpayer shelter, support touching continue housing. are still interruption assistance crisis time. steps. will community mortgage help opportunity and Washington continues over We continued pandemic policymakers, macro private of passed. book, this changes that National to shifts also than the favorable to process We risk insurance look us and the after believe the of value their is proposed given payment quarter had forbearance equal additional timeline opportunity CFPB The the the are and while there we have business bring and while providing market, the downturn. well Claudia. mortgage And in the the to are credit low pandemic, from optimistic pace effort with front movement a capital for longer in matters. With The ever borrowers broader Shifting for of still originate business. quality we a of we placing our by turn are in helping in we nationally rates and absorb critically risk, and in higher loss MI of the constructive terrific for we that, has we increased move borrower. and forward and delivering down the important. X% purchase And Overall, that as stable industry it on borrowers helping long-term to

Claudia Merkle

borrowers for per XX.X% the GAAP was the reported per of significant strong was $XX.X We income net achieved and insured ROE were lenders first quarter. NIW our diluted and help return XX. The adjusted record X%. performance portfolio, highly and private volume, perspective. net solutions on pricing, deliver remains insurance or Thank The share valuable from profitability million million $XX.X was NIW from mortgage the delivered business in quarter first you, in high-quality fourth XX% $X.XX and to XXX% strong and XXXX. the $XX.X continued first to generated quarter. quarter adjusted GAAP team income risk, returns. at our constructive and line of a a Brad. or able record was of the We diluted quarter equity growth pace $X.XX for bottom in And and demand and compared billion, share. record market up we

XX all in focused quarter, first helping NIW the lenders. growth market. the quarter and consistent across activated lenders Our the terms equally We on organic. on all supporting In borrowers remain was new we

with group lenders more the of high-quality nationwide. X,XXX diverse originators, now doing including XXX business a than are of broadly We top XXX

engagement We consistent leading and have approach with consultative of service. clear a market, value certainty and the of proposition differentiated our in sales coverage been to

our We to the developed. also and to found COVID relationships new innovative deepen crisis customer with lenders as ways and engage

the over several while tallied on fuel our success, us risk-adjusted record quarter customer credit achieve the strict Our discipline strong last maintaining helped and focus growth volume in allowed our returns. years, to and

activated us Additionally, the to origination NIW broad our the scale our customer push relationships. an we provided towards new once quickly technology volume ramp and account with and an have digitization landscape ability accelerated across has

have an activity, trends which refinancing is market. robust pandemic first reinforced refinancing Long-term NIW in the in and we shift the experience of demand. purchase credit interest support the of outlook The has our is throughout home demographic discipline remains mortgage positive. value paramount the ownership, Notwithstanding volume quarter the in precursor volume. from rising April, our flow impact and a to momentum early applications, NIW record achieved rates we seen enjoy through continued While of

team Our every working is engaged and hard day.

lender healthy. Our pipeline activation is

drive and balanced over we with maintaining that, over strategy Our customers time. and focus grow turn expect a portfolio, Adam. working. to deploy discipline consistency With returns responsibly I’ll differentiate with is our capital, risk-adjusted on credit while insured it to to value And

Adam Pollitzer

share, equity growth $XXX.X our Primary Thank XX% originations quarter, billion to XX-month $XX.X our NIW you, the accounted first adjusted performance. primary volume, force return of billion delivered $XXX.X million, were up in resiliency reflecting to We portfolio, prior volume in adjusted compared $X.XX quarter, XX.X%. our persistency refinancing the premiums was from fourth NIW was XX% locked income continued for $XX.X in from and credit by up and of of driven diluted who XXXX. in rates. was monthly the in mortgage results our quarter or quarter our primarily activity fourth strong insured was first the portfolio borrowers increase the note Net XX%, in $XX.X from earned of $XXX.X record and XX% Claudia. strong net recent on Purchase Total in production. XX% down quarter. the per end included billion, at billion of million insurance in the financial

record volume an exceptionally period. rates business last stays to half written begin We XX as activity second we’ve refinancing our slows the extended the in rebound low expect the and for books will on at that interest over months persistency of

premium the basis was single-premium to the quarter. the While noted, as the policies for quarter. our our provide quarter. future $X.X refinancing potential the portion expenses million persistency in in the expect April. the in in provides quarter Expenses higher change volume. compared all fourth extension contribution the in XX be decreased from rates, million $XX a from in the $XX.X $XXX,XXX of monthly claims rate operating perform improving yield $XXX.X to compared quarter first basis quarter, the acquisition of with in as in cancellation incurred will the costs. up given balance, in benefit of a were persistency a without points were compared in the else volume, million, $X.X our we during to originated first Improving points Investment earnings Claudia particularly periods revenue business XX the generally quarter the recent million quarter. helping period. compared income impact of in continued most due will existing and We million $X.X as with in any quarter a compared included to of policies to connection Net equal, And in impacted was Underwriting of may absorb cancellation first is valuable contribution to rising $XX.X Reported premiums was X% ILN also, insured of us premium million of fourth the In-force earned a additional million earned seasoning. environment. to fourth reflecting fourth $XXX.X better costs primarily the flow fourth offering million portfolio matter

$X.X related ILN come quarter issuance expect costs of through in the million We to second to transaction. the an additional

adjusted Excluding underwriting the were million quarter. costs, ILN-related and in compared million fourth $XX.X to $XX.X expenses operating

expense to to declined rate defaults XX,XXX of during had the XXst compared in our XX.X% GAAP expense adjusted period. in compared Our was X.X% March XX.X% XX,XXX ratio of quarter. the including primary fourth default quarter. to quarter our XX.X% in a our And default population. in at our We last the at and was ratio compared At our to XX% we December X.X% insured in enrolled loans primary loans XXst, or forbearance X,XXX XX,XXX end, were portfolio the program, portfolio

default of Of an to last of number pre-pandemic continues level at and note, our their performance lowest the encouraging credit progressed nearly our fell payment with emerging of impacted to missed April of Our new into since our least default portfolio increasing crisis an that borrowers its the declined our to an defaults credit indicator At important March status, as curing direction back recedes. performance, stress at is X.X%. population the levels. and leading near-term XX,XXX but trend to and have in loans in rate fewer XX, COVID default number delinquencies not one

five optimistic the our the those we’re vaccination at of an progress as year, personal resumption broader forward, allows of in at accelerating claims that and the the availability strength for other forbearance as housing for Looking remainder improvement We broad the see economy of factors, the their defined borrowers, credit in was assumptions the of every we through period. expense pace, our divided end performance activity. among our quarter first still and our ratio, earned, as was Claims additional and continued support premiums in nationwide consider, the we’ll expense the quarter loss we market recovers will business of carries forward, underpinning analysis performance effort existing net X.X%. by the million the the and re-evaluate of reserve need

path were liability the billion was And holding for end of net Shareholders’ which carries the We quarter the any including that have during period. a million October in equity first net is the pre-COVID attachment and and income change diluted to the those our of Total and in on quarter [indiscernible] largest Interest price $X.XX the exploits the of recent of further XXXX achieved. XX% extends appreciation share. in The for production. changes a claims are per lifetime of our our additional levels company. of The to X and success investments of originated investments and at gains $X.X most year X.XX% at provides fair XX from at And our And is pre-tax resiliency a cash our $X.X reserve million, sworn realized on the $X.XX offerings. dollar per from we to market forbearance across million. necessary. expense deal date their weighted deal diluted $XXX,XXX loss an of of March costs, periodic per $XXX quarter previous point was akin re-insurance support the cost with sixth ever losses was risk million, tied X% primarily determine million of and end, we is tightest The deductible cash the whether share. the period. coverage or end $XX.X capital. value closed between of up investment underlying quarter to risk this or up week, transaction need our warrant the recorded $X.X to estimated Gavin at we’ve estimated to of compared house transaction cost attachment detachment. X.XX% still point island the offering, the billion, housing and $XX.X of $XX The the close transfer comprehensive upon value lifetime was the the Adjusted $XX.XX our last and that changes, quarter fair coverage income, and lowest markets, builds our XXXX. share transaction to a average equal maximum the first to

senior dollar after premiers it credit future facility At even completed of under our outstanding production, for of it available. that, business $X.X performance, short million Overall, million required closed the significant figures we that assets ILN notes, the and new more position and issuance will million remains back bolster and available $XXX $XXX to our strong included growth delivered in provide total reported offering $XXX record in and end, funding fully billion, runway these and further for we assets end, have April driving We undrawn is results as with quarter a revolving encouraging strong $XXX our assets periods. excess credit quarter strong was billion. in return. and profitability risk-based were we million. in not portfolio, mid-teens Excess The of With $X.X turn let Claudia. me available quarter

Claudia Merkle

Thanks Adam.

stands and strong the in way. out and first the significant quarter record the primary and upon Our demonstrated NIW performance builds force, insurance dramatic crisis volume duration strength and in profitability a with in of the COVID resiliency return mid-teens through we’ve a

to COVID we beginning the as the to questions. win come with we balance, backdrop deliver continue our so outlook the insurance stress ask and back economy joining well recede, with shareholders. I’ll take the the for broadly continuing results now in improving we to this maintain us risk the Against improving we customers, optimistic growth look to portfolio, the you housing to are drive of for can Thank pandemic positioned high-quality forward market sharply, operator strong believe today. return our right on your strengthen. for We’re and

Operator

of Mark from comes first Your Barclays. question the DeVries, Instructions] [Operator line

Mark DeVries

you Can you just you you kind build point to gets of the cushion, above thoughts talk deployed updated or time, shareholders? need your over that well it’s feel this on how term. to out, like premier’s return whether Yes. as longer about in Adam, any continues access probably business into

Adam Pollitzer

Yes, sure Mark I’m happy to.

XX%. ratio, clarifying perhaps of I significant $XXX worth as at cushion think obviously but March it’s that’s The size is a quite our XX, approximately piece. dollar at one million premier’s

Our a the much we’re have in above levels that business business, high capital long-term required and amount the when generate needs. we’re at quarter, minimum goal writing we and record XX% first is with to did to organic roughly consume we then cushion continuing as as as much our operate quality additional

we MI as is in increased there our get from a we’ve Writing is premier’s like a efficiency forward, we would the point get business. way But standpoint. so to deploying responsibly of really we in to And to the return look market. right core business strong generate a by investing do access best, that’s capital expected which and what mid-teens to proven doing that now,

Mark DeVries

we’re just any latest And then you trends seeing on can the provide industry? updates across Okay got pricing it. the us

Claudia Merkle

mean I remains the environment on pricing constructive and economics and Mark. sure attractive. be business see new very the continue Yes, returns the is unit expected we to what importantly, the

constructive see very environment So in a overall the we market.

Mark DeVries

realizing additional the they pressure at competitors bad loss from the Okay. as No thought summer? things looking and expectations might as have in aren’t

Claudia Merkle

think No it’s static It with, we but the mean stands I we find it’s nothing MI market, It out. constructive working remains remains but all lenders we’re environment. a constructive. risk we all mean, feel place I and the also, that look I competitive overall risk. that companies, isn’t have all a in different our

Operator

from question Suisse. Harter line of Credit Next Doug with is the

Josh Bolton

on this Josh Doug. Hey, Bolton for is good afternoon

Curious and any market from what is. a that share our of math, yield that yield you around First, And coming quarters. give the you over color the that looks drivers the behind it the the can trend decent in gained where more of drove decline secondly, quarter. sustainable have if then quarter, company thoughts how to thoughts and like premium any the us during amount of gained expect you

Adam Pollitzer

will a in the the quarter. take share and volume the premium then yield you give perspective Claudia on the piece I’ll Sure and question

points our plus the QX to to and million basis in the the cost QX with XX earnings, contribution in in the right, quarter the Our largely $X.X of to insurance from a the in growth $XX.X point were force net in as denominator contribution dollar cancellation of because paired basis yields the of move one in XX basis That quarter. in cancellation us QX. in amount, in so in a ratio, decline in the force, form which a define compared insurance points the was in compared million a it’s traces earnings our shift growth yield

‘XX, item note of terms In of would the that the begin most see the quarter. explicit, guidance I will come second provide is we the one in remainder of but through through anything to not ILN we’re recent our going cost to

Claudia Merkle

Josh regarding And a a on quarter. drivers, question it terrific the just was

comes of XX really proud proud Building a succeed. years ourselves putting to business and we strong time, lender We’re base in our our on achieved. and the for of hard this working We’ve and work this close been for through position in what team quarter. long That to a now.

In lifting things. terms of of heavy the to decade drivers company, specific I build beyond the two find

NIW. said, us of there in it’s incremental in our static. we risk sustainability, where amount I all distribution can risk clicking have in ratable felt terrific in First, quality we’re serving ever of we’ve always don’t we’ve that lenders driving our But the the with COVID evolution driving when because their will allows flow is MI are Josh a into maintain returns. and to generate matters a it boost. portfolio. full a the done anticipate also note has we a before. strong to that I’ve environment most that quarter to more pair allowed reason a cycle modest just quarter, a the adjusted is what highly note availability. build overall still hard the towards just and housing it’s Things high significant headwinds And fluctuations. as isn’t is but portfolio, critical, the layer digital And chose adoption than integrity by our accelerate focused result comparison on with layer manner our of with record work engagement as an still And refi of is all seen basis lender lenders that deploying this industry. bars, was a even to risk to appetite NIW, relationships seen us Digital the shift, it our we prudently the and significant capital shift tools our are shift we in additional and And responsibly, relates any on while over some market and I slowing, purchase of quarter and customers you

Operator

Your George of next the Bose from question with is line KBW.

Bose George

with ask this NIW. expenses expect and despite quarter, what I [indiscernible] wanted to to First down this there, strong about

Adam Pollitzer

obviously pleased Yes, right. we’re

Our today. focus has that remains case always been on and efficiency the

bill of given of first expenses $XX.X operating and result, side particularly of good is quarter adjusted the the on a our million scale in So growth the performance business. the

our in quarter certain to spend, in through turnover In our we year, rate expect costs, it some variability with expenses, terms from fourth turnover modest what that continue means comes in through, pace of TNE on a for broadly a continues QX with of as as mentioned the and our in increase I do the progression impact operating an recognition. as growth invest that well portfolio. reopening DAC related the and force to advancing the we come of to tied our performance

net fluctuation, items as be through modest we will year those of expect the QX from all that level. but may increase progressed the some cause we So a

Bose George

quarter. peers. it I you with a sustainability And the kind next, like back just level could in shift reported, looks to that just and the a it sustainability. just was because with If discuss that meaningful like looking feel where moved that’s industry, there the your that? do of mean this market of So maintain you I looks companies want NIW have to discussion the share at the go line just

Claudia Merkle

ability we have some what proud a quarter. to years And but we’ve we share We’ll digital NIW not about this achieved. ground volume measure expect mentioned what in business. everyone before, this the portfolio. amount making, share, insured like multiplier are We I on market Sure, we deliver growth the do layer we’ve business, market of gained hard of yes into we’re is in feel reports, did lot And strong such but but after to be certainly focused a into we that force obviously when our but able the would about good call years almost a risk did think slight work. the in of of in I of the it’s you a really side our

Adam Pollitzer

building in maintain because the ability to And provides the period and I is moves So that It market we is way, does, fluctuate. are her us going a is tell Claudia achieved. you with that obviously always was. we’ve to in things increase why the it to from remarks period, success greater towards naturally mentioned going prepared obviously about But, itself sustainable which organic, and our fluctuate. to this is besides it volume conviction all organic

but most long-term just over for insurance results, period. is period as return, to our think continue financial success in current appetite any high it’s we important, static. be And risk putting with return is in in Our customers expected force our obviously quality, And it, going on our because in driving any we not business build will period high the NIW and force about that our given critically long-term important not that’s both to given naturally high insurance is evolve.

Operator

Okay is with of Arren next from Cyganovich Citi. line question the

Arren Cyganovich

quarter, several mean past what you’ve you’ve this is has you something with actions Are that or the specific taken about years. doing this Claudia, just I a you’re could bit an digital was engagement saying been for with been process ongoing hoping there little you lenders. maybe expand

Claudia Merkle

for at time been now. of focus Sure, The long the Arren. then of the adoption closing we’ve mortgage origination technology It’s actually the a that mortgage looked number it huge process. And a of lenders. overall, digitization a and parts of market our touches for and different

being day. means our less our a and terms now immediately In in about with loan I growth, a on officer, us it visible such being of points with with for us It’s the processor, per strong hundreds market. front the it’s of amplifies lender, tens things. our why platform. of underwriter, that is an directly for visibility engagement day. per two And thousands now it their know lenders the or catalyst One of in touch about in active gave it It’s touch points what of provides

it’s substantial. really So

other the old thing The the for habits breaks down is lenders. digital market

have relationship, company. longer that underwriter MI just that longer historically go No one you has really at that tenured to been towards does their For loan the to may skewed my dynamic. have it, processor, shifted of officer, habit a longer-term

So us and industry. for it’s significant been transformation a for the

Arren Cyganovich

we quarter, That’s was a it be going improve function third being the the And in mentioned Do as think persistency, year. it’s then on very view to this that? just helpful. you half as that in of second will about the the or of gradual little step more it a bit more

Adam Pollitzer

gradual. more going a it’s to bit Yes be

that in We both business on begin recent in the But that’s going improve be the both it’s to because second from it year of from benefit and the last the to -- we refinancing of the half, that on rates benefit year the its activity. more impact the comes because increase into rates in farther expect will that and progress, the importantly, of XX-month also increase wrote the into and the a calculation we persistency its calculation. impact recent

low ago as XX on that accelerating will modest fully months that expect before first we improvement report it when be includes books So full and more we that only it time. our first past comes record at $XX.X XXXX into year of the year roll last the rates into of note when billion the NIW the actually we calculation end effect wrote exceptionally that at anticipate come through, we That to business for was number. we

Operator

question Rick JP with Shane next of is line Your from Morgan. the

Rick Shane

do forward. reserve you think I’d slightly on talk that the you the of factors the as look different basis, in going sense quarter you aging rate default. a up some that delinquencies you I’m the love consider are down. of When and think much will Adam, mentioned First, we of you the that just factors makes is about as some latitude bit, dollar little loans curious you’ll The move forward? at to reserve this given a additional give those how they’re

Adam Pollitzer

not Yes, And I question. a that Rick, would latitude, deliberate about it’s great about so posture it’s taken. candidly, much this we’ve say a quarter but more

exposure they reserves macro, March market, measurably paving ultimate this business, Vaccines in time spent of rebounding and by do, continues things Our a have economy the the discussion resilient. the our the better in reflect, we market as broad reopening, that in instance, our day we every of be optimism way better, and At credit this the and getting best are lot about performance claims to every XX. enormously estimate earlier for as do are of goes where highlighting are the a point, housing that our is the trending sharply, day. broad because always

an also Our declining is default population at pace. accelerating

April Our to to reserving years, house our a the all, as several XX. default to as be as scenarios, March price but that borrowers company, inventory more an and because just more downside those for still and declined next offered the outlook downside to XX that assistance additional in And anchor for as MI decided more optimistic overall to decisions a not of was down at X.X% by for have the to matter we, muted set appreciation the from beyond as we our And to forbearance the assumption But necessarily appropriate of alone. anchor that’s establish the of be it X.X% that reserves. way accounting we making, month the December think we embedding we’re in reserving business broadly over far reserves. our posture, prospect our may

a establish We It’s subset bank. a reserve for the the reserve the default small portfolio of bank that that the not entirety in of like for don’t loan only a Cecil portfolio. in We’re we’re loans our for. establishing are

anchored broad And of so presents, unique purposes if now, in like we’re a with a we for living downside but duality you of little like the that optimism, reserves. have of will, bit also comfortable, to a pandemic environment

as that posture. we the consider through We get look to course of see year be to moderated. things current out not to posture we going to of items And end to expire. the after happens into that the where those forbearance develop back assess or see We’re want programs conservative should deliberately be whether the what will year the continue that for

Rick Shane

to are dispositive they the the I to the regardless I that to are loans not that there in think the or your the term. more of is specific Cecil, aging of really that point likely an appreciate answer of cure of in Got different and versus influence. it. It factor one loans, more less default and is whether economic Look, becomes those short is things is

Adam Pollitzer

That’s right.

Operator

of Your Truist. Mark is Hughes with from next question line the

Mark Hughes

million sequential that I meaningfully being think in you may conservative, have bigger the current just on that. of $XX.X but seems meaningful of but just number, addressed strokes, surely at a is portfolio the on a looking and you’re broad jump. claims curious this year but drivers the like basis, I’m

Adam Pollitzer

significant one this interesting Yes. QX. to provided quarter And in of the than in great help defaults We the million in population. this us. additional net really established came for years highlight emerges question. only in $X.X a And the size Mark, through first for it’s fact, past the year case that that quarter reserves more dynamic given new default it some in of X,XXX emerges a footnoting we And way

net during current shows that of our prior solely the amount QX period reserves position, We also reserves the default row of that the period the March case $X.X entirety period, additional on at defaults. are It’s IBNR an IBNR in isn’t calculated our carried inclusive based based on reserves established reserve XX. case and but for million the calculated population of

of reserves will you current about period view. period $X our and QX. about million give that’s a $XXX,XXX role million And period subtract incurred prior more dynamic to of that favorable in largely of million half if you $X it line, development that normalized that back the the to can five simply the but add for that net normalize that line. if you million And table, that a you on established get the prior $X.X of and how claims defaults. you from And view reserve in skews so current period QX of optics normalized yields And reserve expense in a IBNR was of

Mark Hughes

any in few you of regulatory And -- That’s then front money spoken things point what private a to about changes have absorb putting risk, that see that your in the any very helpful. government meaningful capital emerging the about Brad, taxpayer you to compared order might ago? months

Brad Shuster

Yes, side think basically, of of discussion on there. lot the Mark. movement announced positive being environment’s the lot both that A a were lot new talked There’s taxes. recently very reform, personal and But tax and the obviously constructive. forbearance extensions a about with the about I business administration

bright really affect And doing pandemic. to a has anything the that spot appreciates and sure administration won’t think new be I’m terms negatively. hasty that I of throughout in that housing the been

pass. that be that environment stay we’re good feel could just and come some to is period up to we changes likely regulatory coming that to overall a could even way there though the So when

early So constructive conclusions. long-term too it’s draw any to but

Operator

Randy Riley. Your next B. Binner question comes from of the line with

Randy Binner

and there’s way. that persistency just less as a there’s an model, asked comes helps Mostly back volume. I’d answered, but offset the different try some persistency and Understanding

And so bit we thought would the quite around lower recover now. a It’s quarter. usually than that in

housing function you if period time? low or And more that? a maybe haven’t and prolonged this of activity of data place. volatile together, you different and and this where the seeing the housing something draw persistency activity we question of points for more really try dynamic hot stay still a there refi they’re all time keep Because loan chance a Is a is over economy can is, have market, you the or seen a so there just in versus the economy before good where just

So just this different some could around. wondering if there dynamic time be

Adam Pollitzer

as we while returns, us that line for the but great that and is of in refinancing the a And position interesting piece balance that risk We it’s pre-COVID somewhat that written a the refinancing its interest rates pre-COVID as we post-COVID have quality our there of Randy, purgatory adjusted question. a high of all rate to in on dramatically was it’s and post-COVID Yes, note in we’ve would And attractive rates different some means our before book, way which ask March it is it’s mortgage speed that’s achieve pushed that that a the decline to it, business on activity or priced spectacular magnitude. it, and that bucket at doesn’t bright immediately. in Things I and then because XXXX, weighs turnover a somehow and note generally to incredibly we’re there’s or XXXX a written note between talking And almost are that matter. include distinction as portfolio the ourselves great. on is it. by get underlying book, rate enough its rates. slow and the don’t really type April would extension when all that where our business onset about of call well, all be somewhat which of where business business COVID high rates after our

rate. book carries weighted our note underlying pre-COVID book X.XX% Our rate post-COVID average a and X.XX% a has

the in in we the production. of refinancing note positive underlying volume, record record majority It’s that’s XX XX that in on rate of activity, year that’s to but of also both the profoundly And because an And X.XX%, recent going that is significant consistently be we’ve rates move that the that important year’s was production. business And the its critically a book, an terms at in impact is book. X%, so what impact persistency our lock going on supporting we’ve business had to in post-COVID increase expect the originated X.XX% have seen said X.XX% whether will where that locked environment in. effectively with value that of we and

call X.XX%, isn’t you’re for dramatically, less or side, more X.XX%. our flip the On right X.XX%, X%, at pre-COVID whether it, refinancing, I’ll production X.XX% at

of do we that the there’s of One, so the a from turnover as of of April in the expect portfolio, because And last X of for events distinction our amount turnover, will natural was that X/XX/XX this actually and different that force some continue us originated life point, portfolio. drive to forward. see we majority at two, of but in year though, insurances halves

at going terrific business be the XX the for And over is locked that volume we unless months move the still a still record continued us amount cancellation to in in is record we’ve that in so turnover and long-term us. the contribute most some And in last originated see portfolio in a phenomenal That the value significant place. of positive will have that’s for way, but rates. we higher earnings constructive will

Randy Binner

loss. then that’s the And right, of it that’s another was the last helpful. All ILM, one, excess re-insurance,

the of there So be the that Wouldn’t being any vintage that was would post-COVID recent the large on from things book? not ILM dynamic loss affect all equal a more correct? unless then, smaller,

Adam Pollitzer

we the they’re get instances the longer, And provide. down of in reference is right. the self the tools. risk again, risk the risk the ILMs generally because road. runs the positive also basis really off as There’s That’s size size to no because public stay ILM underlying that where amortize that speaking the that the are is is so then calibrated also down cost underlying they slower, mass develops In which amortizing they elegant running outstanding [indiscernible], capital relief off, underlying and

you how to ILMs expose too not relative which the a That’s built. have from you they’re quickly off running risk could capital standpoint. If risk,

Operator

Your comes question the from next of Ryan with line Gilbert BTIG.

Ryan Gilbert

you quarter Q cures quarter, happening the you far the in explore then on the cure call is and I quarter. seems both in the then just I My quarter. guess, was how if on And so cures as wondering the -- could appreciate like measurable well was first rate absolute far. in so provided -- the fourth an I are specifically a in question and pretty there in compared basis trending the guess that to It think slowdown detail the first what you on in second one what cures April.

Adam Pollitzer

overall, And to month cure from activity, When roughly look roughly March the individually. a defaults would encouraging things time, in period those Sure. stress. some facing a yes. think default of longer default than hopeful from say us. the and us. migrate We new of Borrowers XXXX been a the thousand level default through continue. trend period are look three ultimately, cure advantage a then of some at the April, the think a on same at I we’re the outside our and look really to overwhelming it’s move went March -- cures that will, loans December it and it’s of default are longer I decline we opposed the encouraged. over time, time, the into other total of had for we’re for inventory, decline live books that to at not referenced through population COVID period. in XXst do are those see said we’ll as still -- will who at this default ultimately assistance perhaps still in that I’ve of to on as defaults who would age earlier out going expect and otherwise But Those in older Look, us as programs we not offered, a call. of just roughly result to for overall enormously stress of forbearance population pandemic. of you claim for who’ve living, the took will we necessarily if We surprising the for borrowers period period to forbearance majority Again, XXst, from of and isolating was

Ryan Gilbert

basis I because And and influence the macro getting is that you improving more your trends conservative at sequentially. like I the I’m in hundred Okay. up time, points, better, the it same is guess the a with quarter? your slowdown stance did agree but ratio in the first cures over loss are asking looks credit

Adam Pollitzer

Yes.

Ryan Gilbert

basis This ratio XXX is up sequentially. points over

Adam Pollitzer

I also would in perspective. put -- and that that that I put calibrate Yes, would

yes, and of relative still three QX. it’s a in But half X.X% X.X%.Up, points. ratio percent basis loss to Our XXX

or Broadly maintain speaking, think what more a do relative. And as in it I the I QX. decision to as conservative. the way. matters to so was didn’t think influence about is much level it equally we this there to no, say be as less absolute an had goal And posture would our degree, But conservative our

conservatism up some You goal those bit but the embed run of your your your somewhat little is that place, in a frame of deeper we picks like. in at around rates back heels need assumptions the to speed? If would wind and in in dig terms the to

And cure came cure It’s or rate. through. what really that’s a from movement in activity so independent

Ryan Gilbert

some growth. is it. to impact question NIW. opening you offset slowdown lenders on business ability new on refinancing the in And second going NIW if can headwinds forward, got wondering your of if XX you Okay, that think quantify And new the lenders add your volume. I’m from can had to your quarter a the in

Claudia Merkle

and have lenders a been activating we new adding in consistent focus quarter for us. quarter. Look, Sure. over It’s been

diversification basis is the success. insurance to digital of all force use the of of and all will. order the be use fact, activations to is quite if of really As activated Because that top is able our a go all the today do frankly, back is we -- the of you in one at and a technology what even matter gain is things deeper in our what’s those technology, XXX through we this the lenders of can really because strong customers. But of beyond got market type strategy, that the have we’ve

grow volume? we opportunity is though that that. refinance a continuing. of just refi So opportunities matter continue MI and we driving the opportunities question out out There’s missed to I And other us? just piece, for if still balance largest about are there asking your we see on for constantly what that the it are would And the priority, us, to it’s

Ryan Gilbert

from was question can you throughout year, the on that and opening were lenders opened you’ve the planning volume. the the new the you quarter, course if of can think some in I’m whether headwinds likely. you you’re that assuming the that that more offset that help of expecting lenders My refinance

Claudia Merkle

goal. will Yes, sure. on quarter, quarter shift the but in that’s Things general

of continue success, on just the we going applications a there. do make it’s higher of so side, we to refis the to seen think a degree a dynamics. rates. see issue. had see availability We slow I you quite the activity, refi difference. strong won’t down We’ve also interest to matter the April, that because And a Also we purchase the what have due in the will quarter-over-quarter the are

Operator

And your from is final with Bank. question Phil Deutsche of the line Stefano

Phil Stefano

for rate-able bit I’m it which comparative response guess -- where earlier as move mind to volume. follow-up I push guess surprising. guess been NIW new to the is business, best digitization was I and feels translate we there’s to ask that a a to would a this on the going like my raters, wins. question, market a comment an a in I price execution

there the part could was And it in -- this question a there business on is this I anything made what seen pop feels digitization Is of the that. comment gives an So like more to inflection hoping quarter the over it change quarter. than new couple? in this we’ve still apparent or that second past look, as you you’d was it’s point a

Adam Pollitzer

are a it’s was started a that tools that dynamic broad not happening push, towards is that So lenders what in. that’s It’s rate-able rate-able Claudia let push. What towards was a The strategy not me clarify hastens a have industry about one end, to shift said. using rate-able the necessarily your question, move item in share not said that’s a a outcome. in by then of comment lay is It’s a and adopt. share lenders on virtue drive the will earlier not our tools

Claudia Merkle

drivers. Remember, to And digital Yes. was as that as really around COVID. evolution just the this far came fruition

will, if dynamic with and You’re customer, of you and now forces tool, outside does any that us have that of at people the activated don’t It And your gets a you’re shift. of office? out home comparison so you sitting in a build hoping and at where that you’re get we for coming been looking that and on The diverse broadly for. driver. quickly base. lenders, significant to us, it’s if the the was that what about we the X,XXX base, But so it’s we’ve big active map customer a really, you fact fact that had have it’s

portfolio. layer the of risk right As It of time, the we I our quality. that driver. is, think integrity mentioned, was did we volume and modest into our incremental amount other maintain still to choose the high prudently When about

it in a a the strong combination activation years customer acceleration of So yes, making help evolution did us, it’s the significant really boost. momentum. having of The and was digital

very came so all layering Some proud just on incremental we’re very modest of together in of and this risk, our nicely, success. the

Phil Stefano

I All I’m to just understand closed cadence If -- business about to If of switch understand, that XX, latest through happened. correctly, the ILN think ILN going this makes a the went the right, it of I sense. the question gears. the April was transaction I March ask end and

Adam Pollitzer

than Yes, that. little I’d a earlier it’s say bit

in were as market it’s price the X, about issuance, a where legally takes offering two deal, you transaction we the close. to as time April like frame. weeks bond and other that then early It’s X or allocated So capital it marketing

market a We about later. more days compressed it’s even month, timeline. the of the a we’re out in market and So closed the XX deal with and

XX XX, later. days So

Phil Stefano

can marketing to you until month that shortened driving like significant out as risk before be with So has closing fairly we’ve in is it it’s and the feels deal timeline well. is feels What that? it seen ILNs, like from pretty the that me warehousing that these shrinking the Because the significantly. that

Adam Pollitzer

Yes.

portfolios I we’ve issuance transaction Phil, that not able directly others on one I been we of don’t don’t say other is lag, others, that our and posture. for of some degree something exist issuers actually the execution, reason which point that the we’re but believe But actually Not So it’s the for it closed. have it’s reasons that like sandwich, others same in for it month a great time. doesn’t ILN against call that that that to there’s the there’s have of I I’ll the really highlighted. exactly focused focused will you lag an think path. It’s to quite most know on enormous this couldn’t amount follow been us. adopt some if you’ve that

to execution for warehousing really able We’re standpoint. so something time for There’s to that’s speaking less some generally a our reduce to time cadence. been now. our a exposure, That’s and to candidly and out standpoint from from just going quite be elapse and develop turn, market and cadence both our get

sandwich April if we that last completed we that it the right in from covered against XX, the really Our through reference deal year last of September X of so originated ‘XX up same you close, exact where October issuance was we risks the the of pool. will rhythm

Phil Stefano

be X is need reference of big And ILN that the to to enough transactions you get a to a attractive? X pool scale you for months the

Adam Pollitzer

there did million was in to underwriters This Yes. now. do, the was in a you have hand there. Probably $XXX actually files deal play the that we see transaction have so are enough before was reference some probably $XXX size, latitude also timeframe pool. issuance loan the have could of that on There five they large for portion is other the dynamics the that shortest absolute terms to diligence million in some that underlying at of months size,

these So other the takes for some bring our of volume just of to sense, given deals and aspects what cadence X-month where us, it about makes to a issuance market. is

Phil Stefano

tax to pricing Okay. is in a dynamics that. risk-based The to a in thinking is, that about last that this. change you Is engine the potential could Or up around for My me assumption simple that? as as we’ll just I’m US pricing dials for have account the about the change one I maybe get rate. talk it corporate you the

Adam Pollitzer

I hit we risk the reform, early importantly tax requirements and through, or does GPS. participants. on happens for Look, expected new adjusted rate an between appropriate, actually does from increase And the a with to that anything through, just Yes. an legislation, offer comes not too embedded nail happens, And impact need that US with us field tax rate, think would or in to to and standpoint. but reform think bill the risk else achieve level. basis it pan ultimately do would the any to it’s playing certainly of return. We But any have that some out. either increase offshore including in what level price play how we after how pricing our see say capital because that more And what see be an factors tax mind specifics. the they think to in overnight broadly to tax it’s price And drive appropriate think after we also to that We’d would pricing we with tax other it ultimately That prospect I’ll comes as after need would on to ability we’re on an an a there’s return. I you’ve head. to have tax then

Phil Stefano

more quick how see Do much do And follow-up. the landscape unfolds? is the about of use the this, slowly drive you When you can? as competitive as strategy What you that up think one dial mechanics you change? it through to behind

Adam Pollitzer

tax [indiscernible], now, shield the look what with the what will see is of but reform talked actively. being replacement that’s of right legislation ultimately say like. happens something to contours the there’s that’s would I need and about no Things provisions evolve. considered continue to We

response a map strategy just to as too early for So to it’s to far out. legislation, something us

Operator

now management for will back to call the I closing turn remarks.

Claudia Merkle

Thank us. you joining for again

be We hope XX, hosted virtual on and on Truest on you to of all and of May May Deutsche you healthy. Bank in June X. safe and at one are conferences look by participating XX investor will KBW We these forward events, seeing staying

Operator

and a have day. conference this and participation for concludes your gentlemen, you call. Thank today’s Ladies wonderful

all You may disconnect.

NMI (NMIH) 8 May 212021 Q1 Earnings call transcript