NMI Holdings Inc ((NMIH)) has held its Q1 earnings call. Read on for the main highlights of the call.
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NMI Holdings struck an upbeat but measured tone in its latest earnings call, underscoring record revenue and insurance-in-force alongside robust profitability and capital strength. Management framed the quarter as continued outperformance, yet acknowledged early signs of credit normalization, with rising defaults and macro uncertainty prompting a cautious stance on future credit trends and refinance-driven volumes.
Record Top Line and Revenue Growth
NMI Holdings reported record total revenue of $183.5 million for the first quarter of 2026, marking a 2% sequential increase and a 6% rise year over year. The steady growth underscores resilient demand for mortgage insurance products and the company’s ability to sustain pricing and volume momentum despite a choppy housing and rate backdrop.
Strong Profitability and Returns
Adjusted net income reached $99.4 million, or $1.28 per diluted share, translating into an adjusted return on equity of 15.2%. GAAP net income closely matched at $99.3 million, highlighting efficient capital deployment and disciplined underwriting that continue to drive double‑digit returns for shareholders.
Robust New Insurance Written
New insurance written surged to $12.3 billion in the quarter, which management indicated represented roughly 33% growth versus the prior year. The strength in NIW reflects NMI’s continued penetration with lenders and borrowers, as well as its ability to win business while maintaining risk discipline in a competitive mortgage insurance market.
Record Insurance-in-Force
Primary insurance-in-force ended the period at a record $222.3 billion, consisting of what management characterized as high‑quality risk. This expanding book of insured mortgages provides a growing base of recurring premium revenue and supports the company’s long‑term earnings power, even as credit trends begin to normalize.
Net Premiums and Yield Stability
Net premiums earned climbed to a record $154.8 million, up from $152.5 million in the prior quarter, while net yield held steady at 28 basis points with core yield at 34 basis points. The stability in yields suggests that reinsurance costs and pricing dynamics remain well managed, providing visibility into future premium income.
Investment Income and Expense Efficiency
Investment income increased to $28.6 million, up from both the prior quarter and the prior year, benefiting from higher interest rates on the company’s investment portfolio. Underwriting and operating expenses edged down to $30.6 million, improving the expense ratio to 19.8% and reinforcing NMI’s focus on operating leverage and cost discipline.
Capital Strength and Shareholder Returns
Shareholders’ equity reached $2.6 billion, with book value per share at $34.57 and book value excluding unrealized marks at $35.46, up 3% sequentially and 15% year over year. The company repurchased $27.7 million of stock, or 716,000 shares, during the quarter and still has $198 million of buyback capacity, signaling confidence in intrinsic value and future earnings.
Regulatory and Balance Sheet Cushion
Under the PMIERs framework, NMI reported $3.6 billion of available assets versus $2.2 billion of required risk‑based assets, leaving about $1.5 billion in excess. This substantial cushion offers flexibility to absorb potential credit stress, support ongoing growth in the insured portfolio and continue capital returns without compromising regulatory strength.
Reserve Discipline and Stability
The reserve per new notice of default was $14,200 in the quarter, essentially in line with the prior quarter’s roughly $14,500 level. Management emphasized that defaults are modeled loan by loan and that reinsurance and pricing decisions remain conservative, underscoring a disciplined stance as the portfolio seasons.
Rising Defaults and Default Rate
Defaults increased to 8,044 at quarter‑end from 7,661 three months earlier, pushing the reported default rate to 1.17%. While still low by historical standards, this uptick signals modest upward pressure on credit costs as the book matures and as more recent vintages experience normal loss development.
Persistency Slightly Lower
Twelve‑month persistency slipped to 82.2% from 83.4% in the prior quarter, indicating a mild weakening in policy retention. Although the level remains healthy, the decline suggests less benefit from refinance‑driven churn, which can influence both volume dynamics and the mix of new versus legacy policies.
Claims and Credit Normalization Trends
Claims expense came in at $20.7 million, down slightly from the prior quarter but sharply higher than the $4.5 million reported in the same period a year earlier. The increase versus last year reflects a normalization in claims as more post‑pandemic vintages enter default and as loss severity rises within a relatively small subset of loans.
Reserve Per Notice and Exposure Growth
Average reserve per notice across the overall notice-of-default population rose by about 2% sequentially, driven by larger average loan sizes and higher exposure to post‑COVID originations with less embedded equity. This incremental build indicates management is proactively capturing higher potential severity as the risk profile of the portfolio evolves.
Macro and Market Risks
Management flagged several external risks, including swings in mortgage rates, with 30‑year rates moving from below 6% to around 6.5%, as well as geopolitical tensions and softer consumer indicators. These factors could weigh on refinance activity, constrain new purchase volumes and influence future credit performance, even as the core business remains robust.
Profit Commission Trend
Profit commissions linked to reinsurance arrangements have been trending lower as credit metrics normalize and the economics of profit‑sharing adjust. While this drag reflects the end of unusually benign credit conditions, it also underscores how NMI’s reinsurance structures are designed to balance earnings with risk transfer over the cycle.
Directional Outlook and Strategic Priorities
Looking ahead, management expects 2026 volumes to be broadly similar to 2025 and plans to maintain disciplined pricing, risk selection and reinsurance while growing its high‑quality insured portfolio. They highlighted a strong earnings and capital position, tight cost control, sound credit metrics and ample buyback capacity, and signaled that they are preparing for potential macro stress while aiming to sustain outperformance.
NMI Holdings’ latest earnings call painted a picture of a company balancing strong growth and profitability with rising but manageable credit risk. Investors heard a story of record financial metrics, conservative capital management and pragmatic caution on the macro backdrop, suggesting that NMI intends to defend returns even as the mortgage cycle gradually normalizes.