• Total Revenue: $166.5 million in Q4 2024, a record high.
• Adjusted Net Income: $86.1 million in Q4 2024.
• Adjusted EPS: $1.07 per diluted share in Q4 2024.
• Adjusted Return on Equity: 15.6% in Q4 2024.
• New Insurance Written (NIW) Volume: $11.9 billion in Q4 2024.
• Primary Insurance in Force: $210.2 billion at the end of Q4 2024.
• Net Premiums Earned: $143.5 million in Q4 2024.
• Investment Income: $22.7 million in Q4 2024.
• Underwriting and Operating Expenses: $31.1 million in Q4 2024.
• Expense Ratio: 21.7% in Q4 2024.
• Claims Expense: $17.3 million in Q4 2024.
• Total Cash and Investments: $2.8 billion at the end of Q4 2024.
• Shareholders' Equity: $2.2 billion at December 31, 2024.
• Book Value per Share: $28.21 at December 31, 2024.
• Book Value per Share (Excluding Unrealized Gains/Losses): $29.80 at December 31, 2024.
• Common Stock Repurchased: $27.9 million in Q4 2024, retiring 722,000 shares.
• Total Available Assets: $3.1 billion at the end of Q4 2024.
• Excess Available Assets: $1.3 billion at the end of Q4 2024.

• Warning! GuruFocus has detected 3 Warning Sign with NMIH.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NMI Holdings Inc (NASDAQ:NMIH) reported record adjusted net income of $365.6 million for 2024, up 13% compared to 2023.
• The company achieved a record adjusted EPS of $4.50, marking a 17% increase from the previous year.
• NMI Holdings Inc (NASDAQ:NMIH) closed 2024 with $210.2 billion of high-quality primary insurance in force, demonstrating strong portfolio growth.
• The company activated 118 new lenders in 2024, ending the year with over 1,600 active accounts, indicating robust customer development.
• NMI Holdings Inc (NASDAQ:NMIH) was recognized as a great place to work for the ninth consecutive year, reflecting a strong corporate culture.

Negative Points

• The company's default rate was 1% at year-end, with 6,642 defaults, including 471 new notices related to FEMA-declared disaster areas.
• Claims expense in the fourth quarter increased to $17.3 million from $10.3 million in the third quarter, indicating rising claims costs.
• The reserve release for prior period defaults was lower than in previous years, suggesting a potential slowdown in cure rates.
• The net yield for the quarter decreased slightly due to the way reinsurance claims expense flows through the income statement.
• Despite strong financial performance, the expense ratio remained at 21.7%, indicating limited improvement in expense efficiency.

Q & A Highlights

Q: How should we think about the pacing of capital return with the new repurchase authorization? A: Adam Pollitzer, President and CEO, explained that the $250 million repurchase authorization strikes a balance, allowing for prudent management of funding needs while providing ample runway for consistent stock repurchases over the next several years. Historically, they have averaged about $25 million per quarter, and with the new authorization, they plan to maintain this consistency while also being opportunistic if the market environment allows.

Q: Can you provide more details on the credit reserve release and claims activity this quarter? A: Aurora Swithenbank, CFO, noted that the reserve release for prior period defaults was $4.4 million, with most cures embedded in the current year line. The total cure population was $16.3 million, with a cure rate of 29% in the fourth quarter. Adam Pollitzer added that claims expense was $17.3 million, influenced by storm-related defaults, but overall credit performance remains strong.

Q: When might dividends become part of the capital return strategy? A: Adam Pollitzer stated that the focus is currently on the repurchase program, which provides significant value given the trading position relative to book value. While a common dividend might be considered in the future as earnings grow, the repurchase program remains the primary focus for capital return.

Q: Are there any specific regulatory plans from the new administration that could benefit the MI industry? A: Adam Pollitzer mentioned that there is broad bipartisan recognition of the value the private mortgage insurance industry brings, providing low-cost solutions for homeownership while protecting taxpayers. The company is eager to engage with the new administration to understand their priorities and where they can contribute.

Q: What is the outlook for premium yield, and how does credit deterioration impact it? A: Aurora Swithenbank explained that the core yield is expected to remain stable, while the net yield may vary with claims experience due to the workings of profit commissions in reinsurance treaties. Credit deterioration could impact the net yield, but the overall financial impact remains consistent.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.