What changed in this filing

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Item 1A. Risk Factors

2022-02-16 compared with 2021-02-24 · 144 added, 118 removed, 596 unchanged (31% of the section changed)

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

• Increases in inflation may have an impact on our business performance and operations.

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

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• 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 COVID-19 pandemic 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.

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• 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.

• The Company may be adversely impacted by the phasing out of London Interbank Offered Rate ( LIBOR).

Risks Related to Our Holding Company and Capital Structure

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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.

• We do not currently pay any dividends on our common stock and may not do so in the 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.

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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 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.

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• 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;

• GSEs and other investors using credit enhancements other than MI (including alternative forms of credit risk transfer such as the now discontinued IMAGIN and EPMI programs that could be relaunched in the future), using other credit enhancements in conjunction with reduced levels of MI coverage, or accepting credit risk without credit enhancement;

• lenders originating mortgages using "piggy-back" or other structures to avoid MI, such as a first mortgage with an 80% LTV and a second mortgage with a 10%, 15% or 20% LTV (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather than a first mortgage with an LTV above 80% that has MI;

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Our customers may choose to diversify the mortgage insurers with which they do business, which could negatively affect our level of NIW and our market share.

In addition, our Master Policy does not require our customers to do business with us.

In addition, our Master Policies do not require our customers to do business with us.

Loss of business from significant customers, if not offset by additional business from other customers, could have an adverse effect on the amount of new business we are able to write, and consequently, our financial condition and operating results.

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• 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, which currently is impacted by the COVID-19 pandemic and related containment measures;

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

• housing affordability;

• housing supply;

• population trends, including the rate of household formation, preferences of potential mortgage borrowers and cultural shifts;

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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, which currently have been impacted by the effects of the COVID-19 pandemic and related containment measures.

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 continue to be 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.

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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.

Losses result from events that reduce a borrower's ability or willingness to continue to make mortgage payments, which include borrower-specific factors, such as job loss, illness, death and divorce, and macroeconomic factors, such as rising unemployment, market deterioration, rising interest rates and home price depreciation.

Losses result from events that reduce a borrower's ability or willingness to continue to make mortgage payments, which include borrower-specific factors, such as job loss, illness, death, divorce, existing federal supported forbearance programs, and macroeconomic factors, such as rising unemployment, market deterioration, rising interest rates and home price depreciation.

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.

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Home values may decline even absent deterioration in economic conditions due to declines in demand for homes, which may result from changes in buyers' perceptions of the potential for future home price appreciation, rising interest rates or availability of mortgage credit.

The ending of widely embraced forbearance programs such as those provided under the CARES Act may also increase the realization of losses related to borrower defaults.

If our default and loss projections are materially inaccurate, our actual losses could materially exceed our expectations and adversely affect our financial condition and operating results.

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In addition, a higher than expected persistency rate will decrease the profitability from single premium policies if they will remain in force longer than was estimated when the policies were written.

The factors affecting persistency include:

The factors affecting persistency may include, but are not limited by, the following:

• servicing guidelines and other policies of the GSEs and other mortgage investors determining the timing and rationale for cancelling mortgage insurance;

• the level of current mortgage interest rates compared to the mortgage rates on the IIF, which affects the sensitivity of the IIF to refinancings ( i.e.

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• efforts of lenders to solicit borrower refinancing;

• 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 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.

We could experience significant turnover in our IIF if the current low-rate environment persists over a prolonged period of time, which could negatively impact our future revenues.

In 2021, mortgage interest rates remained near historical lows, primarily as a result of changes in monetary policy by the Federal Reserve.

We expect low interest rate environments 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.

We could continue to experience significant turnover in our IIF if the current low-rate environment persists over a prolonged period of time, which could negatively impact our future revenues.

We are unsure, however, what the ultimate impact on our revenues will be as insured mortgages are refinanced, because the number of policies we write for replacement mortgages may be more or less than the terminated policies associated with the refinanced mortgages and could be written at lower premium rates.

In addition, the GSEs and other mortgage investors who hold the mortgages on which we write mortgage insurance largely control the decision on whether to maintain mortgage insurance.

If the GSEs and other mortgage investors change their view on the timing of cancellation of mortgage insurance due to house price appreciation, policy goals, other risk appetite decisions or otherwise, we could experience increased and unexpected turnover in our IIF, which could negatively impact our future revenues.

Increases in inflation may have an impact on our business performance and operations.

Rising inflation may negatively impact our expense base by increasing the costs we have to pay, including for services, contractors and employees.

If inflation rises to a level that results in the Federal Reserve Board (the Fed) raising the federal funds rate, interest rates will generally rise.

Rising interest rates can have an impact on housing affordability for our customer base, possibly resulting in lower NIW volume.

In addition, if the Fed decides to raise interest rates, there can be no guarantee the Fed will raise rates at a gradual pace, nor can there be any assurance that markets will not adversely react to rate increases.

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

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In addition, if our USPs place our MI coverage on loans that are ineligible for coverage under our underwriting guidelines, our risk of claims will be increased on those loans or the premiums we charge may be inadequate for the corresponding risk.

We do not have the right under our Master Policy to cancel coverage of an ineligible loan as a result of a USP making an incorrect decision.

We do not have the right under our Master Policies to cancel coverage of an ineligible loan as a result of a USP making an incorrect decision.

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.

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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.

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.

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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 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.

Among other things, our Master Policies require 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 timelines 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.

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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.

In June 2020, the GSEs temporarily amended PMIERs (subsequently amended and restated in each of September 2020, December 2020 and June 2021) that, among other items, 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.

In 2021, we did not see any notable changes in servicer payment practices, with servicers generally continuing to remit monthly premium payments as scheduled, including those for policies covering loans that are in a forbearance program.

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.

Furthermore, 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.

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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.

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.

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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.

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.

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 COVID-19 pandemic 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.

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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.

states adopted measures to contain the virus, including travel restrictions, quarantines, shelter-in-place orders, mask mandates, 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 many sectors 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.

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 COVID-19.

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.

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

In March 2021, the Biden administration enacted the American Rescue Plan Act (the American Rescue Plan), which injected $1.9 trillion in financial relief and economic stimulus into the economy.

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

In addition, the CARES Act enacts into law a requirement to provide payment forbearance for up to 18 months 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 twelve-month term, and for certain borrowers, if their hardships have not been resolved at the end of their twelve-month terms, they may extend their forbearance terms for up to six additional months.

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;

Consistent with the CARES Act, the GSEs have provided 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.

Borrowers that avail themselves of forbearance relief would 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:

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• 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.

Notwithstanding the GSEs' efforts 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 pandemic 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.

There have been and we believe there may continue to 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.

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• 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.

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

The continuing spread and rise of new variants could also negatively impact the business and operations of our customers and critical third-party service providers.

Further, significant 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.

While there are continuing efforts underway and vaccines have been introduced 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 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.

Higher unemployment rate could result in higher number of defaults we receive in the near term.

In addition, as a result of COVID-19-related relief programs, the defaults related to the COVID-19 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.

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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.

As a result of costs incurred in connection with rising defaults associated with the COVID-19 pandemic, 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.

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• 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.

Under our Master Policies,

a national foreclosure moratorium does not limit the amount of accrued interest (subject to the three-year limit) or advances that may be included in the claim amount.

Since the foreclosure moratorium mandated by the GSEs covered an extended period of time, loans in our default inventory, including those with defaults unrelated to the COVID-19 pandemic 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 or the containment or mitigation efforts related thereto.

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.

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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.

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.

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• 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.

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

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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.

Given the continuing spread of COVID-19 and the rise of new variants, the aforementioned impacts of the COVID-19 pandemic and containment measures may continue and may worsen to affect households and businesses, or cause continuing or additional limitations on commercial activity, increased unemployment, and general economic and financial instability or volatility.

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

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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.

For example, a disaster event could lead to unexpected changes in persistency rates as policyholders and borrowers who are affected by the disaster may be unable to meet their contractual obligations, such as payment of premiums on our insurance policies and mortgage payments on loans we insure.

We are exposed to various risks arising out of natural disasters, including pandemics other than COVID-19, earthquakes, wildfires, hurricanes, floods, tornadoes and other events that could be related to and could be worsened by changing climatic conditions.

We are also exposed to various risks arising out of man-made disasters, including acts of terrorism, and military actions.

For example, a natural disaster event that could be triggered by climate change, or otherwise, could lead to unexpected changes in persistency rates as policyholders and borrowers who are affected by the disaster may be unable to meet their contractual obligations, such as payment of premiums on our insurance policies and mortgage payments on loans we insure.

The continued threat of terrorism may cause significant volatility in global financial markets, and a natural or man-made disaster or a pandemic could trigger an economic downturn in the areas directly or indirectly affected by the disaster.

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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.

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.

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If we do not continue to receive full capital credit in connection with these transactions, we would likely need to seek other sources of capital or reductions in RIF sooner than we would have expected with full capital credit under PMIERs and state insurance laws.

Future sources of capital will depend on the cost, availability and terms and conditions that are acceptable to us, our regulators and the GSEs.

Future sources of capital will depend on the cost, availability and terms and conditions that are acceptable to us, our regulators and the

We cannot be sure that we will be able to secure other sources of capital or substitute reductions in RIF in the amounts we require and on favorable terms, if at all.

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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.

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

As a result of the remote work arrangement adopted, and that have continued either on a hybrid or permanent basis, 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.

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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.

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.

Further, our business would be negatively impacted if we are unable to enhance our platform when necessary to support our primary business functions, including to match or exceed the technological capabilities of our competitors over time.

We cannot predict with certainty the cost of maintaining and improving our platform, but failure to make necessary improvements and any significant shortfall in any technology enhancements or negative variance in the time-line in which system enhancements are delivered could have an adverse effect on our business, financial condition and operating results.

We cannot predict with certainty the cost of maintaining and improving our platform, but failure to make necessary improvements and any significant shortfall in any technology enhancements or negative variance in the timeline in which system enhancements are delivered could have an adverse effect on our business, financial condition and operating results.

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

Our IT systems process, transmit, store and protect large amounts of personal information of borrowers whose mortgages we insure, in addition to the confidential, proprietary, financial and other information that are critical to our business.

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.

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.

Our IT 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.

We may, from time to time, upgrade certain of our information systems, and transform and automate certain of our business processes.

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

If we fail to timely and successfully implement and integrate new technology systems or if the systems and/or transformed and automated business processes do not operate as expected, 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, and that have continued either on a permanent or hybrid basis, 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.

We have adopted information security procedures and controls to safeguard our systems and the information that we process, transmit and store, including new multi-factor authentication.

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.

The continuing 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.

There is no assurance that our information security policies and systems in place can prevent unauthorized use or disclosure of confidential information, including nonpublic personal information.

Although we believe that we have appropriate information security policies and systems in place, t here is no assurance that our information security policies and systems in place can prevent unauthorized use or disclosure of confidential information, including nonpublic personal information.

Any compromise of the security of our IT systems may result in loss of personally identifiable information, financial losses, loss of customers and the inability to transact business;

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If any of these were to occur, our business, financial condition and operating results could be materially adversely affected.

Further, the technology errors and omissions insurance coverage we maintain may be inadequate to cover claims and/or costs associated with incidents that may occur in the future.

Further, the technology errors and omissions insurance coverage we maintain may be inadequate or unavailable to cover claims and/or costs associated with incidents that may occur in the future.

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

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NMIC's investments and investment policies are subject to state insurance laws, which results in our portfolio being predominantly limited to highly rated fixed income securities.

To date, our investment portfolio has been established at a time of historically low interest rates.

Our investment portfolio has been established at a time of historically low interest rates.

If interest rates rise above the rates on our fixed income securities, the market value of our investment portfolio would decrease.

Any significant decrease in the value of our investment portfolio would adversely impact our financial condition.

We may be required or find it advisable to change our investments or investment policies depending upon regulatory, economic and market conditions, or our existing or anticipated financial condition and operating requirements, including the tax position, of our business.

We may be required or find it advisable to change our investments or investment policies depending upon regulatory, economic, social and market conditions, or our existing or anticipated financial condition and operating requirements, including the tax position, of our business.

Our investment objectives may not be achieved.

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

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.

For example, in 2021, the GSEs finalized the 2021 PMIERs Guidance, which, among other things:

(i) temporarily amended PMIERs 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 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.

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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 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.

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 2021 PMIERs Guidance and in response to the COVID-19 pandemic, 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.

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 or otherwise required by the GSEs for us to remain an approved insurer.

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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.

Between the Director of the FHFA and the Treasury Department, they possess significant capacity to effect administrative GSE reforms.

In September 2019, the Treasury Department released its Housing Reform Plan that included a compilation of legislative and administrative recommendations for reforms to achieve various goals, and among them, the goals of ending the conservatorships of the GSEs and setting regulations for the GSEs that provide for their safety and soundness.

Additionally, the previous Director of the FHFA had also publicly stated as his priority to exit the GSEs from conservatorship.

Accordingly, the previous FHFA leadership focused on preparing the GSEs to exit from conservatorship by increasing the GSEs’ overall capital levels and reducing their credit risk profile.

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.

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.

On June 23, 2021, the U.S.

Supreme Court ruled that the President could remove the FHFA Director other than for cause, Subsequently, President Biden removed the previous FHFA Director and appointed a new Acting Director to lead the FHFA.

Unlike the prior FHFA leadership’s primary focus to exit the GSEs from conservatorship, the new Acting Director's actions are more focused on increasing the accessibility and affordability of mortgage credit, especially to low-and-moderate income borrowers and underserved communities.

Between the Acting Director of the FHFA and the Treasury Department, they possess significant capacity to effect administrative GSE reforms.

In September 2021, the FHFA together with the Treasury Department proposed amendments to the regulatory capital framework that would, among other things, reduce the amount of capital the GSEs are required to hold compared to the final December 2020 rule, including by increasing the capital credit the GSEs receive for the credit risk that they distribute.

It is uncertain if and when these proposed amendments may be adopted into the regulatory capital framework and what form that they may take.

If any GSE reform is adopted, whether through legislation or administrative action, it could impact the current role of private mortgage insurance as credit enhancement, including its reduction or elimination, which would have an adverse effect on our revenue, operating results, prospects or financial condition.

Some other examples of potential GSE reforms or policy changes that could impact our business, may also include, but are not limited by, the following:

• Policies or requirements that may result in a reduction in the number of mortgages GSEs acquire;

• The national conforming loan limit for mortgages GSEs acquire;

• The level of mortgage insurance required;

• The terms on which mortgage insurance coverage may be canceled prior to reaching the cancellation thresholds established by law;

• The terms required to be included in master policies for the mortgage insurance policies GSEs acquire;

• The amount of loan level price adjustments or guarantee fees that the GSEs charge on loans that require mortgage insurance;

• The degree of influence that the GSEs have over a mortgage lender’s selection of the mortgage insurer providing coverage.

As a result of these matters, it is uncertain what role private capital, including MI, will play in the domestic residential housing finance system in the future or the impact of any such changes on our business.

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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.

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.

To date, several credit risk transfer products have been created under the program, including IMAGIN and EPMI and others discussed above in " Our NIW volumes could be adversely affected if lenders and investors select alternatives to private MI.

To date, several credit risk transfer products have been created under the program, including the now discontinued IMAGIN and EPMI and others discussed above in " Our NIW volumes could be adversely affected if lenders and investors select alternatives to private MI.

" To the extent these credit risk products evolve in a manner that displaces primary MI coverage, the amount of insurance we write may be reduced.

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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.

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.

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The NAIC has formed the Working Group to discuss and recommend changes to the solvency and market practices regulation of mortgage insurers, including changes to the Model Act.

Proposed amendments to the Model Act include, among other changes, adoption of a risk-based capital model.

We, along with other mortgage insurers, have provided feedback to the Working Group since early 2013, including comments on the risk-based capital approach.

Proposed amendments to the Model Act include, among other changes, the introduction of a risk-based capital model.

We, along with other mortgage insurers, have provided feedback to the Working Group since early 2013, including comments on the risk-based capital model.

If the risk-based capital model is adopted by the NAIC, some or all of the 16 states that currently have minimum statutory capital requirements, and potentially others that do not, could enact a portion or all of the revised Model Act, including the loan-level capital model.

The Working Group's discussions are ongoing and the ultimate outcome of these discussions and any potential actions taken by the NAIC cannot be predicted at this time.

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

New leadership at the CFPB or any changes made under the current 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.

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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.

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

A subset of mortgages falling under the ATR that has certain low-risk characteristics are known as QMs.

QMs that are deemed to have the lowest risk profiles are entitled to a safe-harbor presumption of compliance with the ability-to-pay requirements.

The original ATR/QM rule (Original QM Definition) 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.

The General QM final rule is effective on March 1, 2021 and originally had a mandatory compliance date of July 1, 2021, after which the Original QM Definition and QM Patch would no longer apply.

The mandatory compliance date for the New QM Definition (and therefore, the preservation of the Original QM Definition and QM Patch) has since been extended to October 1, 2022.

However, the GSEs announced on April 8, 2021 that, for loan applications received on or after July 1, 2021, they will only purchase loans satisfying the New General QM Definition.

Given the mandatory compliance date and the GSE announcement, we expect creditors may opt to use the new, price-based General QM definition.

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

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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.

The Company may be adversely impacted by the phasing out of London Interbank Offered Rate (LIBOR).

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

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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.

On March 5, 2021, IBA confirmed its 2020 announcement that it would permanently cease the publication of overnight, one-month, three-month, six-month and twelve-month USD LIBOR settings in their current form after June 30, 2023.

Financial Conduct Authority ("FCA"), the regulator of IBA, announced on the same day that it intends to stop requiring panel banks to continue to submit to LIBOR and all USD LIBOR settings in their current form will either cease to be provided by any administrator or no longer be representative after June 30, 2023.

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).

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

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.

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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.

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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 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's principal source of operating cash is investment income, and could in the future include dividends from NMIC and Re One, which currently does not have active insurance exposure.

NMIC currently has the capacity to pay aggregate ordinary dividends of $34.9 million to NMIH during the twelve-month period ending December 31, 2021 without prior approval from the Wisconsin OCI.

NMIH also has access to $250 million of undrawn revolving credit capacity under the senior secured credit facilities.

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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 $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.

We may incur substantial additional debt in the future, including up to $250 million in borrowings we may choose to make under our 2021 Revolving Credit Facility.

Although the credit agreement governing our 2021 Revolving Credit Facility 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, our 2021 Revolving Credit Facility 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.

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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.

We have not declared or paid dividends in the past, and we do not expect to pay dividends in the near future.

We currently intend to retain all of our earnings, if any, to fund our growth.

As a result, only appreciation in the price of our common stock, which may not occur, will provide a return to investors.

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

We have not declared or paid dividends in the past, and we may not pay dividends in the future.

As a result, until we otherwise declare and pay dividends on our common stock, only appreciation in the price of our common stock, which may not occur, will provide a return to investors.

Any future declaration and payment of dividends by our Board will depend on many factors, including general economic and business conditions, our strategic plans, our financial results and condition, legal requirements and other factors that our Board deems relevant.

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Our preferred stock, if issued, could have a preference on liquidating distributions or a preference on dividend payments that would limit amounts available for distribution to holders of shares of our common stock.

Accordingly, if we were liquidated, holders of our debt securities and preferred stock and lenders with respect to our Credit Agreement or other future borrowings, if any, would receive a distribution of our available assets prior to the holders of shares of our common stock.

Accordingly, if we were liquidated, holders of our debt securities and preferred stock and lenders with respect to our 2021 Revolving Credit Facility or other future borrowings, if any, would receive a distribution of our available assets prior to the holders of shares of our common stock.

Any decision to issue debt or preferred stock in the future will depend on market conditions and other factors, some of which will be beyond our control.

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

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.

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As a Delaware corporation, we are also subject to anti-takeover provisions of Delaware law, including Section 203 of The Delaware General Corporation Law, which, subject to certain exceptions, prohibits a public Delaware corporation from engaging in a business combination (as defined in such section) with an "interested stockholder" (defined generally as any person who beneficially owns 15% or more of the outstanding voting stock of such corporation or any person affiliated with such person) for a period of three years following the time that such stockholder became an interested stockholder, unless (i) prior to such time, the board of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

(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);

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.

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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