What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-24 compared with 2020-02-14 · 279 added, 150 removed, 435 unchanged (50% of the section changed)

5 unchanged sentences

Our actual results could differ materially and adversely from those anticipated in these forward-looking statements, including any such statements made in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Risk Factors Relating to Our Business Operations

Risk Factors Summary

The following is a summary of the principal risks that could materially adversely affect our business, operations and financial results:

Risk Related to Our Business Operations

• We face intense competition for business in our industry, and if we are unable to compete effectively, we may not be able to achieve our business goals, which would adversely affect our business, financial condition and operating results.

• Our NIW volumes could be adversely affected if lenders and investors select alternatives to private MI.

• If we are unable to continue to attract and retain the most significant mortgage originators as customers, our ability to achieve our business goals could be negatively impacted.

• If the volume of high-LTV loan originations declines, our NIW volume could decline, which would reduce our revenues.

• Our underwriting and credit risk management policies and practices may not anticipate all risks and/or the magnitude of potential for loss as the result of unforeseen risks.

• Unexpected material increases in borrower defaults could cause our actual losses to materially exceed our expected loss rates, including in certain geographic regions in which our business may be concentrated and more susceptible to downturns.

• The premiums we charge may be insufficient to cover claim payments and our operating costs.

• Changes in factors that impact the length of time that our policies remain in force may adversely affect our future revenues and claims experience.

• We are outsourcing the underwriting of our mortgage insurance on certain loans to third-party underwriting service providers (USPs).

If these USPs fail to adequately perform their underwriting services or place our coverage on loans we would deem ineligible, we could experience increased claims on loans underwritten by them and our customer relationships could be negatively impacted.

• Our Master Policies contain restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics.

• The mix of business we write affects our revenue stream and the likelihood of losses occurring.

• We expect our claims to increase as our insured loan portfolio grows and matures.

• Our business depends, in part, on effective and reliable loan servicing.

• If the estimates we use in establishing claims reserves are incorrect, the actual claim payments we make may materially exceed the amount of our corresponding claims reserves, resulting in unexpected charges to income, which could be material and adversely affect our results of operations.

• The COVID-19 outbreak may continue to materially adversely impact our financial results and may also materially adversely affect our business, liquidity and financial condition.

• The occurrence of natural or man-made disasters or pandemics other than COVID-19 could adversely affect our business, financial condition and operating results.

• We are exposed to certain risks associated with our third-party reinsurance transactions, including the possibility that our reinsurers will fail to perform their obligations or that we will lose the capital credit we expected to receive when we entered

into the transactions as a result of future GSE or Wisconsin OCI action or if any of our reinsurers experiences a downgrade or other adverse business event.

• Our operating results depend in large part on our ability to manage the risks related to the growth of our business and on maintaining and enhancing effective operating procedures and internal controls.

• We are exposed to operational risk from fraud, malfeasance or error by employees and third-party service providers, and any such fraud, malfeasance or error could materially and adversely affect us.

• If we do not maintain connectivity with or otherwise meet the technological demands of our customers or are unable to develop, enhance and maintain our proprietary technology platform, our business and financial performance could be adversely affected.

• We may not be able to prevent the unauthorized disclosure or misuse of confidential, personal or proprietary information.

• Adverse investment performance may affect our financial results and ability to conduct business.

• We face regulatory and litigation risks associated with offering loan review services.

Risk Related to Regulation of the Mortgage Insurance Industry

• There can be no assurance that the GSEs will continue to treat us as an approved insurer in the future, and our failure to maintain compliance with the GSEs' PMIERs could adversely impact our business, financial condition and operating results.

• Changes in the business practices of the GSEs, including a decision to decrease or discontinue the use of private MI, federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses.

• We are subject to comprehensive state insurance regulations and capital adequacy requirements, which we must satisfy to continue to operate our MI business.

• The private MI industry is, and as a participant we are, subject to litigation and regulatory enforcement risk generally.

• Our business prospects and operating results could be adversely impacted if, and to the extent that, the Consumer Financial Protection Bureau's ATR Rules defining a QM negatively impact the size of the origination market.

• The Company may be adversely impacted by the phasing out of LIBOR.

Risks Related to Our Holding Company and Capital Structure

• Our holding company structure and certain regulatory and other constraints could affect our ability to satisfy our obligations and potentially require us to raise more capital.

• Our substantial indebtedness could adversely affect our financial condition.

• Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

• Despite our substantial level of debt, we may incur more debt, which could exacerbate any or all of the risks described above.

• Our current credit ratings may adversely affect our ability to access capital and the cost of such capital, which could have a material adverse effect on our business, financial condition and operating results.

General Risks Related to Ownership of Our Common Stock

• We do not anticipate paying any dividends on our common stock in the near future, and payment of any declared dividends may be delayed.

• The market price of our common stock may be volatile, which could cause the value of an investment in our common stock to decline.

• The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale, and future issuances of our common stock may depress our share price and dilute the book value of our common stock.

• Future issuance of debt or preferred stock, which would rank senior to our Class A common stock upon our liquidation, may adversely affect the market value of our common stock.

• Provisions contained in our organizational documents, as well as provisions of Delaware law and Wisconsin insurance law, could delay or prevent a change of control of us, which could adversely affect the price of shares of our common stock.

For a more complete discussion of the material risks facing our business, see below.

Risks Related to Our Business Operations

We face intense competition for business in our industry, and if we are unable to compete effectively, we may not be able to achieve our business goals, which would adversely affect our business, financial condition and operating results.

The MI industry is highly competitive.

8 unchanged sentences

Certain of our competitors are subsidiaries of larger and more diversified corporations that may have access to greater amounts of capital and financial resources than we do, or a lower cost of capital, and some have better financial strength ratings than we have.

As a result, they may be better positioned to compete in and outside of the traditional MI market, including when the GSEs pursue alternative forms of credit enhancement other than private MI.

In particular, in 2018, each GSE began piloting a new credit risk transfer program under which the GSE purchases high-LTV loans ( i.e.

, LTVs above 80%) without MI and subsequently places mortgage insurance with a captive insurer controlled by one of our competitors, which captive in turn cedes 100% of the risk to a panel of offshore reinsurers.

Freddie Mac's program is known as IMAGIN and Fannie Mae's program is known as Enterprise-Paid Mortgage Insurance or EPMI.

We believe these programs compete with traditional LPMI products offered by private MI companies, including ours, and they may gain traction in the market if, and to the extent, the pricing for these products is lower than prevailing LPMI rates and features of the GSEs' offerings cause originators and the GSEs to materially modify their historical preference for private MI as credit enhancement on high-LTV loans.

In addition, the pricing of the IMAGIN and EPMI programs and competing LPMI products may allow these products to begin to impinge on BPMI market share, or may cause MIs, including NMIC, to reduce BPMI rates to more effectively compete with these products.

As a result, they may be better positioned to compete in and outside of the traditional MI market, including when the GSEs pursue alternative forms of credit enhancement or credit risk transfer other than private MI, such as their IMAGIN and EPMI programs.

Our financial strength ratings are important for our customers to maintain confidence in our products and our competitive position.

5 unchanged sentences

• lenders using government mortgage insurance programs, including those of the FHA, USDA and VA, and state-supported mortgage insurance funds in several states, including Massachusetts and California;

lenders and other investors holding mortgages in portfolio and self-insuring;

• lenders and other investors holding mortgages in their portfolios and self-insuring;

• GSEs and other investors using credit enhancements other than MI (including alternative forms of credit risk transfer such as IMAGIN and EPMI), using other credit enhancements in conjunction with reduced levels of MI coverage, or accepting credit risk without credit enhancement;

14 unchanged sentences

Factors that could cause government-supported mortgage insurance programs to remain significant include:

change to federal housing policy, including government MIs reducing their premiums or loosening their underwriting guidelines;

• change to federal housing policy and/or priorities, including government MIs reducing their premiums, which may be more likely under the current Presidential administration, or loosening their underwriting guidelines;

• increase in premium rates or tightening of underwriting guidelines by private mortgage insurers;

• capital constraints in the private MI industry;

increases in capital requirements imposed on private mortgage insurers by the GSEs or states;

• increase in capital requirements imposed on private mortgage insurers by the GSEs or states;

• continuation of increases to or imposition of new GSE loan delivery fees on loans that require MI, which may result in higher borrower costs for MI loans compared to loans insured by government MIs;

27 unchanged sentences

• restrictions on mortgage credit due to more stringent underwriting standards, more restrictive regulatory and capital requirements and lender liquidity issues;

the health of the real estate industry and the national economy and conditions in regional and local economies;

• the health of the real estate industry and the national economy and conditions in regional and local economies, which currently is impacted by the COVID-19 pandemic and related containment measures;

• housing affordability;

10 unchanged sentences

The presence of multiple higher-risk characteristics ( i.e., layered risk) in a loan materially increases the likelihood of a default on such a loan unless, and to the extent, there are other characteristics to mitigate the risk.

The frequency and severity of claims we incur is uncertain and depends largely on general economic conditions, including unemployment and interest rates and trends in home prices.

The frequency and severity of claims we incur is uncertain and depends largely on general economic conditions, including unemployment and interest rates and trends in home prices, which currently have been impacted by the effects of the COVID-19 pandemic and related containment measures.

To the extent that a risk is unforeseen or is underestimated in terms of frequency and/or severity of loss, our underwriting and credit risk management policies and practices may not be sufficient to mitigate the effects of those risks.

3 unchanged sentences

Borrowers of high-LTV mortgages often have more difficulty weathering personal financial hardships caused by unforeseen events, because they may not have sufficient personal savings or available credit to structure viable workout solutions.

Rising unemployment rates and deterioration in economic conditions for extended periods of time, across the U.S.

Rising unemployment rates and deterioration in economic conditions for extended periods of time, including as a result of the COVID-19 pandemic, across the U.S.

or in specific regional economies, generally increases the likelihood of borrower defaults.

An increase in interest rates typically leads to higher monthly payments for borrowers with existing ARMs and could materially impact the cost and availability of refinance options for borrowers.

An increase in interest rates typically leads to higher monthly payments for borrowers with existing adjustable-rate mortgages (ARMs) and could materially impact the cost and availability of refinance options for borrowers.

A decline in home values typically makes it more difficult for borrowers to sell or refinance their homes, generally increasing the likelihood of a default followed by a claim when borrowers are impacted by events that reduce their incomes or increase their expenses.

16 unchanged sentences

While we believe our capital, premiums and investment earnings will provide a pool of resources sufficient to cover expected loss payments and have made estimates regarding loss payments and potential claims, the ultimate number and magnitude of claims we experience cannot be predicted with certainty and the actual premiums (along with investment earnings) may not be sufficient to cover losses and/or our operating costs.

An increase in the number or size of claims, compared to what we

anticipate, could adversely affect our operating results or financial condition.

An increase in the number or size of claims, compared to what we anticipate, could adversely affect our operating results or financial condition.

We may not be able to achieve the results that we expect, and there can be no assurance that losses will not exceed our total resources.

18 unchanged sentences

• cancellation of BPMI mandated by the HOPA, with the time-frames for HOPA required cancellations generally accelerating in a lower interest rate environment relative to a higher interest rate environment, and mortgage insurance cancellation policies of the GSEs and other mortgage investors.

In 2019, mortgage interest rates decreased over the course of the year and have remained near historical lows, primarily as a result of changes in monetary policy by the Federal Reserve.

In 2020, mortgage interest rates have remained near historical lows, primarily as a result of changes in monetary policy by the Federal Reserve.

We expect the low interest rate environment to drive higher levels of refinancings in the mortgage market, including with respect to loans we insure with interest rates that are higher than the current prevailing rates.

7 unchanged sentences

Further, other than being able to terminate our contracts with these USPs, we generally do not have express loan-level monetary contractual remedies against these USPs if we are obligated to pay claims on ineligible loans that they improperly agreed to insure on our behalf.

If these USPs fail to perform their

services as expected, we could experience increased claims on loans underwritten by them and our customer relationships could be negatively impacted, which would have an adverse impact on our business, financial condition and operating results.

Our Master Policy contains restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics.

If these USPs fail to perform their services as expected, we could experience increased claims on loans underwritten by them and our customer relationships could be negatively impacted, which would have an adverse impact on our business, financial condition and operating results.

Our Master Policies contain restrictions on our ability to rescind coverage for certain material misrepresentations (including fraud) and underwriting defects, and if we were to fail to timely discover any such misrepresentations or underwriting defects, our rights of rescission would be significantly limited, and we could suffer increased losses as a result of paying claims on loans with unacceptable risk characteristics.

Under our Master Policies' rescission relief provisions, we agree that we will not rescind coverage of an insured loan for material misrepresentation (including borrower fraud) or underwriting defects if the conditions for such relief are satisfied as specified in the applicable Master Policy.

20 unchanged sentences

We expect our claims to increase as our insured loan portfolio grows and matures.

We believe, based on our experience and industry data, that claims incidence for mortgage insurance is generally highest in the third through sixth years after loan origination, and then declining.

Factors, such as persistency of the book and the condition of the economy, including unemployment and housing prices can affect this pattern.

We began writing mortgage insurance coverage in 2013.

Although our claims experience to date has been better than expected, we anticipate incurred losses and claims to increase as each book year reaches its anticipated period of highest claim frequency.

The actual default rate and the average loss per default that we experience is difficult to predict and is dependent on the specific characteristics of our current in-force book, as well as the profile of business we write in the future.

Our default experience and claims incurred are also generally affected by macroeconomic factors.

The actual claims we incur as our portfolio matures are difficult to predict and depend on the specific characteristics of our current in-force book (including the credit score and DTI of the borrower, the LTV ratio of the mortgage and geographic concentrations, among others), as well as the risk profile of new business we write in the future.

In addition, our claims experience is affected by macroeconomic factors such as housing prices, interest rates, unemployment rates and other events, such as natural disasters or global pandemics (including COVID-19), and any federal, state or local governmental response thereto.

See Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations - Insurance Claims and Claim Expenses." Incurred losses and claims may exceed our expectations in the event of general economic weakness or decreases in housing values.

An increase in the number or size of claims, compared to what we anticipate, could adversely affect our operating results and financial condition.

If servicers fail to adhere to appropriate servicing standards or experience disruptions to their businesses, our claims could unexpectedly increase.

Our business depends, in part, on effective and reliable loan servicing.

We depend on reliable, consistent third-party servicing of the loans that we insure.

Among other things, our Master Policy requires our insureds and their servicers to timely submit premium and monthly IIF and default reports, use commercially reasonable efforts to limit and mitigate loss when a loan is in default and if loss mitigation efforts are unsuccessful, to pursue foreclosure of the

underlying property in accordance with required time lines and practices, which are generally set by the GSEs.

If these servicers fail to adhere to such servicing standards and fail to limit and mitigate loss when appropriate, our losses may unexpectedly increase.

Furthermore, we have delegated the authority to implement certain loss mitigation options on loans we insure ( e.g.

Among other things, our Master Policy requires our insureds and their servicers to timely submit premium and IIF and default reports, use commercially reasonable efforts to limit and mitigate loss when a loan is in default and if loss mitigation efforts are unsuccessful, to pursue foreclosure of the underlying property in accordance with required time lines and practices, which are generally set by the GSEs.

Servicers are required to comply with a multitude of legal, regulatory and GSE requirements, procedures and standards for servicing residential mortgage loans.

If servicers of our insured loans fail to adhere to applicable requirements, procedures and standards, our losses may unexpectedly increase.

We have delegated the authority to implement certain loss mitigation options on loans we insure ( e.g.

, modifications, short sales and deeds-in-lieu) to the GSEs, who have in turn delegated such authority to most of their approved servicers, pursuant to the delegation agreements.

5 unchanged sentences

however, exercise of these rights may have an adverse effect on our relationship with the GSEs and servicers.

If one or more servicers were to experience adverse effects to its business, such servicers could experience delays in their reporting and premium payment requirements, which could result in our inability to correctly record new loans as they are underwritten, receive and process premium payments on insured loans and/or properly recognize and establish loss reserves on loans when defaults exist or occur but are not reported to us.

The COVID-19 pandemic has placed additional burdens on servicers, which may make it more difficult for such servicers to effectively service the loans we insure.

Servicers of our insured loans could experience liquidity impacts, which may affect their willingness and/or ability to continue to pay premiums to us.

Although our master policies do not require payment of premiums after a loan has gone into default, most servicers continue to remit premiums to us to avoid a lapse in coverage if the borrower cures the default;

however, in the current environment, it remains uncertain whether servicers will continue to do so.

In 2020, the GSEs temporarily amended PMIERs to require GSE-approved mortgage insurers, including NMIC, to notify the relevant GSE if one or more servicers are unable to continue to remit premiums on loans in default, and give such GSE the opportunity to pay the premium to keep coverage in force.

However, if the GSEs choose not to remit premiums under the foregoing circumstances, we could experience adverse impacts to our liquidity, which could be material.

If one or more servicers were to experience adverse effects to its business as a result of the COVID-19 pandemic or otherwise, such servicers could experience delays in meeting their reporting requirements, which could result in our inability to correctly record new loans as they are underwritten and/or properly recognize and establish loss reserves on loans when defaults exist or occur but are not reported timely or at all.

Significant failures by large servicers or disruptions in the servicing of mortgage loans we insure would adversely impact our business, financial condition and operating results.

We establish claims reserves when we are notified that an insured loan is in default for at least 60 days, based on management's estimate of claim rates and claim sizes, which are subject to uncertainties and are based on assumptions about certain estimation parameters that may be volatile.

As a result, the actual claim payments we make may materially exceed the amount of our corresponding claims reserves.

Our practice, consistent with generally accepted accounting principles in the U.S.

(GAAP) for the MI industry, is to establish loss reserves only for loans that servicers have reported to us as being at least 60 days in default.

We also establish "IBNR" reserves for estimated losses incurred on loans that have been in default for at least 60 days that have not yet been reported to us by the servicers.

The establishment of loss and IBNR reserves is subject to inherent uncertainty and requires significant judgment by management.

We establish loss reserves using our best estimates of claim rates, i.e.

, the percent of loan defaults that ultimately result in claim payments, and claim amounts, i.e.

, the dollar amounts required to settle claims, to estimate the ultimate losses on loans reported to us as being at least 60 days in default as of the end of each reporting period.

We estimate IBNR reserves by analyzing historical lags in default reporting to determine a specific number of IBNR claims in each reporting period.

Our estimates of claim rates and claim sizes are strongly influenced by prevailing economic conditions, including current rates or trends in unemployment, housing price appreciation and/or interest rates, and our best judgments as to the future values or trends of these macroeconomic factors.

If the estimates we use in establishing claims reserves are incorrect, the actual claim payments we make may materially exceed the amount of our corresponding claims reserves, resulting in unexpected charges to income, which could be material and adversely affect our results of operations.

We establish reserves for claims and claim expenses for insured mortgage loans that are in default.

A loan is considered to be in default as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments.

We establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, and additional loans that we estimate (based on actuarial review and other factors) to be in default that have not yet been reported to us by servicers, referred to as "IBNR." We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees and other general expenses of administering the claim settlement process.

Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of the claim payment expected to be paid on each such loan in default, which is referred to as claim severity.

Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, cure rates, size of the loan and estimated change in property value.

The establishment of claims and IBNR reserves is subject to inherent uncertainty and requires significant judgment by management.

Our estimates of claim frequency and severity are strongly influenced by prevailing economic conditions, including current rates or trends in unemployment, housing price appreciation and/or interest rates, the availability of forbearance, foreclosure moratorium, modification and other assistance programs available to defaulted borrowers, and our best judgments as to the future values or trends of these macroeconomic factors.

These factors are outside of our control and difficult to predict.

Further, our expectations regarding future claims may change significantly over time.

If prevailing economic conditions deteriorate suddenly and/or unexpectedly, our estimates of loss reserves could be materially understated.

If prevailing economic conditions deteriorate suddenly and/or unexpectedly, including as a result of the COVID-19 pandemic, our estimates of loss reserves could be materially understated.

Due to the inherent uncertainty and significant judgment involved in the numerous assumptions required to estimate our losses, our loss estimates may vary widely.

Because loss and IBNR reserves are based on such estimates and judgments, there can be no assurance that even in a stable economic environment, actual claims paid by us will not be substantially different than our loss and IBNR reserves for such claims.

Our business, operating results and financial condition will be adversely impacted if, and to the extent, our actual losses are greater than our loss and IBNR reserves.

Because claims and IBNR reserves are based on such estimates and judgments, there can be no assurance that even in a stable economic environment, actual claims paid by us will not be substantially different than the reserves we established for such claims.

Our business, operating results and financial condition will be adversely impacted if, and to the extent, our actual losses are greater than our claims and IBNR reserves.

Further, consistent with industry practice, our reserving method does not take account of losses that could occur from insured loans that are not in default.

Thus, future potential losses that may develop from loans not currently in default are not reflected in our financial statements, except in the case where we are required to establish a premium deficiency reserve.

As a result, future losses on loans that are not currently in default may have a material impact on future results if, and when, such losses emerge.

The occurrence of natural or man-made disasters or a pandemic could adversely affect our business, financial condition and operating results.

result, future losses on loans that are not currently in default may have a material impact on future results if, and when, such losses emerge.

The COVID-19 outbreak may continue to materially adversely impact our financial results and may also materially adversely affect our business, liquidity and financial condition.

We continue to closely monitor developments related to the COVID-19 pandemic to assess its impact on our business.

As a result of the COVID-19 pandemic, the U.S.

federal government and certain U.S.

states have adopted numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders, social-distancing measures and business shut-downs.

The COVID-19 pandemic and related containment measures have had, and are expected to continue to have, a substantial negative impact on nearly every sector of the U.S.

economy and on the financial, capital and credit markets.

Since the outbreak of the COVID-19 pandemic, there have been a number of governmental and GSE efforts to implement programs designed to assist individuals and businesses impacted by the virus.

On March 27, 2020, the U.S.

Congress enacted the CARES Act, and on December 21, 2020, the U.S.

Congress passed the Consolidated Appropriations Act, 2021 (2021 Appropriations Act), which President Trump signed into law on December 27, 2020.

The CARES Act and the 2021 Appropriations Act provide financial assistance for businesses and individuals, and targeted regulatory relief for financial institutions.

Among many other things, the CARES Act suspended foreclosures and evictions for at least 60 days from March 18, 2020, on mortgages purchased or securitized by the GSEs, which moratorium has been extended by the GSEs on such mortgages through at least March 31, 2021 and may be further extended.

In addition, the CARES Act enacts into law a requirement to provide payment forbearance for up to 360 days on mortgages to borrowers experiencing hardship during the COVID-19 emergency.

Consistent with the CARES Act, the GSEs permit payment forbearance for borrowers facing financial hardship from COVID-19 for a cumulative 12-month term, and for certain borrowers, if their hardships have not been resolved at the end of their 12-month terms, they may extend their forbearance terms for up to three additional months.

The GSEs may extend this period further in the future.

The CARES Act and the 2021 Appropriations Act also provide for enhanced unemployment benefits, direct aid to individuals, and increased flexibility under retirement plans, among other things.

The GSEs, the primary purchasers of mortgages we insure, have also adopted certain measures to assist borrowers impacted by COVID-19.

Consistent with the CARES Act, the GSEs will provide a forbearance plan to any borrower who requests a forbearance with an attestation of the financial hardship, directly or indirectly caused by the COVID-19 emergency;

and no additional documentation other than the borrower's attestation to a financial hardship caused by the COVID-19 emergency is required.

Borrowers that avail themselves of forbearance relief will not incur interest or late fees on deferred amounts.

In addition, the GSEs have announced that, at the end of a forbearance plan, the affected borrower will not be required to pay back their reduced or suspended mortgage payments in one lump sum, but may be eligible for a number of different options offered by their mortgage servicer depending on their financial situation, including:

• if the borrower is unable to repay their deferred payments all at once and can afford to pay a higher monthly mortgage payment for a period of time, the borrower may be eligible for a repayment plan that allows them to repay past due amounts over a period of time;

• if the borrower can afford to resume their monthly mortgage payment, they may be eligible for a payment deferral in which missed mortgage payments are due at the sale or refinancing of the home or are moved to the end of the maturity of the loan;

• if the borrower has a sustained reduction in income and is unable to afford their regular monthly mortgage payment, they may be eligible for a loan modification that changes the terms of the mortgage loan to enable an affordable payment, including through a change to the maturity and amortization schedule of the mortgage loan.

Notwithstanding the GSE and other programs, there can be no assurance that borrowers will be able to remain current on their mortgages after a forbearance period ends, and a significant percentage could remain in default and result in mortgage insurance claims.

The COVID-19 crisis continues to evolve and create significant uncertainty about the impacts it will have on the markets in which we operate and on our business, but the impacts are material and adversely affecting our financial results and may adversely impact our business, operations and financial condition.

We are currently unable to estimate precisely the magnitude of the impact that the pandemic will ultimately have on our business, operations and financial condition.

We believe there are and will be a range of adverse effects on our markets, customers, new business, revenues, loss development and related impacts to our capital needs, employee health and productivity, investment portfolio performance, and ability to access capital and reinsurance markets in the future, if we need to.

In turn, these impacts may cause changes, which also cannot be precisely determined at this time, to our estimates of future earnings and other guidance we have provided to the markets.

In particular, we believe we will experience the following impacts, among others:

• Containment measures implemented to mitigate the negative effects of the pandemic could adversely impact our ability to continue to conduct our business.

Although we have been able to continue operations under our business continuity program, the spread of COVID-19 could negatively impact a significant number of our employees and the availability of key personnel necessary to conduct our business activities.

Such a spread or outbreak could also negatively impact the business and operations of our customers and critical third-party service providers.

Further, extreme market volatility may leave us unable to react to market events in a manner consistent with our historical practices in dealing with more orderly markets.

• The COVID-19 pandemic and related containment measures could also affect the number of new mortgages available for us to insure.

Our NIW volume and future revenues are significantly dependent on the volume of high-LTV loan originations.

If there is a significant decline in our NIW, our future revenue could be negatively impacted.

• Mortgage delinquencies are typically affected by a variety of factors, including illness, death, unemployment and other life events, among others, many of which are likely exacerbated by the COVID-19 pandemic.

While there are efforts underway and introduction of vaccines to combat the spread and severity of COVID-19 and the related economic impacts, these measures may be ineffective in mitigating the spike in defaults we have received and may continue to receive as a direct result of the COVID-19 pandemic.

It is unclear how many borrowers will obtain forbearance plans, the length of assistance borrowers will require, and whether borrowers will be able to resume their mortgage payments thereafter.

Increases in unemployment as well as borrowers entering into forbearance plans could result in further increases in the defaults we receive in the near term.

In addition, as a result of COVID-19-related relief programs, the defaults related to the pandemic, if not cured, could remain in our default inventory for a protracted period of time, potentially resulting in higher levels of claim severity for those loans that ultimately result in claims.

There may be additional, extended or extensive forbearance programs or other changes in regulations or laws which may adversely impact us.

• We include a loan in our default population and establish loss reserves on such loan when we have received notice from the servicer that as of a particular payment date, the borrower has missed the preceding two or more consecutive monthly payments.

In addition, PMIERs generally requires us to treat such loans as non-performing, which then increases the capital we are required to hold against such loans.

Under PMIERs, non-performing loans that have missed two or more payments are generally assessed a significantly higher capital charge than performing loans.

As set forth in the COVID Guidance, the GSEs temporarily amended PMIERs to reduce the risk-based required asset amount factor under PMIERS for certain COVID-19 loans that default during the COVID-19 Crisis Period for the duration of their forbearance periods and any subsequent repayment plans or trial modification periods.

As a result of costs incurred in connection with rising defaults associated with the COVID-19 crisis, the impact to our capital needs and incurred losses could be material and adversely impact our NIW opportunity and our business, results of operations and financial condition.

• Whether delinquencies ultimately result in claims will depend on a variety of factors, including the length of the crisis and ultimate success of forbearance, government stimulus and other initiatives established to assist homeowners with curing their delinquencies.

Due to the inherent uncertainty and significant judgment involved in our assumptions when we establish loss estimates for loans in default, they may turn out to be materially inaccurate and we can provide no assurance that actual claims paid by us, if any, with respect to defaults arising from the pandemic will not be substantially more than the reserves we establish for such defaults.

• Our Master Policies require insureds to file a claim no later than 60-days after completion of a foreclosure, and in connection with the claim, the insured is generally entitled to include in the claim amount (i) interest (capped at three years) and (ii) certain advances, each as incurred through the date the claim is filed.

Under our Master Policies, a national foreclosure moratorium of the type currently required will not limit the amount of accrued interest (subject to the three-year limit) or advances that may be included in the claim amount.

If the duration of the current foreclosure moratorium mandated by the GSEs is continued beyond March 31, 2021 for an extended period of time, loans in our default inventory, including those with defaults unrelated to the COVID-19 crisis that had not yet gone through foreclosure, may remain in a pre-foreclosure default status for a prolonged period of time, which would delay our receipt of certain claims for loans that do not cure and could increase the severity of claims we may ultimately be required to pay after the moratorium is lifted.

• Home values could materially decline as a result of a persistent economic downturn arising from the COVID-19 pandemic.

Depreciation in the values of properties underpinning our insured loans may increase the likelihood of default and negatively impact borrowers' abilities to sell their properties for amounts sufficient to cover their unpaid principal.

In turn, the frequency or severity of losses we may incur would be negatively impacted.

• Servicers of our insured loans could experience liquidity impacts, which may affect their willingness and/or ability to continue to pay premiums to us.

however, in the current environment, it remains uncertain whether servicers will continue to do so.

As set forth in the COVID Guidance, during the COVID-19 Crisis Period, if one or more servicers are unable to continue to remit premiums on loans in default, we, and other approved insurers , have agreed to notify the relevant GSE and give such GSE the opportunity to pay the premium to keep the coverage in force.

Notwithstanding our agreement with the GSEs, if there are wide-spread servicer liquidity issues and the GSEs choose not to remit premiums, we could experience adverse impacts to our liquidity, which could be material.

• Our investment portfolio (and, specifically, the valuations of investment assets we hold) has been, and may continue to be, adversely affected as a result of market deterioration caused by the COVID-19 pandemic and uncertainty regarding its outcome.

• The COVID-19 pandemic initially caused significant volatility and disruption to the financial, capital and reinsurance markets and such volatility may continue, making access to such markets difficult.

To the extent that our current sources of income and capitalization are insufficient to meet GSE and state capital requirements (respectively, as defined therein) or to fund our future operations, we would need to raise additional funds through future financing activities, including through the issuance of additional debt, equity, or a combination of both, reduce our RIF, including through additional reinsurance, or curtail our growth and reduce our expenses.

We can give no assurance that any such efforts to raise capital, obtain additional reinsurance or otherwise reduce our RIF would be successful.

If we cannot obtain adequate capital, our business, results of operations and financial condition could be adversely affected.

The above impacts of the COVID-19 pandemic and containment measures are likely to continue and in some cases, may worsen.

The ultimate significance of COVID-19 on our business will depend on, among other things:

the extent and duration of, and severity of illness caused by, the pandemic;

the effectiveness of anti-viral and other medical treatments;

the effectiveness and availability of vaccines and the willingness of people to be vaccinated;

the effects on the economy and the time it takes to stabilize;

the extent and duration of current and future containment measures implemented by governmental authorities;

current and future governmental assistance programs;

and the long-term impact on the mortgage origination and mortgage insurance markets.

While at this time we cannot estimate the short or long-term impacts of COVID-19 on our business, the above factors could have a material adverse effect on our business, liquidity, results of operations and financial condition.

The occurrence of natural or man-made disasters or pandemics other than COVID-19 could adversely affect our business, financial condition and operating results.

We are exposed to various risks arising out of natural disasters, including earthquakes, wildfires, hurricanes, floods and tornadoes and man-made disasters, including acts of terrorism, military actions and pandemics.

2 unchanged sentences

These consequences could, among other things, result in a decline in new business and increased claims from those areas, and adverse effects on home prices in those areas, which could result in unexpected loss experience in our business.

Disasters or a pandemic also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal

business operations.

In addition, a disaster or a pandemic could adversely affect the value of the assets in our investment portfolio if the event affects companies' ability to pay us principal or interest on their securities.

These events also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations.

In addition, the value of the assets in our investment portfolio could be adversely affected if such an event affects companies' ability to pay us principal or interest on their securities.

We insure mortgages for homes in areas that have been impacted by natural disasters, including from hurricanes and wildfires.

Following such natural disasters, we and other MIs typically experience an increase in NODs on mortgages secured by homes in the impacted areas that negatively impact incurred losses in the periods in which we received such NODs.

Our ultimate claims exposure when we experience these events depends on the number of NODs ultimately received, proximate cause of each default and cure rate of the NOD population.

Following such natural disasters, we and other MIs typically experience an increase in defaults on insured mortgages secured by homes in the impacted areas that negatively impact our incurred losses.

Our ultimate claims exposure when we experience these events depends on the number of loans in default, proximate cause of each default and cure rate of the default population.

Cure rates on loan defaults following natural disasters are influenced by the adequacy of homeowners and other hazard insurance carried on a related property, GSE-sponsored forbearance and other assistance programs, and a borrower's access to aid from government entities and private organizations, in ad dition to other factors which generally impact cure rates in unaffected areas.

We have observed that l oans in default in disaster zones typically cure at a higher rate than non-disaster related loans in default.

As such, we historically have established lower reserves for these type of NODs than we otherwise do for similarly situated NODs in non-disaster zones.

Due to the inherent uncertainty and significant judgment involved in our assumptions, our loss estimates may turn out to be materially inaccurate and we can provide no assurance that actual claims paid by us, if any, on NODs in disaster zones will not be substantially different than the reserves we establish for such claims.

As such, we historically have established lower reserves for these type of defaults than we otherwise do for similarly situated loans in default in non-disaster zones.

Due to the inherent uncertainty and significant judgment involved in our assumptions, our loss estimates may turn out to be materially inaccurate and we can provide no assurance that actual claims paid by us, if any, on defaulted loans in disaster zones will not be substantially different than the reserves we establish for such claims.

We are exposed to certain risks associated with our third-party reinsurance transactions, including the possibility that our reinsurers will fail to perform their obligations or that we will lose the capital credit we expected to receive when we entered into the transactions as a result of future GSE or Wisconsin OCI action or if any of our reinsurers experiences a downgrade or other adverse business event.

33 unchanged sentences

We are exposed to many types of operational risk, including the risk of fraud or malfeasance by employees and outsiders, including third-party service providers, clerical record-keeping errors and transactional errors.

Our business depends on our employees as well as third parties to process a large number of transactions.

Our business depends on our employees and third parties to process a large number of transactions.

We could be materially and adversely affected if one of our employees or one of our systems causes a significant operational breakdown or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our operations or systems.

Third parties with which we do business also could be sources of operational risk to us, including breakdowns or failures of such parties' own systems or employees.

In response to the COVID-19 pandemic, we activated our business continuity program and instituted work-from-home practices for our Emeryville-based staff.

As a result of the current remote work environment, the effectiveness of our compliance programs and overall ability to prevent and detect fraud or malfeasance by our employees or contractors may be diminished.

Any of these occurrences could result in a diminished ability to operate our business, potential liability to customers, reputational damage and regulatory intervention, which could result in a material adverse effect on our financial position and operating results.

2 unchanged sentences

Our customers require us to provide and service our MI products in a secure manner, including through our proprietary technology platform, our internet website or direct electronic data transmissions.

Accordingly, we invest significant resources in maintaining and enhancing our technology platform and in establishing and maintaining electronic connectivity with our customers.

Our customers may choose to do business only with mortgage insurers with which they are technologically compatible and may choose to retain existing MI providers rather than invest the time and resources to integrate with a new MI provider.

Our business, financial condition and operating results may be adversely impacted if we do not successfully establish and maintain these arrangements or otherwise keep pace with the technological demands of customers.

In furtherance of this, we are party to an agreement with TCS, whereby TCS provides services across business functions, such as application development and support, infrastructure support (service desk, end user computing and engineering services), and information security.

Our customers may choose to do business only with mortgage insurers with which they are already technologically compatible and may choose to retain existing MI providers rather than invest the time and resources to integrate with a new MI provider.

Our business, financial condition and operating results may be adversely impacted if we do not successfully establish and maintain these arrangements and relationships, or otherwise keep pace with the technological demands of customers.

The success of our business depends on our ability to timely and effectively resolve any significant issues that may arise with the operation of our technology platform.

While we anticipate that our engagement with TCS will enhance our ability to further develop, deploy, and service our technology platform, any delays caused by the outsourcing of these functions, deterioration in our relationship with TCS, or termination of our engagement with TCS could lead to significant disruptions in our operations.

If our technology platform fails to perform in the manner we expect, our business, financial condition and operating results may be significantly harmed.

4 unchanged sentences

Our technology systems and networks, including those functions that we may outsource, are vulnerable to unauthorized access, interruptions or failures due to events that are often beyond our control, including cyber-attacks, natural disasters, theft, terrorist attacks and general technology failures.

Our employees and vendors may use portable computers or mobile devices which can be stolen or lost or mis-used, making information accessible through such devices more vulnerable to unauthorized access, including by employee malfeasance.

We have outsourced certain technology and business functions to third parties, and may continue to do so in the future.

This may expose us to increased risk related to data and information security and unexpected

service disruptions, which could result in monetary and reputational damage or harm to our competitive position.

Remote working arrangements adopted in response to the COVID-19 pandemic may also increase the risk of cyber-security attacks or data security incidents.

In particular, in a remote environment, our employees and vendors rely on the use of portable computers and mobile devices, which can be stolen, lost or misused, making information accessible through such devices more vulnerable to unauthorized access, including by employee malfeasance.

We have adopted information security procedures and controls to safeguard our systems and the information that we process, transmit and store.

Despite these efforts, we may not be able to anticipate or implement effective preventive measures against all cyber threats, or detect and contain a breach in a timely manner, including because employees may not follow the controls we have implemented, the techniques used change frequently or are not recognized until launched, and because security attacks can originate from a wide variety of sources and methods.

Despite these efforts, we may not be able to anticipate or implement effective preventive measures against all cyber threats, or detect and contain a breach in a timely manner, including because employees may not follow the controls we have implemented, the invasive techniques used change frequently or are not recognized until launched, and because security attacks can originate from a wide variety of sources and methods.

The COVID-19 pandemic has exacerbated these risks.

Our employees, customers or other users of our systems are from time-to-time subject to fraudulent inducements by parties attempting to gain access to our data or that of our customers.

15 unchanged sentences

The success of our investment activity is affected by general economic conditions, which may adversely affect the markets for credit and interest-rate-sensitive securities, including the extent and timing of investor participation in these markets, the level and volatility of interest rates and, consequently, the value of fixed income securities.

We face risks associated with offering loan review services.

We provide loan review services for certain of our customers, including on loans for which we are not providing mortgage insurance.

Under the terms of our loan review agreements with customers and subject to contractual limitations on liability, we provide these customers with limited indemnity rights if we make a material error in providing such services and the error materially restricts or impairs the saleability of a loan, results in a material reduction in the value of a loan or results in the customer being required to repurchase a loan.

In addition, our investment portfolio (and, specifically, the valuations of investment assets we hold) has been, and may continue to be, adversely affected as a result of market deterioration caused by the COVID-19 pandemic and uncertainty regarding its outcome.

We face regulatory and litigation risks associated with offering loan review services.

NMIS offers loan review services for certain of our customers that are performed by SAFE Act-licensed third-party service providers, including on loans for which NMIC is not providing mortgage insurance.

Under the terms of our service agreements and subject to such agreements' contractual limitations on liability, we provide limited indemnity rights for "material errors," if such errors materially impair the saleability of a reviewed loan, results in a material reduction in the value of such loan or results in the customer being required to repurchase such loan.

The indemnification may be in the form of monetary or other remedies, subject to per loan and annual limitations.

Accordingly, we have assumed some credit risk in connection with providing these services.

We also face regulatory and litigation risk in providing these services.

NMIS contracts with SAFE Act-licensed third-party service providers to provide loan review services, and we believe we have structured NMIS' operations so that it does not itself engage in any activities that would trigger licensure under the SAFE Act.

However, the CFPB or other regulators could take a different position, thereby increasing the risk of regulatory scrutiny and potential enforcement action and/or litigation involving these loan review services.

Any such scrutiny, enforcement action or litigation could result in a diminished ability to operate our business, potential liability to customers, reputational damage and regulatory intervention, which could in turn result in a material adverse effect on our financial position and operating results.

See " The private MI industry is, and as a participant we are, subject to litigation and regulatory enforcement risk generally ," below.

Risk Factors Relating to Regulation of the Mortgage Insurance Industry

Risks Related to Regulation of the Mortgage Insurance Industry

There can be no assurance that the GSEs will continue to treat us as an approved insurer in the future, and our failure to maintain compliance with the GSEs' PMIERs could adversely impact our business, financial condition and operating results.

13 unchanged sentences

In addition, the GSEs may amend or clarify other aspects of the PMIERs at any time.

On September 27, 2018, the GSEs published the Revised PMIERs, including updated financial requirements, which took effect and became applicable to NMIC on March 31, 2019, after which NMIC has remained in full compliance.

For example, in 2020, the 2020 PMIERs Guidance, among other things:

(i) temporarily amended PMIERs, effective as of June 30, 2020, to recognize the COVID-19 pandemic as a nationwide major disaster and to reduce the risk-based required asset amount factor under PMIERS for certain COVID-19 defaulted loans (the COVID Guidance) and (ii) permanently amended PMIERs, effective December 31, 2020, to clarify delinquency reporting requirements for non-performing loans under PMIERs.

There is no assurance NMIC will remain in compliance or that the GSEs will not make the PMIERs financial requirements more onerous in the future.

1 unchanged sentence

Any such effect could have a negative impact on our flexibility to meet our business plans and our future operating results.

Compliance with PMIERs requires us to seek the GSEs' prior approval before taking many actions, including implementing new products or services or entering into reinsurance arrangements and inter-company agreements among others.

PMIERs' prior approval requirements could prohibit, materially modify or delay us in our intended course of action.

Compliance with PMIERs requires us to seek the GSEs' prior approval before taking many actions, including implementing new products or services or entering into inter-company agreements among other actions.

In addition, for an approved insurer to receive a reduction in its risk-based required asset amount for new or revised reinsurance transactions, the approved insurer must obtain the GSEs' written approval.

PMIERs' approval requirements could prohibit, materially modify or delay us in our intended course of action.

Further, the GSEs may modify or change their interpretation of terms they require us to include in our mortgage insurance policies for loans purchased by them, requiring us to modify our terms of coverage or operational procedures to remain an approved insurer, and such changes could have a material adverse impact on our financial position and operating results.

For example, we and other approved insurers were required to draft and implement new master policies to, among other things, include terms that conform to the GSEs' new RRPs.

It is possible the GSEs could, in their own discretion, require additional limitations and/or conditions on certain of our activities and practices that are not currently in the PMIERs in order for us to remain an approved insurer .

Additional requirements or conditions imposed by the GSEs could limit our operating flexibility and the areas in which we may write new business.

For example, we and other approved insurers were required to implement new master policies to, among other things, include terms that conform to the GSEs' RRP.

In addition, consistent with the 2020 PMIERs Guidance and in response to the COVID-19 crisis, we agreed with the GSEs to implement for a limited period of time certain operational and contractual flexibilities, including providing the GSEs the opportunity to pay premiums to keep coverage in force if one or more servicers are unable to continue to remit premiums on loans in default.

Additional requirements or conditions imposed by the GSEs could further limit our operating flexibility and the areas in which we may write new business.

If, in the future, NMIC fails to comply with the PMIERs, including the financial requirements, it may lose its approved insurer status from one or both GSEs, or may have to enter into a remediation plan (with the approval of the GSEs), curtail its business writings or cease transacting new business altogether.

11 unchanged sentences

Recently, there has been increased focus on and discussion of administrative reform independent of legislative action.

On September 5, 2019, the Treasury Department released its Housing Reform Plan that included a compilation of legislative and administrative recommendations for reforms to achieve the goals of (i) ending the conservatorships of the GSEs, (ii) advancing competition in the housing finance market, (iii) setting regulations for the GSEs that provide for their safety and soundness and limit their risk to the financial stability of the United States, and (iv) providing proper

compensation to the United States government for any explicit or implicit support it provides to the GSEs.

Additionally, the Director of the FHFA has publicly stated his priority for exiting the GSEs from conservatorship during his five-year term which began April 2019.

5 unchanged sentences

Any such changes that come to pass could have a significant impact on our business.

On November 18, 2020 the FHFA announced that it had finalized and sent for publication a rule establishing a new regulatory capital framework for the GSEs, which included provisions governing the capital relief allowed to the GSEs for loans with private MI.

The final rule established that loans with private MI as opposed to loans without private MI, provide more favorable capital relief to the GSEs.

Notwithstanding this beneficial capital treatment for loans with private MI, the total capital required to be held by the GSEs upon implementation of the final rule is significant.

It is too early to predict the impact, if any, on us as a counterparty to the GSEs or any future implications for PMIERs.

An increase in the capital required to be held by us under PMIERs could make our products more expensive and could have a material adverse impact on our financial condition and future business prospects.

In recent years, the FHFA has set goals for the GSEs to transfer significant portions of the GSEs' mortgage credit risk to the private sector.

6 unchanged sentences

Although their scope varies, state insurance laws generally grant broad supervisory powers to state insurance regulatory authorities to examine insurance companies and enforce rules or exercise discretion affecting almost every significant aspect of the insurance business, including premium rates, trade and claims practices, accounting methods, marketing practices, policy forms and capital adequacy.

These state insurance regulatory authorities could take actions that could materially impact the types of products and services we and our industry are permitted to offer, including requiring us (and other MI companies) to modify current pricing and business practices.

current pricing and business practices.

Further, failure to comply with the applicable regulations could lead to enforcement or disciplinary action, including the imposition of penalties and the revocation of our authorization to operate.

NMIC's principal regulator is the Wisconsin OCI.

Under applicable Wisconsin law, as well as that of 15 other states, a mortgage insurer must maintain a minimum amount of statutory capital relative to its RIF in order for the mortgage insurer to continue to write new business.

Under applicable Wisconsin law, as well as that of 15 other states, a mortgage insurer must maintain a minimum amount of statutory capital relative to its RIF for the mortgage insurer to continue to write new business.

While formulations of minimum capital may vary in each jurisdiction that has such a requirement, the most common measure applied allows for a maximum permitted RTC ratio of 25:1.

2 unchanged sentences

, our RIF grows faster than expected) or is less profitable than expected ( i.e.

, our revenues do not generate the return we expect), our actual RTC ratios over the short to mid-term could exceed our expected RTC ratios and could begin to approach the limits to which we are subject, which could require us to enter into alternative arrangements to reduce our RIF, including through additional reinsurance, or raise additional capital.

If this were to occur, we can give no assurance that our efforts to obtain additional reinsurance or otherwise reduce our RIF, or to raise capital would be successful, and if such efforts are unsuccessful, we could exceed state-imposed capital requirements.

8 unchanged sentences

As a result, the members of the MI industry, including NMIC, face litigation risk, including the risk of class action lawsuits, and administrative enforcement by federal regulators and state insurance agencies in the ordinary course of operations.

In addition, the private MI industry, including NMIC, may be affected by changes in the laws and regulations to which we are subject or the way they are interpreted or applied.

See "Item 1 - Business - U.S.

Mortgage Insurance Regulation."

In the past, mortgage insurers (excluding NMIC) have been involved in litigation and regulatory enforcement actions alleging violations of Section 8 of RESPA.

5 unchanged sentences

The insurance law provisions of many states also prohibit paying for the referral of insurance business and provide various mechanisms to enforce this prohibition.

New leadership at the CFPB may also have an impact on future CFPB enforcement activity.

New leadership at the CFPB or any changes made under the new presidential administration may also have an impact on future CFPB enforcement activity.

The CFPB's interpretation and enforcement of Section 8 of RESPA presents regulatory risk for many providers of "settlement services," including mortgage insurers.

5 unchanged sentences

To date, we have not recognized a material liability related to any of our legal proceedings.

However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of any such matters in the future could have an unanticipated material adverse effect on our liquidity, financial position and operating results.

The implementation of Basel III may adversely affect the use of MI by certain banks.

In July 2013, U.S.

federal banking regulators adopted regulations to implement Basel III.

The effective date for the U.S.

Basel III regulations was January 1, 2014, although the majority of its provisions are subject to multi-year phase-in periods to achieve full implementation.

With the ongoing implementation of U.S.

Basel III and the potential continued evolution of the international Basel capital framework, it is difficult to predict the impact, if any, on the MI industry and the ultimate form of any potential future modifications to the regulations by federal banking regulators.

If federal regulators revise the U.S.

Basel III rules to reduce or eliminate the capital benefit banks receive from insuring high-LTV loans with private MI, or if our customers who are subject to Basel III believe that adverse changes may occur at some time in the future, our current and future business may be adversely affected.

Our business prospects and operating results could be adversely impacted if, and to the extent that, the Consumer Financial Protection Bureau's ATR Rules defining a QM further reduce the size of the origination market.

The Dodd-Frank Act authorized the CFPB to issue regulations requiring a loan originator to determine whether, at the time a loan is originated, the consumer has a reasonable ability to repay the loan (ATR).

The CFPB's final ATR rule went into effect on January 10, 2014.

A subset of mortgages within the ATR rule are known as QMs, which generally are defined as loans without certain risky features, such as negative amortization, points and fees in excess of 3% of the loan amount, borrowers with DTI ratios above 43% and terms exceeding 30 years.

QMs under the rule benefit from a statutory presumption of compliance with the ATR rule, thus potentially mitigating the risk of the liability of the creditor and assignees of the loan.

The rule also provides for the "QM Patch," so long as loans satisfy the general product feature requirements of QMs (other than borrower DTI) and so long as they meet the underwriting requirements of the GSEs.

The QM Patch is scheduled to phase out upon the earlier to occur of the end of conservatorship or receivership of the GSEs or January 10, 2021.

In July 2019, the CFPB announced their intent to study possible amendments to the ATR/QM rules in anticipation of the planned expiration of the QM Patch on January 10, 2021 or following a short extension.

On January 17, 2020, the CFPB announced that the CFPB will propose an amendment to the ATR/QM rule that would move away from DTI, extend the date of expiration of the QM Patch beyond January 10, 2021 and issue by May 2020 a Notice of Proposed Rulemaking seeking comments on proposed amendments to the ATR/QM rule.

The expiration of the QM Patch or any action by Congress or the CFPB to modify it could affect the residential mortgage market and demand for private mortgage insurance.

However, the outcome of litigation and other legal

and regulatory matters is inherently uncertain, and it is possible that one or more of any such matters in the future could have an unanticipated material adverse effect on our liquidity, financial position and operating results.

Our business prospects and operating results could be adversely impacted if, and to the extent that, the Consumer Financial Protection Bureau's ATR Rules defining a QM negatively impact the size of the origination market.

In January 2014, the CFPB implemented the Dodd-Frank Act ATR mortgage provisions, which govern the obligation of lenders to determine a borrower's ability to pay when originating a mortgage loan covered by the rule.

A subset of mortgages within the ATR rule are known as QMs.

The original ATR/QM rule established two different categories of QMs, one referred to as the "General QM" category and a second, temporary QM category, typically referred to as the QM Patch.

In the fourth quarter of 2020, the CFPB released a series of final rules to (i) eliminate the QM Patch, (ii) amend the definition of a General QM, and (iii) provide for a new, Seasoned QM category.

See "Item 1, "Business - U.S.

Mortgage Insurance Regulation - Other U.S.

Regulation - Housing Finance Reform" above for a summary of the GSEs final rules related to QMs.

The expiration of the QM Patch or eventual implementation of the General QM and Seasoned QM final rules could affect the residential mortgage market and demand for private mortgage insurance.

The Dodd-Frank Act also gave statutory authority to the HUD, the VA, and the USDA to develop their own definitions of "QM," which those agencies have completed.

1 unchanged sentence

We, along with other industry participants, have observed that the significant majority of covered loans made after the effective date of the ATR rule have been QMs.

We expect that most lenders will continue to be reluctant to make loans that do not qualify as QMs (either under the rule's specific underwriting guidelines, GSE underwriting guidelines or the HUD definition of a

QM) because absent full compliance with the ATR rule, such loans will not be entitled to a safe-harbor presumption of compliance with the ability-to-pay requirements.

We expect that most lenders will continue to be reluctant to make loans that do not qualify as QMs because absent full compliance with the ATR rule, such loans will not be entitled to a safe-harbor presumption of compliance with the ability-to-pay requirements.

As a result, we believe ATR regulations have given rise to a subset of borrowers who cannot meet the regulatory QM standards, thus restricting their access to mortgage credit and reducing the size of the residential mortgage market.

The CFPB recently completed its statutorily mandated assessment of the ATR rule's impact and effectiveness in meeting its objectives.

It is unclear what, if any, changes the CFPB may implement to address the findings of this assessment, including in connection with its broader review of amendments to the ATR/QM rules in anticipation of the QM Patch planned expiration.

Our business prospects and operating results could be adversely impacted if, and to the extent that, the QM regulations or the CFPB's actions have the impact of further reducing the size of the origination market, including potentially when the QM Patch expires.

Uncertainty relating to the potential discontinuation of LIBOR after 2021 may adversely affect our business, results of operations and financial condition.

It is unclear whether the expiration of the QM Patch or the revised General QM rule or the new Seasoned QM category will have any impact on access to mortgage credit or the size of the mortgage market.

Our business prospects and operating results could be adversely impacted if, and to the extent that, the QM regulations or the CFPB's actions negatively impact the size of the origination market.

The Company may be adversely impacted by the phasing out of LIBOR.

We have exposure to LIBOR-indexed financial instruments, including our credit instruments and ILN Transactions.

As of December 31, 2019, we held approximately $90 million of floating-rate securities in our investment portfolio that yield interest based on an index rate, predominantly LIBOR, plus a margin (the LIBOR-indexed securities).

As of December 31, 2020, we held $61.7 million of floating-rate securities in our investment portfolio that yield interest based on an index rate, predominantly LIBOR, plus a margin (the LIBOR-indexed securities).

In addition, we believe most ARMs in our IIF are indexed to LIBOR.

In 2017, the U.K.

Financial Conduct Authority, which regulates LIBOR, announced its intention to stop persuading or compelling the banks that sustain LIBOR to submit rate quotations after 2021.

Accordingly, it is uncertain whether LIBOR will continue to be quoted after 2021, or if it does continue to be quoted, whether it will be reliable.

Financial Conduct Authority, which regulates LIBOR, announced its intention to stop persuading or compelling the banks that sustain LIBOR to submit rate quotations after December 31, 2021.

On November 30, 2020, ICE Benchmark Administration Ltd.

(IBA), the administrator of LIBOR, announced it will consult with constituents on its intention to cease the publication of the one week and two month U.S.

dollar LIBOR (USD LIBOR) settings immediately following the LIBOR publication on December 31, 2021, and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023.

IBA expressly stated that its announcement should not be construed as a decision by the IBA to either cease or continue the provision of any LIBOR settings after December 31, 2021 or June 30, 2023.

That same day, U.S.

financial regulators issued supervisory guidance noting that "the agencies encourage banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021." Accordingly, it remains uncertain whether USD LIBOR will continue to be quoted after 2021, or if it does continue to be quoted, whether it will be reliable.

Efforts to identify and transition to a set of alternative U.S.

dollar reference rates have been underway, including proposals by the Alternative Reference Rates Committee of the Federal Reserve Board (ARRC).

In 2017, the ARRC recommended an alternative reference rate referred to as the Secured Overnight Financing Rate (SOFR) and the Federal Reserve Bank of New York began publishing SOFR in 2018.

However, SOFR is calculated based on different criteria than LIBOR.

Accordingly, SOFR and LIBOR may diverge, particularly in times of macroeconomic stress.

Since the initial publication of SOFR in 2018, daily changes in SOFR have at times been more volatile than daily changes in comparable benchmark or market rates, and SOFR may be subject to direct influence by activities of the Federal Reserve and the Federal Reserve Bank of New York in ways that other rates may not be.

In 2017, the ARRC recommended an alternative reference rate referred to as the Secured Overnight Financing Rate (SOFR), a combination of certain overnight repo rates, to replace USD LIBOR, and the Federal Reserve Bank of New York began publishing SOFR in 2018.

We continue to analyze potential risks associated with the LIBOR transition, including financial, operational, legal and market risks.

3 unchanged sentences

However, there is considerable uncertainty as to how the financial services industry will address the discontinuance of LIBOR in these financial instruments.

Alternative reference rates that replace LIBOR may not yield the same or similar economic results over the lives of these financial instruments.

Alternative reference rates that replace

LIBOR may not yield the same or similar economic results over the lives of these financial instruments.

In addition, while the ARRC was created to ensure a successful transition from LIBOR, there can be no assurance that the ARRC will endorse practices that create a smooth transition and minimize value transfers between market participants, or that its endorsed practices will be broadly adopted by market participants.

In addition, we cannot anticipate how long it will take to develop the systems and processes necessary to adopt SOFR or other benchmark replacements, which may delay and contribute to uncertainty and volatility surrounding the LIBOR transition.

Accordingly, a change or transition away from LIBOR as a common reference rate in the financial market could have a range of adverse effects on our business, results of operations and financial condition.

Accordingly, a change or transition away from LIBOR as a common reference rate in the financial market could have a range of adverse effects on our business.

In particular any such transition could:

4 unchanged sentences

• disrupt the residential mortgage market, including with respect to ARMs, if replacement indices unilaterally chosen by lenders negatively impact borrowers, which could give rise to higher than expected rates of default on such loans and increased litigation.

Risks Related to Our Holding Company

Risks Related to Our Holding Company and Capital Structure

Our holding company structure and certain regulatory and other constraints could affect our ability to satisfy our obligations and potentially require us to raise more capital.

NMIH serves as the holding company for our operating subsidiaries and does not have any significant operations of its own.

NMIH's principal source of operating cash is investment income, and could in the future include dividends from NMIC, if available and permitted under law or by state insurance regulators.

NMIH's principal source of operating cash is investment income, and could in the future include dividends from NMIC and Re One.

Re One currently has the capacity to pay aggregate ordinary dividends of $1.6 million to NMIH during the twelve-month period ending December 31, 2021.

NMIC reported a statutory net loss for the year ended December 31, 2020 and does not have the capacity to pay dividends to NMIH during the twelve-month period ended December 31, 2021 without prior approval from the Wisconsin OCI.

NMIH also has access to $110 million of undrawn revolving credit capacity under the senior secured credit facilities.

In addition, NMIH currently receives cash from our insurance subsidiaries, consisting of payments made under our tax and expense-sharing arrangements.

Among such agreements, the Wisconsin OCI has approved the allocation of interest expense on our $400 million aggregate principal amount of senior secured notes that mature on June 1, 2025 (the Notes) and senior secured credit facilities to NMIC to the extent proceeds from the Notes offering and facility are distributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.

The expense-sharing arrangements between us and our subsidiaries, as amended, have been approved by the Wisconsin OCI, but such approval may be revoked at any time.

1 unchanged sentence

If payments to NMIH were curtailed or limited, there is a risk that NMIH would be unable to satisfy its financial obligations.

Our dividend income is limited to upstream dividend payments from our subsidiaries.

NMIH's dividend income is limited to upstream dividend payments from our subsidiaries.

With respect to our insurance subsidiaries, under Wisconsin law, dividends in excess of prescribed limits are deemed "extraordinary" and require approval of the Wisconsin OCI.

1 unchanged sentence

It is possible that Wisconsin and other states that have dividend restrictions will adopt revised statutory provisions or interpretations of existing statutory provisions that could be more restrictive than those currently in effect or will otherwise take actions that may further restrict the ability of our insurance subsidiaries to pay dividends or make distributions or returns of capital.

In addition, under the PMIERs, if an approved insurer fails to meet the PMIERs financial requirements, such approved insurer may not pay dividends without the prior approval of the GSEs.

In addition, under the PMIERs, if an approved insurer fails to meet the PMIERs financial requirements, such approved insurer may not pay dividends without the prior written approval of the GSEs.

In addition, to support NMIC's future growth, we could be required to provide additional capital support for NMIC if additional capital is required by the GSEs or pursuant to insurance laws and regulations.

4 unchanged sentences

If we cannot obtain adequate capital, our business, financial condition and operating results could be adversely affected.

Our 2018 Credit Agreement contains various covenants, restrictions and required financial ratios and tests that limit our operating flexibility.

The violation of one or more of these covenants, ratios or tests could have a material adverse effect on our business, financial condition and operating results.

In May 2018, NMIH entered into a credit agreement (2018 Credit Agreement), providing for (i) a $150 million five-year senior secured term loan facility (2018 Term Loan) that matures on May 24, 2023;

and (ii) an $85 million three-year secured revolving credit facility (2018 Revolving Credit Facility) that matures on May 24, 2021.

Proceeds from the 2018 Term Loan were used to repay in full the outstanding amount due under our previous $150 million amended term loan (the 2015 Term Loan) and to pay fees and expenses incurred in connection with the 2018 Credit Agreement.

The 2018 Credit Agreement is secured by substantially all of the assets of NMIH, including the capital stock of NMIC and Re One.

Among other requirements, under both the 2018 Term Loan and the 2018 Revolving Credit Facility, NMIH may not permit our debt to total capitalization ratio to exceed 35% as of the last day of any fiscal quarter.

Under the 2018 Revolving Credit Facility, NMIH may not permit (i) the aggregate amount of our unrestricted cash and cash equivalents to be less than $10 million at any time when NMIH does not have an investment-grade credit rating from both Standard & Poor's Rating Service (S&P) and Moody's Investors Service (Moody's), (ii) the statutory capital of NMIC to be less than $414,424,624 as of the last day of any fiscal quarter, or (iii) our consolidated net worth to be, as of the last day of any fiscal quarter, less than the sum of (A) $461,607,905, plus (B) 50% of our cumulative consolidated net income for each fiscal quarter for which such consolidated net income is positive, plus (C) 50% of any increase in our consolidated net worth after March 31, 2018 resulting from certain issuances of equity by or capital contributions to NMIH or our subsidiaries.

In addition, under the Revolving Credit Facility, NMIC must remain at all times in compliance with all applicable "financial requirements" imposed pursuant to the PMIERs, subject to any allowed transition period or forbearance thereunder.

Further, the 2018 Credit Agreement prohibits, restricts or limits, among other things, NMIH's and its subsidiaries' ability to (i) incur additional indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions, (iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate and (vii) enter into transactions with affiliates, in each case subject to certain limitations, exceptions and qualifications as set forth in the 2018 Credit Agreement.

These covenants place significant restrictions on the manner in which we may operate our business, and our ability to meet these covenants may be affected by events beyond our control.

If we fail to meet any of these covenants, the lenders could declare the outstanding principal amount of the 2018 Term Loan, accrued and unpaid interest and all other amounts owing and payable thereunder to be immediately due and payable, which could have a material adverse effect on our business, financial condition and operating results.

We are required to assess our ability to continue as a going concern as part of our preparation of financial statements at each quarter-end.

This assessment includes, among other things, our ability to comply with the covenants and requirements under the 2018 Credit Agreement.

If in future periods we are not able to demonstrate that we will be in compliance with the financial covenant requirements in the 2018 Credit Agreement for at least 12 months following the date of the financial statements, management could conclude there is substantial doubt about our ability to continue as a going concern, and the audit opinion that we would receive from our independent registered public accounting firm would include an explanatory paragraph regarding our ability to continue as a going concern.

Such an opinion would cause us to be in breach of the covenants in the 2018 Credit Agreement.

NMIH's obligations under the Credit Agreement are guaranteed (Guarantee) by one of its subsidiaries, NMIS (the Guarantor).

NMIH's and the Guarantor's obligations under the 2018 Credit Agreement and the Guarantee, respectively, are secured by first-priority liens on substantially all the assets of NMIH and the Guarantor, respectively, subject to certain exceptions.

If we fail to make the required payments on the 2018 Term Loan, do not meet the financial covenants or otherwise default on the terms of the 2018 Credit Agreement, the lenders under the 2018 Credit Agreement could declare all of the obligations under the 2018 Credit Agreement to be immediately due and payable.

We cannot assure you that our assets would be sufficient to repay such amounts in full if this were to occur, and the lenders could foreclose on the collateral securing the 2018 Credit Agreement and the Guarantee, including, subject to regulatory approval, the stock of NMIC and Re One.

In addition, although we currently expect that we will have sufficient assets to repay the outstanding principal of the 2018 Term Loan at maturity;

we can give no assurance that our assets at that time will be sufficient to repay such amounts in full or that NMIH will be able to extend or refinance the 2018 Term Loan.

Our substantial indebtedness could adversely affect our financial condition.

We currently have and will continue to have a substantial amount of indebtedness.

As of December 31, 2020 our debt totaled approximately $393.3 million

Our indebtedness could have significant negative consequences for our business, financial condition and operating results, including:

• increasing our vulnerability to adverse economic and industry conditions;

• limiting our ability to obtain additional financing;

• requiring the dedication of a substantial portion of the cash flow from our subsidiaries' operations to service our indebtedness, thereby reducing the amount of cash flow available for other purposes;

• making it more difficult for us to retain our existing ratings or to obtain investment-grade credit ratings in the future;

• making it more difficult to conduct our business successfully or to grow our business, or limiting our flexibility in planning for, or reacting to, changes in our business;

• placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.

In addition, our senior secured credit facilities and the indenture governing our senior secured notes contain certain restrictive covenants that, among other things, limit our ability to incur additional indebtedness, make investments, incur liens, transfer or dispose of assets, merge with or acquire other companies and pay dividends.

Our senior secured credit facilities require us to comply with certain financial and other maintenance covenants.

A failure to comply with covenants or the other terms of our senior secured credit facilities and the indenture governing our senior secured notes could result in an event of default under such indebtedness, which, if not remedied, may trigger an event of default under certain other indebtedness.

If the lenders under our senior secured credit facilities terminate their commitments or we are unable to satisfy certain covenants or representations, we may not have access to funding in a timely manner, or at all, when we require it.

If funding is not available under the senior secured credit facilities when we require it, our ability to continue our business practices or pursue our current strategy could be limited.

If any indebtedness under the senior secured credit facilities or our senior notes is accelerated, we cannot assure you that our assets would be sufficient to repay such amounts in full, and the lenders and/or noteholders could foreclose on the collateral securing the obligations under the senior secured credit facilities and the senior notes, including, subject to regulatory approval, the stock of NMIC and Re One.

Any of these actions could have a material adverse effect on our business, financial condition and operating results.

Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

Our indebtedness under the 2018 Credit Agreement is, and our future indebtedness may be, subject to variable rates of interest, exposing us to interest rate risk.

Any indebtedness we may incur under our senior secured credit facilities and our future indebtedness may be subject to variable rates of interest, exposing us to interest rate risk.

If interest rates increase, our debt service obligations on such variable rate indebtedness would increase, resulting in a reduction of our net income that could be significant, even though the principal amount borrowed would remain the same.

Despite our substantial level of debt, we may incur more debt, which could exacerbate any or all of the risks described above.

We may incur substantial additional debt in the future, including up to $85 million in borrowings we may choose to make under the 2018 Revolving Credit Facility.

Although our 2018 Credit Agreement limits our ability and the ability of certain of our subsidiaries to incur additional debt, these restrictions are subject to a number of qualifications and exceptions, and, under certain circumstances, we may incur additional debt in compliance with these restrictions.

In addition, the 2018 Credit Agreement does not prevent us from incurring certain obligations that do not constitute "indebtedness" as defined therein.

To the extent that we incur additional debt or such other obligations, the risks associated with our 2018 Credit Agreement described above, including our possible inability to service our debt or other obligations, would increase.

We may incur substantial additional debt in the future, including up to $110 million in borrowings we may choose to make under the senior secured credit facilities.

Although the credit agreement governing our senior secured credit facilities and the indenture governing our senior secured notes each limit our ability and the ability of certain of our subsidiaries to incur additional debt, these restrictions are subject to a number of qualifications and exceptions, and, under certain circumstances, we may incur additional debt in compliance with these restrictions.

In addition, the applicable credit agreement and indenture does

not prevent us from incurring certain obligations that do not constitute "indebtedness" as defined therein.

To the extent that we incur additional debt or such other obligations, the risks associated with our credit agreement and indenture described above, including our possible inability to service our debt or other obligations, would increase.

Our current credit ratings may adversely affect our ability to access capital and the cost of such capital, which could have a material adverse effect on our business, financial condition and operating results.

Our current issuer credit and debt ratings are below investment grade.

Our current credit ratings, or any future negative actions the credit agencies may take, could affect our ability to access the reinsurance, credit and capital markets in the future and could lead to worsened trade terms and adversely affect the cost.

An inability to access reinsurance, capital and credit markets when needed to continue to grow our business, refinance our existing debt or raise new debt or equity could have a material adverse effect on our business, financial condition, operating results and liquidity.

Risks Related to Ownership of Our Common Stock

We do not anticipate paying any dividends on our common stock in the near future, and payment of any declared dividends may be delayed.

31 unchanged sentences

These sales could also make it more difficult for us to sell equity or equity-related securities in the future, at a time and place that we deem appropriate.

In addition, we have filed registration statements on Form S-8 under the Securities Act to register an aggregate of 5.5 million shares of our common stock for issuance under our 2012 Stock Incentive Plan (2012 Plan) and an aggregate of 6 million shares of our common stock for issuance under our Amended and Restated 2014 Omnibus Incentive Plan (2014 Plan, and together with the

2012 Plan, the Stock Plans).

Any shares issued under our Stock Plans, including as a result of the exercise of stock options, would dilute the percentage ownership held by investors who purchase our shares prior to such issuance.

15 unchanged sentences

• provide our Board the ability to issue common stock and warrants within the amount of authorized capital;

provide that, subject to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of our stockholders and may not be effected by any consent in writing by such stockholders;

• provide that, subject to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, any action required or permitted to be taken by our stockholders must be effected at a

duly called annual or special meeting of our stockholders and may not be effected by any consent in writing by such stockholders;

• provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, generally must provide timely advance notice of their intent in writing and certain other information not less than 90 days nor more than 120 days prior to the meeting.

3 unchanged sentences

(ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan);

or (iii) on or subsequent to such time the business combination is approved

by the board of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.

or (iii) on or subsequent to such time the business combination is approved by the board of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.

In addition, Wisconsin's insurance laws and regulations generally provide that no person may acquire control of us unless the transaction in which control is acquired has been approved by the Wisconsin OCI.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors