NMI Holdings, Inc. Q4 FY2025 earnings call

Brad Shuster highlighted that in the fourth quarter, NMI again delivered standout operating performance, with $49 billion of total NIW volume and a record $221.4 billion of primary insurance in force closed in 2025. They achieved record net income of $388.9 million, up 8% from 2024, record diluted EPS of $4.92, up 11% from 2024, and a 16.2% return on equity. Focus areas include people, customer differentiation, discipline in growing the insured portfolio, and creating value for shareholders. Adam Pollitzer noted that NMI continued to perform in the fourth quarter with significant new business production, consistent growth in the insured portfolio, and strong financial results. They had a record $180.7 million in total revenue, $94.2 million in GAAP net income, and $1.20 per diluted share. They activated 90 new lenders in 2025, ended with over 1,700 active accounts, and were recognized as a great place to work for the tenth consecutive year. They innovated in the reinsurance market, securing new treaties. Aurora Swithenbank discussed the strong Q4 financial results, including record total revenue, net premiums earned, investment income, and detailed on underwriting and operating expenses, credit performance, claims expense, net income, EPS, shareholders' equity, and book value per share. She also mentioned share repurchases and the new reinsurance treaties entered into.

In the fourth quarter, NMI Holdings achieved strong financial results. Total revenue was a record $180.7 million. They generated $14.2 billion of NIW volume, and their primary insurance in force grew to $221.4 billion, up 1.4% from the end of the third quarter and 5.4% compared to 2024. Net premiums earned in the fourth quarter were a record $152.5 million. Investment income was $27.5 million. Underwriting and operating expenses were $31.1 million, with an expense ratio of 20.4%. GAAP net income for the quarter was $94.2 million, or $1.20 per diluted share, and return on equity was 14.8%. Shareholders' equity at December 31 was $2.6 billion, and book value per share was $33.98.

Management expects the private MI market to remain strong in 2026 with long-term secular trends continuing to drive an attractive new business opportunity. They are confident in continuing to deliver value for their people, customers, and shareholders, building on their strong customer franchise, talented team, high-quality book, and robust balance sheet.

Potential impact of a reduction in FHA premiums, macroeconomic factors such as labor market strain, consumer debt at all-time highs, and consumer confidence issues. Also, credit volatility in the insured portfolio poses a risk.

Q: Have you seen any changes in the competitive landscape in the industry? And should we expect the core premium yield to remain pretty steady in 2026?

A: Broadly, a constructive environment with balanced volume, pricing, and unit economics. Core yield is expected to remain generally stable with potential minor fluctuations but generally stable.

Q: What might a potential reduction of premiums at the FHA mean?

A: The private MI industry already provides a low-cost high-value solution. There are challenges at the FHA regarding capital, regulation, and budget, and no additional FHA rate adjustment is expected as the MI industry is ready to provide support.

Q: Can you talk about what you're seeing in terms of the health of the consumer as we look out into 2026? And any color on credit trends by state or region?

A: Headline unemployment remains low, consumers are still spending, but there are risks like labor market strain and consumer debt. No notable concentrations in default experience by geography or cohort due to portfolio mix management.

Q: Quarterly runoff accelerated in the fourth quarter. Are you seeing that trend continue early this year? And what's the outlook for persistency?

A: Persistency declined 50 basis points in Q4 due to rate rally spurring refi and purchase activity. Persistency is expected to come down more in line with historical norms, with rate driving potential movements.

Q: When we disaggregate persistency, how should we think about credit and implications of the tale of two portfolios?

A: The pandemic-era portfolios will naturally run off, while later vintages have strong credit profiles but less embedded equity. Refinancing activity could refresh the credit experience normalization.

Q: When we look at NIW for the fourth quarter, do you think 2026 is the year to achieve parity share in NIW?

A: Delighted with Q4 performance, adding customers and winning share. Market expected to be attractive in 2026 with rates holding, but no specific target for parity share.

Q: When we disaggregate the persistency what you start to see is sort of the tale of two portfolios persistency on the twenty three and twenty four cohorts. How should we start to think about credit and the implications?

A: Pandemic-era portfolios will run off, later vintages have strong credit but less embedded equity. Refinancing can refresh credit experience normalization.

Q: The quarter share in XOL, think you talked about forward flow through 2028. Is that going to have a little further in the future than usual? And is there something you saw in the market or anticipate about coming in the market that influences them?

A: Forward flow coverage for 2028 was greater with better economics than previous years, showing strength in the reinsurance market.

Q: How about share buybacks or capital management 2026? Continue with this recent pace or accelerate a bit?

A: Delighted with the execution so far, a good assumption is around $25 million per quarter, with potential to take advantage of value opportunities.

Q: From an expense standpoint, any particular initiatives one way or the other? As we think about 2026? And anything on the AI front that jumps out at you that could contribute to some efficiencies?

A: Expenses were $31.1 million in Q4, same as 2024, with a lower expense ratio due to higher earned premiums. AI is deployed in various departments to increase speed and accuracy, with no significant incremental investment needed for deployment, as the company is already efficient.