What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-14 compared with 2024-02-15 · 230 added, 280 removed, 997 unchanged (34% of the section changed)

32 unchanged sentences

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Reserve for Insurance Claims and Claim Expenses

As described in Notes 2 and 7 to the consolidated financial statements, the Company’s consolidated reserve for insurance claims and claim expenses balance was $124.0 million at December 31, 2023.

The establishment of the insurance claims and claim expenses reserve is subject to inherent uncertainty and requires significant judgment by management.

As described in Note 7 to the consolidated financial statements, the Company’s consolidated reserve for insurance claims and claim expenses balance was $152.1 million at December 31, 2024.

As described in Note 2 to the consolidated financial statements, the establishment of the insurance claims and claim expenses reserve is subject to inherent uncertainty and requires significant judgment by management.

The insurance claims reserve is established by estimating:

(i) claim severity which is the amount of the claim payment expected to be paid on each loan in default, (ii) claim frequency which is the number of loans in default expected to result in a claim payment, and (iii) the beneficial impact of assistance programs, such as forbearance, repayment, and modification options.

The claim frequency is determined based on historical experience regarding certain loan factors.

The claim severity and claim frequency estimates are also strongly influenced by current economic conditions including unemployment and the housing market.

We identified the Company’s estimation of the reserve for insurance claims and claim expenses as a critical audit matter.

The principal consideration for our determination is the high degree of subjectivity in estimating claim severity, claim frequency and the beneficial impact of assistance programs.

Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized knowledge and skill needed.

(i) claim frequency which is the number of loans in default expected to result in a claim payment and (ii) claim severity which is the amount of the claim payment expected to be paid on each loan in default.

The claim frequency and claim severity are determined based on historical experience regarding certain loan factors and are also strongly influenced by current and expected economic conditions including the housing market.

We identified the Company’s estimation of the reserve for insurance claims within the reserve for insurance claims and claim expenses as a critical audit matter.

The principal consideration for our determination is the high degree of subjectivity in estimating claim frequency and claim severity.

Estimation of these factors is inherently subjective as it requires the Company to make assumptions with respect to the future of the housing market.

The primary procedures we performed to address this critical audit matter included:

• Testing a sample of the underlying loans and claims data used in management’s insurance claims reserve calculations, which supported estimates of claim severity, claim frequency and the beneficial impact of assistance programs, by agreeing key characteristics of the underlying loans and claims data to source documents and data provided by third party loan servicers.

• Utilizing personnel with specialized knowledge and skill in actuarial methods to assist in:

(i) evaluating the appropriateness of the methodology and the assumptions used by management and management’s specialist, including assessment of the reasonableness of changes in assumptions and inputs used in developing claim severity, claim frequency and the beneficial impact of assistance programs, (ii) developing an independent estimate of the reserve for insurance claims and claims expense using Company and historical mortgage industry data and comparing this independent estimate to management’s and management’s specialist’s estimated reserve and (iii) performing a retrospective review of the development of the prior year reserve estimate compared to current year actual results and continued estimated reserves.

• Testing the design and effectiveness of certain internal controls related to the Company’s valuation of reserve for insurance claims, including automated application controls over the source data utilized in the development of significant assumptions.

• Testing a sample of the underlying loans and claims data used in management’s insurance claims reserve calculations, which supported estimates of claim frequency and claim severity, by agreeing key characteristics of the underlying loans and claims data to source documents and data provided by third party loan servicers.

• Utilizing personnel with specialized skill and knowledge in actuarial methods to assist in:

(i) evaluating the appropriateness of the methodology and the assumptions used by management and management’s specialist, including assessment of the reasonableness of assumptions and inputs used in developing claim frequency and claim severity by evaluating industry data such as macroeconomic trends in delinquency rates, the Freddie Mac House Price Index data, historical pandemic data, and expected impact of natural disasters;

(ii) developing an independent estimate of the reserve for insurance claims using Company and historical mortgage industry data and comparing this independent estimate to management’s and management’s specialist’s estimated reserve;

and (iii) performing a retrospective review of the development of the prior year reserve estimate compared to current year actual results and continued estimated reserves.

/s/ BDO USA, P.C.

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54,308 96,689

Premiums receivable 76,456 69,680

Premiums receivable, net 82,804 76,456

Accrued investment income 22,386 19,785

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Reserve for insurance claims and claim expenses 152,071 123,974

Reinsurance funds withheld 1,421 2,674

Deferred tax liability, net 386,192 301,573

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Shareholders' equity

Common stock - class A shares, $ 0.01 par value;

Common stock - $ 0.01 par value;

87,902,626 shares issued and 78,600,726 shares outstanding as of December 31, 2024 and 87,334,138 shares issued and 80,881,280 shares outstanding as of December 31, 2023 ( 250,000,000 shares authorized)

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Net investment income 85,316 67,512 46,406

Net realized investment (losses) gains ( 33 ) 481 729

Net realized investment gains (losses) 23 ( 33 ) 481

Other revenues 944 756 1,192

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Other comprehensive income (loss), net of tax:

Unrealized gains (losses) in accumulated other comprehensive income, net of tax expense (benefit) of $ 17,113 , $( 54,608 ) and $( 13,768 ) for each of the years in the three-year period ended December 31, 2023, respectively

Unrealized gains (losses) in accumulated other comprehensive loss, net of tax expense (benefit) of $ 3,921 , $ 17,113 and $( 54,608 ) for each of the years in the three-year period ended December 31, 2024, respectively

15,113 64,380 ( 205,428 )

Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of $ 0 , $( 7 ) and $ 101 for each of the years in the three-years ended December 31, 2024, respectively

26 ( 380 ) ( 576 )

Other comprehensive income (loss), net of tax

1 unchanged sentence

Comprehensive income

$ 375,219 $ 386,516 $ 87,094

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Common Stock - Class A Additional

Paid-in Capital Treasury Stock, At Cost Accumulated Other Comprehensive Income (Loss) Retained Earnings Total

Paid-in Capital Treasury Stock, At Cost Accumulated Other Comprehensive Loss Retained Earnings Total

Shares Amount

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Common stock:

class A shares issued related to warrant exercises 86 1 1,982 — — — 1,983

shares issued related to warrant exercises 84 1 1,767 — — — 1,768

Common stock:

class A shares issued under stock plans, net of shares withheld for employee taxes 544 5 ( 1,230 ) — — — ( 1,225 )

shares issued under stock plans, net of shares withheld for employee taxes 596 6 223 — — — 229

Repurchase of common stock ( 2,923 ) — — ( 56,575 ) — — ( 56,575 )

Share-based compensation expense — — 15,425 — — — 15,425

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Common stock:

class A shares issued related to warrant exercises 84 1 1,767 — — — 1,768

Common stock:

class A shares issued under stock plans, net of shares withheld for employee taxes 596 6 223 — — — 229

shares issued under stock plans, net of shares withheld for employee taxes 861 8 1,185 — — — 1,193

Repurchase of common stock ( 3,530 ) — — ( 92,346 ) — — ( 92,346 )

Share-based compensation expense — — 16,914 — — — 16,914

Change in unrealized investment gains/losses, net of tax benefit of $ 54,709

Change in unrealized investment gains/losses, net of tax expense of $ 17,120

— — — — 64,406 — 64,406

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Common stock:

class A shares issued under stock plans, net of shares withheld for employee taxes 861 8 1,185 — — — 1,193

shares issued under stock plans, net of shares withheld for employee taxes 569 6 ( 5,935 ) — — — ( 5,929 )

Repurchase of common stock ( 2,849 ) — — ( 97,673 ) — — ( 97,673 )

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Balances, December 31, 2024 78,601 $ 879 $ 1,004,692 $ ( 246,594 ) $ ( 124,804 ) $ 1,583,259 $ 2,217,432

80,881 $ 873 $ 990,816 $ ( 148,921 ) $ ( 139,917 ) $ 1,223,153 $ 1,926,004

See accompanying notes to consolidated financial statements.

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Adjustments to reconcile net income to net cash provided by operating activities:

Net realized investment loss (gains)

Net realized investment (gains) loss

( 23 ) 33 ( 481 )

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Depreciation and amortization 11,936 11,541 11,870

Net amortization of premium on investment securities 481 5,721 6,733

Net (accretion)/amortization of (discount)/premium on investment securities

( 1,078 ) 481 5,721

Loss on extinguishment of debt

Amortization of debt discount and debt issuance costs 2,214 1,961 1,846

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Changes in operating assets and liabilities:

Premiums receivable ( 6,776 ) ( 9,322 ) ( 10,579 )

Premiums receivable, net

( 6,348 ) ( 6,776 ) ( 9,322 )

Accrued investment income ( 2,601 ) ( 5,641 ) ( 2,244 )

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Purchase of fixed-maturity investments, available-for-sale ( 481,731 ) ( 488,562 ) ( 233,586 )

Proceeds from maturity of short-term investments 320,545 151,635 —

Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale 143,613 116,663 163,103

Proceeds from maturities of short-term investments

114,072 320,545 151,635

Proceeds from maturities and redemptions of fixed-maturity investments, available-for-sale

205,241 143,613 116,663

Additions to software and equipment

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Taxes paid related to net share settlement of equity awards ( 10,219 ) ( 9,356 ) ( 5,213 )

Proceeds from senior unsecured notes

Repayments of senior secured notes

( 405,080 ) — —

Payments of debt issuance costs ( 7,785 ) — —

2 unchanged sentences

( 96,699 ) ( 90,420 ) ( 55,828 )

Net increase (decrease) in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

( 42,381 ) 52,263 ( 32,220 )

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NMI Holdings, Inc.

(NMIH) is a Delaware corporation, incorporated in May 2011 to provide private mortgage guaranty insurance (which we refer to as mortgage insurance or MI) through its wholly-owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One).

One (Re One).

Our common stock is listed on the Nasdaq exchange under the ticker symbol “NMIH.”

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(GAAP) and our accounts are maintained in U.S.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date.

Estimates also affect the reported amounts of income and expenses for the reporting period.

Actual results could differ from those estimates.

Certain prior year amounts on our consolidated balance sheet have been reclassified to conform with our current period presentation.

Summary of Accounting Principles

Use of Estimates

We use accounting principles and methods that conform to GAAP.

We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters.

Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of income and expenses for the periods presented.

Actual results could differ from those estimates.

Insurance Premium Revenue Recognition

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Upon cancellation of a policy, all remaining non-refundable deferred and unearned premium is immediately earned, and any refundable deferred and unearned premium is returned to the policyholder and recorded as a reduction to written premium and unearned premium reserve in the period paid.

Premiums written on pool transactions are earned over the period that coverage is provided.

Our pool insurance agreement with Fannie Mae expired on August 31, 2023 and we will not recognize any pool premiums written or earned in connection with the agreement in future periods.

Concentrations

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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

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

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 incurred but not reported (IBNR) reserves.

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 incurred but not reported (IBNR) reserves.

We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claim settlement process.

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, not associated with a specific claim).

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

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

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Any adjustments required due to changes in effective yields and prepayment assumptions are recognized on a prospective basis.

Realized gains and losses are computed using the specific identification method.

We recognize an impairment on a security through the consolidated statement of operations and comprehensive income if (i) we intend to sell the impaired security;

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• other adverse conditions related to or impacting the security or issuer.

" We recognize an allowance for credit losses for the difference between the amortized cost and present value of future expected cash flows, limited by the amount the fair value of the security is below its amortized cost.

" The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes.

To the extent we determine that a security impairment is credit-related, an impairment loss is recognized through the statement of operations as a provision for credit loss expense, and presented as a “ Realized Investment Loss.” We recognize an allowance for credit losses for the difference between the amortized cost and present value of future expected cash flows, limited by the amount the fair value of the security is below its amortized cost.

Subsequent changes (favorable and unfavorable) in credit losses are recognized through the statement of operations as a provision for or a reversal of credit loss expense, and presented as a “ Realized Investment Gain or Loss.” The portion of a security impairment attributed to other non-credit related factors is recognized in other comprehensive income, net of taxes.

NMI HOLDINGS, INC.

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We have elected to present accrued interest receivable separately from available for sale securities on our consolidated balance sheets.

Accrued interest receivable was $ 19.8 million and $ 14.1 million as of December 31, 2023 and 2022, respectively, and is included in " Accrued Investment Income.

" We have elected not to measure an allowance for credit losses for accrued interest receivable on available for sale securities.

Accrued interest receivable was $ 22.4 million and $ 19.8 million as of December 31, 2024 and 2023, respectively, and is included in “ Accrued Investment Income.” We have elected not to measure an allowance for credit losses for accrued interest receivable on available for sale securities.

Accrued interest for available for sale securities is written off against interest income when the receivable has aged 90 days past due.

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We cede insurance risk through the use of reinsurance contracts and follow reinsurance accounting for those transactions where significant risk is transferred.

We account for premiums, claims and claim expenses that are ceded to reinsurers on basis consistent with that which we use to account for the original policies we issue and pursuant to the terms of our reinsurance contracts.

We account for premiums, claims and claim expenses that are ceded to reinsurers on a basis consistent with that which we use to account for the original policies we issue and pursuant to the terms of our reinsurance contracts.

We account for premiums ceded or otherwise paid to reinsurers as a reduction to premium revenue.

NMIC entered into quota share reinsurance treaties effective September 1, 2016 (the 2016 QSR Transaction), January 1, 2018 (the 2018 QSR Transaction), April 1, 2020 (the 2020 QSR Transaction and, as amended January 1, 2024, the Amended 2020 QSR Transaction), January 1, 2021 (the 2021 QSR Transaction), October 1, 2021 (the 2022 QSR Transaction), July 1, 2022 (the 2022 Seasoned QSR Transaction), and January 1, 2023 (the 2023 QSR Transaction), which we refer to collectively as the QSR Transactions.

NMIC entered into quota share reinsurance treaties effective September 1, 2016 and as modified April 1, 2019 (the 2016 QSR Transaction), January 1, 2018 (the 2018 QSR Transaction), April 1, 2020 and as amended January 1, 2024 (the 2020 QSR Transaction), January 1, 2021 (the 2021 QSR Transaction), October 1, 2021 (the 2022 QSR Transaction), July 1, 2022 (the 2022 Seasoned QSR Transaction), January 1, 2023 (the 2023 QSR Transaction), and January 1, 2024 (the 2024 QSR Transaction), which we refer to collectively as the QSR Transactions.

We earn profit and ceding commissions in connection with the QSR Transactions (see Note 6, “ Reinsurance” ).

1 unchanged sentence

We recognize any profit commissions we earn as a decrease to ceded earned premiums.

Ceding commissions are calculated as a percentage of ceded written premiums under the 2016 QSR Transaction and as a percentage of ceded earned premiums under the 2018, 2020 (and Amended 2020), 2021, 2022, 2022 Seasoned and 2023 QSR Transactions, and are intended to cover our costs of acquiring and servicing direct policies.

Ceding commissions are calculated as a percentage of ceded written premiums under the 2016 QSR Transaction or as a percentage of ceded earned premiums under the 2018, 2020, 2021, 2022, 2022 Seasoned, 2023 and 2024 QSR Transactions, and are intended to cover our costs of acquiring and servicing direct policies.

We recognize any ceding commissions generated under the QSR Transactions in a manner consistent with our recognition of earnings on the underlying reinsured policies.

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Variable Interest Entities

NMIC is a party to excess-of-loss reinsurance agreements with Oaktown Re III Ltd., Oaktown Re V Ltd., Oaktown Re VI Ltd., and Oaktown Re VII Ltd.

(special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective July 30, 2019, October 29, 2020, April 27, 2021, and October 26, 2021, respectively.

NMIC is a party to excess-of-loss reinsurance agreements with Oaktown Re VI Ltd., and Oaktown Re VII Ltd.

(special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective April 27, 2021 and October 26, 2021, respectively.

At inception of the respective reinsurance agreements, we determined that each of the Oaktown Re Vehicles was a variable interest entity (VIE), as defined under GAAP Accounting Standards Codification (ASC) 810, because they did not have sufficient equity at risk to finance their respective activities.

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Share-Based Compensation

We account for stock compensation in accordance with ASC 718, Compensation - Stock Compensation , which addresses accounting for share-based awards and recognition of compensation expense, measured using grant date fair value, over the requisite service or performance period of the award.

We account for stock compensation in accordance with ASC 718, Compensation - Stock Compensation , measuring awards using grant date fair value and recognizing the associated compensation expense over the requisite service or performance period of the award.

Share-based compensation includes restricted stock units (RSUs) and stock option grants under our stock incentive plans.

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services to mortgage loan originators.

NMIS fees are earned and recognized as services are provided.

NMIS fees are earned and recognized as services are provided, with cash payments typically received one month after billing.

Recent Accounting Pronouncements – Adopted

In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944).

The update provides guidance to the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity.

The FASB subsequently issued ASU 2019-09 in November 2019 and ASU 2020-11 in November 2020, which amended the effective date for this standard and provided transition relief to facilitate early application for long duration contracts.

The standard will now take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

We adopted this ASU on January 1, 2023 and determined it did not have a material impact on our consolidated financial statements as none of our contracts were within scope of the update.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

The update provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting.

Reference rate reform refers to the global transition away from referencing the London Interbank Offered Rate (LIBOR) in financial contracts.

Topic 848 includes optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

This standard may be elected and applied prospectively over time from March 12, 2020 through December 31, 2022 as reference rate reform activities occur.

In December 2022, the FASB issued ASU 2022-06, which extended the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

We adopted Topic 848 on September 30, 2023 and determined it did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements – Not yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280).

The update expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The standard will take effect for all public business entities, including those that have only a single reportable segment for fiscal years beginning after December 15, 2023.

We are currently evaluating the impact the adoption of this ASU will have, if any, on our consolidated financial statements.

The standard took effect for all public business entities, including those that have only a single reportable segment for fiscal years beginning after December 15, 2023.

We adopted this ASU on December 31, 2024 and have included Note 9, “ Segment Reporting ” herein in accordance with the new requirements.

Recent Accounting Pronouncements – Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740).

The update enhances the disclosure requirements related to tax rate reconciliations and income taxes paid.

The standard will take effect for public business entities for fiscal years beginning after December 15, 2025.

The standard will take effect for all public business entities for annual reporting periods beginning after December 15, 2024.

We adopted this ASU on January 1, 2025 and will include enhanced disclosures in our fiscal year-end 2025 annual consolidated financial statements, as applicable.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expense (Topic 220).

The update expands disclosure requirements related to certain income statement expenses, including a requirement to provide a tabular disaggregation of certain operating expenses by category.

The standard will take effect for all public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

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The portion of impairment loss that is attributed to credit related factors is recognized through the statement of operations as a provision for credit loss and the portion that is attributed to non-credit related factors is recognized in other comprehensive income, net of taxes.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Fair Values and Gross Unrealized Gains and Losses on Investments

9 unchanged sentences

Total investments $ 2,876,343 $ 5,820 $ ( 158,622 ) $ 2,723,541

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

Cost Gross Unrealized Fair

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Total 100 % 100 %

As of December 31, 2023 and 2022, approximately $ 5.3 million and $ 5.4 million, respectively, of our cash and investments were held in the form of U.S.

As of both December 31, 2024 and 2023, approximately $ 5.3 million of our cash and investments were held in the form of U.S.

Treasury securities on deposit with various state insurance departments to satisfy regulatory requirements.

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Total 98 $ 486,314 $ ( 7,848 ) 474 $ 1,578,701 $ ( 150,774 ) 572 $ 2,065,015 $ ( 158,622 )

* Amounts not identifiable due to rounding.

NMI HOLDINGS, INC.

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Net investment income $ 85,316 $ 67,512 $ 46,406

(1) Includes interest income recognized on cash and cash equivalents of $ 2.3 million and $ 0.4 million for the years ended December 31, 2023 and 2022, respectively.

Interest income recognized on cash and cash equivalents was de minimis for the year ended December 31, 2021.

The following table presents the components of net realized investment (losses) gains:

(1) Includes interest income recognized on cash and cash equivalents of $ 5.0 million, $ 2.3 million, and $ 0.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table presents the components of net realized investment gains (losses):

For the years ended December 31,

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Gross realized investment losses ( 10 ) ( 33 ) ( 9 )

Net realized investment (losses) gains

Net realized investment gains (losses)

$ 23 $ ( 33 ) $ 481

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Financial Instruments Not Measured at Fair Value

On June 19, 2020, we issued $ 400 million aggregate principal amount of senior secured notes that mature on June 1, 2025 (the Notes) and used a portion of the proceeds from the Notes offering to repay amounts due under our then outstanding $ 150 million term loan.

At December 31, 2023, the Notes were carried at a cost of $ 397.6 million, net of unamortized debt issuance costs of $ 2.4 million, and had a fair value of $ 401.9 million as assessed under our Level 2 hierarchy.

On May 21, 2024, we issued $ 425 million aggregate principal amount of senior unsecured notes that mature on August 15, 2029 (the 2024 Notes).

Proceeds from the 2024 Notes offering were primarily used to repay our then outstanding $ 400 million senior secured notes (the 2020 Notes).

At December 31, 2024, the 2024 Notes were carried at a cost of $ 415.1 million, net of unamortized debt issuance costs and an original issue discount totaling $ 9.9 million, and had a fair value of $ 429.6 million as assessed under our Level 2 hierarchy.

At December 31, 2023, the 2020 Notes were carried at a cost of $ 397.6 million, net of unamortized debt issuance costs of $ 2.4 million, and had a fair value of $ 401.9 million.

Senior Secured Notes

At December 31, 2023, we had $ 400 million aggregate principal amount of senior secured notes outstanding.

The Notes were issued pursuant to an indenture dated June 19, 2020 and bear interest at a rate of 7.375 %, payable semi-annually on June 1 and December 1.

The Notes mature on June 1, 2025.

We may elect to redeem the Notes in whole or in part at any time prior to March 1, 2025 at a price based on 100 % of the aggregate principal amount of any Notes redeemed plus the “Applicable Premium,” plus accrued and unpaid interest thereon.

Applicable Premium is defined as the greater of (1) 1.0 % of the principal amount of the Notes, or (2) the excess of the present value of the principal value of the Notes plus all future interest payments over the principal

Senior Unsecured Notes

At December 31, 2024, we had $ 425 million aggregate principal amount of senior unsecured notes outstanding.

The 2024 Notes were issued pursuant to an indenture dated May 21, 2024 and bear interest at a rate of 6.00 %, payable semi-annually on February 15 and August 15.

Proceeds from the 2024 Notes offering were primarily used to repay the $ 400 million aggregate principal amount outstanding and associated amounts due on the redemption of the 2020 Notes.

Remaining proceeds are available for general corporate purposes.

The 2024 Notes mature on August 15, 2029.

We may elect to redeem the 2024 Notes in whole or in part at any time prior to July 15, 2029 at a price equal to the greater of (1) the aggregate principal balance outstanding plus the present value of all future interest payments due through July 15, 2029, and (2) the aggregate principal balance due plus any accrued and unpaid

NMI HOLDINGS, INC.

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DECEMBER 31, 2024

We may elect to redeem the Notes in whole or in part at any time prior to March 1, 2025 at a price equal to 100 % of the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon.

Interest expense for the Notes includes interest and the amortization of capitalized debt issuance costs.

In connection with the Notes offering, we recorded capitalized debt issuance costs of $ 7.4 million.

We may elect to redeem the 2024 Notes in whole or in part at any time on or after July 15, 2029 at a price equal to 100 % of the aggregate principal amount of the 2024 Notes to be redeemed plus accrued and unpaid interest thereon.

In connection with the 2024 Notes offering, we recorded capitalized debt issuance costs and an original issue discount of $ 10.9 million.

Such amounts will be amortized over the contractual life of the 2024 Notes using the effective interest method.

The effective interest rate on the 2024 Notes is 6.583 %.

At December 31, 2023 and 2022, approximately $ 2.4 million and $ 3.9 million, respectively, of unamortized debt issuance costs remained.

At December 31, 2023 and 2022, $ 2.5 million of accrued and unpaid interest on the Notes was included in “ Accounts Payable and Accrued Expenses ” on the consolidated balance sheets.

At December 31, 2024, $ 9.9 million of unamortized debt issuance costs and original issue discounts remained.

At December 31 2023, $ 2.4 million of unamortized debt issuance costs remained related to the 2020 Notes.

During the twelve months ended December 31, 2024, we recorded a $ 6.8 million loss related to the redemption of the 2020 Notes in “ Interest Expense” on our consolidated statements of operations and comprehensive income.

At December 31, 2024 and 2023, $ 15.6 million and $ 2.5 million, respectively, of accrued and unpaid interest was included in “ Accounts Payable and Accrued Expenses ” on our consolidated balance sheets.

Revolving Credit Facility

On November 29, 2021, we amended our $ 110 million senior secured revolving credit facility (the 2020 Revolving Credit Facility and as amended, the 2021 Revolving Credit Facility), expanding the lender group, increasing the revolving capacity to $ 250 million, and extending the maturity from February 22, 2023 to the earlier of (x) November 29, 2025, or (y) if any existing senior secured notes remain outstanding on such date, February 28, 2025.

Borrowings under the 2021 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations, and accrue interest at a variable rate equal to, at our discretion, (i) a Base Rate (as defined in the 2021 Revolving Credit Facility) subject to a floor of 1.00 % per annum plus a margin of 0.375 % to 1.875 % per annum, or (ii) the Adjusted Term Secured Overnight Financing Rate (as defined in the 2021 Revolving Credit Facility) plus a margin of 1.375 % to 2.875 % per annum, with the margin in each of (i) or (ii) based on our applicable corporate credit rating at the time.

As of December 31, 2023 and 2022, no amounts were drawn under the 2021 Revolving Credit Facility.

On April 29, 2024, we entered into a new $ 250 million five-year unsecured revolving credit facility (the 2024 Revolving Credit Facility) to replace our then outstanding $ 250 million four-year secured revolving credit facility (the 2021 Revolving Credit Facility).

The 2024 Revolving Credit Facility matures on May 21, 2029.

Borrowings under the 2024 Revolving Credit Facility may be used for general corporate purposes, including to support growth, new business production and operations, and accrue interest at a variable rate equal to, at our discretion, (i) a Base Rate (as defined in the 2024 Revolving Credit Facility) subject to a floor of 1.00 % per annum plus a margin of 0.375 % to 1.875 % per annum, or (ii) the Adjusted Term Secured Overnight Financing Rate (as defined in the 2024 Revolving Credit Facility) plus a margin of 1.375 % to 2.875 % per annum, with the margin in each of (i) or (ii) based on our applicable corporate credit rating at the time.

As of December 31, 2024 and 2023, no amounts were drawn under the 2024 or 2021 Revolving Credit Facilities, respectively.

Under the 2024 Revolving Credit Facility, we are required to pay a quarterly commitment fee on the average daily undrawn amount of 0.175 % to 0.525 %, based on the applicable corporate credit rating at the time.

As of December 31, 2024, the applicable commitment fee was 0.225 %.

For the years ended December 31, 2023, 2022 and 2021, we recorded $ 0.8 million, $ 0.8 million and $ 0.4 million of commitment fees in interest expense, respectively.

In January 2024, Moody's upgraded its insurance financial strength rating of NMIC and its rating of the Notes.

As a result of the upgrade, the commitment fee due under the 2021 Revolving Credit Facility will be reduced to 0.225 % in future periods.

We incurred debt issuance costs of $ 1.1 million in connection with the 2021 Revolving Credit Facility and had $ 0.6 million of unamortized debt issuance costs associated with the 2020 Revolving Credit Facility remaining at the time of its amendment and replacement.

For the years ended December 31, 2024, 2023 and 2022, we recorded $ 0.6 million, $ 0.8 million and $ 0.8 million, respectively, of commitment fees in interest expense under the 2024 or 2021 Revolving Credit Facilities.

We incurred debt issuance costs of $ 2.1 million in connection with the 2024 Revolving Credit Facility and had $ 0.6 million of unamortized debt issuance costs associated with the 2021 Revolving Credit Facility remaining at the time of its replacement.

Combined unamortized debt issuance costs are amortized through interest expense on a straight-line basis over the contractual life of the 2024 Revolving Credit Facility.

At December 31, 2023 and 2022, remaining unamortized deferred debt issuance costs were $ 0.8 million and $ 1.2 million, respectively, in “Other Assets” on our consolidated balance sheets.

We are subject to certain covenants under the 2021 Revolving Credit Facility, including, but not limited to, the following:

a maximum debt-to-total capitalization ratio of 35 %, compliance with the private mortgage insurer eligibility requirements (PMIERs) financial requirements (subject to any GSE approved waivers), and minimum consolidated net worth and statutory capital requirements (respectively, as defined therein).

At December 31, 2024 and 2023, unamortized deferred debt issuance costs of $ 2.3 million and $ 0.8 million, respectively, were recorded in “Other Assets” on our consolidated balance sheets.

Under the 2024 Revolving Credit Facility we are subject to certain covenants, including a maximum debt-to-total capitalization ratio of 35 %, a minimum consolidated net worth requirement (as defined therein), and a requirement to maintain compliance with the financial standards prescribed by the private mortgage insurer eligibility requirements (PMIERs).

We were in compliance with all covenants at December 31, 2024.

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Insurance-Linked Notes

NMIC is a party to reinsurance agreements with Oaktown Re III Ltd., Oaktown Re V Ltd., Oaktown Re VI Ltd., and Oaktown Re VII Ltd.

(special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective July 30, 2019, October 29, 2020, April 27, 2021, and October 26, 2021, respectively.

NMIC is a party to reinsurance agreements with Oaktown Re VI Ltd.

and Oaktown Re VII Ltd.

(special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective April 27, 2021 and October 26, 2021, respectively.

Each agreement provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies.

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Each Oaktown Re Vehicle financed its respective collateral requirement through the issuance of mortgage insurance-linked notes to unaffiliated investors.

Such insurance-linked notes mature ten years (in the case of the notes issued by Oaktown Re III Ltd.

and Oaktown Re V Ltd.) and 12.5 years (in the case of the notes issued by Oaktown Re VI Ltd.

and Oaktown Re VII Ltd.) from the inception date of their associated reinsurance agreement.

We refer to NMIC’s reinsurance agreements with and the insurance-linked note issuances by Oaktown Re Vehicles individually as the 2019 ILN Transaction, 2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN Transaction, and collectively as the ILN Transactions.

The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease (over a ten-year period in the case of Oaktown Re III Ltd.

and Oaktown Re V Ltd.

and 12.5-year period in the case of Oaktown Re VI Ltd.

and Oaktown Re VII Ltd.) as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled.

Such insurance-linked notes mature 12.5 years from the inception date of their associated reinsurance agreement.

We refer to NMIC’s reinsurance agreements with and the insurance-linked note issuances by Oaktown Re Vehicles individually as the 2021-1 ILN Transaction and 2021-2 ILN Transaction, and collectively as the ILN Transactions.

The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease over a 12.5-year period as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled.

As the reinsurance coverage decreases, a prescribed amount of collateral held in trust by the Oaktown Re Vehicles is distributed to ILN Transaction noteholders as amortization of the outstanding insurance-linked note principal balances.

The outstanding reinsurance coverage amounts stop amortizing, and the distribution of collateral assets to ILN Transaction noteholders and amortization of insurance-linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event).

At December 31, 2023, the 2019 ILN Transaction was deemed to be in Lock-Out due to the default experience of its underlying pool.

NMIC holds optional termination rights under each ILN Transaction, including, among others, an optional call feature which provides NMIC the discretion to terminate the transaction on or after a prescribed date, and a clean-up call if the outstanding reinsurance coverage amount amortizes to 10 % or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the

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capital treatment afforded to NMIC under a given agreement.

In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC's failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others.

Effective July 25, 2023, NMIC exercised its optional call to terminate and commute its previously outstanding excess of loss reinsurance agreement with Oaktown Re II Ltd.

In connection with the termination and commutation of the agreement, the insurance-linked notes issued by Oaktown Re II Ltd.

Effective July 25, 2024 and December 27, 2024, NMIC exercised its optional termination rights to terminate its previously outstanding reinsurance agreements with and associated insurance-linked notes issued by Oaktown Re III Ltd.

and by Oaktown Re V Ltd., respectively.

In connection with the terminations, NMIC's excess of loss reinsurance agreements with Oaktown Re III Ltd.

and Oaktown Re V Ltd.

were commuted and the insurance-linked notes issued by Oaktown Re III Ltd.

and Oaktown Re V Ltd.

were redeemed in full with a distribution of remaining collateral assets.

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Inception Date Covered Production Initial Reinsurance Coverage Current Reinsurance Coverage Initial First Layer Retained Loss Current First Layer Retained Loss (1)

2019 ILN Transaction July 30, 2019 6/1/2018 – 6/30/2019 $ 326,905 $ 159,476 $ 123,424 $ 121,751

2020-2 ILN Transaction October 29, 2020 4/1/2020 – 9/30/2020 (2)

242,351 55,792 121,777 121,177

2021-1 ILN Transaction April 27, 2021 10/1/2020 – 3/31/2021 (2)

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(1) NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable ILN Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.

(2) Approximately 1 % of the production covered by the 2020-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2020.

(2) Approximately 1 % of the production covered by the 2021-1 ILN Transaction has coverage reporting dates between July 1, 2019 and September 30, 2020.

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Traditional Reinsurance

NMIC is party to five excess-of-loss reinsurance agreements with broad panels of third-party reinsurers – the 2022-1 XOL Transaction, effective April 1, 2022, the 2022-2 XOL Transaction, effective July 1, 2022, the 2022-3 XOL Transaction, effective October 1, 2022, the 2023-1 XOL Transaction, effective January 1, 2023, and the 2023-2 XOL Transaction, effective July 1, 2023 – which we refer to collectively as the XOL Transactions.

NMIC is party to six excess-of-loss reinsurance agreements with broad panels of third-party reinsurers – the 2022-1 XOL Transaction, effective April 1, 2022, the 2022-2 XOL Transaction, effective July 1, 2022, the 2022-3 XOL Transaction, effective October 1, 2022, the 2023-1 XOL Transaction, effective January 1, 2023, the 2023-2 XOL Transaction, effective July 1, 2023, and the 2024 XOL Transaction, effective January 1, 2024 – which we refer to collectively as the XOL Transactions.

Each XOL Transaction provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies.

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NMIC retains losses in excess of the outstanding reinsurance coverage amount.

Under the terms of the XOL Transactions, NMIC makes risk premium payments to its third-party reinsurance providers for the outstanding reinsurance coverage amount and ceded aggregate premiums of $ 31.2 million and $ 13.9 million during the years ended December 31, 2023 and 2022, respectively.

Under the terms of the XOL Transactions, NMIC makes risk premium payments to its third-party reinsurance providers for the outstanding reinsurance coverage amount and ceded aggregate premiums of $ 38.4 million, $ 31.2 million and $ 13.9 million during the years ended December 31, 2024, 2023 and 2022, respectively.

NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure under each agreement.

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NMIC holds optional termination rights which provide it the discretion to terminate each XOL Transaction on or after a specified date.

NMIC may also elect to terminate the XOL Transactions at any point if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount provided at inception, or if it determines that it will no

Additionally, under the terms of the treaties, NMIC may selectively terminate its engagement with individual reinsurers under certain circumstances.

Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold, and/or a reinsurer breaches (and fails to cure) its collateral posting obligation.

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longer be able to take full PMIERs asset credit for the coverage.

Additionally, under the terms of the treaties, NMIC may selectively terminate its engagement with individual reinsurers under certain circumstances.

Each of the third-party reinsurance providers that is party to the XOL Transactions has an insurer financial strength rating of A- or better by S&P Global Ratings (S&P), A.M.

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100,777 95,304 136,875 136,715

2024 XOL Transaction (4)

January 1, 2024 1/1/2024 – 12/31/2024

162,500 162,500 312,172 312,172

(1) NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable XOL Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.

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(3) Approximately 1 % of the production covered by the 2022-2 XOL Transaction has coverage reporting dates between January 4, 2021 and March 31, 2022.

(4) The 2023-2 XOL Transaction provides coverage for production generated between July 1, 2023 and December 31, 2023.

(4) The 2024 XOL Transaction provides coverage for production generated between January 1, 2024 and December 31, 2024.

The current reinsurance coverage and current first layer retained loss will decrease in future periods to the extent the PMIERs minimum required assets of the covered pool declines.

In October 2024, NMIC entered into two sequential excess-of-loss reinsurance treaties that will provide aggregate coverage for mortgage insurance policies to be written in 2025 and 2026 (the 2025 XOL Transaction and 2026 XOL Transaction, respectively).

Under the terms of each agreement, NMIC will retain a first layer of aggregate loss exposure on covered policies and its reinsurance counterparties will then provide second layer loss protection up to a defined reinsurance coverage amount (of $ 283.8 million for the 2025 XOL Transaction and $ 164.2 million for the 2026 XOL Transaction).

NMIC retains losses in excess of the respective reinsurance coverage amounts.

Quota Share Reinsurance

NMIC is party to seven quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016, the 2018 QSR Transaction, effective January 1, 2018, the 2020 QSR Transaction, effective April 1, 2020 (and amended effective January 1, 2024), the 2021 QSR Transaction, effective January 1, 2021, the 2022 QSR Transaction, effective October 1, 2021, the 2022 Seasoned QSR Transaction, effective July 1, 2022 and the 2023 QSR Transaction, effective January 1, 2023 – which we refer to collectively as the QSR Transactions.

NMIC is party to eight quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016 and as modified April 1, 2019, the 2018 QSR Transaction, effective January 1, 2018, the 2020 QSR Transaction, effective April 1, 2020 and as amended January 1, 2024, the 2021 QSR Transaction, effective January 1, 2021, the 2022 QSR Transaction, effective October 1, 2021, the 2022 Seasoned QSR Transaction, effective July 1, 2022, the 2023 QSR Transaction, effective January 1, 2023 and the 2024 QSR Transaction, effective January 1, 2024 – which we refer to collectively as the QSR Transactions.

Under each of the QSR Transactions, NMIC cedes a proportional share of its risk on eligible policies to panels of third-party reinsurance providers.

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Best or both.

Under the terms of the 2016 QSR Transaction, NMIC cedes premiums written related to 25 % of the risk on eligible primary policies written for all periods through December 31, 2017 and 100 % of the risk under our pool agreement with Fannie Mae.

The 2016 QSR Transaction is scheduled to terminate on December 31, 2027, except with respect to the ceded pool risk, which expired on August 31, 2023.

NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2020, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.

Under the terms of the 2018 QSR Transaction, NMIC cedes premiums earned related to 25 % of the risk on eligible policies written in 2018 and 20 % of the risk on eligible policies written in 2019.

Under the terms of the 2016 QSR Transaction, NMIC cedes premiums written related to 20.5 % of the risk on eligible primary policies written for all periods through December 31, 2017.

The 2016 QSR Transaction is scheduled to terminate on December 31, 2027.

Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21 % of the risk on eligible policies written from April 1, 2020 to December 31, 2020.

Under the terms of the 2018 QSR Transaction, NMIC cedes premiums earned related to 25 % of the risk on eligible policies written in 2018 and 20 % of the risk on eligible policies written in 2019.

The 2018 QSR Transaction is scheduled to terminate on December 31, 2029.

NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2022, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.

Under the terms of the 2021 QSR Transaction, NMIC cedes premiums earned related to 22.5 % of the risk on eligible policies written from January 1, 2021 to October 30, 2021.

Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21 % of the risk on eligible policies written between April 1, 2020 and December 31, 2020.

The 2020 QSR Transaction is scheduled to terminate on December 31, 2030.

NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the

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agreement as of December 31, 2025, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.

Under the terms of the 2021 QSR Transaction, NMIC cedes premiums earned related to 22.5 % of the risk on eligible policies written from January 1, 2021 to October 30, 2021.

The 2021 QSR Transaction is scheduled to terminate on December 31, 2031.

NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2024, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.

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NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2024 or semi-annually thereafter, which could result in NMIC recapturing the related risk.

In connection with the 2022 QSR Transaction, NMIC entered into the 2023 QSR Transaction as a springing back-to-back quota share agreement.

Under the terms of the 2023 QSR Transaction, NMIC cedes premiums earned related to 20 % of the risk on eligible policies written from January 1, 2023 to December 31, 2023.

The 2023 QSR Transaction is scheduled to terminate on December 31, 2033.

NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2025 or semi-annually thereafter, which could result in NMIC recapturing the related risk.

Under the terms of the 2022 Seasoned QSR Transaction, NMIC cedes premiums earned related to 95 % of the net risk on eligible policies primarily for a seasoned pool of mortgage insurance policies that had previously been covered under the retired Oaktown Re Ltd.

Under the terms of the 2022 Seasoned QSR Transaction, NMIC cedes premiums earned related to 95 % of the net risk on eligible policies primarily for a seasoned pool of mortgage insurance policies originated between January 1, 2013 to December 31, 2016 and July 1, 2019 to March 31, 2020, that had previously been covered under the retired Oaktown Re Ltd.

and Oaktown Re IV Ltd.

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Such termination could result in NMIC recapturing the related risk.

Under the terms of the 2023 QSR Transaction, NMIC cedes premiums earned related to 20 % of the risk on eligible policies written in 2023.

The 2023 QSR Transaction is scheduled to terminate on December 31, 2033.

Under the terms of the 2024 QSR Transaction, NMIC cedes premiums earned related to 20 % of the risk on eligible policies written in 2024.

The 2024 QSR Transaction is scheduled to terminate on December 31, 2034.

NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2027, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.

NMIC may terminate any or all of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the RIF ceded under the respective agreements.

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Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement.

Effective April 1, 2019, NMIC elected to terminate its engagement with one reinsurer under the 2016 QSR Transaction on a cut-off basis.

In connection with the termination, NMIC recaptured approximately $ 500 million of previously ceded primary RIF and stopped ceding new premiums earned or written with respect to the recaptured risk.

With the termination, ceded premiums written under the 2016 QSR Transaction decreased from 25 % to 20.5 % on eligible policies.

The termination had no effect on the cession of pool risk under the 2016 QSR Transaction.

Effective December 31, 2023, NMIC elected to selectively terminate its engagement with certain reinsurers under the 2020 QSR Transaction and concurrently entered into an amended agreement effective January 1, 2024 (the Amended 2020 QSR Transaction) with the remaining reinsurance participants.

Under the Amended 2020 QSR Transaction, NMIC will retain consistent coverage with that provided under the original 2020 QSR Transaction and continue to cede premiums earned related to 21 % of the risk on eligible policies written from April 1, 2020 to December 31, 2020.

NMIC will receive an enhanced ceding commission under the Amended 2020 QSR Transaction.

The Amended 2020 QSR Transaction is scheduled to terminate on December 31, 2030 and NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2025, or at the end of any calendar quarter thereafter, which could result in NMIC recapturing the related risk.

Effective January 1, 2025, NMIC terminated its engagement with one reinsurer under the 2016, 2018 and 2021 QSR Transactions by mutual agreement on a cut-off basis with no termination fees.

Upon termination, NMIC recaptured approximately $ 100 million of previously ceded primary RIF.

NMIC will stop ceding new premiums with respect to the recaptured risk and ceded premiums under each agreement will decrease by less than 1 % in future periods.

In October 2024, NMIC entered into three sequential quota share reinsurance treaties that will provide coverage for mortgage insurance policies to be written in 2025, 2026 and 2027 (the 2025 QSR Transaction, 2026 QSR Transaction and 2027 QSR Transaction, respectively).

Under the terms of the 2025 and 2026 QSR Transactions, NMIC will cede premiums earned related to 20 % of the risk on eligible policies written between January 1, 2025 and December 31, 2026, in exchange for reimbursement of ceded claims and claims expenses on covered policies, a 20 % ceding commission, and a profit commission of up to 62 % that varies directly and inversely with ceded claims.

Under the terms of the 2027 QSR Transaction, NMIC will cede premiums earned related to 12 % of the risk on eligible policies written between January 1, 2027 and December 31, 2027, in exchange for reimbursement of ceded claims and claims expenses on covered policies, a 20 % ceding commission, and a profit commission of up to 61 % that varies directly and inversely with ceded claims.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

The following table shows amounts related to the QSR Transactions:

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Profit commission 89,790 90,006 80,714

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Ceded premiums written under the 2016 QSR Transaction are recorded as prepaid reinsurance premiums in “ Other Assets” on our consolidated balance sheets and amortized to ceded premiums earned in a manner consistent with the recognition of revenue on direct premiums.

Under all other QSR Transactions, premiums are ceded on an earned basis as defined in the agreement.

NMIC receives a 20 % ceding commission for premiums ceded under the QSR Transactions, except with respect to the 2022 Seasoned QSR Transaction under which it receives a 35 % ceding commission and the Amended 2020 QSR Transaction under which it receives a 36 % ceding commission.

NMIC also receives a profit commission under each of the QSR Transactions, provided that the loss ratios on loans covered under the 2016, 2018, 2020 (2020 Amended), 2021, 2022, 2022 Seasoned and 2023 QSR Transactions, generally remain below 60 %, 61 %, 50 % ( 50 % as amended), 57.5 %, 62 %, 55 % and 62 %, respectively, as measured annually.

NMIC receives a 20 % ceding commission for premiums ceded under the QSR Transactions, except with respect to the 2022 Seasoned QSR Transaction under which it receives a 35 % ceding commission and the 2020 QSR Transaction under which it receives a 36 % ceding commission.

NMIC also receives a profit commission under each of the QSR Transactions, provided that the loss ratios on loans covered under the 2016, 2018, 2020, 2021, 2022, 2022 Seasoned, 2023 and 2024 QSR Transactions, generally remain below 60 %, 61 %, 50 %, 57.5 %, 62 %, 55 %, 62 % and 56 %, respectively, as measured annually.

Ceded claims and claim expenses under each of the QSR Transactions reduce the respective profit commission received by NMIC on a dollar-for-dollar basis.

In accordance with the terms of the 2016 QSR Transaction, rather than making a cash payment or transferring investments for ceded premiums written, NMIC established a funds withheld liability, which also includes amounts due to NMIC for ceding and profit commissions.

Any loss recoveries and any potential profit commission to NMIC will be realized from this account until exhausted.

Any loss recoveries and any potential profit commission to NMIC are realized from this account until exhausted.

NMIC’s reinsurance recoverable balance is further supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates.

The reinsurance recoverable on loss reserves related to the 2016 QSR Transaction was $ 1.1 million and $ 1.7 million as of December 31, 2024 and 2023, respectively.

In accordance with the terms of the 2018, 2020 (2020 Amended), 2021, 2022, 2022 Seasoned and 2023 QSR Transactions, cash payments for ceded premiums earned are settled on a quarterly basis, offset by amounts due to NMIC for ceding and profit commissions.

In accordance with the terms of the 2018, 2020, 2021, 2022, 2022 Seasoned, 2023 and 2024 QSR Transactions, cash payments for ceded premiums earned are settled on a quarterly basis, offset by amounts due to NMIC for ceding and profit commissions.

Any loss recoveries and any potential profit commission to NMIC are also recognized quarterly.

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The size of the reserve we establish for each defaulted loan (and by extension our aggregate reserve for claims and claim expenses) reflects our best estimate of the future claim payment to be made for each individual loan in default.

Our future claims exposure is a function of the number of defaulted loans that progress to claim payment (which we refer to as frequency) and the amount to be paid to settle such claims (which we refer to as severity).

Our estimates of claims frequency and severity are not formulaic, rather they are broadly synthesized based on historical observed experience for similarly situated loans and assumptions about future macroeconomic factors.

Our future claims exposure is a function of the number of defaulted loans that progress to claim payment (which we refer to as frequency) and the amount to be paid to settle such claims (which we

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The following table provides a reconciliation of the beginning and ending gross reserve balances for primary insurance claims and claim expenses (benefits):

refer to as severity).

The following table provides a reconciliation of the beginning and ending gross reserve balances for primary insurance claims and claim expenses:

For the years ended December 31,

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Add claims incurred:

Claims and claim expenses (benefits) incurred:

Claims and claim expenses incurred:

Current year (2)

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(4) Excludes a $ 0.7 million termination fee for the year ended December 31, 2023 incurred in connection with the amendment of the 2020 QSR Transaction.

The “claims incurred” section of the table above shows claims and claim expenses (benefits) incurred on defaults occurring in current and prior years, including IBNR reserves, and is presented net of reinsurance.

The amount of claims incurred relating to current year defaults increased during the year ended December 31, 2023, compared to the years ended December 31, 2022 and 2021, primarily due to an increase in the average case reserve established against newly defaulted loans, as well as an increase in the total number of new delinquencies emerging during the period tied to the growth and natural seasoning of our portfolio.

The “claims incurred” section of the table above shows claims and claim expenses incurred on defaults occurring in current and prior years, including IBNR reserves, and is presented net of reinsurance.

The amount of claims incurred relating to current year defaults increased during the year ended December 31, 2024, compared to the years ended December 31, 2023 and 2022, primarily due to an increase in the total number of new delinquencies emerging during the period tied to the growth and natural seasoning of our portfolio.

Our provision for claims and claim expenses during the years ended December 31, 2024, 2023 and 2022 benefited from favorable development on prior year defaults.

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Gross reserves of $ 35.0 million related to prior year defaults remained as of December 31, 2024.

The following tables provide claim development data by accident year (or the year in which a default has occurred) and a reconciliation to the reserve for insurance claims and claim expenses.

The information about net incurred losses and paid claims development for the years ended prior to 2023 is presented as supplementary information.

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The following tables provide claim development data by default year (or the year in which a default has occurred) and a reconciliation to the reserve for insurance claims and claim expenses.

The information about net incurred losses and paid claims development for the years ended prior to 2024 is presented as supplementary information.

Cumulative Incurred Claims and Allocated Claims Adjustment Expenses, net of Reinsurance (1)

As of December 31, 2024

Accident Year

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total of IBNR Defaults (2)

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Cumulative Paid Claims and Claims Adjustment Expenses, net of Reinsurance

Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

(In Thousands)

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Total $ 28,484

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses

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Total gross liability for unpaid claims and claim adjustment expenses $ 152,071

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The following is supplementary information shows the average percentage of claims and allocated claims adjustment expenses paid in the years following the incurrence of a claim as of December 31, 2023:

The following supplementary information shows the average percentage of claims and allocated claims adjustment expenses paid in the years following the incurrence of a claim as of December 31, 2024:

Average annual percentage payout of incurred claims and allocated claims adjustment expenses by age, net of reinsurance (unaudited)

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No warrants remained outstanding as of December 31, 2024, 2023 or 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

Segment Reporting

We manage our business activities on a consolidated basis under a single reportable operating segment and our Chief Executive Officer (CEO) serves as the Chief Operating Decision Maker (CODM).

Our Mortgage Insurance segment provides private mortgage insurance and ancillary loan review services and our CODM evaluates our performance and allocates resources based on our consolidated financial results, including consolidated revenue, expenses, net income, assets and shareholders' equity.

Our CODM reviews these financial metrics to gauge our performance and make strategic decisions, such as whether to reinvest profits in our Mortgage Insurance segment or return capital to shareholders.

The significant revenue and expense categories that are regularly reviewed by our CODM align with those presented on our consolidated statement of operations and comprehensive income (see “ Consolidated Statement of Operations and Comprehensive Income ”), and the accounting policies governing our Mortgage Insurance segment are the same as those described in Note 2, “ Summary of Significant Accounting Policies.

Included in our consolidated statement of operations, investment income, also referred to as interest revenue, for the years ended December 31, 2024, 2023 and 2022 were $ 86.4 million, $ 68.2 million and $ 47.7 million, respectively, and are reported within " Net Investment Income.

” Amortization and depreciation expense for software, equipment, and leasehold improvements for the years ended December 31, 2024, 2023 and 2022 were $ 11.9 million, $ 11.5 million and $ 11.9 million, respectively.

Share-Based Compensation

3 unchanged sentences

Share-based compensation previously issued under the 2012 Plan remains outstanding following the 2012 Plan expiry to the extent non-exercised or non-vested.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The 2014 Plan was originally approved by our stockholders at our annual meeting on May 8, 2014 and authorized 4.0 million shares of common stock to be reserved for issuance.

1 unchanged sentence

On May 12, 2022, our stockholders approved further amendments to the 2014 Plan, authorizing an additional 2.25 million shares of common stock for issuance, increasing the total shares of common stock reserved for issuance under the plan to 8.25 million with the full amount available to be issued as either RSUs or options.

These shares may be either authorized but unissued shares or treasury shares.

These shares may be either authorized as unissued shares or treasury shares.

Options granted under the 2014 Plan are non-qualified stock options and may be granted to employees, directors and other key persons.

3 unchanged sentences

For the years ended December 31, 2024, 2023 and 2022, we incurred $ 19.8 million, $ 16.9 million and $ 15.4 million, respectively, of expenses related to awards granted under the Stock Plans and we recognized associated gross income tax benefits of $ 4.2 million, $ 3.6 million and $ 3.2 million during each respective period.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

A summary of option activity during the year ended December 31, 2024 is as follows:

4 unchanged sentences

Options exercised (1)

( 1 ) 4.97 12.32

Options forfeited — — —

1 unchanged sentence

Options outstanding at December 31, 2024 (2)

As of December 31, 2023, there were 0.7 million fully vested and exercisable options.

During the year ended December 31, 2023, 0.4 million options were exercised with an aggregate intrinsic value of $ 8.2 million.

The weighted average exercise price for fully vested and exercisable options outstanding as of December 31, 2023 was $ 15.53 and the weighted average remaining contractual life of such options was 3.81 years as of December 31, 2023.

730 $ 5.61 $ 15.53

(1) During the year ended December 31, 2024, 1.3 thousand options were exercised with an aggregate intrinsic value of $ 24 thousand.

(2) The weighted average remaining contractual life of such options was 2.81 years as of December 31, 2024.

The aggregate intrinsic value of such fully vested and exercisable options was $ 15.5 million as of December 31, 2024.

13 unchanged sentences

(2) Represents amounts vested during the year, including the impact of performance adjustments for service and performance-based RSUs.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

At December 31, 2024, we had 1.3 million granted and non-vested RSUs with a weighted average remaining contractual life of 1.26 years, consisting of 0.8 million RSUs that are subject to service-based vesting requirements and 0.5 million RSUs that are subject to performance and service-based vesting requirements.

9 unchanged sentences

During the years ended December 31, 2024, 2023 and 2022, we incurred approximately $ 2.1 million, $ 1.9 million and $ 2.0 million of expense related to our matching 401(k) Plan contributions, respectively.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

We are a U.S.

19 unchanged sentences

Effective income tax rate 22.3 % 22.0 % 22.4 %

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The components of our net deferred tax liability are summarized as follows:

19 unchanged sentences

As a mortgage guaranty insurance company, we are eligible to claim a tax deduction for our statutory contingency reserve balance, subject to certain limitations outlined under IRC Section 832(e), to the extent we acquire tax and loss bonds in an amount equal to the tax benefit derived from the claimed deduction, which is our intent.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

During the years ended December 31, 2024, 2023 and 2022, we purchased $ 86.9 million, $ 80.9 million and $ 65.2 million, of tax and loss bonds, respectively.

As a result, we had no current federal income tax provision for the years ended December 31, 2023, 2022 and 2021.

As of December 31, 2024 and 2023, we held $ 322.2 million and $ 235.3 million of tax and loss bonds, respectively, in “ Prepaid Federal Income Taxes” on our consolidated balance sheets.

At December 31, 2024, we had a federal net operating loss carryforward of $ 1.0 million which expires in varying amounts in 2030 and 2031, and state net operating loss carryforwards of $ 135.2 million, which begin to expire in varying amounts in 2032.

Section 382 of the IRC imposes annual limitations on a corporation's ability to utilize its net operating loss carryforward if it experiences an "ownership change." As a result of the acquisition of our insurance subsidiaries in 2012, $ 7.3 million of federal net operating losses were subject to annual limitations of $ 0.8 million through 2016, $ 0.5 million in 2017 and $ 0.3 million, thereafter, through 2028.

Section 382 of the IRC imposes annual limitations on a corporation's ability to utilize its net operating loss carryforward if it experiences an “ownership change.

” As a result of the acquisition of our insurance subsidiaries in 2012, $ 7.3 million of federal net operating losses were subject to annual limitations of $ 0.8 million through 2016, $ 0.5 million in 2017 and $ 0.3 million, thereafter, through 2028.

Our federal net operating loss carryforward arises from this limitation and the constraint on our ability to utilize the net operating loss carryforward in full during the current period.

3 unchanged sentences

At December 31, 2024 and 2023, we recorded valuation allowances of $ 9.5 million and $ 9.2 million, respectively, against state net deferred tax assets.

The valuation allowances for both years primarily relate to state net operating losses generated by NMIH, as NMIH operates at a loss and currently only generates revenue from its investment portfolio.

The valuation allowances for both years primarily relate to state net operating losses generated by NMIH, as NMIH has historically operated at a loss and currently only generates revenue from its investment portfolio.

As of December 31, 2024 and 2023, we had zero reserves for unrecognized tax benefits as we have taken no material uncertain tax positions that would have required a reserve to be measured and recognized.

3 unchanged sentences

federal income tax returns for 2021 and subsequent years, and state income tax returns for 2020 and subsequent years, remain open by statute.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Software and Equipment

11 unchanged sentences

Amortization and depreciation expense for software, equipment, and leasehold improvements for the years ended December 31, 2024, 2023 and 2022 were $ 11.9 million, $ 11.5 million and $ 11.9 million, respectively.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

Intangible Assets and Goodwill

11 unchanged sentences

As of December 31, 2024 and 2023, we did not have any finance leases.

In January 2022 we modified the lease for our corporate headquarters, securing a reduction in pricing and incremental leasehold improvement concessions, reducing the square footage of leased space and extending the remaining term through March 2030.

In February 2024, we renewed the lease of our data center facility, extending its term through January 2026.

Upon the respective modification and extension, the ROU asset and liability associated with each lease was remeasured, using our current estimated incremental borrowing rate, resulting in an aggregate increase to ROU assets and lease liabilities of $ 9.7 million.

We did not enter any new operating leases or recognize any new ROU assets or lease liabilities during the year ended December 31, 2023.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The following table provides a summary of our ROU asset and lease liability assumptions as of December 31, 2023:

Upon the extension, the ROU asset and liability associated with the lease was remeasured, using our current estimated incremental borrowing rate, resulting in an aggregate increase to ROU assets and lease liabilities of $ 0.5 million.

We did not enter into any new operating leases or recognize any new ROU assets or lease liabilities during the year ended December 31, 2023.

The following table provides a summary of our ROU asset and lease liability assumptions as of December 31, 2024 and 2023:

December 31, 2024 December 31, 2023

Weighted average remaining lease term

5.1 years 6.2 years

Weighted average discount rate

6.50 % 6.50 %

Cash paid on our operating leases for the years ended December 31, 2024, 2023 and 2022 was $ 2.3 million, $ 1.5 million and $ 0.8 million and lease expense incurred was $ 2.1 million, $ 2.0 million and $ 2.0 million during each respective period.

9 unchanged sentences

This renewal option is not included in the calculation of future lease payments due under the existing lease as presented above as it is not reasonably certain to be exercised.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

Commitments and Contingencies

13 unchanged sentences

We continuously monitor NMIC's compliance with the PMIERs.

On August 21, 2024, the GSEs and FHFA updated PMIERs to revise the Available Asset credit mortgage insurers will receive for certain assets based on several factors, including asset class and credit rating.

The updated PMIERs will take effect on a phased basis beginning March 31, 2025 and will be fully implemented on September 30, 2026.

We do not expect the updated PMIERs to have a material impact on our available assets and risk-based required assets , and we expect to remain in full compliance with the existing and updated PMIERs, as applicable, prior to, on and after March 31, 2025.

We record a litigation liability when we determine that it is probable a litigation loss will be incurred and the amount of such anticipated loss can be reasonably estimated.

In the event we determine that a litigation loss is reasonably possible (though not probable), we disclose an estimate of the possible loss if such estimate can be reasonably established or disclose the matter with no estimate if such estimate cannot be reasonably made.

We evaluate litigation and other legal developments that could

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

affect our accrual for probable losses or our estimated disclosure of possible losses and make ongoing adjustments to our accruals and disclosures as appropriate.

We evaluate litigation and other legal developments that could affect our accrual for probable losses or our estimated disclosure of possible losses and make ongoing adjustments to our accruals and disclosures as appropriate.

Significant judgment is required to determine both the likelihood and the estimated amount of potential losses related to such matters.

1 unchanged sentence

The case was dismissed in September 2023 and is currently pending appeal.

We do not currently expect that it is reasonably possible that we will incur a material loss in connection with the case and have not recorded a litigation liability for this matter.

As of December 31, 2023 and 2022, we had 80.9 million and 83.5 million outstanding shares of Class A common stock, respectively.

We do not currently expect that we will incur a material loss in connection with the case and have not recorded a litigation liability for this matter.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

As of December 31, 2024 and 2023, we had 78.6 million and 80.9 million outstanding shares of common stock, respectively.

Holders of our common stock have no preemptive or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock.

2 unchanged sentences

Share repurchase program

On February 10, 2022, our Board of Directors authorized a $ 125 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2023.

On July 31, 2023, our Board of Directors authorized a new $ 200 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2025.

Concurrent with the new authorization, our Board of Directors also approved an extension of our existing $ 125 million share repurchase program through December 31, 2025 to align its remaining tenor with that of the $ 200 million program.

On February 10, 2022, our Board of Directors authorized a $ 125 million share repurchase program (excluding associated costs and applicable taxes, the 2022 Repurchase Program) effective through December 31, 2023.

On July 31, 2023, our Board of Directors authorized a $ 200 million share repurchase program (excluding associated costs and applicable taxes, the 2023 Repurchase Program) effective through December 31, 2025 and extended our 2022 Repurchase Program through December 31, 2025 to align its remaining tenor with that of the 2023 Repurchase Program.

The authorization provides us the flexibility, based on market and business conditions, stock price and other factors, to repurchase stock from time to time through open market purchases, privately negotiated transactions, or other means, including pursuant to Rule 10b5-1 trading plans.

During the year ended December 31, 2024, we repurchased 2.8 million shares at an average price of $ 33.98 per share (excluding associated costs and applicable taxes).

During the year ended December 31, 2022, we repurchased 2.9 million shares at an average price of $ 19.34 per share (excluding associated costs).

As of December 31, 2023, we had $ 176.9 million of repurchase authority remaining.

During the year ended December 31, 2023, we repurchased 3.5 million shares at an average price of $ 25.93 per share (excluding associated costs and applicable taxes).

As of December 31, 2024, we had $ 80.1 million of repurchase authorization remaining.

Regulatory Information

8 unchanged sentences

While such treatment impacts NMIC's statutory net income, it does not have an effect on NMIC's statutory capital position.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The following table presents NMIC's statutory net income, statutory surplus, contingency reserve, statutory capital and risk-to-capital (RTC) ratio as of and for the years ended December 31, 2024, 2023 and 2022:

10 unchanged sentences

(1) Represents the total of the statutory surplus and contingency reserve.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024

Re One recorded statutory income of $ 43 thousand for the year ended December 31, 2024, and a statutory loss of $ 0.4 million and $ 58 thousand for the years ended December 31, 2023 and 2022, respectively.

Re One had $ 2.1 million and $ 2.0 million of statutory capital at December 31, 2024 and 2023, respectively.

Under applicable law in Wisconsin and 15 other states, mortgage insurers must maintain minimum amounts of statutory capital relative to RIF to continue writing new business.

3 unchanged sentences

As of December 31, 2023, NMIC's performing primary RIF, net of reinsurance, was approximately $ 29.0 billion and its RTC ratio was 11.4 :1.

Effective October 1, 2021, the reinsurance agreement between NMIC and Re One was commuted and all ceded risk was transferred back to NMIC.

Following the commutation, Re One has no risk in force or further obligation on future claims.

Re One recorded a statutory loss of $ 0.4 million and $ 58 thousand for the years ended December 31, 2023 and 2022, respectively, and statutory income of $ 3.0 million for the year ended December 31, 2021.

Re One had $ 2.0 million and $ 5.6 million of statutory capital at December 31, 2023 and 2022, respectively.

Debt Service Allocation

12 unchanged sentences

Approved insurers that fail to meet the prescribed PMIERs financial requirements are not permitted to pay dividends without prior approval from the GSEs.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Quarterly Financial Data (Unaudited)

2023 Quarters

First Second Third Fourth Year

(In Thousands, except per share data)

Net premiums earned $ 121,754 $ 125,985 $ 130,089 $ 132,940 $ 510,768

Net investment income 14,894 16,518 17,853 18,247 67,512

Net realized investment losses

( 33 ) — — — ( 33 )

Other revenues 164 182 217 193 756

Insurance claims and claim expenses

6,701 2,873 4,812 8,232 22,618

Underwriting and operating expenses 25,786 27,448 27,749 29,716 110,699

Service expenses 80 267 239 185 771

Interest expense 8,039 8,048 8,059 8,066 32,212

Income before income taxes 96,173 104,049 107,300 105,181 412,703

Income tax expense 21,715 23,765 23,345 21,768 90,593

Net income $ 74,458 $ 80,284 $ 83,955 $ 83,413 $ 322,110

Basic earnings per share (1)

$ 0.89 $ 0.97 $ 1.02 $ 1.03 $ 3.91

Diluted earnings per share (1)

$ 0.88 $ 0.95 $ 1.00 $ 1.01 $ 3.84

Weighted average common shares outstanding - basic 83,600 82,958 82,096 81,005 82,407

Weighted average common shares outstanding - diluted 84,840 84,190 83,670 82,685 83,854

(1) Due to the use of weighted average shares outstanding when calculating EPS, the sum of quarterly per share data may not equal the per share data for the year.

NMI HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

2022 Quarters

First Second Third Fourth Year

(In Thousands, except per share data)

Net premiums earned $ 116,495 $ 120,870 $ 118,317 $ 119,584 $ 475,266

Net investment income 10,199 10,921 11,945 13,341 46,406

Net realized investment gains 408 53 14 6 481

Other revenues 339 376 301 176 1,192

Insurance claims and claim (benefits) expenses

( 619 ) ( 3,036 ) ( 3,389 ) 3,450 ( 3,594 )

Underwriting and operating expenses 32,935 30,700 27,144 26,711 117,490

Service expenses 430 336 197 131 1,094

Interest expense 8,041 8,051 8,036 8,035 32,163

Gain from change in fair value of warrant liability

( 93 ) ( 1,020 ) — — ( 1,113 )

Income before income taxes 86,747 97,189 98,589 94,780 377,305

Income tax expense 19,067 21,745 21,751 21,840 84,403

Net income $ 67,680 $ 75,444 $ 76,838 $ 72,940 $ 292,902

Basic earnings per share (1)

$ 0.79 $ 0.88 $ 0.91 $ 0.87 $ 3.45

Diluted earnings per share (1)

$ 0.77 $ 0.86 $ 0.90 $ 0.86 $ 3.39

Weighted average common shares outstanding - basic 85,953 85,734 84,444 83,592 84,921

Weighted average common shares outstanding - diluted 87,310 86,577 85,485 84,809 85,999

(1) Due to the use of weighted average shares outstanding when calculating EPS, the sum of quarterly per share data may not equal the per share data for the year.

Subsequent events

Quota Share Reinsurance

Effective January 1, 2024, NMIC entered into a quota share reinsurance treaty with a broad panel of highly rated reinsurers that will provide coverage for mortgage insurance policies to be written between January 1, 2024 and December 31, 2024 (the 2024 QSR Transaction).

Under the terms of the agreement, NMIC will cede premiums earned related to 20 % of the risk on eligible policies in exchange for reimbursement of ceded claims and claim expenses on covered policies, a ceding commission equal to 20 % and profit commission of up to 56 % that varies directly and inversely with ceded claims.

Excess-of-Loss Reinsurance

Effective January 1, 2024, NMIC entered into a reinsurance agreement with a broad panel of highly rated reinsurers that provides for up to $ 162.5 million of aggregate excess-of-loss reinsurance coverage for delinquencies that emerge on mortgage insurance policies written between January 1, 2024 and December 31, 2024 (the 2024 XOL Transaction).

For the reinsurance coverage period, NMIC will retain a first layer of aggregate losses on covered policies and the reinsurers then provide second layer loss protection up to $ 162.5 million.

NMIC retains losses in excess of the outstanding reinsurance coverage amount.

Share repurchase program approval and extension of existing program

On February 5, 2025, our Board of Directors authorized a new $ 250 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2027.

The authorization provides us the flexibility, based on market and business conditions, stock price and other factors, to repurchase stock from time to time through open market repurchases, privately negotiated transactions, or other means, including pursuant to Rule 10b5-1 trading plans.

Concurrent with the new authorization, our Board of Directors also approved an extension of our existing share repurchase programs through December 31, 2027 to align its remaining tenor with that of the new $ 250 million program.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data