NMIH - Earnings call 3 2023 | NMI Holdings, Inc.

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Operator

Good day, and welcome to the NMI Holdings Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. John Swenson. Please go ahead.

John Swenson

operator. you, Thank welcome for and XXXX Quarter Third Good MI. to Call National Conference afternoon, the I'm President Swenson, John Vice and Treasury. of Investor Relations

under us located the Chief press accessed today Investors Adam Joining Nick today. Rilmuto, the Chief call The Shuster, Financial and at released the Chairman; results on after Controller. Executive close for Financial are Officer; be Pollitzer, were . Officer; NMI's release Executive Brad and nationalmi.com may our website Ravi quarter Mallela, path. President on the

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

can our to the the we any about the trends subsequent materially discussed information do and be to regulatory Additional light SEC. our undertake update If differ in call those the found those or website forward-looking filings that results on could makes statements, future not with statements to of in through cause actual from developments. extent or the factors company the obligation on

GAAP. guidance one the the on Also the measures press our of that refer a of may the call. no provided should call, reconciliation statements and to any this such these other to we fact on rely In time comparable this current that non-GAAP certain than measures. note under on time release is Further, at of measures today's website, we most

over to the Now call I'll turn Brad.

Bradley Shuster

portfolio financial report in MI delivered continued again you, our growth performance, John, afternoon, National and quarter, results. Thank the standout third pleased record good I'm insured that and everyone. operating to in

high-quality, support. in period of volume, us we third their for the of record and high-performing borrowers the turn generated lenders continue insurance in $XX.X critical down a ending force. billion to payment And $XXX.X Our billion with NIW quarter, to

and the broader of While the to high-quality believe long-term valuable need a with focused encouraged insurance the equitable achieving the National this success market, the the the and a regard. and wealth broad macro borrowers FHFA that role of insured identity Washington, industry business. of access recognition housing constructive. on market, exceptional market. active . In our performance MI, mortgage through unique establish Policymakers, to greatly [indiscernible] evolve, remain and broader affordability our we private and plays across by regulators, there our environment we highly promoting all the portfolio the housing the risk access continues the and remain is remain to the we in resiliency And housing fair we're conversations build opportunity to At provide community homeownership. recognize and

quarter and With borrowers over our positioned for continue people, lead forward. our let it well most. going are us increasing we an and products need provide opportunity a and ever their time had Overall, and to value and before at to terrific our a more are when shareholders to drive we the Our third turn they and Adam. we to with customers me today than support borrowers that, support impact see important

Adam Pollitzer

in market for a macro environment financial XX% and record equity. quarter, a ahead. $X and diluted critical share to National results. everyone. particular, interest $XX the on third new customers insured Thank outperform continuing strong in look and as billion delivering we you, of Brad, record have rely record continued net portfolio with billion We in good strong we an the $XXX.X per to production, $XX.X of opportunity business quarter afternoon, return in had delivered period we in GAAP generated MI support. new . Overall, payment and business and our with see rates. million, are in million high-performing We significant their our exceptionally down growth of the housing Total in quarter size the ended and resilient insurance sustained borrowers or a confident revenue The remained high-quality, force. face lender and increasing on volume a income NIW record third us $XXX.X and of was

exceptionally performance insured an portfolio high-quality and have continues We stand to credit our ahead.

continue well that we've trends our book. and our innovation Our and value ever with when is has reinsurance have discipline manage comprehensive coverage persistency position markets volume nearly paired in robust current remains power all and significant balance building secured by led the of continued and of embedded on gains sheet transfer platform. helped supported growth we with expenses our risk in above earnings to drive the historical our insured to originated. policies with the And efficiency, capital NIW and We've a

seen course. these that has served strong us pricing, we've do to selection maintained More stance risks and a respect have be to and however, approach decisioning. remain, prudent we with risk broadly, had terrific portfolio reinsurance Notwithstanding in discipline standards macro the we've proactive positives, market. the and It's the across record appropriate and our financial strong an constructive. by performance the continues a well operating and remains we encouraged that Underwriting Overall, delivering our environment and MI rigorous, results. and been continued insured balanced quarter, remain pricing private growth continued

borrowers, over and shareholders. continue insured returns employees and it growth, through to in growth portfolio our we're turn our for their that, serve deliver to to ahead, With drive in Ravi. cycle the customers and their I'll Looking invest well success, value high-quality our positioned and our

Ravi Mallela

continued significant and credit record profitability. production, Adam. with line expense financial performance, in you, record in high-quality bottom growth business quarter results strong Thank the third delivered our record favorable portfolio, We efficiency line insured new experience, top

and net quarter. was grew X% serve $XX.X as million We XX.X% The in and value embedded Persistency return insured portfolio. persistency and compared second the the or was the driver insurance XX-month quarter GAAP quarter a per end XX% to of to $XXX.X important our our $X diluted X% revenue compared equity million. second second the billion, second the of a third growth record continues in was the from share, income quarter record our billion an $XXX.X and quarter XX%. in the of in on of NIW to to was XXXX. $XX force up of Total generated

Core quarter. the points, premiums the the points, basis quarter $XXX,XXX XX.X excludes XX.X to $XXX.X up to up $X.X earned in XX.X was coverage points which basis contribution in Net second second a earnings of yield, the cost in in from the second the of was the quarter. yield the cancellation our from Net compared quarter were from quarter. and reinsurance quarter million, XX million We cancellation record for $XXX basis single compared earned the from second third third points in premium the in policies basis million quarter.

second in in second XX% million $XXX.X to was income in to in the Investment quarter. to third quarter $XX.X XXXX. $XX.X a record operating compared the third million quarter expenses second quarter. up compared third Underwriting was $XX.X to in revenue quarter, Total the compared and quarter and million the compared the of the third million $XX.X the million X% quarter, were

XX at compared X,XXX quarter. default third June to the quarter. as in Our expense of rate $X.X compared September million of and quarter to in X,XXX was quarter had was the basis We ratio second our was as XX.X% points the XX $X.X second Claims to defaults compared end. million XX, expense XX.X% in

to have uniquely have housing insured with claims experience portfolio as of we discipline our seeing position the which benefit strong borrowers book market. continues the and our shaped broad resiliency and our as from high-quality we're a existing well We the the in

$X.XX $X.XX was a Net in including income per and $XXX investments the billion million. share, was diluted per diluted the were XXXX. of at million per XX% $X quarter quarter record holding compared end, to in $X.X to quarter cash diluted second third and expense of the X% cash share Interest compared or investments at the million $XX quarter company. share in up $X.X Total and

was year. compared $X.X we losses value X% compared quarter price $XX.XX, Shareholders' stock, XXX,XXX equity In average XX% repurchased of share the an The $XX.XX. to quarter at portfolio common shares million quarter, the in investment the per excluding third and $XX.X was gains the retiring of impact of per and to of third unrealized last the net second September $XX.XX. as and up Book book value of share, was billion, XX

September $XXX of capacity repurchase our of we program. remaining million existing under As XX, had

we and record experience $X.X me billion. in available insured performance, credit of with profitability required quarter assets financial available At Excess results driving bottom reported returns. back and efficiency quarter and record billion that, total under were billion. let assets our strong continued end, favorable continued growth risk-based Adam. to turn PMIERs expense In top third during portfolio, $X.X of delivered assets $X.X it standout With line high-quality the we summary, line

Adam Pollitzer

new significant Overall, Ravi. insured once record terrific portfolio growth had business our continued performance. a delivering we high-quality in and you, production, again financial quarter, Thank

that we've while to the to confident far day macro continue resiliency X evolve, environment our seen we approach the are thus our tremendous are we've will disciplined housing that in continues taken and economy market by and the managing to business forward, from Looking the encouraged drive performance.

a franchise, customer significant risk platform. talented solutions earnings team by driving set power covered sheet robust strong forward an day, a of every our comprehensive and exceptionally book a have We transfer a the by us high-quality balance of supported

ask so for Taken are the returns . Thank I'll value we can take to questions. today. for well back delivering our on joining growth, continue differentiated and you to positioned together, now shareholders. come operator we us your

Operator

first Your Instructions] with from JPMorgan. Shane question [Operator comes Rick

Richard Shane

well. I everybody hope is

would At bit what ratio. of the that Again, you be And what a operating ratio threshold would 'XX. see versus and wanted you see asymptotically 'XX to leverage? you a what don't step of continue the approach sort about little to sort you [indiscernible]. forward point do talk build that will expense -- down Just level tick where

Adam Pollitzer

and might on broader Ravi but we to from want of discipline nice and ratio in by business with specifics and the operating operating really our always it candidly, as matter. a advantage on speaking, it's wide we expenses sector Rick, managing expense MI it then with in the about have sustained how that a a I we focused absolute let you. to efficiency. about And the we expense perspective offer with a strategic our have hear dollars where answer lowest and start think Broadly quarter I'll expense been Yes, margin. believe trend,

into strategic the the that's the right? about financial it there's real benefits overlooked the portfolio. talk aspect, to terms returns naturally. our have we a and shape value directly approach and obvious is of insured expenses always you'll actively recognize, one, In of allow more profile often Lower management high-quality impact stronger generate also consistently our to we us risk . real that an that feeds But that strategic flexibility

taxes. to business simply coming revenue funding our we advantage, financial return premium with adequate operating our business our to and loss in expense matter, on absorb an concentration price higher needs our As coming to capital, costs, our generate a And have write risk, cover and We operating right? expenses, to policies of base. in our a we higher-yielding don't higher need need

proactive deliver while been our ability most so our to actually lot standpoint, And large risk can operating also expense returns carry on discipline while strong the and consistently we and of returns a traces of the the being have we to and from side. to disciplined continue achieving a to that most the business a approach and part that taking best-in-class flexibility mix managing discerning

not a So just about and a expense, but about I'll specifics as let expense we core us, advantage Ravi ratio. really operating think expense advantage strategic the model numbers answer for the

Ravi Mallela

our that past, just talked really really we our expect particular, comes the way we've also lot scalable, benefit just expense profile came we growth. head And that's of would expense Rick, Adam, smallest from happy QX our platform us XX.X% performed on. because wide do time, by the in about where a over from is efficient IT a And in and and But in And that advantage the I that a benefit that margin. strength management risk comes with people, technology, flexible. dollars focused grow our really, ratio OpEx ratio. having from add through novo about again And we're to of this has de we're and to what invest we continue expense in in and count

and efficiency mid- Now think QX, about our future. managing going manner we're and a optimistic delighted to of the to in certainly in we're low continue range we're achieve OpEx, to XXs, driving be disciplined and in that long-term to we for

Adam Pollitzer

industry. going Yes. rate to ratio Look, expense obviously low is got the the of lowest in base. the slow such from improvement absolutely lowest We've dollars a of broadly, expense

we're now, carry. we a with see forward. But is in we'll efficiency that where going So the right really trend good position

Richard Shane

advantage mean an you. the the focused No. I or creates but Thank I the day, well. observation on appreciate the am well. more important probably of comments little that, as the model and numbers benefit end a in at I it guy on as strategic it's

Operator

Next question with comes George KBW. from Bose

Bose George

It your reserving past to pretty that up that's of compared changed discuss for especially can trended how down, it for drivers for you like kind has over new accurate? looks was provision new XQ notices just and the And meaningfully. notices where year? Is

Ravi Mallela

to our broadly So a Bose, same does expectation for had X we've essentially been the in have nice the And environment, performing attributes far. you. home I I broad to prices to months they've would would generally, additional just environment. had in would What strain, given and from in recent And that What resiliency QX downside we've anchor just new defaults. into frankly, process. to the quarters. reserving into you come Certainly scenarios. the position. our We've have to highlight as price speaking, But is we been hear really they tend house that rising how moderated model I macro say, say, so

of so driven And those by aspects. quarter-over-quarter change that see sort you

Bose George

persistency have makes the runoff discuss over that ticked curious you a can kind I And It couple how ties with Okay. last of Is number annual has a just because that? and quarters. you definitely in persistency yes, sense. the just just just actually, then that the was statistic, of that -- up or quarterly quarterly

Adam Pollitzer

right. exactly that's Yes,

books runoff So off XX-month is on September of earlier. of has at. remains simply runoff percentage by quarterly number that's XX. inverse on was of much persistency. business at September that But XX we look June persistency as this the that our we how the as What of rate that run books the our measures It XX of what technically our that looking business to the of time year, months the of XX. run as was The get off is

Bose George

Okay.

suggest the see what So quarterly is annual that it better number? versus persistency a runoff, at sort that if I of annualize the we does that, not on Or doable? of kind the is pace

Adam Pollitzer

while of the rate in forward. we've No, well it's books, our the persistency going to isn't our talked for That above is persistency. historical runoff be So leaves now, the inverse, trends. which is staying inverse right? but us of our Right obviously of a going that on persistency terms trend

as expect see it's probably may forward. that roll as a but will We it down to we that, and up remain case, a the where sit we're migration, whether getting to some touch upper bounds touch will

Operator

comes question with [indiscernible] from Securities. Next Truist

Unknown Analyst

I'm this but for quarter? there in it, if calling missed Mark buybacks were I I'm Hughes. any share sorry

Ravi Mallela

there QX. approximately Yes, back In $XX.X QX, shares, were. million in we of shares XXX,XXX bought

Unknown Analyst

mentioned, And still to low as default concerns the you on an question helpful rates? with, in prices last rising quarter the was what it current would updated view asked figure, NMI most be right now give the environment you and

Adam Pollitzer

for to around we risk every and Yes.ellook, say our managers as it's concerns that. look certainly job corner, do I'd

ourselves So what we're a right? matters. around look We give cost we're that we're doing we on, around Are internally, what there of variety stress how should focused things us structured, IT for concern. We're at our culture, Thankfully, expense platform. across strength portfolio, high base, across our our there delivering exceptionally real our aren't. core and level our people, operating an performing whole

business everything internally. takes to that it for manage So us the

in that then whatever in talking tremendous in broadly let's a we last right? and risk we've while we still the right in candidly, that the of so up we're seen where And spent degree, environment perhaps in turn housing some though And right? market factors risk we we've an particular, think the back look months, volume we're elevated even economy time a several now for not And externally. the bit, at end the seen, now. say, over is of We're to external a terms resiliency

incremental have instability. geopolitical significant We

few the weeks as with shut down that for will government U.S. uncertainty long We the economy. that have sector ultimately to increasing what still are this have a We rates forward. mean

we're on on consumer we're response it's go we're it's performance about, price to surround the focused And naturally now, of macro, borrower these might that when most factors will performance that and that so house those that right are items It's where us. in paths. touch most risk focused unemployment all concerned the environmental

Operator

Your question next comes Eric with from BTIG. Hagen

Eric Hagen

Can maybe you that are pricing market. respect you elaborate you how is think to a and market. more competitive balanced surprised say maybe I slow in just not it's on you're that with seeing new is the constructive what what way, being given I origination characterized And activity or heard

Adam Pollitzer

that it's let really environment. then we the again, origination -- I'll is And really across on hardened macro well for their be question. fairly look risk to but say still for that a balance through forward touch strike hire elevated, discipline and speaking, is I we also year call support continue and need believed the still price at than should we and emerging approach right where laddered appropriate. very focused on as the be, so and what It's able and now have Today, we But also we're environment in is to We're the a we that necessary pricing on where and rates we risks No. risk vantage start us, in the recognize we was higher a were a by our the day both pricing. to with encouraged through selection. constructive both And it's view every that was taking. macro account to importantly from last what standpoint a itself holding fully right? broadly pricing where noted for mid-XXXX. ensuring good as from it while me that we and deliberate pricing in our And see incremental that point borrowers is And a way. customers achieve the it We've meaningfully and industry or over market. point, of

not so surprised And at all. we're

pricing lends where still that and heavy in itself in think deployment is risk-based the tools investment potential elevated. more great risk the of environment sector We for the the to value an

But volume. a in bit still not a at purchase in to new look the this we're a to year market And You from origination purchase And in record general years forward Right? is exactly trillion, were around an origination XXXX, even during size trillion $X.X expected And come question look, as a product. on as business from standpoint. XXXX. points business where a XXXX. up a and is purchase-driven very level around we Ours in is the XXXX is next a up peak year, you sense, touched which XXXX $X.X obviously, from was at MI the contemplate constructive to very pandemic environment with forecast pre-pandemic it $X.X environment. MIU environment, primarily we normalized in to more constructive XXXX, market, about same XXXX. trillion give

so sustained slowing a about point. ours level new origination a is the of side. market, through themselves, that but at the obviously purchase-focused an as on activity attractive opportunity And stress are originators the business primarily yes, headlines the emerge seeing We're

Eric Hagen

Yes. That's really helpful.

could even severity down? But comes the scenario scenario kind is rate with move is there with. will. to and point? stays delinquencies assume stable Or together, begin pick applied up some up it you to that delinquencies that's at to they rational where I or recognize there that of pick a if where stable they're delinquencies could very is So low a those

Adam Pollitzer

say good for So the it's frequency expectations question. I'd severity. both a and

if When severity of defaults might removed The directly means we but that were default How or default tend find defaults also defaults. their they've well, borrower -- from very a assumption is, this will that unemployment. the that's a is lost owe what tied increase, right? frequency reemployment can't which see of jobs established [indiscernible], were presented to likelihood the payment, play, they we other to the that, severity to happen progression and foreclosure reserve once see assumption borrowers the the which a incidence their some quickly, claim what's that comes to is being much claim. against we into we importantly, those is and most opportunities progresses home So being is ultimately the happen. actual do So when and number with frequency itself

of Both and The to unemployment. frequency price influenced tied incidence to more heavily default severity house by primarily are paths.

terms assume relationship would always house be but call tied by the in a the we default in that reserving stream carried environment, you If in of one-to-one shift that's demand obviously, And an we path I'll is corresponding close many paths saw gainful default an because a to so generally fundamental with necessarily where and see, a that's speaking, to we in house supply-demand-driven activity, a market through prospective going it, increase the didn't wouldn't case. relationship assumptions. see unemployment reasonably But between have price we not come borrowers. housing levels in price employment increase there's a

Ravi Mallela

I you've that that it's this And Adam, assumptions blanket apply process. in think important don't the recognize reserving sort of our to we past to Right. mentioned

about the to our we do quarter a are based these on of macro-driven allow us And process that loan our to of a each individual conclusion analysis reserving level defaulted come and models borrowers. every so profile

Operator

Daniel Bank of question comes [indiscernible] next America. from with Your

Unknown Analyst

new Your average dynamic versus on just yields a pretty at the you yield? the clip. nice overall increase investments portfolio between to the yield like Can portfolio continue about talk

Ravi Mallela

points naturally to net stable, so -- and been basis points, seen year basis XX cumulative few yield we're over over quarters. from profile. And the our by year were and generally the and QX. And it's it's in that business plus. we And and yields benefiting been and it's continued a it's trend that XX.X high-quality gains I favorable we've production new balanced yield we've respect both different achieved And generate core where persistency think somewhat modestly. had we're and from the in So at seeing both -- perspective, in the those is sometimes and of increases inflect that pricing taken higher the with was what a comes rate sort rate last in up last generally we've it's -- actions

Adam Pollitzer

round out. to just it Also

about what us in-force for word portfolio yield So and terrific. to allows revenue and quarters inflecting from premium we certainly yield it think higher generate a across the now, both headline is several the on the standpoint. We've been there yield which premium

We about for and delta meaningfully spread portfolio. rates you higher currently new compared average give we're the to at the rate money around increasingly yield focused our move a way portfolio it . on also seeing talk same And at lower of in X.X% to in and was the portfolio. seeing of higher X.X% continues an book from on terms yield investment dynamic. you're an focused blended book investment portfolio yield new we're a run on, standpoint, opportunities off, pretax to we're yielding X.X% that money The maturities as investing that the

Unknown Analyst

that like That's a business of detail. the moment. curious developments relatively [indiscernible] earlier, then industry any materially regulatory if things was see policymakers. change And great active have you like you quiet like lot the at just or or mentioned could the you I

Bradley Shuster

Yes. It's Brad.

said, of and We have value and have do with transparency consistency active engagement. FHFA that always we So and dialogue we as we [indiscernible]. the

are there we range imagine, can you As discussed. of items that a

range broad surround nothing and pending at fairness the Our most access, moment. really recent a of remain issues, and but among other affordability right focus points critical conversations those of

Operator

with Geoffrey question Dowling. next comes from Your Dunn

Geoffrey Dunn

'XX 'XX look potential the maybe elongating for the unique that interest years come of is you developing books, a through vintages, from are curious, vintage you those out ask the 'XX 'XX, now? of interest more credit 'XX those take going seasoning about effect curves to and results, earnings to wanted they the Or any season rate hit is higher profile specifically, 'XX time I curves? I'm where and softening a couple rates, out and and there vintages, but Adam, profile, same to as the at when the loan higher along and maybe low there's stick

Adam Pollitzer

they a the an manage homes. about also are they record of Jeff, high with XX-year Yes. provide their manageable good and spent equity that to are a And them that situated time as we all as they're in the borrowers, times rate environment extent employed. we And very we're lot low fixed stream sort today with emerges look, with how significant obviously, gainfully of existing look to in Because Obviously, it's service 'XX a notes and more forward, production debt locked from came those strong obligation. question. have higher credit but the and note equally borrowers . that stress talking we portfolio in had through the in seeing well rates. 'XX, as because speaking, they're we're more employment, low broadly good environment unemployment, carrying embedded who because both characteristics in our into portfolio earlier so a periods, through progress

mean, what right? mean forward. performance that for going does portfolio does so What that And

origination that that are are borrowers that's their vetted to is piece one from and I are the think where standpoint still the an applied same an and decision affirmative underwriting made critical ability their they seeing upfront. shifted. there's are rigor fully side. we're rigor, hasn't These support the is that That same evaluated pay tested -- mortgages on

So that's obligations underwritten, we're assuming and obviously a have. the comfortable positive. rate higher, is borrowers forward, who've though Even are carry the with rate they will that these that itself been debt

course appreciation and production see As their for for really may the we 'XX XXXX their time. compared see price we that and some from that we in may see homes years The environment say, through certainly an extraordinary in experience house the path, the performance XXXX now, loans for the several ever and driver or the who borrowers again 'XX of are pandemic through it's not benefited we credit the of right? years to, shift look forward, that price bigger house

with we will see rate. so appreciated book stress price the XX end they X% of to still 'XX of coverage. years of X% X% it, through service different day 'XX or now for positions forward. borrow XXXX or And the who in happens DTI, with house it's with not their a really same seasoning note the we've and just path a necessarily the its borrowers rate, begin seen that's a whether just XX portfolio But the borrowers. natural an XXXX the mortgage the implication what [indiscernible], has At be terms calculation about a still going whether of call it's their, in BTI, related borrower from note a and the equity than an to the the face X% get as mortgage there It's debt

Geoffrey Dunn

as think about the And you home incremental particularly the How assumptions given you're your Okay. reserving the negative prices. supply. making can for for assumption housing on of tightness the then you anchor

Adam Pollitzer

Look, can an we always we reserving time to purposes, anchor aim responsibility to conservative a But estimate. for how we that have appropriately establish -- to we negative a also take best use appropriate an to, for but talked some view.

We going And all tomorrow. we what see to setting downside balance practice, today position. to seeing has we're our that of so is our have today. at our what when to times anchor in inform reserve actually that to we happen naturally more what's that do means view scenarios by What generally

embedding stress strain in . But Robbie and mentioned, as so moderate our we embedded are declines price reserve still we that September our did economic in a bias also for position. expectations XX, at are analysis. And house our

Operator

I'll session. question closing hand our for and now answer back remarks. concludes This

Adam Pollitzer

look be with December will Thursday, thank our soon. annual Services us. for We'll Day XX, Financial you November Investor to X. in be New hosting again again Goldman We and on Sachs York participating on forward speaking Conference you the in Well, joining

Operator

for participating. concluded. Thank has This now you conference

now disconnect. may You

NMI (NMIH) 1 Nov 232023 Q3 Earnings call transcript