NMI Holdings Earnings Call Highlights Record Results

NMI Holdings Inc ((NMIH)) has held its Q4 earnings call. Read on for the main highlights of the call.

NMI Holdings’ latest earnings call struck an upbeat tone, spotlighting a string of record results while treating emerging credit headwinds as manageable. Management leaned on strong capital, robust reinsurance and disciplined expenses to argue the franchise is well positioned, even as defaults, claims and modestly lower persistency begin to normalize the portfolio.

Record Revenue and Full-Year Profitability

NMI reported record quarterly revenue of $180.7 million and full-year revenue of $706.4 million, up about 9% year over year. Full-year GAAP net income reached a record $388.9 million, with diluted EPS of $4.92 up 11% and return on equity a strong 16.2%, underscoring sustained profitability.

Strong NIW and Growing Insurance Portfolio

New insurance written totaled $14.2 billion in the fourth quarter and $49 billion for the year, supporting steady franchise expansion. Primary insurance in force climbed to a record $221.4 billion, up 1.4% sequentially and 5.4% year over year, with more than 680,000 policies outstanding.

Rising Book Value and Capital Strength

Book value per share came in at $33.98, or $34.58 excluding unrealized investment swings, rising 4% quarter over quarter and 16% year over year. The company ended the year with $3.5 billion of PMIERs assets against $2.1 billion required, leaving $1.4 billion of excess capital as a key safety buffer.

Reinsurance Strategy Enhances Resilience

Management highlighted a series of quota-share and excess-of-loss reinsurance deals, including forward-flow coverage extending through 2028. These treaties, at an estimated 4% pretax cost of capital, were characterized as best-in-class for cost, capacity, duration and structure, helping shift risk off balance sheet.

Premiums Hit Records as Yields Hold

Net premiums earned reached a record $152.5 million in the quarter, up roughly 6.3% from a year earlier. Net yield stayed at 28 basis points while core yield, excluding reinsurance and cancellation effects, held steady at 34 basis points, signaling pricing stability despite portfolio shifts.

Ongoing Share Repurchase Program

The company repurchased $31 million of stock in the quarter, buying back 811,000 shares at an average price of $37.72. Since 2022, total repurchases have reached $349 million, or 12.1 million shares, with $226 million of capacity remaining and a targeted pacing of about $25 million per quarter.

Expense Discipline Supports Margins

Underwriting and operating expenses were $31.1 million in the quarter, flat versus the prior year in absolute dollars. That translated into an expense ratio of 20.4%, comfortably within the 20–25% target range and presented as best-in-class efficiency relative to peers.

Investment Income Adds to Earnings Power

Investment income rose to $27.5 million in the fourth quarter, up from $22.7 million a year earlier, a roughly 21% increase. This higher investment contribution provides an additional lever for revenue and earnings growth alongside core mortgage insurance results.

Customer and Distribution Expansion

NMI activated 90 new lenders during the year and closed 2025 with more than 1,700 active accounts. This broadening distribution network underscores continued customer traction and supports future NIW and insurance-in-force growth.

Persistency Eases but Remains Elevated

Twelve-month persistency slipped to 83.4% from 83.9% in the prior quarter, a 50-basis-point decline tied to rate moves and stronger refinance and purchase activity. Management stressed that persistency remains well above historical norms and is expected to gradually drift back toward long-term averages.

Defaults Tick Higher as Portfolio Seasons

Defaults increased to 7,661 at year-end from 7,093 at the end of the third quarter, an 8% sequential rise. The reported default rate of 1.12% remains low by historical standards, but it reflects the natural seasoning of a growing book and the beginning of credit normalization.

Claims Expense Rises with Growth and Seasonality

Claims expense climbed to $21.2 million in the quarter from $18.6 million, a 14% sequential increase. Management linked the move to seasonal factors and the continued seasoning of the insured portfolio rather than any discrete credit shock.

Uneven Runoff Across Vintages

The company described a “tale of two portfolios,” with 2023–2024 production showing faster runoff than older cohorts. This mix dynamic could accelerate turnover in some higher-quality vintages and influence the timing and shape of credit normalization as large post-pandemic books age.

Macro and Consumer Risks Under Watch

Executives flagged rising consumer debt, slower hiring and pockets of weaker confidence as watchpoints for future credit stress. They also noted that interest-rate volatility could influence mortgage activity and borrower performance, though current trends remain within expected risk parameters.

Yield Volatility and Reinsurance Dependence

While core yield stayed stable, management cautioned that net yield and profit commissions can move with loss experience and reinsurance economics. The company continues to lean on reinsurance, including forward-flow structures at about a 4% pretax cost, to scale growth while managing capital and risk.

Forward-Looking Guidance and Outlook

Management expects core yields to remain broadly stable and persistency to stay above historical norms while gradually trending down. They see the private mortgage insurance market remaining healthy in 2026, plan to maintain reinsurance coverage through 2028, continue buybacks near $25 million per quarter, and aim to sustain mid-teens ROE while growing book value.

NMI’s call painted a picture of a mortgage insurer delivering record earnings and capital strength while acknowledging early signs of portfolio seasoning. For investors, the key takeaway is a company leaning on robust reinsurance, disciplined costs and active buybacks to navigate a maturing credit cycle and preserve attractive returns.