NMI Holdings Earnings Call Shows Profitable Growth

NMI Holdings Inc ((NMIH)) has held its Q1 earnings call. Read on for the main highlights of the call.

NMI Holdings’ latest earnings call struck a confident tone, with management highlighting record revenue, strong profitability and disciplined capital deployment. Executives acknowledged early signs of credit normalization, including rising defaults and slightly lower persistency, but insisted that robust capital, prudent reserving and cautious underwriting position the company well for a more volatile macro backdrop.

Record Top Line and Revenue Growth

NMI Holdings reported record total revenue of $183.5 million for Q1 2026, marking a 2% increase from the prior quarter and a 6% rise year over year. Management framed this as evidence that the company is still growing profitably even as the broader mortgage market faces rate-driven headwinds.

Strong Profitability and Returns

Adjusted net income reached $99.4 million, or $1.28 per diluted share, translating to a healthy adjusted return on equity of 15.2%. GAAP net income was essentially identical at $99.3 million, underscoring that earnings quality remains solid without heavy reliance on one-time items.

Robust New Insurance Written (NIW)

The insurer generated $12.3 billion of new insurance written in the quarter, which management said represented roughly 33% year-over-year growth. This performance suggests NMI is gaining share or deepening relationships even as higher rates weigh on overall mortgage origination volumes.

Record Insurance-in-Force

Primary insurance-in-force climbed to a record $222.3 billion, reflecting both strong NIW and still-elevated loan persistency. Management emphasized the high quality of this book, which they see as a key driver of recurring premium and long-term earnings power.

Net Premiums and Yield Stability

Net premiums earned rose to a record $154.8 million, up from $152.5 million in the fourth quarter, supported by the growing insurance-in-force. Net yield held steady at 28 basis points, with core yield at 34 basis points, signaling stable pricing and reinsurance economics despite changing credit conditions.

Investment Income and Expense Efficiency

Investment income continued to benefit from higher interest rates, increasing to $28.6 million from $27.5 million in Q4 and $23.7 million a year earlier. At the same time, underwriting and operating expenses fell modestly to $30.6 million, nudging the expense ratio down to 19.8% and highlighting tight cost control.

Capital Strength and Shareholder Returns

Shareholders’ equity stood at $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, in Q1 and still has $198 million of remaining buyback authorization.

Regulatory and Balance Sheet Cushion

Under PMIERs, NMI reported $3.6 billion of available assets against $2.2 billion of required assets, leaving about $1.5 billion of excess regulatory capital. Management pointed to this surplus as a key buffer that enables continued growth, supports shareholder returns and protects against potential macro shocks.

Reserve Discipline and Stability

Reserve per new default notice was $14,200 in Q1, roughly in line with the prior quarter’s $14,500 level, indicating stable loss assumptions. Executives stressed that each default is modeled individually and that reinsurance and pricing remain conservative to keep loss volatility in check.

Rising Defaults and Default Rate

Defaults rose to 8,044 at March 31 from 7,661 at year-end, pushing the default rate to 1.17% and signaling modest upward credit pressure. Management characterized this as part of a normalizing cycle rather than a sign of systemic deterioration, but investors will likely watch this trend closely.

Persistency Slightly Lower

Twelve-month persistency slipped to 82.2% in Q1 from 83.4% in Q4, reflecting slightly higher policy runoff. While still strong by historical standards, the small decline hints that some borrowers are refinancing or moving, which could gradually temper premium growth if the trend accelerates.

Claims and Credit Normalization Trends

Claims expense came in at $20.7 million, down slightly from $21.2 million in Q4 but sharply higher than $4.5 million in Q1 2025, as more post-COVID vintages enter default. Management framed this spike as credit costs returning to a more normal level after unusually benign pandemic-era performance.

Reserve Per NOD and Exposure Growth

Average reserve per notice of default increased about 2% quarter over quarter, reflecting larger loan sizes and more exposure to post-pandemic vintages with less built-up equity. This shift suggests that while the overall book is strong, loss severity on new problem loans could be higher than in earlier cohorts.

Macro and Market Risks

Executives flagged interest rate volatility, including a move in 30-year mortgage rates from below 6% to around 6.5%, as a key external risk. They also cited geopolitical tensions, slower hiring and softer consumer confidence as factors that could weigh on refinance volumes and drive further credit normalization.

Profit Commission Trend

Management acknowledged that profit commissions tied to reinsurance and profit-sharing arrangements have been trending lower. This decline is consistent with rising defaults and claims as credit normalizes, and it modestly offsets some of the gains from higher volume and investment income.

Forward-Looking Outlook and Strategic Priorities

While avoiding formal numerical guidance, NMI expects 2026 volumes to be broadly in line with 2025 levels and plans to maintain disciplined pricing, risk selection and reinsurance. The company aims to grow its high-quality insured portfolio, manage expenses with only modest increases, return capital via buybacks and leverage its sizable PMIERs excess while staying prepared for potential macro stress.

NMI Holdings’ earnings call presented a story of continued outperformance built on record revenue, strong returns and a fortified balance sheet, set against a backdrop of gradually normalizing credit. For investors, the key takeaway is that management sees ample room to grow and return capital, but is clearly bracing for tougher conditions and is tightening risk controls rather than chasing volume at any price.